Why Clive Palmer speaks budget sense

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It was an inter­est­ing expe­ri­ence to be part of the bud­get lock-up last week, but as I warned in my arti­cle, I could make mis­takes under that time pres­sure — and I did. I’ll cor­rect them below, but I want to open with a dec­la­ra­tion that I never expected to make: that the best sense I heard spo­ken about the bud­get was uttered by nei­ther Lib­eral nor Labor nor Green, but by Clive Palmer.

Taking stock of Wall Street’s boom (1)

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If the US econ­omy was per­form­ing as well as the US stock­mar­ket, even Wal­mart work­ers would be break­ing out the champagne.

Since 2009, the S&P has risen over 250 per cent in nom­i­nal terms, and almost 230 per cent in infla­tion adjusted terms. In nom­i­nal fig­ures, it is at its high­est value ever, though when you adjust for infla­tion, it is still 10 per cent below its peak in 2000 (see Fig­ure 1).

Should Governments run Deficits? a Minsky Model

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This is a talk about what the eco­nomic con­se­quences could be of Australia’s ambi­tion to achieve a per­ma­nent gov­ern­ment sur­plus of 1% of GDP. I present a very sim­ple Min­sky model in which banks lend money to the pri­vate sec­tor, and the gov­ern­ment both spends and taxes the pri­vate sec­tor. I then explore 4 sce­nar­ios: a bal­anced bud­get; a per­ma­nent sur­plus of 1% of GDP with no change in bank behav­ior; a per­ma­nent sur­plus of 1% of GDP with a sig­nif­i­cant increase in bank lend­ing; and a per­ma­nent deficit of 1% of GDP. The results are not what pro­po­nents of gov­ern­ment sur­pluses expect.

Should governments run budget surpluses?

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Ask any politi­cian if gov­ern­ments should run sur­pluses and the answer is likely to be a resound­ing yes, with the ratio­nale being that gov­ern­ments should “live within their means”.

Pre­cisely this rea­son was given by the Aus­tralian National Com­mis­sion of Audit, which has been charged by the Abbott gov­ern­ment with the task of sug­gest­ing ways to rein in gov­ern­ment spend­ing. Its first report gave as the very first of its “Prin­ci­ples of good gov­ern­ment” the mantra that gov­ern­ments should: