Henry Thornton - Economics: A discussion of economic, social and political issues Peter Jonson (AKA Henry Thornton) on economics Date 13/07/2014
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Peter Jonson's contributions to political economy.

Biographical


On The Edge of Chaos, June 1995
Biographical talk about Australia's financial system. 


Economics and economic policy


Reflections on central banking, July 1988
'... a degree of independence - certainly independence of thought and opinion - from normal political processes is also desirable, perhaps essential'.


Inflation: Its Costs, Its Causes and Its Cure, July 1990 
'Inflation is theft and it is now widely agreed that inflation is a major underlying cause of Australia's economic malaise'. 


Some_Facts_that_March_13_did_not_change.pdf, March 1993
Speech to Society of Modest Members, Parliament House, Canberra.  Theme - 'Do we have the nerve to be winners?'


Financial regulation and moral suasion, July 1994  (With Elizabeth Prior Jonson)
'Should society rely on black letter law or morality? The more we use the former, the more moral values will decline'. 


Letter to Prime Minister on Unemployment, January 1998
'I know that you agree that unemployment is a matter of great concern. Unless we can reduce unemployment substantially, it will be difficult, probably increasingly difficult, for governments to pursue economic policies that will continue to increase Australia's productivity and competitiveness'.


Paul Johnson on boom and bust, December 2004
'Do you detect analogies with our current situation gentle readers?  That is the question'.


Tax reform - the economic case, February 2006  
'The moral aspect to the tax [reform] story should not be ignored – after all it’s our money! But there are powerful economic arguments also'. 


The alchemy of growth, May 2008
How to boost Australia's sustainable growth


Six principles for economic policy at this time of crisis, February 2009
'1. Provide incentives for individuals to finance for themselves and their children the necessities of life, including adequate medical care, education, food and shelter.  Battler bailout should be limited to alleviating real hardship and should come in forms that encourage a culture of robust self-reliance, such as income-contingent loans'.


Australia's forgotten workers, March 2009
'Unemployment + underemployment in Australia is a far bigger problem than generally believed'.


What would Keynes say now?, April 2009
'Fix the banking crisis and stimulate supply, not rampant consumerism'.


Floating the dollar ...
... A Reserve Bank view


Monetary Policy Revamp, January 2013
Taming the overvalued Australian dollar


Asset Inflation and Monetary Policy, June 2013
'Monetary policy cannot serve two masters, therefore ...


Growing the Trade Exposed Industries, July 2014
Advice for the Abbott government


Writing as Henry Thornton


Columns on monetary policy
Until September 2013 published in The Australian
(From June 2002 to sometime in 2005/06 jointly with Alex Erskine)


Democracy and Global Business, July 1999
'For most of recorded history various forms of totalitarian government have been the norm.


'Not always have these governments produced economic efficiency in the modern sense of the greatest output for the smallest input, and many were hopelessly inefficient'.


Educating Australians, April 2000
'The global economic battle is being fought partly in our schools and universities. A skilled and creative workforce is a vital ingredient of economic success, yet we have little systematic information about the success of our educational efforts'.


How can we help the poor?, July 2000
'Rising poverty is a fearsome thing and one that chills the blood of ordinary Australians. It signposts breakdown of community structures and raises fears that entrenched and widespread poverty will ultimately result in a greatly weakened society.' 


Asylum-seekers - the Burden of Proof, July 2002
'Do the ends justify the means with Australia's current methods of dealing with asylum seekers?'


Interest rates in Australia - how high, how soon?, June 2002
'... I predict that the cash rate will be moved up to 6.25% in 6 separate 0.25% moves (anything bigger, like 0.5%, would be ‘unusual’), spread over the next 9 months. The faster the pace of increase, the sooner forecasts for the CPI will fall from the top of the target range, and the sooner rates can subsequently be reduced from their peak'.


Raise or we'll be crunched, September 2003
'The RBA Board seems petrified, frozen like a startled rabbit in the spotlight, and appears incapable of deciding to change interest rates for fear of destabilizing today's fragile financial and economic balance.'


RBA plays a dangerous game, November 2004
'Ian Macfarlane is engaged in a dangerous double play. He is either trying to allow time for inflated goods prices and wages to catch up with property prices, which is ok while it lasts but risks igniting new speculative excesses (including reigniting the property boom).  Or he is playing chicken with his opponents - be they in Treasury or amongst his political masters - and is hoping for some sensible fiscal action.   He is obviously unwilling to act pre-emptively to prevent what could be a serious mess. Our problem with that is that he is gambling with Australians’ welfare.


'It would be better if he took the Australian people into his confidence, told them they had been living beyond their means, and raised interest rates.  It is a case of better late than never'.


