Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Respect the dismal science: public policy needs some economics

By Tony Makin - posted Thursday, 15 September 2016

It has become increasingly obvious that public policy debate, though ostensibly about economic issues, has drifted further and further from time-tested economic principles.

These days, it seems economic growth and raising overall living standards through economic reform and improved productivity counts for nought and everything has to be “fair”.

Yet the risk with gearing policy towards equity at the expense of efficiency is that only fair economic performance will result.


Not excellent. Not good. Just fair. There are many examples of countries from Argentina to Zimbabwe where the demise of economics as a foundation for policy became a first step to economic demise.

During the recent election campaign increased taxes on individuals and business were proposed as fair, without regard to their macro-economic costs through lost work effort, investment and production.

Company tax cuts were criticised as an unfair giveaway to the top end of town when they were intended to improve Australia’s international competitiveness and improve long-term growth.

Mind you, the company tax cuts yet to pass through parliament would be much better sold if accompanied by equivalent cuts to the billions of dollars of industry assistance doled out annually by the federal government.

The GST cannot be raised to alleviate Australia’s serious fiscal problem because it would be unfair on low-income households, many of which pay no net income tax and are young.

Yet, because they are young, they are also likely to be richer than their forebears on average in the future because of continuous economic growth.


How much richer depends, of course, on how much productivity improves into the future because of greater efficiency.

Meanwhile, it is fair that the mostly older, top 20 per cent of taxpayers pay 60 per cent of the tax.

Pervasive economic illiteracy and an anti-business sentiment in the electorate is part of the present problem, and ultimately results from deficiencies in the education system.

  1. Pages:
  2. Page 1
  3. 2
  4. All

This article was first published in The Australian.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

15 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Tony Makin is professor of economics at the Gold Coast campus of Griffith University and author of Global Imbalances, Exchange Rates and Stabilization Policy recently published by Palgrave Macmillan. He is also an the academic advisory board of the Australian Institute for Progress.

Other articles by this Author

All articles by Tony Makin

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 15 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy