Europe’s “catastrophic error”

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The headline writer chose this, Europe must follow our lead on turnbacks: Tony Abbott but the first sentence says what he was really trying to say:

Europe is heading towards a “catastrophic error” that could change it forever and must instead study and adopt Australia’s policy to turn back the tide of asylum-seekers, Tony Abbott said today.

Delivering the second ­Thatcher Lecture at London’s Guildhall, the former prime minister also called for more to be done to strike Islamic State terrorism “at its source” and said it was a pity a recent summit by world leaders looked only at countering violent extremism and not the ­inspiration for it.

In his first significant speech since he was toppled by Malcolm Turnbull six weeks ago, Mr Abbott said his invitation to give the lecture “suggests there was at least a hint of Thatcherism about my government in Australia”.

For some, a hint of Thatcherism is the kiss of death. For others, who have some idea of the stakes involved, there cannot be enough of Mrs Thatcher and what she stood for. What he and she understood is the difference between right and wrong. Now it is the difference between good and evil, and even so the left is blind to it all. And here’s the advice:

Europe should study how Australia had stopped the boats and restored border security as “the only compassionate thing to do”.

“This means turning boats around, for people coming by sea. It means denying entry at the border, for people with no legal right to come; and it means establishing camps for people who currently have nowhere to go,” he said.

“It requires some force; it will ­require massive logistics and ­expense; it will gnaw at our consciences — yet it is the only way to prevent a tide of humanity surging through Europe and quite possibly changing it forever.

“The Australian experience proves that the only way to dissuade people seeking to come from afar is not to let them in.”

In the meantime, it can only be hoped that Malcolm gets the message before we end up in the same boat as Europe. Abbott is world class, one of the deepest thinkers ever to rise to high office in this country. It’s only a shame that what he saw and understood was too difficult, not just for the media and the left in general, which is to be expected, but for the people who he had to deal with in cabinet and in his own party room.

AND CONTINUING: This has been cross-posted at Catallaxy and the comments thread is quite interesting. Hard for me to imagine people who would disagree with Abbott on these issues but, I guess, with much of the right self-identified as “libertarian”, and therefore open-borders, perhaps it’s not that surprising after all. I have added two comments of my own. First this:

Abbott was all Thatcher but where was his Keith Joseph? And Margaret didn’t have to put up with a creep like Turnbull who relentlessly stalked his own PM to the extent that nothing debated in cabinet was not the next day being aired on the news. But Margaret was famous for her foreign policy even more than the economics. She with Ronald Reagan and the Pope stared down the Evil Empire, not to mention Argentina and the Falklands. I only wish we had a Margaret Thatcher somewhere in one of the major countries of the West. Instead we have Obama, Merkel and Malcolm. There is some potential in Cameron but he, too, is no Margaret Thatcher.

And then this:

Dealing with migration and the Islamic State is the issue of our time in the same way that dealing with the Soviet Union was the issue of her time. Who besides Tony gets it? As for economics, this is from her first budget in 1979:
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The 8 and 12.5 per cent VAT rates were unified at 15 per cent, putting around 3.75 per cent on the RPI. There was also a 7p increase in petrol duty, adding 10p to a gallon when VAT was added in. (For RPI reasons, alcohol and tobacco duties were left untouched.) The oil companies were tapped: Petroleum Revenue Tax (PRT) was increased from 45 to 60p and BNOC lost its exemption from the tax.

Let us compare with Joe defending his first budget in 2013:
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An emotional Mr Hockey described his first budget, which included the now-dumped GP co-payment, plans to uncap university fees and increased fuel and income taxes, as too courageous for the Parliament.

We will see as time goes by who will be as courageous as Joe and Tony were then. I suspect there is no one around who will take these issues on, least of all the current incumbent, who was probably leaking as furiously as he could to all his mates at the ABC.

