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Government for people or profit?

There are many promises made in the lead up to an election. Figures are thrown around, consequences of future actions are debated, dirt is thrown at opponents.

It’s all speculation. So much depends on what assumptions are made or what terms of reference are set for reviews. Everyone can produce a report supporting their view.

But since no-one can predict the future, let alone trust the things we are being told are based on any sort of evidence or will actually ever happen, it is perhaps more informative to compare past performance when in government than listen to empty promises/guesses for the future.

When Labor came to power, they were immediately hit with the global financial crisis. Treasury advice was spend big and spend fast. The aim was to keep people employed.

The first step provided $10.4 billion to help support millions of Australians.

  • $4.8b down payment to pensioners, payable in December.

  • $3.9b in support payments for families.

  • $1.5b for first home buyers.

  • $187m to create new training positions

In a plan designed to support activity in the housing sector, the Government tripled to $21,000 the previous $7,000 first-home buyers grant for people buying a newly constructed home. Those first-home buyers moving into existing properties received a doubling of the allowance to $14,000.

A second economic stimulus package worth $42 billion was announced in February 2009. It consisted of an infrastructure program worth $26 billion, $2.7 billion in small business tax breaks, and $12.7 billion for cash bonuses, including $950 for every Australian taxpayer who earned less than $80,000 during the 2007-8 financial year.

And it worked. Sure there were some problems, but nothing like what the rest of the world faced.

After almost six years in government, Labor left a net debt of $161,253 million at 31 August 2013.

After a bit over four years of Coalition government, net debt had risen to $350,578 million by the end of November 2017 without the excuse of the GFC.

Where Labor ran up a debt to keep people in Australia employed, the Coalition are borrowing to spend $400 billion on their defence white paper acquisitions – submarines, patrol boats, frigates, jet fighters, helicopters, missiles – you name it, we are getting the biggest and the…oh wait.

Then today, Malcolm Turnbull, announced we are going into the death trade. Labor spent money on foreign aid. The Coalition would rather sell them bombs.

Turnbull has unveiled a new “defence export strategy” to make Australia one of the world’s top 10 weapons exporters within the next decade.

It will set up a new Defence Export Office and a new Australian Defence Export Advocate position. A $3.8bn Defence Export Facility, to be administered by the Export Finance and Insurance Corporation, will provide the finance local companies need to help them sell their defence equipment overseas.

Why on earth would you refuse to subsidise the renewable energy industry and car manufacturing yet be prepared to spend billions on subsidising an armaments industry and fossil fuels?

When Labor was in government, they raised the tax free threshold from $6,000 to $18,200. This saved many part-time workers from having to fill in a tax return not to mention saving the lowest income earners up to $1,830 in tax.

When the Coalition formed government, they imposed a temporary levy on the highest income earners which they could and did promise to remove in the lead up to the next election. They wanted credit for removing a tax they imposed which cost a few people 2c in the dollar for a few years (if their accountants weren’t creative enough).

[A bit like the Chinese who, in the middle of the free trade negotiations, slapped a new tariff on our coal. Andrew Robb could then proudly claim to have negotiated for that tariff to be removed, no doubt costing a few more concessions on our part.]

The Coalition also raised the threshold for the second highest tax bracket meaning everyone earning over $87,000 saved $2,590 in tax.

When Labor was in government, they legislated for the superannuation guarantee to gradually increase from 9 to 12%. It only got to 9.5% before the Coalition put a temporary freeze on it which seems to have turned into permafrost.

Labor began the rollout of a nationwide broadband network that would have seen 93% of properties with a fibre connection. The Coalition’s change of plan has created a digital divide in the country with some properties able to access increased speeds while others are limited by last century infrastructure.

It really doesn’t matter which area of government you look at. Labor care about the people. The Coalition care about wealth, profit, and courting favour.


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  1. Florence nee Fedup

    Interesting we have both Trump & Turnbull boasting about improvements in the economy. A economy world wide where the poor are getting poorer, the rich richer.

    When have we ever seen a government take responsibility when the economy goes into downfall? Never in my long life have I seen this.

    We have seen our car industry disappear. Our trains no longer made in this country. Seen them destroy what was a blossoming industry to in clean energy exports. We exported the industry instead.

    Why are we for the first time, as the PM is saying, are we financing with government money, an export arms industry. Why has no other government ever gone down this track?

  2. sandrasearle

    You are right on the money once again Kaye Lee.
    We need to somehow get your message through to Shorten to start using it as a mantra so that we can counter this totally financially incompetent and morally bereft government.
    We need to get as many good investigative journalists to start to follow your lead Kaye.
    Well done.

  3. Kronomex

    Kaye, selling death and destruction is a sure moneymaker, just look at the US, England, China, Russia and the cash they rake in. The little yappy handbag dog that is Trembles and company is desperate for money, jealous, and must keep up with the Jones’s, so to speak.

    I can just see it now: Pynebox trying to sell the new “Australia Stealth Tinnie” or the “Multi-Barrel Pie and Beer Can Launcher (drunk raving Bogan operators extra).”

    The “local companies” that are supposed to benefit from this madness are Australian? Yeah, sure they are.
    Major military manaufacturers here –

    Thales Australia – owned by the French. *True blue…snort.
    ASC Pty Ltd, formerly the Australian Submarine Corporation – owned by the Gubmint with the recommendation in 2014 that they sell their share so technically it’s Australian.
    BAE Systems Australia – British owned. *
    Boeing Australia – American. *

    Others –

    Lithgow Small Arms Factory – owned by Thales.

    Let’s hope this is just another brain fart by our cretin of a prime minister.

  4. Terry2

    Strange how the spinners in the USA are getting away with talk of an economic upturn since Trump came to power just twelve months ago when all of the economic analysis shows that the prudent economic management of the Obama administration – including weathering the GFC – and Janet Yellen as an astute head of the Federal Reserve set the groundwork for economic recovery.

    Can you imagine what would have happened if Trump had to face a GFC, it would be a disaster.

  5. James

    If we had balanced media reporting then the LNP would be out. What the public get however is an ongoing propaganda filled narrative in support of the neo-cons with the illusion the LNP are the better mangers.
    Re the idea of profits from warfare, is that why MT recently went to Israel (weapons manufacturer par excellence)? The story never seems to end. Egomaniacs looking for a chance to make a profit by playing out in brute form? Where once Africa, then Asia were good places for a weapons testing and fear-mongering, it’s now the Middle East. Most people are evolving but the really slow learners are stuck in a feudal past mistaking force and fear with power and respect. Sad that they don’t understand that as yet.

  6. win jeavons

    LNP ; the Killers party. They ‘ll spend on death like drunken sailors, but not on life as we remember it on its own citizens. You conservative voters have a reckoning coming! They go to war readily, but deny the rights of the people they murder and displace. Not a proud time to be Australian!

  7. townsvilleblog

    Kaye, you are spot on as usual, it seems that when it comes to killing people there is no limit to how much money a tory government will give. As you quite rightly pointed out net debt under the tories has ballooned, yet ‘real’ unemployment is running at 9.8% according to the Roy Morgan Research Corporation in the December quarter. They are making a hash of the economy, doubling the debt with high unemployment and inflation is on an upward trend. They do however have a couple of records,in excess of three million people living below the poverty line, record debt and only 0.2% off double digit unemployment, please remind me why we (not me) voted for them again?

