My review of Paul Cleary’s book ‘Too Much Luck’ is up at The Conversation. The original review included a discussion of the role of the exchange rate which unfortunately hit the cutting room floor, but can be found below the fold. The review draws on a monograph by Robert Carling and I making the case against a sovereign wealth fund for Australia that will be published by CIS in the New Year.
The Torygraph is all over Alessio Rastani and who can blame them for wanting to stick it to the pretentious Beeb over their seeming lack of quality control. Turns out that Rastani is a ‘talker not a trader’ with somewhat limited credentials on both counts. While his now famous opinions are highly questionable, this doesn’t exactly set Rastani apart from the vastly more credentialed talking heads routinely used by the Beeb and others to fill air time.
The sad fact is that a PhD from Oxbridge or an Ivy League school and a stellar career at the IMF and/or an investment bank more often than not yields a set of opinions and insights only slightly less dubious than those of Rastani.
The government looks set to proceed with a media inquiry. Twenty years ago, Kerry Packer demonstrated the right amount of respect and deference to be afforded the parliament in relation to such inquiries. It is still the most colourful defence of the rule of law in relation to cross-border acquisitions ever mounted in Australian public life. I was working in Parliament House at the time and I think it is fair to say that most of the politicians on the print media inquiry felt ashamed of themselves at the end of that hearing.
Reserve Bank deputy-governor Ric Battellino quietly destroyed a bunch of major myths this week – turns out we’re actually good savers, our household debt isn’t a problem, the housing affordability crisis has been exaggerated and our foreign debt is sustainable. In short, most of the usual scary headlines about the domestic economy are rubbish.
You’d think that would be worth a few headlines, but the RBA made a couple of mistakes in the timing of what is really a very good news story.
Pascoe thinks the speech got buried by the RBA minutes, released the same day. But Pascoe is mistaken if he thinks Battellino’s comments were newsworthy in the usual sense. Battellino and other RBA officials have been arguing along these lines for years. The comments are only news to those who haven’t been listening. If Battellino’s comments were under-reported, it is perhaps because his remarks are embarrassing to the lazy prejudices peddled by so many media commentators over the years.
As noted in the previous post in relation to the Henry review, the media are more than capable of ignoring arguments that are inconvenient to established narratives. Commentators like George Megalogenis and Mike Steketee could hardly ignore the most comprehensive review of the Australian tax system ever undertaken, but they still managed to write it up in way that pretended it was something other than a wholesale repudiation of most of what they have previously written on the subject.
Electronic Frontiers Australia has been campaigning for online civil liberties since 1994 and is currently on the frontline of the battle against the federal government’s internet filtering regime. They are currently conducting a fundraising drive and I hope IE readers will join me in making a donation. EFA Board members are not paid for their efforts, so you can be sure funds will be used for campaigning purposes.
The federal government often references IMF reports in support of its policies, but is none too keen on facilitating interactions between Fund staff and the media. The IMF’s Independent Evaluation Office report on interactions with Fund members notes that:
the authorities of some advanced economies that had been major proponents of the Fund’s transparency policy in practice resisted the timely disclosure and dissemination of mission findings.
That would be us:
Press conferences/calls associated with the publication of the Public Information Notice and the Staff Report took place in the remaining countries, with the exceptions of Australia and New Zealand.
Speculation about RBA media backgrounding in relation to future interest rate decisions is back again. Even if no such backgrounding has taken place, the perception that this still occurs is very damaging, not only for the integrity of financial markets, but also for the supposed beneficiaries of the backgrounding. It is well understood that politicians engage in selective leaks in order to control journalists. There is nothing more damaging to the credibility of a press gallery journalist than to be seen as the mouthpiece for a politician. The relationship between the RBA and journalists should not be viewed any differently.
The RBA could put a stop to the speculation by denying that the practice takes place or at least foreswearing its use in future. Not only would this benefit the integrity of financial markets, it would also give us more confidence that the rather generous treatment the RBA receives from many in the media was actually deserved.
My CIS colleague and former Treasury official Robert Carling has an op-ed on page 21 of today’s Australian (no link, but see text below the fold) noting that neither Treasury nor the Budget papers are independent of the federal government.
The claim that Treasury is an institution independent of government fundamentally misconstrues the relationship between the federal government and the Commonwealth public service. While it is not surprising to see politicians fail Economics 101, it is more surprising to see them also failing Political Science 101. The government now routinely hides behind Treasury and RBA independence and the federal opposition is increasingly accommodating this behaviour through their unwillingness to challenge official sector views.
While the RBA is more independent than Treasury, this independence is limited in scope. At its most basic, RBA independence means that it is free to set interest rates without the approval of the Treasurer, what is often called ‘operational independence.’ This independence in no sense precludes the government or opposition from taking a different view on monetary policy to the RBA or being publicly critical of central bank policy actions, statements and forecasts. The RBA has been made progressively more independent of government precisely in order to facilitate differences of opinion with government. Under the Reserve Bank Amendment (Enhanced Independence) Bill, it is almost impossible to remove the RBA Governor, so public criticism could hardly be viewed as a threat to the Governor’s position. By the same token, the RBA would not be compromising its independence by speaking out on issues relating to its statutory responsibilities, provided it does so in a non-partisan fashion.
Mistaken notions of Treasury and RBA independence are being used to suppress public debate over economic policy, not least by the current government. That the federal opposition and media are accommodating this behaviour on the part of the government can only undermine the robustness of public debate and democratic accountability.
Rupert Murdoch’s aim to have readers pay for access to newspapers online has been called into question by a global survey that found readers are unlikely to pay for general news they can get elsewhere free.