Fake economics

Economic language isn’t used to help, inform or educate the public but to silence it argues Richard Denniss.

“We now have the ridiculous situation that, if you can stand it and tune into Q&A, you’ll see non-economist politicians talking to a million non-economist voters in the language of economics. If I didn’t speak Japanese and you didn’t speak Japanese it would be odd for us to choose Japanese as a language to converse in,” Richard Denniss, chief economist for the Australia Institute told NSWNMA Professional Day.

“Except, if I didn’t want to converse. Except, if I just wanted to tell you that there is no alternative, that we just can’t collect more tax and spend more on health.

If I wanted to keep you out of the debate, then I would choose to speak a language that you yourself couldn’t participate in.”

Furthermore, he says, “the economics profession plays a disproportionately important role in our public debates”.

“My profession more than any other profession is wheeled out to say ‘suck it up’. My profession is wheeled out to say: ‘sure we could do something about inequality, but if we did that, you know it would destroy the economy don’t you? You know you’d all lose your jobs, don’t you?’

Malcolm Turnbull’s mantra of “jobs and growth” during the federal election fitted this pattern, he says.

“I call these arguments econobabble. It’s not actually economics. If you go and ask actual economists about these claims they’ll say, ‘oh that’s not really true’. But within our public debate these arguments are mounted very forcefully.

“We’ve created a public debate where if we suggest that we collect more tax revenue by closing loopholes in superannuation, by closing loopholes on capital gains, if we were to do that – and spend more money on important job-creating services like teachers, nurses and dental care – then to do that would somehow wreck the economy.

“And it is fake economics that are used to maintain a democracy in which the overwhelming majority of the population agree that closing down tax loopholes used by the rich to spend the money on important services is a great thing.

“The only thing stopping us from doing it is the ‘econobabble’ used by powerful people in powerful positions talking down to other people.”

The market speaks!

Economic jargon is being used to derail important democratic debate about our priorities as a society, Denniss says.

“The best trick used by powerful voices to silence public debate about these things is to talk about ‘the market’ and what ‘the market’ wants and what ‘the market’ needs.

“I’ll give you an example. The government suggests it’s going to close superannuation tax concessions raising tens of billions of dollars a year. It’s going to crack down on capital gains tax concessions and negative gearing, making houses cheaper and collecting tens of billions of dollars a year, we can do this, and we’re going to spend a lot more money on health and education.”

How is this progressive agenda stopped?

“Oooh, ‘the markets’ will react angrily. ‘the markets’ would mark us down. ‘the markets’.”

“When we hear that ‘the market’ reacted angrily at suggestions that we close capital gains tax concessions, what you heard was the following: Rich people who own a lot of shares reacted angrily today, at the thought that they should pay more tax.”

A real debate about creating jobs and growth

Instead of ‘jobs and growth’ being an empty, three-word election slogan there needs to be a real debate about improving employment in Australia, Denniss says.

“(Nurses) work in one of the most labour-intensive industries in the Australian economy. Per million dollars spent on health services we create more jobs than almost any other activity.

“Mining, on the other hand, creates the least jobs per million dollars of activity. We subsidise the Australian mining industry to the tune of tens of billions of dollars. And every billion dollars spent subsidising a mine is a billion dollars that wasn’t spent on health and education.”

He says that five times as many jobs are created in health than in mining for the same amount of money.

“So here is a crazy, crazy way to create jobs: collect more tax or reduce subsidies on industries that create almost no jobs and spend it in industries that employ not just a lot of people but a lot of people whose job it is to help the rest of us.

“Crazy talk I know, but when you strip away the ‘Econobabble’, I assure you that everything they say is crazy.”


Listen to the  podcast – Health and inequality: Richard Denniss on economic language: http://bit.ly/RDenniss