  8. ozibody

    Thank you Kaye Lee ! These are salient factors which are generally lost in the hubhub of today’s world. The comparisons are stark , yet unfortunately, they will not receive attention in the current (Murdoch) media environment.

    Real world information which you have listed in an uncluttered fashion forms the basis for genuine assessment by Australian citizens.

    A return to the presentation of Recent Achievement to Australian voters is a fair and just debate to encourage – particularly when compared to $ $ Funded $ $ spin through the neo-libcontrol of the msm !.

    Today’s political debating style of presenting comparisons with the ‘ competition ‘ is, in effect ,offering the ‘ conclusion ‘ instead of presenting the ‘ case ‘ … thus encouraging the voter to ‘ reach ‘ their particular conclusion!

    From a marketing perspective not one of today’s politicians could ‘ sell ‘ me a cool drink on a stinking hot day ! … ‘cos they want me to buy their (spiked) ‘ brand ‘, instead of (really) quench my thirst !

  9. Peter F

    @townsville blog . . . . . one word Rupert

  10. jimhaz

    “In the period from 1 July 2007 to 31 March 2015 the DMO [Defence Materiel Organisation] has placed approximately 117,000 contracts
    worth a little over A$71 billion for acquisition, sustainment and sundry other items. In the financial year 2007–08 almost 80 per
    cent of the DMO contracting was to companies operating within Australia, but this has steadily declined since that time to the
    current state where less than 60 per cent are awarded locally.”


    I note they are concentrating on export, rather than lifting the level of Australian supply to what it was a decade ago.

    I’d say that means the government is looking for ways to GIFT taxpayers money to multinationals, to pay for their marketing expenditure (not R&D), not to assist smaller companies where the profits would remain in Australia.

  11. Zathras

    It really is time the myth that the Coalition are “better economic managers” was laid to rest, once and for all.

    Like the US Republicans, all they do is to plunder the public vaults to enrich themselves and their owners/sponsors.

    Their only aims simply are lower taxes for the wealthy, decentralisation (when it suits them) and the removal of government regulations to let loose “the miracle of free market capitalism from which all good things will flow”.

    Everything else is just window dressing and a means to that end.

    Now with the prospect of exporting weapons which will end up who-knows-where, will Malcolm become the 21st century version of “Pig Iron Bob?”

  12. diannaart

    So Turnbull wants Australia to start manufacturing again and export those products to the rest of the world.

    Fine so far.

    Yep, weapons, bullets, things that destroy other things, permanently. Lot of money in that.

    Now, I may be wrong… which is not unusual, but I do believe the USA and Russia and Britain and quite a few other nations are already supplying demand in the weapons trade. Have done for decades.

    How about we do something original, dare I say innovative? We couldn’t sell our technological advances in quantum computing? Or electric cars or maybe just healthy food? C’mon Malcolm you can do better – not that anyone is still holding their breath for you, but you know you could go out on something worthy. Just a thought… WTF do I know?

  13. totaram

    I’ll add to Jimhaz’s observation, that much of the money for the big-ticket defence items will go straight overseas, so no money will get invested in Australia. Any promised investments by the govt. are just a blip compared to the total what will be spent, and I can bet it will be spent largely on “marketing”, which might even involve giving bribes to politicians in small countries. These are most likely the countries that will buy the kind of low-tech armaments manufactured in Australia. After all the ADF army uses the Steyr assault rifle, which is manufactured here under licence, but the other arms of govt. can’t be bothered to use it. They prefer to import US-made ones. Just look at the rifles in the photo. I can even bet that none of the gear those soldiers are wearing is made here.

    I recall some similar “marketing” for wheat exports to Iraq.

  14. Matters Not

    The armaments, we sell to those who wage wars, should have excellent steering mechanisms – be able to change direction very quickly, particularly when it comes to cornering. In Afghanistan, for example, the US is now on its 17th Commander. Each of whom claimed they had turned the corner or were about to. We have seen invasion, regime change, occupation, nation-building, pacification, decapitation, counterterrorism, and counterinsurgency, not to mention various surges, differing in scope and duration. We have had a big troop presence and a smaller one, more bombing and less, restrictive rules of engagement and permissive ones. Not to mention our training and mentoring roles.

    Perhaps the introduction of Australia supplied armaments will make all the difference. We will have turned another corner. It’s a maze of mirrors and yet we never see that we are the problem. Maybe we should seel Pyne instead – or maybe offer him as a gift – to the enemy.


  15. totaram

    MN: American wars will never have their “Weinstein moment”, because there is too much money to be made. There is a huge military Industrial complex, which even the Republican President Eisenhower warned about. And the power of that lobby has only grown. With Trump’s latest boost to arms spending, what can you expect?
    All the more reason for Australia NOT to develop an armaments industry. We would be going down the same path.

  16. Andreas Bimba

    I like the photo of Turnbull outside one of the new Centrelink offices. No entrance provided and lots of friendly staff to discourage confused bystanders.

    Kaye I think you are too kind to the Coalition in pointing out they care about wealth and profit when the wealth of 90% of Australians is declining or stagnating. Big tax cuts for corporations and generous tax concessions and loose taxation legislation for the wealthy means the tax burden of government has shifted to the less wealthy – 90% of us. This along with stagnant wages and very high real levels of unemployment and underemployment acts to reduce consumption demand which drives sales and therefore profits for most businesses. Only a well connected few benefit from Coalition policies which makes sense as they got what they paid for from a very corrupt political system that we now endure.

    Labor did very well after the GFC to use fiscal net spending to stimulate consumption and thereby reduce the severity of the downturn but Swannies next budget was way too austere and unemployment jumped as a result. This was the budget when even single mothers were denied a fair level of social support.

    Morrison’s last budget deficit is 2.4% of GDP and this is a good thing as without it unemployment would be far higher than it is now. We have some of the Senate cross bench and Labor to thank for this deficit as without it the social welfare, health and education cuts would have been a lot worse. The Coalition’s big spending on defence is also a factor in the deficit as you clearly point out.

    I don’t agree with criticising the Coalition or Labor for any federal deficits if we have high unemployment as that means deficits are too small. The portion of government spending that goes to foreign beneficiaries such as defence contractors also does not reduce Australian unemployment levels.

    The federal government using the RBA are the sole issuers of Australian dollars and federal deficits are funded by issuing new currency and no debt is incurred. Government bonds do not fund deficits even though they are currently issued on a 1 to 1 ratio by convention. Bonds can be seen as a type of term deposit that the RBA provides to financial institutions and investors to park excess Australian dollar holdings. We are falling into a neoliberal trap if we also argue for smaller deficits or for the federal debt to be reduced which is highly contractionary.

    Note also how the Murdoch media, the corporate oligarchy and plutocracy remain largely silent about Coalition federal deficits but hysterically attack Labor for any deficits.

    Please expose this hypocrisy, macroeconomic incompetence and sociopathic cruelty against the innocent of high levels of unemployment, underemployment that can be solved by having adequate federal deficits.

  17. Matters Not

    totaram, it’s extremely unlikely that Australia will ever be a serious provider of armaments, apart from the odd 4 wheel drive and perhaps some MAX TRACKS or equivalents. Note that the timeline is a decade – well beyond the political life of the current promoters. Although new weapons provide endless photo opportunities.

