QED

The Bitter Fruit of an Untended Orchard

For afore the harvest, when the bud is perfect, and the sour grape is ripening in the flower, he shall both cut off the sprigs with pruning hooks and take away and cut down the branches
                                                                                                                            
Isaiah 18:5

The Budget has occupied the news. Wymyn, COVID and climate change momentarily took a back seat to the spendathon. I personally enjoyed Albo more than Josh. Liked his promise to give the homeless houses and to make Australia a renewable energy superpower. Can’t get much better than that. And, remember, he promised even more for aged care than did Josh, and the NDIS, hospitals, schools and women’s wellbeing wouldn’t be short changed.

By the way, both of these spendthrifts, generous to a fault with our money, promised jobs and more jobs. It’s obvious really, when you daydream about it, the more you spends the more you gets. And if you think that’s silly, more fool you. John Maynard Keynes thought it to be true and he was much more clever than you. And remember all the world’s governments are spending like crazy too. So that makes it truer than true.

OK, I don’t want to be a party pooper, but there ain’t no Magic Pudding. Nevertheless, it is an alluring concept when dressed up as budget deficits. The theory is that governments can keep economies buoyant by spending more than they tax. Where’s the catch?

One catch is inflation if, as now, governments don’t fund their deficits by borrowing from the marketplace. Currently central banks are buying the debt. As a result, money supplies are growing quite rapidly and eventually this will likely lead to inflation. But that would be just an outward manifestation of a deeper malaise. Like a sneeze from a cold virus. The malaise is there whether government deficit spending is monetized (as now) or whether it isn’t.

You can see it by simple reflection. No economics training is required. In fact, economics training is positively counterproductive. Economists these days, or most of them, have no idea how the world works. That’s because while they understand how they work individually in the world, and how their friends work individually, they believe that when taken together, collectively, they work quite differently. They don’t.

You get richer by producing more this year than last. Equally, and no differently, society gets richer by producing more this year than last. This happens because collectively you all put in more time and effort or because you get cleverer and, say, replace manual effort with machines. There is no other way. Spending won’t make you rich unless it’s on those aforementioned machines. Spending on consumption is the fruit of producing. No producing, no fruit.

So where is all this government spending going is the question? Some is going to machines, in other words, to infrastructure, roads, airports, freight hubs and such, but not much relatively speaking. Most is going straight into fruit, into aged care, disability care, childcare, women’s safety or whatever, and bypassing production. That will make us poorer.

Suppose you owned a business employing twenty people producing tarts. The government offers half your employees more money to work in nursing homes. Better care for the aged is good. But now there are fewer tarts to go around. That’s bad. What you need to do is to produce more tarts in the first place.

This government spendathon will end in tears. Governments’ focus, here and elsewhere, should be on encouraging production – take a leaf, at least in part, from Donald Trump – and then scoop up some of the abundance to spend on fruit like aged care. Deficit spending on fruit makes us less rich and less able in the end result to care for the disadvantaged. Being compassionate without the wherewithal is illusory. As for jobs, government can only spend its way to full employment at the cost of plummeting prosperity and increasing misery.

Here you are in your apple orchard offering free apples to the local kids’ home. Only problem, you haven’t tended your orchard. Only a few rotten apples to give away.

8 comments
  • Harry Lee

    Problem is this:
    The majority of people now embrace the parasitic life.
    Marxism promises people free everything. Then, once the people are enslaved by the idea that everything should be free, they are enslaved in All Ways That Human Beings Can Be Enslaved.
    The triumph of Evil eh.

  • STD

    Your a good apple Peter Smith

  • Granny Smith

    Economics has always been opaque to me, but now I think I get it. It’s all about sour grapes, tart apples and fruitfulness.
    When the buds are good and the grapes are sour you cut them down. Then, you make tarts, not spending anything on fruit—that’s a government function—give your apples away and if your orchard has a few rotten fruit you get some leaves from Mr Trump. But if the aged care sector expands there will be fewer tarts, possibly because you’ve given some apples away. For verily, he who gives thereafter has less.
    But wait! Great Scott and the Mighty Josh are handing out lots of magic apples to those whose orchards are untended. To point out that they should be saved for tomorrow would be sour grapes.

  • nfw

    Dear STD, it’s “you’re” which is the contraction of “you are”.

  • nfw

    Thirty-five years ago my wife and I heard politicians (to saying lying would only be tautological) tell us we had to save for the future and look after ourselves as the demands of welfare were too great and we could not count on gummint assistance. So we did just that. Now I see my self-managed superannuation assets down 25% on last FY; businesses and investments which we made to help provide jobs and boost the economy being destroyed; and now realised we were being played as fools while trying to do the right thing. But we are always buoyed by the knowledge thieving lying politicians and their never-worked-so-hard-in-their -lives public servants, which includes trough swilling judges and their hangers-on, continued to be paid full freight in the knowledge their pensions are protected. And here we thought “we were all in this together”. And they continue to lie to us about the Wuhan Flu and the poison they demand we take to help their global elite mates.

  • Harry Lee

    Peter Smith does excellent work -offering education about the ways economics works.
    Now e must focus on reducing if not eliminating the impediments to wealth-creation that are part of the (sadly suicidal) accepted fabric of the Australian social-economic system , viz:
    -the tax regime that strongly discourages entrepreneurial investment and stymies strong management in key value-add high-margin enterprises
    -the union control of labour markets
    -the anti-free enterprise formal/legislated regulatory clamps on business development
    -the informal but powerful anti-business activities conducted by public servants at Federal, State/Territory, and Council levels
    -the anti-business ideology that shapes/elevates what is channeled by the ABC, SBS, much of the commercial media, and the education systems.
    -the insanity of reduction/elimination of the use of fossil fuels
    -the insanity of the prohibition of the development of a full-scale nuclear industry.
    -immigration/refugee inflow that brings in a majority of future ALP voters and groups that are and will remain permanent nett drains on Treasury funds.
    Yes, these are all results of the ALP-union-Greenist-marxist anti-Westernism that now fully dominates Our Once Fair Land that once had a promising future.

  • STD

    In regard to Islam, we hear what your saying , but we would like to know what your thinking. For an up to date briefing on the silent question, head to the Koran.

  • STD

    Nfw, thank you for the heads up. Of course ,silly me, there’s yaw in a flight as there is yaw in your rudder as you are in your summation, you are studiously right, therefore you’re correct.

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