Here’s Ross Gittin’s response to Andrew Leigh’s open borders garbage today:
Talk about a slow burn. It’s 10 years since the beginnings of the global financial crisis, the greatest economic collapse any of us will ever see. Things ought to be back to normal by now, but they aren’t.
…For a long time, it looked as though the same people who brought us the disaster were kept on to clean up the mess. “Sorry about that. Poor execution. Nothing wrong with the basic policies, of course. Won’t let it happen again.”
…Now, however, there’s a revolt by disillusioned and angry punters evident in many developed countries: the Americans voting in an outsider oddball like Trump, the Brits voting to quit the European Union then knackering the government trying to arrange it, the French electing a president from neither of the two main parties, the Germans re-electing Mummy Merkel, but only after reducing the combined vote of her party and the main alternative to their lowest share since the war.
…As Dr Andrew Leigh, federal Labor’s shadow assistant treasurer and a former economics professor, writes in a new book for the Lowy Institute, Choosing Openness, advances in technology have been shifting jobs from the farm to the cities, and now from manufacturing to the services sector, continuously since Australia became a federation.
This means attempting to “make Australia great again” by restoring protection – reducing our openness to the world – can’t work. We’d have trouble establishing many new factories, and those we did would employ a lot more machines than workers.
What restoring protection would do, however, is raise the prices of all the goods we protected – starting with cars, clothing and footwear – worsening the cost of living of all working people.
It’s too easy to forget the benefits of globalisation along with the costs.
Apart from being a bit too late, trying to return to White Australia would rob us of greater human links with rapidly developing Asia, where we all know our best hope of future prosperity lies.
This is the Domainfax self-censoring Gittins. What we know he actually means can be seen by entering the Gittins time machine and setting the dial a few weeks back:
Economists aren’t supposed to believe in growth for its own sake. Their sales pitch is that economic growth is good because it raises our material standard of living.
But this is true only if the economy grows faster than the population, producing an increase in income per person (and even this ignores the extent to which some people’s incomes grow a lot faster than others).
This simple truth is obscured by economists’ practice of measuring growth in the economy without allowing for population growth.
Take the national accounts we got for the June quarter last week. We were told the economy grew by 0.8 per cent during the quarter and by 1.8 per cent over the year to June.
Allow for population growth, however, and that drops to 0.4 per cent and a mere 0.2 per cent. So, improvement in living standards over the past financial year was negligible.
Over the past 10 years, more than two-thirds of the growth in real gross domestic product of 28 per cent was accounted for by population growth, with real growth per person of just 9 per cent.
It’s a small fact to bear in mind when we compare our economic growth rate with other developed countries’.
We usually do well in that comparison, but rarely admit to ourselves that our population growth is a lot higher than almost all the others.
Our population grew by 1.6 per cent in 2016, and by the same average rate over the five years to June 2016. This was slower than the annual rate of 1.8 per cent over the previous five years, but well up on the 20-year average rate of 1.4 per cent.
…I oppose “bizonomics” – the doctrine that the economy should be run primarily for the benefit of business, rather than the people who live and work in it – and the older I get the more sceptical I get about the easy assumption that population growth is good for all of us.
For a start, I don’t trust economists enough to accept their airy dismissal of environmentalists’ worries that we may have exceeded our fragile ecosystem’s “carrying capacity”.
But even before you get to such minor matters as stuffing up the planet, there are narrowly economic reasons for doubting the happy assumption that a more populous economy is better for everyone.
The big one is that the more we add to the population, the more we have to divert our accumulation of scarce physical capital – housing, business equipment and public infrastructure of roads, public transport, schools, hospitals and 100 other things – from “capital deepening”, so as to improve our productivity, to “capital widening”, so as to stop our average productivity actually worsening.
And if we set the dial a little further back still:
Bravo Ross for holding Labor’s post-Australia ideological loons to account.
