Even the ABC can Spot a Dud Budget

You might not think me a fan of Sarah Ferguson. You would be right. I recall viewing her would-be takedown of Donald Trump via her melodramatic three-part series on the “story of the century,” which turned out to be the hoax of the century. However, we are all prone to making fools of ourselves once in a while. And since 2018, when the series in question was broadcast, I have seldom tuned into the ABC and have missed seeing her on air. Thus, to be fair, I am agnostic about Ms Ferguson.

Having just missed the budget speech, I surprisingly turned to the ABC to see what the collectivists made of it. I caught Ferguson interviewing Jim Chalmers. Here’s the transcript. I have to say, she was pretty damn good. It’s worth perusing the transcript in full.

Chalmers dissembled in Orwellian Newspeak. “You know, we are trying to put downward pressure on inflation.”

What, by spending big while keeping interest rates down? That’s a good trick, Ferguson might have said but didn’t. I did. However, to be fair to Chalmers, as I have been to Ferguson, he is a complete ignoramus when it comes to economics and therefore must be given a pass. And remember, Wayne Swan probably took him under his wing within the Party; no one could emerge from that with any economic nous.

Please tell your children or grandchildren if they are studying economics to studiously avoid reading The Monthly articles penned by these two gentlemen lest they be led down the garden path. You can read Peter Fenwick on a recent Chalmer effort here in QoL and me on Swan’s earlier effort here. Both feverishly imagine an interventionist alternate to free-market capitalism. Klaus Schwab at Davos has similarly misguided aspirations on the world stage to remake the economic order. In fact, they are preaching socialism in drag, as I like to put it these days. But back to Sarah and Jim and the one-off $300 cut in electricity bills for all households.

 “Why is it you’re choosing to give wealthy people $300,” Fergusion asked?

“It’s the easiest, simplest, most efficient, most effective way to provide this help,” Chalmers replied.

The fun came when Ferguson asked why putting money in people’s pockets wouldn’t put upward pressure on inflation. She referred to this view as “conventional economic wisdom.” Indeed it is. It is also close enough to a truism to be a truism.

Every dollar that the government spends is “inflationary” in the sense that it adds to the money supply. Perforce, the increased supply of anything tends to reduce its price. Which, in the case of money, is expressed in the bundle of goods and services each dollar can buy.

Of course, Chalmers is thrown by this question. Don’t ask me, I’m not an economist, he could have said. That might have been too honest. So, instead he fatuously claimed that the aforementioned truism was “not the unanimous view of all economists.”

“It’s very rare to get a unanimous view amongst economists,” he added as a distracting throwaway. It didn’t work.

“No, but it’s conventional wisdom,” Ferguson retorted.

At this point, Chalmers appealed to authority; to Treasury economists who had apparently assured him the electricity-bill giveaway “would take the edge off inflation” and would not “add to inflationary pressure.” With a deficit forecast to be $28 billion in 2024-25, of which the $300 giveaway is a part, I can only suppose that the Treasurer misunderstood the advice he received.

Ferguson was merciless. “Well, have you found a magic formula that turns payments to households into an instrument to fight inflation? Because that would be a magic formula.”

I just have to say, I almost cheered. In one short sentence, unbeknown to her maybe, she laid bare the whole socialist-cum-Keynesian house of cards. To wit, spending is the key to nirvana.

Giving people free money to spend; giving carpetbaggers money to build things (e.g., solar panels and green hydrogen) that won’t sell or won’t work. Destroying value, causing inflation.

The enlightened alternative is for government to get out of the way; to slash government spending and taxation, to remove regulatory obstacles, and to stand back and watch business start making things of value. Making things which add value is the key to prosperity. It is what free-market capitalism does best. As Michael Douglas puts it to Kathleen Turner in War of the Roses, “It’s a lot easier to spend it than it is to make it, Honeybun!”

In response to the questions asked of him, Chalmers did make one partially sensible point. “You have to look right across the budget,” he said. “We’re showing spending restraint, which would be unrecognisable to our predecessors.” The first part is right. You do have to look at the budget as a whole, not at individual items of expenditure. The problem is that that this year’s projected surplus morphs into large forecast deficits so far as the eye can see. How that can be described as restraint only Chalmers knows.

An afterthought. I am not quite enraptured yet with Ms Ferguson but her whole interview with Chalmers was appropriately interrogative and professional as was her subsequent interview with a rather pensive-looking Angus Taylor. Credit where it’s due.