Friday, August 01, 2014

Damn it - I missed the "stagflation" birthday

I see I just missed the 3 year anniversary of Sinclair Davidson appearing in The Drum (and on Andrew Bolt's show) warning that Australia  had a "looming" stagflation problem.  

It is (stagflation), after all, "the consequence of pursuing Keynesian economic policy."   And this was "an economy facing a stagflation problem."

Yet this utterly failed prediction (and despite his likely hedging that he used the word "could" once or twice, I'm calling this out as a predication based on his wrong headed, ideologically driven theory that low taxes and low government spending is always the cure for what ails an economy), he has the hide to claim US economists are wrong in their view that the Obama stimulus helped reduced joblessness.

The graph he uses to support the argument can, of course, simply be said to show that the effects of the GFC on unemployment in the country was worse than initially expected.   What matters on the question of whether the stimulus helped is the question of where the actual unemployment graph line would be running if the stimulus had not happened.   Merely showing that the initial predictions of where unemployment would go with and without stimulus doesn't answer that. 

Of course, in the fixed ideology of "low government spending at any cost", they will argue that any worsing in an economy is the result of higher government spending. 

Starting from a fixed ideological position is no way to argue economics with any credibility.

4 comments:

nottrampis said...

and he couldn't even define stagflation properly!

nottrampis said...

wow this is after Swan's budget that was the mot contractionary in history. It detracted 0.7 percentage points off GDP. Whereas Hockey's adds about 04 percentage points. Swan's budget cut NOMINAL spending, not real spending NOMINAL spending.

Davidson said the budget was expansionary. He didn't like Sean's budget but liked Hockey's.

The man is an ignoramus or a poor liar!

Anonymous said...

You've missed this too.

http://catallaxyfiles.com/2014/07/23/a-series-of-graphs/

nottrampis said...

I DIDN'T