    It was C Wright Mills that introduced me to the military–industrial complex (MIC) many years ago (circa 1956) and yes it’s now ingrained into the US culture. But who knows what the future will bring. We can only live in hope.


  18. Kyran

    From this morning’s assault upon our senses and sensibilities.
    “Australia’s defence exports are worth about $2 billion a year — but Defence Industry Minister Christopher Pyne said he wants that figure to be higher.
    “We sell a veritable welter of [defence] products, but we haven’t really taken it to the next level which is to seriously compete in the world for a part of what is a $1.5 trillion part of the world economy,” he told ABC’s AM program.”

    “Mr Pyne rejected the criticisms by emphasising Australia would focus on boosting exports to our closest allies, including New Zealand, Canada, the United States and the United Kingdom.
    And he insisted that the current export controls on arms would not be diluted.
    “Obviously, no equipment or platforms will be sold to any country unless the most stringent requirements are put in place through the permits process,” he said.
    “The defence export strategy is not designed to get into markets where we don’t want to be. It is designed to maximise the markets where we perhaps haven’t been making the most of our opportunities.”
    But the Coalition is also eyeing growing arms markets in the Middle East and Asia.”

    “Labor frontbencher Anthony Albanese said he backed the new strategy, but questioned the Government’s focus on defence.”


    So we have the same old, same old. The poodle has been unleashed and Labor is in tow. Some deals with the Saudi’s were in the news, back in May 2017. The Saudi’s must be observing “stringent requirements”.

    “Defence department officials are refusing to divulge details of four exports in the past year, citing commercial-in-confidence reasons for the Australian companies involved.
    But they insist whatever equipment has been exported is not being used in the Yemen conflict and a Saudi-led coalition bombing campaign.

    Defence Minister Marise Payne insisted Australia assessed defence exports against five criteria including human rights implications, foreign policy and national security.”


    So, maybe, human rights implications aren’t a part of the “stringent requirements”. It would be like selling uranium to a country that wasn’t a signatory to the Comprehensive Nuclear-Test-Ban Treaty. Oh well, only one or two. We do our bit though. Australian people started the ‘International Campaign to Abolish Nuclear Weapons (ICAN)’, which won a Nobel Peace Prize this year. Only Russia sent a ‘top diplomat’.

    “It has fought for a global treaty banning nuclear weapons, which now has 53 signatories.
    But the document remains somewhat symbolic because no nuclear powers have signed it and neither have many of their close allies.
    Australia, for example, has long argued banning the bomb outright — while emotionally appealing — will not lead to any meaningful reduction in nuclear weapons and may divert attention from existing treaties aimed at preventing nuclear proliferation.
    Thus far, the Turnbull Government has stopped short of congratulating ICAN, which began in Melbourne.”


    Back in July 2017, the media was abuzz with ‘poodle unleashed Mk1’ and his announcements about ‘Straya being an ethical arms dealer.

    “The defence industry minister said Australia could export “all sorts of arms” to increase jobs, including vessels, offshore patrol vessels, remote warfare systems, surveillance, sonar, radar and potentially frigates.
    “We are doing some of that,” Pyne told the ABC. “My ambition is to enormously increase that capacity and send a lot more weapons overseas to appropriate countries and appropriate places of course.
    “We simply wouldn’t do so willy-nilly. We have a particular process for that.””

    Well, seeing’s how defence is super duper top secret, we can’t expect the government to say too much. But we are talking about the poodle here. Back in July, 2017, he gave a talk.

    “That the government has chosen to spend 195 billion dollars over the next decade to reinforce our national security should say it all.
    We have chosen to do something no government in this nation has even done before – acknowledge the significance of defence industry to jobs and growth in this country.”

    Ta da! It was all about jobs and growth. We are going to spend $195bill on defence and some of the jobs will be in ‘Straya. Now, it’s all super duper secret, so no companies can be named or amounts disclosed. But, then again, we are talking about poodle and talcum. National Security be damned.

    “And as we expand our defence industry and capabilities Australia will continue to play its part as a responsible member of the international community and ensure our most vital technologies and defence exports contribute to global stability.
    Already Australian companies are actively seeking out opportunities overseas, but opportunities remain to partner more closely with defence.
    We’ve got some great success stories.
    CEA has exported more than 260 million dollars of radar and other products in the past five years; products that are in demand by the United States as they beat anything they produce – an enormous achievement.
    The Australian designed Nulka decoy system that protects ships from missiles not so long ago saved the USS Mason from an attack by Houthi rebels off the coast of Yemen.
    Thales has been a major export success story while supporting our own defence needs. Over the past decade or so Thales has exported some 1.6 billion dollars worth of submarine sonars, air traffic control systems and Bushmaster armoured vehicles to Europe, Asia and the nations of the Caribbean.
    Austal is exporting both Australian manufactured vessels and Australian designs and engineering innovations around the world.
    In a major triumph for local industry they won a contract worth just under 800 million dollars to build the Independence Class Littoral Combat Ship for the United States Navy at the end of last month.
    The Joint Strike Fighter is another great example of our export success, but not one that immediately springs to mind.
    Because we committed early to the project, Australian Defence Industry is now reaping significant benefits.
    Companies like Marand, who started life in the automotive sector are one of the biggest beneficiaries in Australia. Among other things, Marand make tail pieces and specialised engine trailers for the Joint Strike Fighter. They recently announced that, over the next decade their order book from the project will be worth more than $1 billion.
    That’s not just for Australia’s Joint Strike Fighters – that’s exporting vital components made here in Australia overseas, to take their place on perhaps the most advanced combat aircraft the world has ever seen, that will be operated by the USA, the United Kingdom, Japan, Israel and many other countries.
    There are more than 35 companies all over the country who have a similar experience with the Joint Strike Fighter programme. Companies like Varley, who have been operating for more than 100 years, and started making rail containers for the booming mining industry in the Hunter Valley, who now make the specialised secure trailers for forward deployments of the jets.
    Or Chemring, who are based outside of Geelong and who make flares for the Joint Strike Fighters – expected to be over 350,000 of them, 90% of which will be for export. I could go on.
    Now, our challenge is to make these more than just showcase examples of Australian innovation and capability.
    They need to become the new normal.
    Australia ranks thirteenth in the world for defence expenditure.
    We are the fifth largest importer of defence material – but only the twentieth largest exporter.”


    Wait a minute. How many billion are we spending on the JSF? Oh, that’s ok, we’ll get $1bill back over the next decade ‘cause we’re making some parts. Bargain!
    Why, just one company alone, Thales Australia, has $1.6bill in contracts. Ok, more than 90% of that is generated off the ‘Bushmaster’ product range, which is manufactured in Australia. It’s such a pity the parent company is French. Wonder where the profits go. Well, we’re going to spend $50bill on subs, and some of them will be made here. Oh, that’s right. It’s a French company currently being investigated in three countries at least and already subject to fraud investigations by the Australian government both in Australia and France. We still haven’t got passed the ‘design stage’, which has a budget of $500mill, and DCNS are now Naval Group.
    So why would it come as any surprise that the poodle is now announcing a $3.8bill facility for a market currently valued at $1.5 -2.5bill? It must be the procurements.

