The Definitive Guide To Economics And Other Things To Help You Sleep…

Let’s start with a decision by a future Australian government to build zoos in order to ensure that biodiversity isn’t lost. This plan involves building 500 zoos in regional centres and, as part of the attempt to save threatened species, they promise a Giant Panda in every zoo.

While this would undoubtedly by attacked as a shocking waste of money by some, that’s not the main problem with the idea. I’ll get back to the zoos later but first I’d like to concentrate on their second proposal which also includes plans to get the regional centres moving by announcing that there will be at least one Taylor Swift concerts in each of these 500 centres and tickets will be $25 each with a concession for students, the unemployed and pensioners.

Again, some will be overjoyed by this decision while others will attack the outrageous waste of money.

Now let me make the point here and now that it’s very hard for a federal government to totally waste money. Of course we can argue about whether the money could have been better spent but, when it comes to governments wasting money, they control the money so it’s the equivalent of arguing that you wasted a cheque from your cheque book when you ripped it up because you made a mistake. You still have the money in your account and you can still spend it. Governments create the money when they spend it so they can continue to create it until… well, this is where it gets interesting.

Of course, it’s hard to know how much it would cost to get Taylor Swift to agree to holding so many concerts in Australia but let’s put it down as one of the costs and just ignore it because it doesn’t suit the rest of the explanation. In doing this I am following a path frequently used by economists where you ignore something which doesn’t suit your argument.

The obvious point is that – at $25 a ticket – you’ll be sold out but given you’ll have to hire stadiums or put up temporary stages as well as paying to have tickets printed and sold, employing people for front of house and security and whole range of things, it’s likely that the whole thing will be a loss making venture.

This would be a problem for anyone in private industry but let me point out something that’s frequently forgotten in this day of privatisation of government services: Governments aren’t there to make a profit!

Yes, I know. That be communist talk and if we were in America then they’d be using their Second Arm-end-meant rights to rip off their sleeves and bare their arms and deal with me... unless I was Putin who seems to be ok with a large number of US citizens these days.

But it’s true. It’s not socialism. It’s just one of the reasons we have governments: to do what isn’t profitable but seems like a good idea. It covers things like defence and once upon a time it would have even covered the Post Office because we thought the idea of being able to cheaply send things from one place to another was of benefit to society. Governments were expected to do what wasn’t profitable but helpful to the smooth running of society. (On the other hand, I did hear a Liberal politician complain a few years ago that social housing wasn’t making a profit but that’s a whole other story.)

Anyway, back to Taylor Swift concerts. there’s plenty of arguments you can raise about how the money could have been better spent but none of them defeat the basic point that it’s not wasted. All the extra work that was created as a result of the exercise has given people extra money and some of them are very glad of it. Just like with the recent Voice Referendum where some are complaining about the money spent when there’s a cost of living crisis, the argument about wasted money completely ignores the fact that some people who got a boost to their bank balance as a result of work created.

But, I hear you say, surely if the government had enough money to create all these concerts then they could have spent it on things like health or education. Or energy. We need cheaper energy costs. These are all areas that desperately need money and while I accept that the concerts weren’t all bad what about the areas of great need?

Yes, well, this is where we get back to the promise of a Giant Panda in every zoo. Currently there aren’t enough pandas in the world to fulfil that promise, so it really doesn’t matter how much the government says it’s prepared to spend. Unless it has access to some radical panda breeding program, it’ll never be able to honour that promise so it’s not about the money. A trillion dollars still won’t put the pandas in the zoos.

Which is the current problem with health and education and energy: there are shortages that can’t be solved by money in the short term. Spending money might help but fixing the problem needs a plan. And the time for making that plan is several years ago.

As someone said the best time to plant a tree is twenty years ago. The next best time is now.

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