Comments on: Should workers support using fiscal policy against inflation? http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/ Observations from Carlton's Lone Classical Liberal Mon, 01 Dec 2008 19:29:04 +0000 http://wordpress.org/?v=2.5.1 By: Andrew Norton » Blog Archive » A good rule-of-thumb on deficits http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-63232 Andrew Norton » Blog Archive » A good rule-of-thumb on deficits Mon, 24 Nov 2008 10:42:45 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-63232 [...] in the year, there were signs that the general public had picked up the then orthodoxy that what we needed was a contractionary [...] [...] in the year, there were signs that the general public had picked up the then orthodoxy that what we needed was a contractionary [...]

]]> By: Chris Crewther http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-15346 Chris Crewther Sun, 08 Jun 2008 15:22:43 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-15346 Australia should do as Singapore does and utilise compulsory personal superannuation contributions to control inflation. The rate of personal contributions can then be adjusted to slow or boost consumption. This means that instead of hitting homeowners hard with mortgage increases to control inflation, inflation can be controlled by a method that increases saving while reducing consumption at the same time. Given only about 30% of the population have mortgages, this also means that inflation will be better controlled where more of the populations spending habits are controlled. Such monetary policy could be utilised in conjunction with with interest rates, tax and limited use of fiscal policy. The task of raising/lowering of compulsory personal superannuation rates could also be undertaken by the RBA. This method would be better than independently adjusting tax rates which would be much more controversial to the general public. Australia should do as Singapore does and utilise compulsory personal superannuation contributions to control inflation. The rate of personal contributions can then be adjusted to slow or boost consumption.

This means that instead of hitting homeowners hard with mortgage increases to control inflation, inflation can be controlled by a method that increases saving while reducing consumption at the same time. Given only about 30% of the population have mortgages, this also means that inflation will be better controlled where more of the populations spending habits are controlled.

Such monetary policy could be utilised in conjunction with with interest rates, tax and limited use of fiscal policy. The task of raising/lowering of compulsory personal superannuation rates could also be undertaken by the RBA.

This method would be better than independently adjusting tax rates which would be much more controversial to the general public.

]]> By: Andrew Norton » Blog Archive » The public warms to tax cuts http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-13922 Andrew Norton » Blog Archive » The public warms to tax cuts Mon, 19 May 2008 07:49:21 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-13922 [...] odd desire of Australian voters to fight inflation with their tax dollars might be coming to an [...] [...] odd desire of Australian voters to fight inflation with their tax dollars might be coming to an [...]

]]> By: Andrew Norton » Blog Archive » First signs that familism has limits? http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-13635 Andrew Norton » Blog Archive » First signs that familism has limits? Mon, 12 May 2008 03:50:46 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-13635 [...] be directed to tax cuts, which would in part benefit those same families. Yet this Newspoll, like other recent polling on the subject, finds that support for tax cuts drops (in this case from 66% to 36%) if respondents [...] [...] be directed to tax cuts, which would in part benefit those same families. Yet this Newspoll, like other recent polling on the subject, finds that support for tax cuts drops (in this case from 66% to 36%) if respondents [...]

]]> By: Andrew Norton » Blog Archive » Gambling with issue strengths http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-13583 Andrew Norton » Blog Archive » Gambling with issue strengths Sun, 11 May 2008 00:50:50 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-13583 [...] by being seen to question the conventional wisdom on the budget and inflation they risk further falls in their standing on handling the economy seen [...] [...] by being seen to question the conventional wisdom on the budget and inflation they risk further falls in their standing on handling the economy seen [...]

]]> By: Andrew Norton » Blog Archive » HECS for sportspeople http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-13452 Andrew Norton » Blog Archive » HECS for sportspeople Tue, 06 May 2008 10:27:27 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-13452 [...] if the punters can be conned into structural reductions in spending to supposedly deal with a cyclical inflation problem, we [...] [...] if the punters can be conned into structural reductions in spending to supposedly deal with a cyclical inflation problem, we [...]

]]> By: Andrew Norton http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-12449 Andrew Norton Mon, 24 Mar 2008 21:29:28 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-12449 Iamspam - While the huge surpluses are an exceptional situation, inflation management will be with us forever. There have been various arguments in recent years that fiscal policy should play a greater role in this task, partly because it would 'spread the pain'. In some versions of the argument, there would be an independent fiscal authority - in practice it would have to be the RBA to achieve coordination - that could move tax rates up or down purely for demand management purposes. Once the principle of using fiscal policy for demand management is entrenched, the independent fiscal authority idea may have some prospect of being adopted. If we are serious about using fiscal policy, that makes more sense that the current very slow budget process, which will take many many months to have any significant impact. But that point Stevens was making, and I was supporting, was that because the people who pay a lot of tax are often the same as the people who pay a lot of interest it could focus the pain rather than spread it. Iamspam - While the huge surpluses are an exceptional situation, inflation management will be with us forever. There have been various arguments in recent years that fiscal policy should play a greater role in this task, partly because it would ’spread the pain’. In some versions of the argument, there would be an independent fiscal authority - in practice it would have to be the RBA to achieve coordination - that could move tax rates up or down purely for demand management purposes.
Once the principle of using fiscal policy for demand management is entrenched, the independent fiscal authority idea may have some prospect of being adopted. If we are serious about using fiscal policy, that makes more sense that the current very slow budget process, which will take many many months to have any significant impact.

But that point Stevens was making, and I was supporting, was that because the people who pay a lot of tax are often the same as the people who pay a lot of interest it could focus the pain rather than spread it.

]]> By: iamspam http://andrewnorton.info/2008/03/should-workers-support-using-fiscal-policy-against-inflation/#comment-12448 iamspam Mon, 24 Mar 2008 20:13:19 +0000 http://andrewnorton.info/blog/2008/03/21/should-workers-support-using-fiscal-policy-against-inflation/#comment-12448 I'm a touch confused. Are you trying to make a slippery slope argument, ie, if we withhold tax cuts now, that will pave the way for more active fiscal policy (tax increases) in the future? Is Kevin's razor gang also a form of fiscal policy? I would have thought that the debate over the proposed round of tax cuts is a response to an exceptional situation, rather than a debate over the future of economic policy in Australia. Particularly given that the electorate hasn't seen, and would vociferously oppose, any nominal (as opposed to bracket creep) tax increase in decades. I’m a touch confused. Are you trying to make a slippery slope argument, ie, if we withhold tax cuts now, that will pave the way for more active fiscal policy (tax increases) in the future? Is Kevin’s razor gang also a form of fiscal policy?
I would have thought that the debate over the proposed round of tax cuts is a response to an exceptional situation, rather than a debate over the future of economic policy in Australia. Particularly given that the electorate hasn’t seen, and would vociferously oppose, any nominal (as opposed to bracket creep) tax increase in decades.

]]>