    “The Australian National Audit Office (ANAO) has released a major report on procurement in the Federal Government.
    It is an information report that says it is “not an audit nor an assurance review” and that no conclusions or opinions are represented. But it does present a useful overview of government procurement.”

    “Nevertheless, the data makes interesting reading. Some key points:
    Total Australian Government procurement in 2016-17 was $47.4 billion, from 64,092 separate contracts.
    By far the largest agency, in terms of both number and value of contracts, is the Department of Defence (including the Defence Materiel Organisation). In the five years to 30 June 2017, that total value of its procurement exceeded $112 billion. The Department of Immigration and Border Protection was a distant second, on $15.3 billion.
    The largest item across all agencies was ‘commercial and military and private vehicles and their accessories and components’, at $42 billion. Defence was responsible for most of this.”


    So, the responsible fiscal managers order major stuff from overseas and we get to make some of the parts for them so we have jobs and growth.
    Bargain. Absolute bargain. Spend $195bill and get a few $bill back. Plus, and this is the important bit, we get jobs and growth. Wages should start going up any decade now!
    Thank you Ms Lee and commenters. Thank goodness the adults are in charge. Take care

  19. Harry

    Labor acted correctly to avoid the worst of GFC.

    Like Andreas Bimba I think the fiscal stimulus was wound back before the economy had recovered, spooked by the “debt and deficit disaster” attacks by Abbott. Wayne Swan could not counter this as he believed that over the long term deficits are somehow “dangerous”. If he was running a State government, which is a currency user, I would agree with him. Swan’s understanding of macroeconomics is flawed. He should not have promised a “return to surplus”.

    Since Federation federal governments have run budget surpluses more than 75% of the time; they are almost always needed. Do not fall for the “government is similar to that of a household” LIE that is still repeated continually. Federal deficits- creating more money for spending into the economy than is taken out in taxes, are essential given the desire of the private sector to accumulate profits. In other words a private sector surplus requires a public sector deficit.

    Progressives must not fall into the trap of believing that deficits lead to some economic disaster or huge debt that our grandchildren will have to pay back. The warnings by bank economists such as Chris Richardson today, are not to be believed.

    I attach a link that explains it better than I can but also refer readers of AIM to John Kelly’s clear articles of the last week or so.


  20. Glenn Barry

    Of all the possible industries to be subsidising – this has got to be the worst, but it seems obvious that this announcement is to counter the profligate defence expenditure and make it look less alarming.
    And so we continue down the Americanisation route, expectedly of course given our status as a vassal state. America which has appalling social inequality and educational opportunity along with crumbling infrastructure because of the level of their defence expenditure…

    Where do we go from here?

  21. Andreas Bimba

    Typo in Harry’s comment which I fully agree with.
    Should be “Since Federation federal governments have run budget [deficits] more than 75% of the time”

  22. guest

    Thank you, Kaye Lee, for so succinctly spiking the Coalition balloon. We need to keep up the revelations of the truth and the destruction of fake news.

    The latest toy thing being played with by the Murdochians is the idea of “virtue-signalling”. Janet Albrechtsen has a go at explaining what it means, beginning with reference to a “cracker episode of ‘South Park'” (You see how she spends her time). And she had the word/phrase explained to her “over lunch in London last week” (You see where she goes for lattes). So by the time she completes her missive with an attack on communism, she has covered almost every public activity which does not say neoliberalism is great! For example, hating Trump is “virtue-signalling”.

    So is promoting an increase in arms manufacturing “virtue-signalling” of the kind which is proclaimed “in the name of sounding good rather than doing good” (her words)? Are Turnbull, Pyne and Ciobo actually “virtue-signallers”?

    Her informant in London had described virtue as being “something carried out quietly, selflessly, for no applause, whether from others or internally.” I do not see much virtue in Albrechtsen’s scribbling from Planet Janet.

    I want to shout “I hate Trump!” from this side of the world because I see no virtue in him.

    As you show, Kaye Lee, the Coalition has been “virtue-signalling” for a long, long time. I hate it.

  23. diannaart


    A crying shame that those who engage in “virtue signalling” never receive any – virtue , that is.


  24. totaram

    Harry: “He should not have promised a “return to surplus”.

    I have said exactly that so many times before. He fell for the “surplus good, deficit bad” rhetoric. He still believes it (I suspect) because he refused to agree that fiat currency issuing govts are not “financially constrained” like households, when this was explained to him. He would probably be hard put to even agree that the three-sector financial identity holds. But his heart is in the right place, I suppose. Clearly not good enough if you are ignorant of reality. This is a big problem with everyone in the human race, in my opinion. No one can understand everything, so it is easy to befuddle the masses, with the aid of a few clever people and mass propaganda (aka the “free press”). That is what we are up against, if we are arguing for a better world (for my children and grandchildren, if any, because my time is almost over).

  25. Kaye Lee

    Virtue Signalling
    To take a conspicuous but essentially useless action ostensibly to support a good cause but actually to show off how much more moral you are than everybody else.

    How very appropriate for Malcolm’s announcement today and, for that matter, most of what he announces

  26. Matters Not


    not good enough if you are ignorant of reality

    Is the reference to an almost universal accepted political reality? After all Swan is a politician – is he not? One who appeals to an existing ‘common sense’.

    By the way re: when this was explained to him. By whom and when. Perhaps a link or two?

  27. jimhaz

    I’ve noticed a lot of Virtue Signalling motivational speeches in ads recently, mostly indicating that it is virtuous to be a ruthless go-getter.

  28. Harry

    Totaram: Yes Swan’s heart is in the right place and I do think Labor would be so much better in practice than the Coalition whose policies and ideology I detest with a passion. But we both know that unless you understand your capabilities when in government, really understand it so that you can strongly defend your policies simplay and in terms people can readily understand, against the inevitable onslaught from your political enemies – including most of the MSM, you will be brought undone.

  29. Krazybirdlady

    Thankyou, Kaye Lee! Seeing the debt debacle put so succinctly is a joy! The LNP wanting to join the arms race is the stuff of nightmares!! Now, if we could find out which of the bastards sold our water to China…?!

  30. totaram

    MN: I made no reference to “political reality”, but “reality”, which is “objective reality as can be determined by the observations we have made to date”. If you don’t believe there is such a thing as “objective reality”, forget the whole of physics etc. I have argued this matter with persons who have no understanding of science, and the result is meaningless, unless you start from the beginning and teach them the whole of science and the scientific method and so on. Clearly, this would take years, otherwise why have a 3 year degree in any of the STEM sciences? You can argue that the “scientific method” is rubbish, but then you have to deny all the accomplishments of this method, including all the technologies by which we are communicating.

    Harry: yes they were indeed brought undone, because Swan “admitted the failure ” of the Gillard govt. by promising a surplus, when he should have said clearly that it was irrelevant and nonsense. So sad, that they repudiated the brilliance of their own stimulus response to the GFC. Stupid, actually, but caused by ignorance.

    MN: when was this explained to him? I have read a comment by John Armour, who says he actually met and spoke to Wayne Swan about fiat currencies, and he walked away saying “i don’t agree”

  31. Matters Not

    Totram re:

    determined by the observations we have made to date

    This made to date observation. Does this entertain the notion of doubt and perhaps future revisions? As I understand science it always proceeds on that basis. Findings being ‘tentative’ and the like. And that’s just the hard sciences. As for the social sciences, of which MMT is part, perhaps more emphasis on its tentative conclusions might be helpful.

