Chalmers offers Australia a New Deal

The branch of economics that deals with values is Austrian Economics.

"The concepts of scarcity and choice lie at the heart of Austrian economics. Man is constantly faced with a wide array of choices. Every action implies forgone alternatives or costs. And every action, by definition, is designed to improve the actor's lot from his point of view. Moreover, every actor in the economy has a different set of values and preferences, different needs and desires, and different time schedules for the goals he intends to reach.

The needs, tastes, desires, and time schedules of different people cannot be added to or subtracted from other people's. It is not possible to collapse tastes or time schedules onto one curve and call it consumer preference. Why? Because economic value is subjective to the individual."

But this is not what Chalmers has in mind. He is not concerned with the values of the individual. He believes it is the role of government to select the values of the economy. In the immediate term these are: "introducing cleaner, cheaper, more reliable and increasingly renewable energy, and adopting practices and technologies that reduce our emissions; developing a more resilient and adaptable economy in the face of climate, geopolitical and cyber risks, unreliable supply chains, and pressures on budgets from an ageing population; and growth that puts equality and equal opportunity at the centre."

Chalmers seeks to create a new, values-based capitalism for Australia by reimagining and redesigning markets – "seeking value and impact, strengthening safeguards and guardrails in areas of unchecked risk and with coordination and co-investment – recognising that government, business, philanthropic and investor interests and objectives are increasingly aligned and intertwined."

But is this idea feasible? Would it work in practice?

In the thirties, Franklin Delano Roosevelt (FDR) introduced the New Deal as a set of policies to ameliorate the Great Depression. It was very popular, but counterproductive.

"The New Deal … included quasi-fascist schemes to regiment industry and agriculture; public works and regional pork barrel spending to reward the New Deal coalition; price support and production control schemes to levitate farm prices; work relief and social programs to relieve the immense destitution and suffering among the unemployed; and endless special interest legislation sought by unions, the housing industry, and other organized lobbies.

Some of these programs provided humanitarian relief and a safety net. Most either retarded recovery or were abandoned before they could do much harm. And a few – like the industrial union legislation, universal social insurance, Fannie Mae, bank deposit insurance, and farm price supports – lived on to cast a heavy and debilitating shadow over the distant future.

But FDR's opening blow was devastating and long lasting. He outright abolished the basis for sound money at home and personally blocked the revival abroad of stable exchange rates and common international money; that is, currencies redeemable in gold."

In 1933, when Roosevelt took over from Hoover, he took charge of all the country's gold. Everyone was forced to convert their physical gold to fiat currency and the gold redemption clause in private and government contracts was declared invalid. Banks were directed to deliver their gold to the Federal Reserve. Once this was complete, the government devalued the dollar by about forty per cent, making a profit of about $2.8 billion on the gold it had confiscated. The government had defrauded its own people. It had taken their capital and was now in total control of the nation's money and how it should be spent.

The National Recovery Act (NRA) set out to control prices, rates and wages by industry. Within six months, industrial production fell twenty-five per cent. The minimum wage laws of the NRA priced the marginal worker out of a job; they were particularly harmful to the inexperienced and the elderly and forced half a million African Americans onto relief in 1934.