This Abbott Derangement Syndrome truly is a form of insanity. People who think politics is no more difficult than agreeing with your friends while sitting around your dining room ought to get out once in a while. Abbott had a right to expect some slack from those who understand what the other side represents but political sophistication is as rare as a modern economist’s understanding of the operation of a market economy.

A classical economist looks at modern macro

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This is the first draft of the conclusion of the paper I have finally finished on classical economic theory. The rest of the paper leads up to these conclusions. Whether it is published is, of course, not in my hands. But after the mess that has been made of economic management following the GFC, there is plenty of real world evidence that modern theory has a lot to answer for.

The one thing all sides can agree on is that there was a “classical economics” before Keynes published his General Theory and that modern macroeconomic theory is different from classical economic theory. Beyond that, other than a superficial gloss on what that classical theory consisted of, virtually no modern economist any longer knows what that classical theory was. This paper has therefore provided an explanation of the economics before Keynes, focusing as Keynes did on what we would today describe as the macroeconomic issues. What makes this paper particularly useful is that it has been written by someone who believes the economics of John Stuart Mill is superior to modern macroeconomic theory. Whether others will share this belief after reading the paper is neither here nor there. The actual intent is to allow modern economists to gain an appreciation and understanding of the economic theories of their predecessors.

Possibly the greatest obstacle for modern economists is that they assume a pre-Keynesian economist had no theory of involuntary unemployment. The quote from Mill at the start of this paper, plus recognition that there had been a detailed and intricate theory of the cycle that had developed for over a century through until 1936, should provide some incentive for economists to examine the great history of their own subject, not only with a sense of the grandeur and depth of understanding that has pervaded our subject since its origins in Adam Smith and The Wealth of Nations, but with a sense of adventure about finding out what they knew that we do not. As J.E. Cairnes (1888: iv-v) pointed out at the end of the nineteenth century, whatever mathematics may have brought to economic theory, it has not provided any additional insights into our understanding of the underlying dynamics of an economy. The broad features of the economies we live in today were evident even as far back as 1776. The belief that we know something a classical economist did not about human motivations, the potential for markets to bring prosperity, the need for government regulations to be properly crafted, or the pros and cons in relation to the provision of welfare are beliefs that cannot withstand a deeper understanding of classical theory. We may have better statistics and more sophisticated analytical techniques, but the theories a modern economist applies to make sense of it all are not obviously better than the theories that had prevailed before the publication of The General Theory in 1936. The argument presented here is that they are, in fact, actually worse.

Your thoughts would be welcome.

Is government spending consumption or investment?

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I return to an issue raised by Sinclair at the beginning of the day in his post on Welfare is consumption not investment. This is the confused notion economics now has about the nature of value adding and the role of saving. It goes further. Would modern economists recognise saving if it came and hit them in the eye and are they able to distinguish saving from public spending? It ought to be straightforward but it is not.

This is a knotty issue I find myself trying to resolve as I finish off a paper. It’s not that I don’t know what I think saving is. It’s whether there is a truly solid definition of saving so that economists will know what saving is. Is government spending officially part of consumption or is it part of investment, or is there a division, and if there is a division, how is the dividing done since most public “investment” is not market tested? That is, can government investment still be called investment even if there is no positive return or must it at some stage pay a dividend? This is the definition for “saving” that comes up first on Google:

According to Keynesian economics, the amount left over when the cost of a person’s consumer expenditure is subtracted from the amount of disposable income that he or she earns in a given period of time.

That is S=Y-C. Nothing new. Here’s the second one:

The portion of disposable income not spent on consumption of consumer goods but accumulated or invested directly in capital equipment or in paying off a home mortgage, or indirectly through purchase of securities.

Once again, it is S=Y-C. The third one, though, is from The Britannica and there’s a name you can trust. This is more along the lines of what I am looking for since it begins to grapple with the actual issues:

Total national saving is measured as the excess of national income over consumption and taxes and is the same as national investment, or the excess of net national product over the parts of the product made up of consumption goods and services and items bought by government expenditures. Thus, in national income accounts, saving is always equal to investment. An alternative measure of saving is the estimated change in total net worth over a period of time.