    I am not arguing for a moment that the scientific method is rubbish. Far from it. But I am suggesting, in the best academic tradition, that claims to truth via science is a step too far.

    BTW, truth is not what scientists claim. But I’m sure you know that.

    Re MMT so it was explained by John Armour. I hope he’s better at communicating than Mitchell who is hopeless.

  32. Matters Not

    Totram, here’s an article from a MMT advocate that might illustrate what I am trying to communicate.

    Secondly, we should stop treating economics as a science because it is nothing of the sort . A proper science involves testing a hypothesis against the available evidence. If the evidence doesn’t support the theory, a physicist or a biologist will discard the theory and try to come up one that does work empirically.

    Economics doesn’t work like that. Theories can be shown to work only by making a series of highly questionable assumptions – such as that humans always behave predictably and rationally. When there is hard evidence that disputes the validity of the theory, there is no question of ditching the theory.

    Perhaps MMT needs to be trialled before it becomes politically acceptable? You know – examples where the theoretical insights have been operationalised.


    Not trying to b difficult. Just suggesting that the political anvil can be very unforgiving.

  33. ozibody

    A worthwhile read Matters Not ; thank you for the link ! The words ” Science ” and ” Expert ” in particular, are used to falsely qualify ” biased opinion” or to generally ” mislead”, in current day language!

    Edward Bernays and his ideology (propaganda) is dominant , to the virtual exclusion of all else, in today’s communication.

    Oh for a return to ” real ” reality … and hooroo to ‘ virtual ‘ !

  34. johno

    This is just another component (arms export) of Mal’s innovation nation master plan.

  35. corvus boreus

    As Kyran pointed out, despite the assurances of ministers Pyne and Payne of ‘stringent requirements’ including ‘human rights implications’ we were still happy to sell military hardware to Saudi Arabia (details with-held due to ‘commerce in confidence’.

    The theocratic kingdom, in addition to drawing harsh international condemnation and sanctions for it’s conduct during the war in Yemen, and an unenviable reputation for repression of it’s own citizenry (particularly females and non-sunni religious minorities), is also directly responsible for spreading militant Islamic extremism through the international establishment of Wahhabi / Salafi schools, but is also credibly regarded as the main sponsor of the world-wide spread of Islamic variant terrorism.

    Personally, I do not find the Pyne / Payne response of serving up platitudinous assurances in denial of details to be particularly convincing or reassuring, and there is no suggestion of any tightened regulations to accompany the proposed increase in Australian arms peddling.

    Meanwhile Germany, who had previously been a major supplier of weaponry to the Saudis, have recently decided to cease military sales to all parties involved in the conflict.
    The Greens have suggested that Australia adopt a similar policy.

  36. Harry

    Andreas B: Thanks for picking up that typo.

  37. totaram

    MN: Briefly,
    1) the notion of “truth” should only be used in connection with observations (facts).e.g. Australian govt. net debt was $161,253 million at 31 August 2013. That is either true or false. I don’t recall using the word “truth” anywhere else.

    2) most of MMT is descriptive – something everyone misses because of the word “Theory”. Thus MMT describes what has been happening ever since nations started to use fiat currencies because they simply dropped the gold standard. Mainstream macroeconomics continues to use ideas that applied at the time of the gold standard, especially the notion that the govt. is like a household and must “earn” money before it can spend. If you see what govts did after the GFC, under the name of “Quantitative Easing”, you will see that they spent money they had never earned.or even borrowed. There were howls that this “money printing” would lead to massive inflation. It didn’t, just as MMT would predict.
    3) Similarly, mainstream economists have been predicting for about 20 years that the Japanese economy will collapse, or their currency will collapse, as their govt. debt has risen steadily to over 200% of GDP. All those predictions have come to nought. Currently the Japanese Central Bank (BOJ) owns almost 90% of this debt by buying the bonds off the secondary market to drive the yield down. This is a roundabout way of doing what MMT calls Overt Monetary Financing. i.e. do not issue debt for deficit spending.

    So the idea that MMT needs to be “trialled”, or “operationalised” somewhat misses the point.

  38. Kaye Lee

    My real problem with MMT is that, whilst proponents have the concept down pat, they are less clear about the mechanics of how it is done.

    When I suggest that the government can just electronically credit an account at the RBA, I am told there is no mechanism for this. This led to a discussion about overt monetary financing which I gather means the government still issues bonds but they are held by the RBA rather than sold on the open market. But how does the RBA account for this? Do they debit one account to credit another? Do the bonds still have a maturity date? Why issue bonds at all? Others tell me it is to control the overnight interest rates but couldn’t this be achieved by the RBA offering interest on deposits? Isn’t it the trading of bonds rather than the issuance of them that is involved there?

    At the moment, our government issues bonds equivalent to its deficit spending. I can accept that it doesn’t have to do this but MMTers are terribly unconvincing about how this actually happens.

  39. totaram

    Kaye Lee: How Overt Monetary Financing can be done, will need to be legislated.

    Current legislation/rules insist that debt be issued dollar for dollar for govt. spending, possibly in excess of “revenue” (or so it seems – I am not clear on this, as everything is buried in accounting rules and methodology). On the other hand, we know that govt. continued to issue bonds even after Costello had “paid off” all the debt and had a surplus. We also know that Hockey “gave” the RBA about 8 billion AUD to create an even bigger deficit. How was this accounted for?

    Clearly the treasurer can manipulate a lot of things. It is all a question of putting the amounts under different accounting heads. I am not an accountant and do not have the sort of expertise that e.g. “economicreform” has.

    All your suggestions for controlling interest rates are valid and are indeed implemented by different central banks. So trading bonds on the secondary market is used to ensure yields are in line with the interest rate setting. Further, by offering interest on deposits the RBA can ensure the overnight rate does not fall to zero. This will not work, if for example bond yields are much higher than the interest rate offered.

  40. Kaye Lee

    So it is not the system we currently use – it would require new legislation? MMTers say this is what happens now…and then they don’t. This is what I mean. I never get a satisfactory explanation for the mechanics of how it is achieved.

  41. Harry


    The following is an extract from an article by Dr Steven Hail who works at Flinders University of Adelaide:

    “The Australian Government is a monetary sovereign. Every time the Australian Government spends a dollar, it does so by crediting the reserves of a commercial bank which are held at the RBA (Australia’s central bank) by that dollar, and having the commercial bank credit the bank account of whoever has been the beneficiary of that spending. In other words, every time the Government spends, it creates money. Not some of the time – every time. All of the Governments spending creates money, and all this money is created using the equivalent of keystrokes on a computer.

    The Government does not need to receive your money in taxes, or borrow your money by selling bonds, or raise money from you by selling you shares in government owned utilities …. before it spends. Think about it for a moment. It isn’t, in a literal sense, your money in the first place. Who issues the nation’s currency? The RBA. And who owns the RBA? The Australian Government. The Government doesn’t need to collect its money, which it creates, from you before it can spend.

