Chalmers and Albo always have someone to blame

Is nothing ever their fault?

Suppose you’ve loaned your teenage son your credit card to order an uber. But, instead of just ordering a ride, he goes on a shopping spree, buying gifts for his friends, and some appeasements for the bullies that have been accosting him at school. What should you do when you find out? Do you let him keep the credit card? Or do you take away his spending privileges and punish him?

Indeed, one might wonder how it even got to this stage. After all, one of the first lessons you should teach a child is respect. Followed by the need to own up to, and learn from, your mistakes. Parents too should become suspicious if their child seems blunder-prone, but always seems to have an excuse and a convenient patsy to blame.

This should be going through our minds when we think Jim Chalmers.

In this analogy, Jim Chalmers has our national credit card. The government is overspending, and deflecting from $15-billion lost to CFMEU related overruns and corruption in Victoria, in addition to its own runaway perk consumption. And, now Jim Chalmers wants us to pick up the tab.

Inflation has remained stubbornly high. The latest ABS inflation data puts headline inflation at 3.8% y/y. Trimmed mean inflation increased slightly to 3.4% (from 3.3%). Inflation increases the likelihood that the RBA will need to hike interest rates again. But, of course, Jim Chalmers denies that government spending influences inflation, seemingly unable to grasp the mathematical fact that government spending adds to aggregate demand, which adds to inflation.

It seems that nothing is ever his fault. It’s always his predecessors, who were removed from office a full term ago. But, at what point, can a government stop blaming the prior guy? And, can the prior guy really be to blame for decisions that you made several years down the track.

Economists who criticize him are just partisan hacks, it seems. If he even does them the respect of getting their names right. Apparently, “Craig Oliver” of AMP, whose real name is “Shane Oliver” and told to Jim Chalmers in the very question he was answer, simply does not know what he is talking about. According, to Jim Chalmers, public spending does not drive inflation, despite it being a mechanical fact that it does. Let’s not let axions get in the way of talking points.

Former RBA governors are jilted exs who seeking revenge for the government breaking up with them. Apparently, it was simply well know that Philip Lowe wanted to be reappointed as governor; and thus, we should not take his criticism seriously.

Somewhere along the way, we let Jim Chalmers get away with spin. We taught him that spin, prevarication, and lies are acceptable. And, that they work. This is a major problem.

It is very clear that Jim Chalmers will not course correct. His failure to realize that government spending is growing unsustainably, that government spending influences inflation, and that the state is inefficient is astounding. It is the Dunning-Kruger effect writ large.

Let’s take inflation, for example. Jim Chalmers either does not know that government spending adds to aggregate demand, which tautologically influences inflation, or he is gaslighting us. Those are the two options: he is incompetent or he is lying.

Or what about the public sector. Jim Chalmers either cannot understand the blindingly obvious problem of agency conflicts, which arise where an agent is not disciplined for going ultra vires, being inefficient, or wasting money, or he is willfully ignorant. After all, when the government spends our money (not theirs), they clearly have an incentive to pork barrel and bare none of the cost of waste.

Just look at a few examples: $15 billion in CFMEU-linked waste and corruption. $2.2 million on the Green’s party room, and climbing. Chris Bowen’s $62,000 phone bill on one trip. Anika Wells spending $100,000 for her small team to travel to New York to speak for six minutes. Sarah Hanson-Young’s husband – who is a lobbyist – being flown around at the tax payer’s expense. It is very clear that big government is a wasteful government.

Or NDIS. Where to start? It is growing at more than 7% pa. This is faster than GDP growth. This alone should be a flashing red warning light. But, there seems to be little understanding that it is unsustainable for a government program to grow faster than the tax base. But, not only that, there are geographic pockets of abnormally high numbers of NDIS providers. Coincidently, once of the worst of which just so happens to be in Labor heartland in Western Sydney. Quelle Surprise.

Then there are the outright lies. Labor – and Jim Chalmers – have lied by saying they cut taxes. They did not. They reversed the stage three tax cut and made it smaller. This is a tax hike relative to the status quo. They moved to tax unrealized capital gains in superannuation and did not want to index the threshold at which it applies. Again, Jim Chalmers is lying when he says that Labor cut taxes. It simply did not. It hiked taxes and initiated plans for more hikes.

Jim Chalmers’s only solution is to try to hike taxes. Rather than acknowledging that spending is out of control, the government is looking at hiking capital gains tax. Never mind that hiking CGT is a dead weight: everyone ends up poorer. Investors, under a new regime, will find it optimal to hold assets rather than sell. But, the first best would have been able to see, but that option is now prohibitively expensive. But, in so doing, the government actually foregoes revenue, because transactions reduce. The state governments then bear a cost due to falling stamp duty. The idea of hiking CGT is a basic failure to understand cause-and-effect.

So, what can we do about a treasurer that always finds someone else to blame? Well, metaphorically, hold his feet to the fire. The Liberals must hang him by his own petard with his own terrible record of high inflation, inexorably increasing government spending, and wasteful attempts to increase tax.

Most importantly, we must never agree to any tax hike all the time the government covers for, and funds, rampant corruption: we, the tax payer, should not be paying the price for government ineptitude and rent seeking.