It seems to bring in the notion that saving is a form of value adding spending which appeals to me. Which brings me to the passage I am trying to get right.

In a modern macroeconomic model, saving is enumerated in money terms and is seen as a negative, an absence, a failure to spend. National saving is defined as current money income in total less total money spent in the current period in non-value-adding ways. Saving can be seen as the difference between income and the level of unproductive demand, that is S=Y-(C+G), with Y, as usual, representing total income. The level of saving is then equal to the level of investment.

But this does not quite get to the Keynesian conception. First, C+G is made up of actual items of consumer goods and services plus government purchased goods and services. Perhaps complicating these issues further, saving traditionally is restricted to Y-C, with G net of transfers not entirely defined one way or the other, perhaps intrinsically conceived of as being as productive as business investment. It is possible that to properly make sense of modern economic theory, saving should be defined as Y-(C+G). It seems unclear where government spending fits into the notion of savings in a modern macroeconomic model.

Almost everything governments do seems to cost more than their return so I almost automatically think of saving as Y-(C+G). The more government spending there is, the less private investment. The notion that welfare spending is now even conceived in some quarters as part of industry policy seems to hasten us along the road to ruin. Is that now part of what all economists are taught to believe. Not my students, of course, but the rest? If that is how it is, economic theory is in an even worse state than I thought.

Millennials even more clueless than the boomers!

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Cannot say this surprises me since it is the Millennials who are most comprehensively shafted by our current political and economic structures: Survey: Millennials around the world worry most about economic inequality. They would like to get a piece of the action, and I don’t blame them. But they are hopelessly badly served by their own attitudes.

Millennials around the world worry most about social and economic equality, remain skeptical of government and the media, and count Tesla CEO Elon Musk as one their heroes, according to a World Economic Forum survey released Sunday.

More than 1,000 young people, ages 20 to 30, from 125 countries and who are all active in the forum’s Global Shapers Community, were canvassed for the survey. The average age was 28. The results were released at the beginning of a three-day World Economic Forum conference in Abu Dhabi, capital of the United Arab Emirates.

The survey showed that 65% of the Millennials said one of their top three goals in selecting a job was to make a difference in society, their city or country. They also look for an opportunity to learn, followed by career advancement. More than nine out of 10 said they would be willing to relocate to advance their career.

The annual survey “reveals that Millennials care about society in their reflections and also in their own career and economic choices,” said Yemi Babington-Ashaye, head of the Global Shapers Community.

Asked about the top three issues facing the world today, 56% named social and economic inequality, 42% included climate change and environmental preservation, and 33% identified education. Half said their national government was neither fair nor honest. And 46% had the same view about the media, while 35% said they distrusted religious leaders and armed forces, the survey showed.

The most admired figure among the Millennials was the late Nelson Mandela, followed by Pope Francis. Musk, 44, the billionaire inventor, engineer and creator of SpaceX, was third, followed by Mahatma Gandhi, Bill Gates and President Obama.

How did Bill Gates slip in among all of the other no-hopers and grifters. Gates actually created something out of nothing. The rest are charlatans of one kind or another, with Musk, on the receiving end of $4 billion of government money a ridiculous choice. That Obama forms any part of their conception of what is to be admired only means they are a generation heading for an even worse disaster than we boomers have created.

Putin and American foreign policy

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Who is the enemy? Damned if I any longer know. This is from Mike Whitney, described as ” a contributor to “Hopeless: Barack Obama and the Politics of Illusion“. The title: Putin Forces Obama to Capitulate on Syria:

The Russian-led military coalition is badly beating Washington’s proxies in Syria which is why John Kerry is calling for a “Time Out”.