    Every time our national Government spends, it creates some of its money for the purpose. I know commercial banks create a great deal of deposits for themselves, and a great deal of what is normally defined to be ‘the money supply’ by lending to their customers, but they can only do this because they have access to Government money, in the form of their reserves at the RBA. There are two ways for this money to be created. One is the Government spending this money (permanently) into existence, and the other is the RBA lending this money (temporarily) into existence.

    We have come to the answer to our initial question. How can we pay for an increase in health spending? The same way that we pay for all public spending. The Government will spend the money into existence. The way the accounting is done these days, and current institutional practices, obscure this truth, but they do not change the fact that it is a truth. It is not a theory. It is a plain fact”

    As Dr Hail says and totaram have explained, all this is deliberately unclear to obscure the capacity of the federal government. The federal budget conceals more than it reveals.


    and Bill Mitchell:



  42. Potoroo

    No, Turnbull did not announce that “we are going into the death trade.” Australia is already the world’s 20th biggest exporter of arms. All Turnbull did was announce his intention that we should expand our existing trade in weapons, which has long enjoyed bipartisan support, with the goal of becoming the 10th biggest exporter.

    The wisdom of this is indeed arguable, but ill-informed hysterical over-reaction like this serves nobody.

  43. Kaye Lee

    Once again you completely avoid the mechanics of how this is done.

    The closest you come is to dismiss it with “The way the accounting is done these days, and current institutional practices, obscure this truth”

    I have spent countless hours listening to Steven Hall and reading Bill Mitchell and am still none the wiser as to how this is achieved. The RBA will not allow the government to go into overdraft except in short term exceptional circumstances so I want to understand the actual mechanics of how this is achieved..

    We don’t just credit a government account at the RBA with keystrokes though it seems to me we could and that OMF functionally results in that. Tell me how it is accounted for, how it is recorded. That is what I am asking – not for ever more links to Steven Hall and Bill Mitchell who never explain that.

  44. Harry

    Potoroo: “Australia is already the world’s 20th biggest exporter of arms”. What is your source for your claim please?

    I could find nothing like “20th biggest exporter”.Our exports are in the $100 Million category which I understand is trivial compared to arms exports by the US. Unless you have more information than I can find I have to be sceptical.


  45. Kaye Lee

    Tell me Potoroo, what are weapons used for?

    The Syrian war – now in its eighth year – could not have lasted for more than a year without armaments profiteering. As a result, there have been more than 300,000 people killed, including thousands of children, 13.5 million people in need of humanitarian assistance, 6.3 million people internally displaced and 5 million people turned into refugees.

    Having bipartisan support does not, in today’s politics, imply any merit – look at our asylum seeker policy.

    Hysterical over-reaction to upping the ante in joining the arms race?

    Should I meekly say, gee guys, aren’t there more productive things we could use our resources on?

  46. Potoroo


    I’ll try to find the reference, from memory it was in an article about our hidden arms trade with Saudi Arabia, which became an issue in December, 2017. In essence, our arms exports trade is bigger than the official statistics show. Either way, the fact is we have an existing arms export industry (with bipartisan support) so it is not new and not worthy of the “we are going into the death trade” nonsense.

  47. Potoroo

    @Kaye Lee

    I acknowledged that the wisdom of seeking to increase the size of our arms trade is arguable. However, that is a different matter to the question of the morality of trading in arms at all. If you believe that maintaining an armed military is legitimate, as I do, then it follows that if it is moral for us to purchase arms then it must in principle be moral for us to sell them. I say in principle because there is a difference between selling arms to our friends and allies, which is arguably a duty, and selling arms to terrorist regimes like Saudi Arabia. Even so, arguing from the yuck factor — ew, guns! death trade! — doesn’t pass muster and consequently you are confusing two different issues. Can Turnbull et al be trusted? No. Is exporting arms inherently immoral? No.

  48. Kaye Lee

    “If you believe that maintaining an armed military is legitimate”

    There’s our first point of difference. What possible hope would we have against China, or Indonesia or India for that matter, if they chose to invade us – which they won’t.

    Our military does an outstanding job in things like disaster relief, search and rescue, rebuilding, peace-keeping. This is so much more important than having strike force capability.

    Let’s get real here. Take the submarines….

    “AE2 was the first British submarine to penetrate the Dardanelles, achieving this task on 25 April 1915. AE2 operated in the Sea of Marmora for five days and made four unsuccessful attacks on Turkish ships before being damaged by a Turkish gunboat and scuttled by her crew on 30 April. These attacks are the only occasions an Australian submarine has fired in anger.”

    Aside from which, China already has over 70 submarines and ours aren’t arriving for decades by which time drones will have made them obsolete.

    The vast majority of the world’s ridiculous number of “defence” force weapons are only ever used in war games.

    In the unlikely event that we were involved in armed conflict, weapons manufacturing tends to become a target.

    “Is exporting arms inherently immoral? No.”

    I asked my mother, who lived through WWII, if dropping the atomic bombs was immoral.. She also answered no. Perhaps she would have felt differently if they were dropped here.

  49. Roswell

    What are weapons used for?

    My supervisor held up a rifle and asked us a similar question.

    Nobody answered.

    “It’s used for killing people,” bellowed the supervisor. “That’s its only purpose.”

  50. Potoroo

    @Kaye Lee

    Our military does not need to be able to defeat a large power like China in order to be effective. Seriously, that’s a staggeringly silly objection. For example, one of our defence platforms is to make attacking us so expensive that it’s not worth the effort. We don’t need an American-sized military to achieve that.

    And the military is not an emergency response organization. At the end of the day its fundamental purpose is to kill our enemies and anything that interferes with that must be abandoned. If you’re truly going to argue that we don’t need an armed military at all then say so, but the moment you admit we do need “a force authorised to use lethal or deadly force and weapons to support the interests of the state” then we return to the principle I outlined earlier (for example, even peace keepers need to be armed): if it is moral for us to purchase arms then it must in principle be moral for us to sell them.

  51. Möbius Ecko

    Interesting the way this was phrased; “a force authorised to use lethal or deadly force and weapons to support the interests of the state”, not “defend the state”, which is what a defence force should be for, after all globally they are called defence forces, not “support interest” forces.

    It can be succesfully argued that quite a few of our forays into conflict since WWII had nothing to do with supporting the interests of the state, and indeed even in defending the state, but everything to do with a global hegemony for the interests of a wealthy few of just one state.

  52. Matters Not

    Potoroo January 30, 2018 at 1:36 pm

    Given you statement re morality, duty, and

    Is exporting arms inherently immoral?

    It depends what ethical system you bring to bear. Seems to me that you come from a deontological position – with an emphasis on right and wrong and embrace the concept of duty. Others come from a teleological location – with an emphasis on good and bad.

    For me it’s bad that we export arms. And we most certainly do not have a duty to so do. Increasing the numbers of destructive weapons in the world is certainly not good .

  53. Kaye Lee

    ” one of our defence platforms is to make attacking us so expensive that it’s not worth the effort. We don’t need an American-sized military to achieve that.”

    No we don’t. Mutually beneficial ties like trade and education and foreign aid and, dare I say it, emergency response in times of need, build bonds far stronger and more enduring than shooting people does. Why would anyone attack us when they have investments here because we are so stable?

    “if it is moral for us to purchase arms then it must in principle be moral for us to sell them.”

