I’ve
never read a more long-winded pile of bullsh*t and garbage (delivered
in equal portions) than that deposited on your website by Bernie
Shylock on March 4. Is it simply too hard to think that the RBA raised
interest rates because domestic demand is far outstripping supply
(productive capacity), and that in a period of 30-year lows in unemployment,
falling productivity and high capacity utilisation that this might
translate into inflation down the track – which is, after all, the
target of RBA policy? Instead we get the following drivel:

“The
real problem is long standing and deep seated production and financial
system inefficiency that has been increasingly laid across the economy
for at least the last 10 years for lots of reasons, none the least from
an intransigent, unhelpful and incompetent Labour Party and a
cargo-cultist Senate, and exacerbated by a chronically overfed,
inefficient and unbalanced financial sector coupled with weak trade
practices laws and enforcement and timid political will.”

Whatever the hell that all means.

A possible response to Bernie and Mel (from Seven’s Sunrise
program): The RBA doesn’t raise interest rates to boost supply (ie. fix
the infrastructure bottlenecks, train the workforce, raise skilled
labour immigration etc). That’s not its job. But it will dampen
excessive demand where it sees an inflation risk. And if anything, the
interest rate increases should have occurred earlier.

So
stop this phoney war against the RBA. The real anger should be directed
at those in government who have had the power to encourage or sponsor
investment in supply, yet have either done nothing or made the
situation worse through poor economic policy. And here, you can point
the finger straight at the Howard Government, something that Bernie
appears ideologically incapable of doing:

  • No important education/training initiatives over the past 9 years, coupled with;
  • A desire to “hand back the surplus” to taxpayers (ie.
    buy votes through selective tax and transfer policies – ie. pork
    barrelling) rather than invest in infrastructure to boost Australia’s
    productive capacity. This, in turn, has produced a perverse
    ‘pro-cyclical’ fiscal policy (if you can call doing bugger-all a
    policy) that has only reinforced excessive demand.

The
Howard Government has had 9 years to lay the foundations for a strong
Australian economy. Its time that they and their apologists stopped
carping on about Keating and Labor and got started.

CRIKEY: Read Bernie Shylock’s comments on the interest rate free-for-all here: http://www.crikey.com.au/articles/2005/03/004-0001-3865.html