On Monday, U.S. Secretary of State John Kerry called for an emergency summit later in the week so that leaders from Russia, Turkey, Saudi Arabia and Jordan could discuss ways to avoid the “total destruction” of Syria. According to Kerry, “Everybody, including the Russians and the Iranians, have said there is no military solution, so we need to make an effort to find a political solution. This is a human catastrophe that now threatens the integrity of a whole group of countries around the region,” Kerry added.

Of course, it was never a “catastrophe” when the terrorists were destroying cities and villages across the country, uprooting half the population and transforming the once-unified and secure nation into an anarchic failed state. It only became a catastrophe when Vladimir Putin synchronized the Russian bombing campaign with allied forces on the ground who started wiping out hundreds of US-backed militants and recapturing critical cities across Western corridor. Now that the Russian airforce is pounding the living daylights out of jihadi ammo dumps, weapons depots and rebel strongholds, and the Syrian Arab Army (SAA) is tightening their grip on Aleppo, and Hezbollah is inflicting heavy casualties on Jabhat al Nusra militants and other Al Qaida-linked vermin; Kerry’s decided it’s a catastrophe. Now that the momentum of the war has shifted in favor of Syrian president Bashar al Assad, Kerry wants a “Time out”.

Keep in mind, that Putin worked tirelessly throughout the summer months to try to bring the warring parties together (including Assad’s political opposition) to see if deal could be worked out to stabilize Syria and fight ISIS. But Washington wanted no part of any Russian-led coalition. Having exhausted all the possibilities for resolving the conflict through a broader consensus, Putin decided to get directly involved by committing the Russian airforce to lead the fight against the Sunni extremists and other anti-government forces that have been tearing the country apart and paving the way for Al Qaida-linked forces to take control of the Capital. Putin’s intervention stopped the emergence of a terrorist Caliphate in Damascus. He turned the tide in the four year-long war, and delivered a body-blow to Washington’s malign strategy. Now he’s going to finish the job.

Putin is not gullible enough to fall for Kerry’s stalling tactic. He’s going to kill or capture as many of the terrorists as possible and he’s not going to let Uncle Sam get in the way.

These terrorists–over 2,000 of who are from Chechnya–pose an existential threat to Russia, as does the US plan to use Islamic extremists to advance their foreign policy objectives. Putin takes the threat seriously. He knows that if Washington’s strategy succeeds in Syria, it will be used in Iran and then again in Russia. That’s why he’s decided to dump tons of money and resources into the project. That’s why his Generals have worked out all the details and come up with a rock-solid strategy for annihilating this clatter of juvenile delinquents and for restoring Syria’s sovereign borders. And that’s why he’s not going to be waved-away by the likes of mealy-mouth John Kerry. Putin is going to see this thing through to the bitter end. He’s not going to stop for anyone or anything. Winning in Syria is a matter of national security, Russia’s national security…..

The entire US political establishment supports the removal of Assad and the breaking up of Syria. Kerry’s sudden appeal for dialogue does not represent a fundamental change in the strategy. It’s merely an attempt to buy some time for US-backed mercenaries who are feeling the full-brunt of the Russia’s bombing campaign. Putin would be well-advised to ignore Kerry’s braying and continue to prosecute his war on terror until the job is done.

That bit in bold. I didn’t know that. Is it true? Is that really what they want? Seems perfect for ISIS to me, but what do I know? But given Obama’s approach to Libya, Egypt and Israel, whatever the “US political establishment” wants, I am inclined to take the other side.

The problem of under-regulation

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I’m at a Writing Retreat where I hope to finish off my “Classical Criticisms of Keynesian Theory”. And as it happened, this piece of writing by Tom Butler-Bowden arrived just last night. If you don’t know Butler-Bowden and his 50 Classics Series you really should. He started with self-help books, moved onto philosophy and politics in his last two and next will be Economics and Wealth Creation. He analyses and explains in about half a dozen pages the central message of each of these books, and I have to say that his ability is uncanny. On all the authors I know I have never had a quibble about his insight and balance so I feel I can trust him on the others. This is on what it takes to move from an idea to actually finishing a project. I won’t give away anything by telling you that what it requires is concentrated WORK.

