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June 29th 2014 print

Peter Smith

John Hewson’s Emetic Properties

I have suspected for some time that page after page of utter drivel will prompt gastric restiveness even more effectively than an intemperate indulgence in Bacchus' bounty. The failed Liberal leader's latest thoughts on "inequality" have confirmed that diagnosis

hewsonAustralia 21 (close but no not Agenda 21) is a politically androgynous think tank provided, that is, your political preferences go to belief in global warming, sustainable development, the evils of protecting your borders and the sheer unfairness of life. It has recently produced a report on Inequality: Advance Australia Fair? What to do about growing inequality in Australia.

Andrew Leigh and The Australian Institute provided inspiration as, among others, did the Rosses, Gittins and Garnaut. Is that crew not motley enough for you? Well, just add the merest vestigial after-glow of conservatism by having John Hewson launch the report. Maybe Malcolm Fraser wasn’t available.

I admit to downloading (but not to reading) the report. Sometimes I feel as though my stomach, the morning after a few glasses of wine, is not strong enough to handle pages of complete drivel. I’ll get to it mañana, someday, maybe, when I am feeling more resilient.

Anyway, the readers’ digest version is available courtesy of Hewson’s speech notes, which he agreed to share with the world. He briefly lists the report’s recommendations. Even these are hard to take and caused me to vomit a couple of times because of their sheer vacuity. Let me give you a sense of it. I leave aside the obvious recommendation that we need higher taxes on the rich.

Apparently we also need a mature conversation about inequality. Well that should help to do the trick. Fairer funding for schools and investing in early childhood education, especially for the disadvantaged, are on the list. Of course they are. I am only surprised that lobotomising particularly bright rich kids isn’t or sending rich parents who dare to spend lavish amounts on their kids’ education to a gulag for progressive re-programming.

Then there is the implementation of WHO recommendations on the social determinants of health. I have no idea what these are or how they will help make us all more equal — put your hand up if you know — but I admit to being resolutely prejudiced about anything coming out of any UN body.

We need job creation programs apparently. Government will pay – jobs galore are just a program away. Ah, if only real life were as simple as it is in the Left’s playbook. Mummy why can’t I have everything I want? Daddy has lots of money.

And, comrades, we need to develop new models of employee management and cooperative ownership of businesses. Didn’t we have a taste of that in Australia’s now defunct car manufacturing industry? God knows what a full menu would bring; industrial wastelands akin to Detroit perhaps? There is lots of equality of misery there.

The Productivity Commission is roped into this quest for more equality by being ‘encouraged’ to inquire about the impact of inequality on efficiency and growth. Well the authors of the report should look no further than Andrew Leigh himself. He is on the record as expressing surprise that research he undertook with others showed that higher economic growth followed higher inequality. It is called an inconvenient truth, I suppose.

Encompassing it all would be a national research program to monitor the progress and test the impact of the interventions aimed at reducing inequality. I can save them the trouble of establishing such a program and no doubt the significant costs to taxpayers of staffing it with assorted socialists, greens and do-gooders. The impact of the interventions will be zero to negative. There is a guiding principle. All left-wing interventions designed to better the economic lot of the disadvantaged invariably have no effect or make matters worse.

Why John Hewson would lend himself to this tripe is beyond me. A clue is his example of growing inequality in China. He say that the “Gina coefficient of urban–rural inequality has widened from about 0.16 to 0.5 since 1978, when widespread reform and the opening up of the economy began.” He ends this, the third of his opening gambits, by noting that there “are, of course, a host of other most disturbing examples”. How in the world you can describe the economic rise of China as a disturbing example. Is it a disturbing example of success?

Inequality is a derivative of a complex set of economic and social forces; it goes up, it goes down. The gulf between rich and poor goes back to the dawn of time and unless we choose to live in a communist paradise of equal impoverishment it will always be with us. Policy should target freeing markets to make us all as prosperous as possible and in position to provide help to those who fall by the wayside.

Optimising growth and reducing poverty are laudable and consistent aims. Trying to minimise inequality with ham-fisted interventions is one of those feel-good, hopeless and counterproductive endeavours on which the Left builds its repertoire. But think about it. What would be left (or Left) in the repertoire if rational and logical thinking prevailed?

 

Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics