Sunday, 6 June 2010

An interesting turn of events

In 1992 Professor John Carroll co-edited a book "Shutdown: The Failure of Economic Rationalism and How to Rescue Australia". As Roger Kerr notes,
In it Carroll blasted the Hawke-Keating government’s economic reform programme that began in 1983. In essence that Labor government abandoned Fortress Australia policies, liberalised imports, floated the dollar, deregulated industries, corporatised and then privatised government businesses, and adopted more disciplined fiscal and monetary policies.
Recently in the The Australian newspaper Carroll wrote,
MICHAEL Stutchbury refers disparagingly to a book, Shutdown, that I co-edited with Robert Manne in 1992 ("Goodbye to the notion neo-liberalism caused the global financial crisis," 17/4). My view today, with the benefit of hindsight, is that Shutdown was basically wrong. I was principally troubled in 1992 with Australia's escalating international debt, and the consequent foolishness of running down local manufacturing (which would also aggravate the already high unemployment rate). My prediction was that an economic crisis loomed.

The reality turned out to be just the opposite: nigh on two decades of unprecedented economic growth. Moreover, industry policy in 1992 to encourage local manufacturing would have been almost entirely doomed once Chinese export production got into full gear -- something that could not have been foreseen then.

To me now, the past two decades support the maxim: if in doubt, trust the free market.
This brings to mind the famous quote by John Maynard Keynes,
When the facts change, I change my mind. What do you do, sir?
As Roger Kerr also notes
John Carroll was widely congratulated in Australia for admitting his earlier folly.
Will any of the anti-reformers in New Zealand, the likes of Brian Easton, Tim Hazledine, Paul Dalziel, Bryan Gould, Hunter Wade, Keith Rankin or Jane Kelsey, look at the facts and change their minds?


Eric Crampton said...

Wasn't there a recent Quiggin / Hazeldine piece blaming the 80s reforms for NZ underperformance relative to Oz?

Paul Walker said...

You may be thinking of Hazeldine, T. and Quiggin, J. (2006), 'No more free beer tomorrow? Economic policy and outcomes in australia and new zealand since 1984', Australian Journal of Political Science, 41(2), 145-59.

Ed Snack said...

That group that you mention are probably best represented by a twisted quote: "Facts, facts ? We doan need no stinkin facts." I don't believe that there is any fact or collection of facts that could cause Kelsey, for example, to change her mind.

It is difficult to rationally argue someone out of a position that they didn't rationally arrive at in the first place.