The epiphany problem

My initial motivation to write was a desire to understand what made people successful. The earlier books in particular, covering self-help, success and psychology, were the public result of a private investigation into possible ‘secrets’ which, if followed, would virtually guarantee that one’s wishes would become reality. From this project came two things:

1) A distrust of inspiration.
2) An appreciation of time in achievement.

Being inspired is the starting point of anything great, and the moment of inspiration itself is highly pleasurable. But such intellectual highs don’t help us get things done. This ‘epiphany problem’ is becoming better appreciated now, and I enjoyed a recent blog by Peter Shallard on the subject.

Peter mentions Allan Wheelis, a psychoanalyst who noted that there was a point in the 20th century when Freudian therapy no longer seemed to work. The therapy had not changed, so why exactly did it stop working? Wheelis argued that what had changed was people’s capacity for self-control. Freud’s early patients had come of age in the late Victorian era, a time when people were arguably more self-reliant and disciplined, and if Freud told them to make some change, they jolly well did so. But as the 20th century progressed, the capacity for self-regulation and self-discipline waned, just as our exposure to ‘inspiration’ increased. The result: more epiphanies, and less ability to turn them into measurable change.

BaumeisterWillpower

Shallard refers to Roy Baumeister, the social psychologist and author of Willpower (2012), who describes self-regulation failure as “the major social pathology of our time.” In less intellectual terms, and speaking to his entrepreneur audience, Shallard writes:

“If you’re someone who feels like you’re going crazy experiencing breakthrough after breakthrough, but you’re STILL not getting the results in life and business that you know you’re capable of… well, you might have a Self-Regulation problem. More epiphanies won’t help you. Building your self control muscles will.”

Most days I work in Oxford’s Bodleian Library. People are working on lengthy dissertations on Virgil’s poetry, or researching Descartes’ mind-body problem, or getting to the nub of Augustine’s City of God. There is good Wi-Fi in the building, but I’m always struck how little time people seem to spend checking Facebook, or catching up with the news, or shopping on Amazon. When they have decided they are going to work on something, they do it. This ability to self-regulate, I would venture, has played an important part in getting them to a top university and increasing their chances in life. You may be very talented or smart, you may have perfect material conditions to pursue a goal, but none of this counts if you are not able to control your behavior and work habits to an extent that you can get things done.

By the way, I am not claiming to be great at self-control myself; there are so many things that take our attention these days and I can easily waste a morning on trifles! But at least I know that epiphanies don’t last, and that ultimately what gets achieved is thanks to work. The world is full of good ideas, what is rarer is good execution.

My Dad, bless him – it would have been his 98th birthday today – used to tell me the same thing by quoting Thomas Edison: “Genius is 1% inspiration and 99% perspiration”. It’s the same with all ideas that turn into profitable enterprise. It’s not the idea of itself but the commercialisation that makes it happen. Ideas are dime a dozen, but the ability to turn ideas into products that can be profitably produced is something else again.

Alan Kohler on central banks and Keynesian economics

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This is Alan Kohler explaining why “Central Banks Are Destroying The World”. There’s no doubt they are doing everything they can, and there are not a lot of people around who will say this in public. But I mention his comments since it is nice to see myself mentioned in despatches.

These days our “patrician overlords” are central bankers, benignly manipulating our behaviour (“aggregate demand” they call it) by adjusting the price and availability of the thing we all so crave – credit.

The question for this week is: what should they, and you, do instead? Bearing in mind the old joke that if you wanted to get to Dublin, you wouldn’t start from here.

Well, there’s no doubt in my mind that “they” – the Fed, ECB and Bank of Japan – need to start raising interest rates pronto, and stop worrying about inflation being too low. It’s caused by technology reducing costs and debt suppressing consumption and investment – not by a shortage of demand that can be reversed by monetary policy. Specifically they should allow the market to set interest rates, just as the market sets most other prices. But these are not, to say the least, mainstream opinions.

