Josh Frydenberg still doesn’t get it 

The Treasurer delivered a grim economic outlook today, giving figures that have not been seen since the great depression. This was followed by a somewhat giddy Jim Chalmers, jumping at the opportunity to pin the crisis on the Liberals. Though conceding the economic news was “sobering”, the Treasurer, as well as shadow treasurer, still cannot see the forest for the trees.  

The Treasurer speaks about the falls in GDP as well as rises in unemployment, but these figures do not truly capture just how dire of a state the economy is in. GDP has been artificially sustained by government borrowing and spending — clearly is not a wealth creating activity. Phoney unemployment figures have been manipulated by essentially bailing out most businesses through the use of grants and wage subsidies, forcing businesses to keep their staff employed for doing no more than twiddling their thumbs.  

The Treasurer persists to speak about aggregate demand, showing that those at the top will continue to use Keynesian solutions disregarding the fact that they’ve never worked. He talked proudly of how the government has stepped in to provide “support packages” which were the largest ever. as if it was something to be commended for. If government spending was good for the economy, then why wait till now to increase it? Why not just spend more always? He claims that the government has “cushioned the blow” when, in reality, their excessive lockdown policies and extensive spending, have made the impact far worse than what it needed to be.  

In response to the Treasurer’s statement, Chalmers then cames in to talk about how the economy was already in poor shape before coronavirus, which is true, though his solutions are just as misguided as the Treasurer’s. Both men somehow think that the government has some power to fix the economy. In fact, it’s the government that ends up causing the most damage to the economy through its intervention. Only letting the free market operate will allow the economy to truly recover.  

Both men observe the symptoms of the sick economy, but both fail to diagnose the illness correctly. The economy for decades has been suffocated by burdensome government spending that only seems to creep upwards. It has also been coerced into such a fragile state by irresponsible monetary policy by the RBA. Through their determination to keep interest rates artificially low, they’ve incentivised debt and discouraged individuals and businesses to save, setting up the stage for the government to swoop in and pretend to extinguish the fires that they themselves set.  

They say sometimes the best solution is the simplest. This is especially true when it comes to the economy. The government should stay out of it. Let the free market work itself out as it always does. 

Unfortunately, an admission that the government does not have the capability to fix the economy would effectively leave our politicians jobless — though they may just be able to keep themselves on with a JobKeeper subsidy.