Keynesian politics

It’s almost always a choice between bad and worse when it comes to managing the economy. I understand how little a modern economist understands about how an economy works, but there you have it. They still can’t work out why real wages are falling and why we have never fully recovered from the GFC, which was more than ten years ago. You might, if you’re interested, have a look at my Dangerous Persistence of Keynesian Economics which was only published in March. But what brings it to mind was the front page of The Oz today: Double rates cut looms as property primed for rebound.

The nation’s housing market is set to be reignited with a stimulus package focused on winding back lending restrictions and lower ­interest rates fuelling economic growth, in tandem with tax cuts and increased infrastructure spending.

A stimulus package filled with government-directed infrastructure plus lower official rates of interest aimed at raising house prices. I can only hope they really do also mean to eliminate the deficit and cut taxes. Keynesian economics is junk science, but unfortunately Keynesian politics is what most people now expect.

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