As an old friend of mine, Steve Kates of RMIT University, wrote in his book Free Market Economics:

“Today, there is no aspect of an economy’s structure that governments do not believe themselves capable of making a positive contribution towards. … Such actions are not undertaken with a sense of dread at the possible unintended consequences. They are undertaken with a confidence that is simply unwarranted…”

“To believe that some central agency can plan ahead for entire economy is one of the major fallacies often associated with economic cranks. No single person, no central body, no government agency can ever know anything remotely like what needs to be known if an economy is to produce the goods and services the community wants, never mind being able to innovate or adjust to new circumstances.”

In my view, those “goods and services” include credit. Our patrician overlords at the central banks believe themselves capable of determining how much of it we need and at what price.

The Keynesian economic central planners went into hiding after the Berlin Wall came down in 1989 and the failure and corruption of Soviet style Marxism became evident. After that, and after the recession of 1991, the world had 10 years of spectacular growth due, in part, to interest rates being left to find their own level. However after the tech crash of 2000, the real Fed funds rate was taken negative – what Keynes called “the euthanasia of the rentier” – on the basis that wealth creation through rising assets prices would lead to economic growth.

Charles Gave of GaveKal Research calls this “one of the stupidest ideas ever put forward in economics”. It led to an explosion in debt and speculation on housing, which led, in turn, to the 2008 credit crisis, and Great Recession.

Instead of learning from this mistake, the central bankers then went all the way – reducing nominal rates to zero and keeping them there for six years.

To a large extent the current thinking is based on the proposition that we face “secular stagnation” a phrase rediscovered by former US Treasury Secretary Larry Summers (it was originally coined by Alvin Hansen in 1938, in a book called “Full Recovery or Stagnation?”).

Those promoting this idea today don’t remember that it’s the same incorrect argument that was floated towards the end of the 1930s, and they don’t believe that if left to its own devices the economy would go back to normal. Instead they think the world’s entrepreneurs, business people and consumers would somehow remain comatose if central bankers et al didn’t poke at them to wake up. Central bankers have never run a business themselves but are totally confident in their ability to goad businesses and consumers into action and then distributing the proceeds.

These are the misguided vanities of what Lewis Lapham calls our patrician overlords. Economic growth is failing to recover because central bank actions have increased the stock of debt, which is weighing on the world’s economy like a heavy blanket. It needs to be cleared, through being priced correctly and borrowers and lenders recognising their losses. In other words, the free market must apply.

As Steve Kates wrote: “The problem lies in the belief that that the natural state for an economy is for it to be growing with unemployment low, when the reality is that the natural state for an economy is that it is adjusting to new circumstances during every moment of every day.”

The greatest of all Keynesian disasters was to promote the idea that economists have any idea on what to do to make economies grow. As it happens, our growth over the past sixty years has been in spite of our economists, but I think the economic cranks are now in such control that they are pushing our economies backwards at unprecedented rates.

Living in a postmodern world

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This is an article described as “reflections on the election of Justin Trudeau and the ‘idiotized’ culture” whose title is The Triumph of Drivel. It is specifically about Justin Trudeau, but having endured Barack Obama since 2008 and now Malcolm, I can only say I have got used to it as a phenomenon of our times. And what sort of phenomenon is that?

Perhaps I should explain what I mean by “drivel.” I could write “lies,” but these are only possible to those who have criteria for the truth. Drivel is what people talk who have no such criteria. The fact that what they’re saying may be true, or untrue, is of no significance to them. It is enough that it sounds plausible. The truthful man knows when he is lying; the postmodern man neither knows nor cares. He can believe himself “good,” as drivellers will do, because truth doesn’t come into it.