    We purchase arms for our police force. Would it be ok for them to start selling them? Farmers purchase arms for pest and stock control. Would it be ok for them to join the arms trade on the side?

    Unfortunately we do have to have some means of protection. Who owns weapons should be strictly controlled.

    Or we can just join the flood of weapons into the Middle East because that should help fix our budget and will have absolutely no bad consequences.

  54. Potoroo

    @Möbius Ecko

    I think it’s a more honest definition given how much militaries are used to project force overseas (the propriety of which is a separate question).

    @Matters Not

    In the context of alliances we have a duty to support our friends. If that means we make weapons that they need then we arguably have a duty to sell it to them. Otherwise we risk the alliance becoming less effective and possibly even meaningless. Not helping our friends would be the immoral action.

  55. Möbius Ecko

    There you go again, from Defence Force to Projecting Force. One is rightly about defending our country from attack, the other is about attacking or threatening to attack other countries.

    Just because yours is a more honest definition of the current sad state of global military affairs doesn’t make it right.

    And we don’t have a duty to sell weapons to anyone. No nation has a duty to do that. If it were a duty to support our friends and they needed weapons to do so we would give them the weapons. That they are being developed and sold purely for the purpose of a private entity making a profit blows the whole duty argument out of the water. And it’s not as though they are going to be developed by Australia either. Most will be developed by foreign companies resident in Australia giving a handful of jobs locally, avoiding paying tax and shipping most of the profits from Australian made weapons sales offshore.

  56. Matters Not

    Potoroo re:

    arguably have a duty to sell it to them

    Perhaps arguably is the key word. As I understand it, the US does not provide us with access to all its best weapons. If so, are they trying to make the alliance less effective? Don’t they have a duty? Further, are we limiting our arms sales to our friends? And how do we define same? Is Iraq now our friend? Is China? Perhaps you have some links? Or principles we will employ to identify our friends?

    Are you arguing that we must go all the way with our friends regardless of what action they take? Remember Vietnam. Iraq? Syria?

    As I have suggested, when it comes to morality/ethics there are no simple answers. Usually no clear rights and wrongs or even goods and bads. Seems to me that this is not a good path to develop. Remember we are encouraging these companies. We are being actively engaged in weapons development via financial assistance. Not good

  57. Harry


    I admire your tenacity. I freely admit I do not have all the answers or how to frame the mechanics in ways that will satisfy you and I am sorry if I irritate you at times. That dismays me as it is not my intention.

    “The RBA will not allow the government to go into overdraft except in short term exceptional circumstances so I want to understand the actual mechanics of how this is achieved..”

    Well, it does, all the time. (I am interpreting “overdraft” as deficit). The mechanics are set out below:

    Federal government spending, largely facilitated by the government issuing cheques drawn on the central bank. { these days it will be largely electronic}. The arrangements the government has with its central bank to account for this are largely irrelevant. When the recipients of the cheques (sellers of goods and services to the government) deposit the cheques in their bank, the cheques clear through the central banks clearing balances (reserves), and credit entries appear in accounts throughout the commercial banking system. In other words, government spends simply by crediting a private sector bank account at the central bank.

    Operationally, this process is independent of any prior revenue, including taxing and borrowing. Nor does the account crediting in any way reduce or otherwise diminish any government asset or government’s ability to further spend.

    The RBA is the servant of the government, despite the pretence of independence or “arms length”. It is a government creation.

    The federal budget is an accounting document, tracking the “income” from taxes against spending. In most cases (75% of the time since Federation) the fed budget has been in deficit or overdraft as you call it. Those deficits are recorded as “debt”, issued whenever the fed govt spends more than it takes in taxes and as indicated this is nearly all the time. The debt figure represents accumulated deficits but are (from another angle) a net injection of money into the economy. Without these injections and given the desire of the private sector to save and generate profits there will be high unemployment.

  58. Potoroo

    @Kaye Lee

    Police, farmers — and the military — are end users, not manufacturers, so obviously when I say “we” I am talking primarily about the government. End-users and manufacturers also come into it, but suggesting that because it’s legitimate for us (the government) to buy weapons for police the police somehow acquire the right to sell arms — as if they were weapons manufacturers and not police — is such a gross misrepresentation that I wonder whether you are arguing in good faith.

    @Möbius Ecko

    There you go again, from Defence Force to Projecting Force

    You have me confused with someone else. I once used one of our defence platforms as an example of how our military can be effective. I never said our military was solely for defence.

    Just because yours is a more honest definition of the current sad state of global military affairs doesn’t make it right.

    It is neither automatically right or wrong (I did say its propriety was a separate question). Projecting force is not always about America unilaterally invading or otherwise militarily interfering with the sovereign affairs of another nation. United Nations forces, such as in the First Gulf War, are also examples of force projection.

    That they are being developed and sold purely for the purpose of a private entity making a profit blows the whole duty argument out of the water.

    No, it doesn’t. These are by definition legitimate products — we’ve accepted the need for armed forces, remember.

    we would give them the weapons

    At this point I’m just going to back away slowly.

  59. Potoroo

    @Matters Not

    the US does not provide us with access to all its best weapons

    Quite so, the F-22 Raptor being perhaps the prime example. To be very short, yes I think the US not selling it to its friends and allies is a problem, not least because the alternative on offer, the F-35, is a bloated pig of a plane that will never meet its performance specifications. I think it’s the beginning of a bad trend on America’s part but, as always, that’s a separate question.

    when it comes to morality/ethics there are no simple answers

    I’m not suggesting there are. What I primarily objecting to, here and elsewhere, is the mindboggling amount of knee-jerk reactions against Turnbull’s proposal. Kaye’s article did raise the important question of whether it would be an efficient or equitable allocation of resources, I just object to her (or anyone) bringing in the ick factor – ew, guns! We need a military, which means we need weapons, and it’s hypocritical for us to pretend that it’s moral for us to buy them but not to sell them.

  60. Kaye Lee


    Overdraft is not the same as deficit and the RBA disagrees with what you wrote.

    The agreement between the Treasury and the Reserve Bank places strict controls on access to the overdraft facility, as well as imposing a market-related interest rate on the facility. The overdraft is used infrequently, generally to cover unforeseen shortfalls in cash balances, and is extinguished at the next Treasury Note tender.


  61. Kaye Lee

    Potoroo, the difference between us buying and selling them is that when we buy them, we know who they go to. End users indeed. When we sell them we have no such control. (One of the several parts of my argument that you ignored).

    And whilst I didn’t say it in my article, I am very much in the “ew, guns!” camp. They should be the absolute last resort in self-defence, not used to attack others in anticipation of some possible future threat or, as is more frequently the case, to shore up our greed.

  62. Matters Not

    Re our attitude to the arms race – because that’s what we are escalating with increased financial vigour. Instead, perhaps we could have been proactive and joined with many other non-nuclear nations and the Treaty on the Prohibition of Nuclear Weapons.

    Relations between the US and Russia are at their worst in 30 years, with a resurgent Cold War escalating. Relations between the US and China are at their lowest point in decades. Pakistan and India are expanding their nuclear arsenals faster than anywhere else. Both sides are implementing deployments and policies for early use of nuclear weapons if war erupts.

    Did we get on the front foot and lead the way?

