Ross Garnaut

A book suggesting the best economic path forward for Australia following the COVID-19 pandemic of 2020-21, written by respected economist Ross Garnaut. He notes that it's neither possible nor desirable to go back to the way the Australian economy was working pre-pandemic, which he calls the 'dog-days'. An ageing population, increasing financial effects of global warming, trade woes, negative geopolitics and diminishing returns from fossil fuel energy, tourism and education will prevent that. Garnaut notes that there is a positive way forward. It involves big changes to the tax and social security systems and embracing the great opportunities which exist for Australia in renewable energy and local industry using the resultant clean energy.

In order to revive Australia's economic fortunes, Garnaut recommends the government and Reserve Bank strive harder for full employment, running deficits as needed. Since deficits will be incurred in any case, Garnaut argues for a couple of expensive structural reforms which will ultimately bring more prosperity. The first is a negative income tax or universal basic income for Australians, which he calls the Australian Income Supplement (AIS) to avoid the political baggage of the first two names. He also proposes a 'cashflow' tax on companies which would encourage investment and discourage rent-seeking behaviour. All transfer payments back and forth would be governed by the Australian Taxation Office. This last point is not new in Australian economic discussion; it was also recommended by the Henry Tax review (The Australia's Future Tax System Review, 2008-10).

In conjunction with those financial measures, Australia could make better use of its vast renewable energy, mineral resources and good local scientific knowledge. The combination of those things would allow Australia to cleanly and competitively process and export its mineral resources, rather than merely exporting the ore. In a post-carbon emitting world cleanly processed materials will be valuable, and Australia *could* reap the benefits with correct policy.

I'm not an economist and sometimes the language was a bit dry for me. There were some complex diagrams included which were too small and abstruse for me. I tried but did not fully manage to understand the cashflow tax, which it seemed would instantly depreciate and even reimburse business investment or research and development costs, but provide zero reimbursement for interest costs. The book focused on economics though it did touch on social equity as a cornerstone of a healthy democracy. Garnaut seems more optimistic than I that Australia's governments can rise to the many challenges which face them in the post-pandemic years. I hope he's right.… (mere)

A great, intelligent look at the GFC (aka The Great Recession). There is an undercurrent of its own agenda/ideology/ego/conceit when it comes to policy recommendations. However, the main takeaway is that the law (including regulations and policies) are just plain wrong. The book is also well aware that policy reactions to the panic can seem alluring but also contain their own set of different risks.

There are so many excellent quotes that can be pulled from this book. If I have time, I will put some here or elsewhere.… (mere)