The old-style politician told knowing lies. The new-style politician doesn’t know what “lies” are. He uses the term rhetorically, against anything he doesn’t want to hear. The old-style politician would back down when confronted with the truth. The new-style politician doesn’t know what you are talking about. He assumes you are only trash-talking him.

So let us listen to how Malcolm describes events as they have transpired:

“This is the government of Australia, it’s not the Tony Abbott government, it’s not the Malcolm Turnbull government, we can be prime ministers but we are here to serve others,” he said. He also said he had learnt from his own downfall that it was vital for a leader to be collaborative and consultative.

“The one thing I have learnt and learnt this not just from my own experience but also from others (is) the absolutely critical importance of recognising that this is an exercise in collaboration. I’m not the president, I’m the Prime Minister. I am first among equals,” he said in a clear reference to the complaints about Mr Abbott not involving his colleagues enough in decision making.

Ridiculous. Just words with no sincerity. He can’t even fake it, he’s such a phoney, but those folks at The Australian just lap it up. So I return to the conclusion of the original article I quoted:

“The people” believe in drivel, too, as they have just proved. As I’ve mentioned before, a growing percentage of the general voting population has been morally and intellectually debilitated — “idiotized” is my preferred term — by postmodern media and education, and by spiritual neglect within (often broken) postmodern homes. Large vested interests can lead them by the nose, even while they imagine themselves victims of conspiracy.

Postmodern media! The folks of Europe have just discovered how the reality they live in has nothing much in common with what they read in the papers, see on the news or hear from their political leaders. Idiotized may do, but it is a form of political insanity for which no solution that I can think of now exists.

AND FURTHERMORE: That Barack Obama is delusional is truly the only explanation I can think of for his behaviour. He is leading America into a cesspit of social disorder, both nationally and across the world. His only friends are the deep left and the media. I would hardly be the first to describe him as a narcissist. Continuing this theme, the following was picked up via Andrew Bolt, an article by Paddy Manning in the SMH titled: Bad blood and bastardry: how Malcolm Turnbull became opposition leader. This is the passage I find so absorbing, but the lead-up in the article to Brendan Nelson’s comment quoted below is quite astonishing. I remember none of the events, but what I do remember is that Peter Costello gave away the leadership of the Liberal Party in 2007 because he could not bear having to deal with Malcolm. This might be why:

A doctor by profession, Nelson told journalist Peter Hartcher he genuinely believed Turnbull had a “narcissistic personality disorder … He says the most appalling things and can’t understand why people get upset. He has no empathy.”

In the modern world, with the media structured as it is with its far left perspective, this may be the only kind of personality type that can survive the never-ending negativity. The most personally decent man to ascend to become Prime Minister in a very long time, Tony Abbott was driven from office by the media left along with the left in general for whom personal values count for nothing against their own agenda. Malcolm, however, will do just fine.

Our very own Justin Trudeau

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That Malcolm is an economic illiterate has always been evident, but if you are looking for more proof, there is this (picked up at Andrew Bolt):

He wants to trigger a big surge in Australian spending on infrastructure by changing the way the federal government has always operated.

He cheerfully admits that this is “an argument I lost in the Howard government” as minister responsible for water…

It’s now urgent with the economy slowing as the mining boom recedes. Infrastructure investment will partly take up “the slack”, he says…

“I think the Commonwealth should take a more active role,” he tells Fairfax Media. “We should be prepared to actually invest as opposed to simply making grants…”

Economics is supposed to be his long suit but he remains more clueless than the most clueless Keynesian. You might have hoped that the experience with the NBN would have tempered his enthusiasm for Commonwealth-directed expenditures, but apparently not. Losing billions is fine, since in this weird approach to economic prosperity, its the spending that gives you the growth. How stupid do you have to be not to see that spending represents the cost of the project. It is the revenue you get later that is the benefit. And having watched Malcolm for the last month or so, it is true that as short a suit as his economic credentials are, economics is his longest suit. Both Canada and Australia have traded in common sense for a fashion statement, and we are both going to regret this for a very long time to come.