    Australia, the United States, and Britain are among almost 40 countries that will not join today’s talks on a nuclear weapons ban treaty at the United Nations, officials said.

    I suppose we can’t disappoint our friends. But with friends like these – do we really need enemies?


  63. totaram

    Kaye Lee and Harry: From my point of view, the insights provided by MMT are what matter. We are a long way from implementing OMF or even any govt. trying to implement it. Therefore how it will happen or what is the mechanism is unimportant at the moment. What these insights allow us to do is important and these items are the following, all of which are under “existing arrangements”, no change required.

    1) deny that the govt is like a household and must earn before it spends
    2) deny that deficits and debts are a “problem” because they burden our grandchildren etc.
    3) deny that deficits will cause our currency to collapse as argued by the neoliberals
    4) deny that “budgets must be balanced”
    5) deny that “budgets must be brought back into surplus”
    6) deny that the “budget” is even anything more than a set of projections about final financial balances,
    7) deny that a treasurer has the power to “bring the budget into surplus” since the final accounting is endogenously determined
    8) argue that unless we have substantial trade surpluses, govt. must run substantial deficits to allow the private sector to reduce debt
    9) argue that fiscal stimulus, as used after the GFC, is far more effective as a stimulus to the economy than monetary policy of lowering interest rates as carried out by the RBA. The governor of the RBA has already hinted at this, but the govt. doesn’t take the hint, and people must be told that this is the case.
    10) Once we understand that govt debt is not a problem, we can focus on reducing private debt, which IS a problem at over 200% of GDP with the possibility of default.
    11) there is no possibility of default on govt debt which is denominated entirely in AUD, which are issued by the RBA.

    I think this is a long enough list. Many of these things depend only on the 3 sector financial identity which is true irrespective of whether we have a fiat currency or not. All other issues can be put on the back burner as far as I am concerned. The experts in finance and macroeconomics can work out what changes are required to implement OMF in the far distant future. For the present all we need to do is let the govt run large deficits in the public interest, without fear. No need to cut spending on public interest services like health, education, welfare, infrastructure.

  64. corvus boreus

    Matters Not,
    Australia’s attitude to the ‘great arms race’ seems a a bit lassez-faire on a few different fronts.
    Not only is Australia a bit careless about where the conventional weaponry we sell ends up being used, we also getting increasingly careless about to whom we sell uranium (aka ‘nuke fuel’).
    In 2014 we decided to start selling uranium to India, a nation that have spurned all international non-proliferation treaties.and are actively expanding their thermonuclear arsenal in a tulwar-rattling atomic arms race with their next-door neighbour. .

    The first shipments of yellow-cake left in July last year.

    As with exactly how much of what went to the Saudis, the details of this first uranium shipment are ‘commercial in confidence’, but similar vague assurances have been given that the ultimate intent is benevolent.

    Ps, given India’s international reputation for overstretched resource and corrupted incompetence leading to drastic corner-cutting, even if the worst possible designated usage for the uranium was merely to fuel new reactors to greater empower Mumbai telemarketing, I would still have some very serious reservations.

  65. totaram

    CB: I don’t think you quite realise that India’s “spurning of non-proliferation treaties” is based on the principle that they are pretty useless and unfair. India has never passed on nuclear technology to anyone else. If you can dispute that please do so. On the other hand China, which signed the NNPT, happily passed on the technology to Pakistan. What was the punishment? Nothing. Which proves India’s point. And China is free to buy Uranium from everyone because it is “a signatory to the NNPT”. What hypocrisy!

    I’m afraid your argument is full of holes. I don’t condone India’s nuclear ambitions but given that China has free hand, why would you deny India the right to defend themselves from bullying by a neighbour with whom they had a border dispute and a war? A neighbour who has deliberately transferred nuclear bomb technology to another enemy on their other border and with whom they have had three wars?

    The whole NNPT is a con by the nuclear “haves” to limit the power of the “have -nots”. And once you “have” you sign the NNPT and do as you please, and no one can say a thing. It’s a joke.

  66. Matters Not

    So it follows that North Korea (pragmatically speaking) is doing what it should do – given the treachery and hypocrisy here, there and everywhere. As it’s to be America first – then so it should be North Korea first?

    Seems reasonable?

    Trump did say at Davos, that all Leaders should put their country first!

  67. corvus boreus

    I made little argument regarding the fairness of the NNPT (which, though deeply flawed, remains the only treaty operating), more an informational statement regarding the broad reasons why I do not think that Australia should be supplying raw materials for a regional atomic arms escalation, with reference to broader safety concerns around the potentially catastrophic consequences of non-military nuclear fission thrown in for good measure.

    You can argue that India should have the right to make more nukes (or reactors), I continue to think that us selling them the uranium to do so is not a very good policy idea.

  68. totaram

    CB: then to be fair we should not sell uranium to anyone who has nuclear weapons. I would agree with that. Of course, some nation may have nukes without revealing it.

  69. Chris

    Did everyone see the Weird Al Yankovic song that saved the US from being nuked by north Korea ?

    Nobel Prize for Weird Al !

  70. totaram

    MN: You are absolutely right. Kim Jong Un has done the only thing he could do to ensure that there will not be some move to create “regime change” in his neck of the woods, the likes of which we saw in various countries over the last decade. He has put his country (and himself) first. He is yet another beneficiary, I suspect , of China’s benevolence with respect to nuclear technology.

  71. corvus boreus

    To clarify, I’m not particularly thrilled with the fact that radioactive rock from Australia is being shipped to China either.
    This is despite the superficially reassuring fact that they are NNPT signatories.
    I have deep reservations, which are similar reasons as why I don’t like the idea of us sending radioactive fuel to India..
    There is no real guarantee that Australian uranium isn’t being enriched for use in the clandestine expansion of the atomic arm of the PLA, or, possibly worse, being supplied to proxies and puppets for their own thermonuclear ambitions.
    This is aside from the fact that, even in projects done for purely benign and civil purposes, Chinese governed societal practice isn’t always to measure true or cut straight, and this can be very risky when phuqqing around with fission.
    In short, I basically reckon that Australia shouldn’t sell yellow cake as a cheap, over the counter item.

  72. Matters Not

    Most citizens in Australia, the US and elsewhere don’t appreciate there was A Forgotten War waged against North Korea far longer than necessary. It was:

    a “long, leisurely and merciless” US bombing campaign: well over half a million tons of bombs dropped, napalm and chemical weapons deployed, cities levelled. … “Although the ferocity of the bombing was recognised as racist and unjustified elsewhere in the world,” says Harden, for many Americans it was just another conflict in a distant and poorly understood country, he concludes. Not for nothing is it called the forgotten war.

    Not only the complete destruction of virtually ever city in North Korea but the almost annihilation of the population as well.

    The result was perhaps three million dead … Air Force general Curtis LeMay, head of the strategic air command during the Korean War, estimated that the American campaign killed 20 per cent of the population. “We went over there and fought the war and eventually burned down every town in North Korea,”

    When Trump threatens to destroy North Korea he seems to have no appreciation that the populace have been there, done that. Historical amnesia writ large.


    This is a good article outlining the ways North Korea is depicted in the Australian MSM>

    How the Australian media frames North Korea and impedes constructive relations. Guest blogger: Dr Bronwen Dalton

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