My short review of Ross Garnaut's new book appears in this month's AFR Boss magazine.
Review of Ross Garnaut, Dog Days: Australia After the Boom, Australian Financial Review, Boss Magazine, 6 December 2013
When judging a batsman in cricket, we often forget to account for the ground. We all know the Adelaide Oval has even bounce and short square boundaries compared to the MCG. But we still mistakenly think a batsman is doing better when he’s wielding the willow in Adelaide.
The same goes for economic policymakers. In the ‘salad days’ of the early-2000s, argues Ross Garnaut, ordinary policy looked celestial. In the ‘dog days’ of the post-GFC era, celestial economic policy could look ordinary. Poor decision-making in Mining Boom Mark I went unnoticed. In Mining Boom Mark II, everyone was a critic.
Ross Garnaut has been a major feature in Australia’s public life for over two decades (which helps explain the fact that his writings account for one-fifth of the reference list). Dog Days catalogues a plethora of concerns. Garnaut is troubled by the dominant role of bank economists in macroeconomic debates, shamelessly partisan newspapers, sluggish productivity in the utilities sector, and a fall in hours worked per person. On climate change, he warns that non-market approaches ‘would cost much more to meet the same targets’.
Garnaut notes that the beneficiaries of reform are diffuse and may not even exist at the time of the change. His suggested solutions include a negative income tax to raise participation rates, a state-federal mining profit tax, a cut in official interest rates, and the promotion of greater competition policy. But even with a new reform era, Garnaut believes, living standards will fall. Dog Days indeed.
Andrew Leigh is the Shadow Assistant Treasurer and the Federal Member for Fraser, and his website is www.andrewleigh.com.
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