Economic policy

Economic policy is like commanding the sea

As the story goes, Xerxes of Persia, during the invasion of Greece which played the role of the famous last battle of the Spartans at Thermopylae and ended the Persian claims at Marathon, attempted to build a vast bridge on the Hellespont on which his men could march from Asia to Europe. A storm soon destroyed this bridge and Xerxes, in retaliation, had the straits whipped, “branded” with hot irons and chains thrown over it.

King Canute of England, to his credit, was more circumspect in his dealings with the sea. After receiving flattering flattery from his courtiers, Canute had his throne sit on the shore and ordered the rising tides to retreat. The sea, indifferent and indifferent, advanced and flooded the king’s feet. Canute then warned his courtiers, reminding them that despite the illusion of power, a ruler’s authority does not extend to the forces of nature themselves.

Economics is a discipline that is not well understood – mainly by economists themselves, recognized by their frequent admission. The shifting and choppy tides of consumer behavior and confidence create murky waters through which to view the fiscal undercurrents carrying the Australian people.

Much like Xerxes and Canute, Australian politicians have fallen into a similar madness; namely, that of thinking that they have authority over the impenetrable force of nature that is our economy. Despite our interference with reserve banks, quantitative easing and interest rate movements (or perhaps because of them), we have experienced a period of great financial difficulty for many Australians.

No doubt there will be a lot of blame assigned over the next three years; on social networks it is already starting. The new government will be the scapegoat for the economic policies that had their origins in the last two years of prodigious spending and debt.

Yet it will not be unjustified. Unless the Albanian leadership turns out to be a new Hawke, this program will only continue. The truth is that economically the two parties have become indistinguishable from each other. In our twist on the hardships Aussies have endured, there’s no mention of the havoc that countless lockdowns, social distancing rules and selective distributions have done on the engine room of Australian jobs that are small businesses – including both red and blue are to blame.

Nowhere is our presumption of mastery of the forces of nature more evident than in the cost of housing. In this latest election, each of Australia’s three main parties shouted proclamations amid rising storms of home ownership unaffordability, hoping to turn the tide of house prices back.

The Liberal Party has suggested that potential home buyers should be able to draw down their retirement pension against a deposit. The Labor Party has proposed a policy that the government should invest money to buy a 40% stake in homes bought by a few disadvantaged people under an extension of state shareholding schemes. The Greens insisted on the need to build a million new social housing units. All of these policies will further inflame the frenzy of housing unaffordability, lead to severe restriction of personal freedom, enormous waste of public spending, or some combination of the three.

The Liberal plan would have had young Australians sacrificing their future retirement funds in an attempt to buy the Australian dream now, leading to a Prisoner’s Dilemma-type arms race of super withdrawals to offset deposit requirements, which are becoming more and more expensive because of the additional expenses. liquidity injected into the market.

The Labor plan would see the Federal Government take on the risk of volatility in housing markets, submitting to the mercy of rising interest rates and negative equity. It would also see the federal authority playing a very problematic role in the privacy of Australians, having undue influence over citizens’ financial planning.

The Greens’ plan would either require huge urban sprawl with the environmental and infrastructure problems that entails, or more likely a series of mandatory acquisitions to build densely populated social housing towers closer to city centers. This would see hundreds of thousands of public dollars used to subsidize workers living closer to where they work. Ironically, it is Green politics that best reflects the real affordability problem – a fundamental lack of supply in in-demand areas, fueled by the same NIMBYism that motivates Green voters.

None of the proposed solutions will work – not just in housing, but across the spectrum of economic policy. The truth is that our ruling elites have deluded themselves into thinking that only they can control the raw power of the waves of economic activity, and we will all suffer more until their illusions are dispelled.

The economy, as a whole of employment, the speed of money, consumer confidence and much more, is affected much more often by the actions of our government than it is. is helped, especially in the last two years.

Instead of throwing shackles into the economy – imposing development and punitively raising taxes on the most productive, we must reduce zoning laws, business taxes, etc., to combat the mind-numbing influence of our government. We must recognize, unlike our leaders, that these changes cannot just be made at the federal level – they must be made at more local levels.

Perhaps our federal and state governments should step aside and let the market, in all its whirling and dizzying complexity, find its own solutions. For the sake of Australians, it is sincerely hoped that our new government will recognize this in some way.