IGNORANCE of the laws of economics is no excuse. Neither is the adolescent classic that everyone else was doing it. Enough to be ouch-worthy to many, yesterday’s 25-basis-point interest rate hike means the official cash rate of 0.35% is now merely close to the all-time Australian low. Speaking to Paul Murray last night, John Howard pointed this out repeatedly, laughed off the significance of the RBA’s move and scoffed at suggestions the long-expected rise would engender disenchantment with the Morrison government. But the “gold standard of prime ministers,” as Murray dubbed the former Liberal leader, missed a more crucial point. So did everybody in the hot-take media except Judith Sloan. Calling interest-free cash an “emergency rate,” Howard acquitted the government of monster spending, xeroxing A-dollars by the truck-load and contributing to inflationary pressures. “Everyone panicked” about covid, Howard explained. It’s a weak defence of leadership to argue a man couldn’t break free from a herd. No Swede, he.
Like a savvy cashier at an old drive-in, economist Sloan knows the Coalition jalopy has a freeloader in the boot; his name is Keynes. The government and its near-teal defenders – no longer interested in the precepts of conservative stewardship – are sneaking Great Society extravagance into a sales pitch about superior economic competency. This is an example of what I call spectrum creep: the process by which the LNP first normalises statism by swapping principle for expediency and then declares itself a more trustworthy practitioner of degeneracy.
“The fact is,” Sloan writes, “the fiscal response to the pandemic – or, more specifically, restrictions imposed to contain the pandemic – was excessive.” At the height of Mad Monetary Theory, federal government spending approached a third of GDP in 2020-21. This government has a harebrained tendency to head off the far left at the pass rather than bulldoze a route to its own destination. The reason Paul Kelly has to use the neologism “super-maximalism” in a condemnation of The Greens’ emission reduction ‘plans’ is that the government’s own policy – minimalist only by comparison – is utterly absurd and extreme. The Prime Minister isn’t entirely a victim of global circumstance. He has to accept responsibility for cheapening the value of a dollar and a job. He also has to take the blame for surrendering to ‘climate change’ fabulists, a political felony that will cost Australia a lot more than a bout of inflation.