Bubble, bubble, toil and trouble ..., March 2005
'... in recognising the need for caution, we urge members of the “no hike” school to ask what happens if you are wrong.  If demand keeps bubbling too strongly in the absence of rate hikes, and wages and inflation break out, there will be a painful slowdown imposed by far higher market rates at some stage.  Far better to try to get ahead of the game and therefore (possibly) to head off this damaging scenario'.


The "nirvana" economy, February 2006
'Our criticism of Ian Macfarlane’s stewardship of the Reserve Bank is that it has left Australian industry far less competitive than it should be, and less wealthier because of the mediocre currency value of the Australian dollar as it moves to balance the external accounts with a massive CAD.  How an uncompetitive industrial structure copes with the surprises that shall be thrown up over the next few years will be the ultimate test of Macfarlane’s Reserve Bank'.


Too little, too late, August 2006
'“Too little, too late”.  That, surely, is the verdict on Ian Macfarlane’s Reserve.  Inflation globally is on the rise and global inflation is set to rise further.  In Australia the economy is benefiting from a major mining boom and this is helping to produce severe shortages of skilled labor, unsustainable growth of credit and rising inflation, which has already raised inflationary expectations.  All these facts are indicators of inflation yet to come'.


Australia's credit bubble, September, 2007
'... the current global explosion of wealthy nation household debt is a "Credit bubble", creating and (while credit keeps expanding) feeding the asset bubbles also such a feature of our world.  Bubbles never deflate gradually'.


Brave RBA should raise rates, September 2007
'What should the Reserve Bank board decide today?  Put simply, it is to press as hard as it dares to keep Australia’s economy out-performing the mighty US economy.  Global inflation is on the rise.  If the Reserve dares to keep Australian monetary policy tight enough to contain domestic demand – now clearly running too strongly for comfort – it will be doing most Australians a good turn.


'I fear the RBA will not be brave enough.  I urge Glenn Stevens during his board meeting today to remember the “almost insatiable” demand for flat screen TVs.


Mining boom, non-mining recession, June 2011
'Australian interest rates need to be higher, and before long will be forced up, perhaps considerably. Today’s meeting of the board may find reasons to delay, but a massive surge of mining investment, a Federal budget still in substantial deficit and an outbreak of wage inflation will force the Reserve’s hand before long.


'The Reserve Bank will be blamed for robust defence of its inflation target, and when the non-mining parts of the economy are in recession RBA governor Glenn Stevens will again be described as Australia’s most useless man. The real reason is the renewed China boom impacting on an economy with rigid labor laws, restricted skilled immigration arrangements and a government that utterly fails to understand how the economy works'.


Dealing with the great recession


Unwinding asset and credit bubbles, March 2008
'There will be a vast de-leveraging of balance sheets.  Credit will shrink dramatically and when growth resumes it will be at a far slower rate. Failed financial institutions will be forced into mergers, as with the takeover at a firesale price of Bear Sterns by JP Morgan, or nationalised.... Asset values will decline substantially....'


Should the RBA abandon inflation targeting?, April 2008
'For the Reserve Bank governor Glenn Stevens to keep overall inflation "mild" when important particular prices -- food, petrol, rents -- are rising sharply he must keep monetary policy firm and rely on this to force down sharply the prices of other goods and services or indeed of assets'.


(A prominant public policy economist, Professor Ross Garnaut, responded overnight: "I thought that your article in the Oz this morning was one of the most important and also analytically sound contributions on Australian macro-economic management in recent years. These are hugely difficult times. I have not yet arrived at your position on suspension of inflation targetting, because I don’t know what I would put in its place. But I agree that we face large risks in keeping the current system in place through the current commodity price extremes.)


Baseball bat economics, August 2008
'Central bankers for many years tried taking away the punchbowl just as the party warmed up.


'Now the Reserve at least has taken out the baseball bat to make sure the party-goer stays quiet until his liver recovers.  ('Too little, too late' leads inevitably to overkill.)


'Meanwhile, in the mighty USA, Ben Bernanke is forcing punch into the patient's thirsty throat'.


Financial world at decision point, October 2008
'The current financial crisis has revealed the astonishing fact that capitalism is not perfect.


Furthermore, progress is in fits and starts, with occasional but costly setbacks.'


The age of restraint, December 2008
'Henry ventures the judgment that the only way to do this is to change the habits of a century and think 'restraint' rather than consumerism and over-stimulated growth.'


A year of survival, January 2009
'This is a year for survival, and anyone who is more optimistic than this will risk their personal or corporate prosperity, or worse.'


Six principles for economic policy at this time of crisis, February 2009
'1. Provide incentives for individuals to finance for themselves and their children the necessities of life, including adequate medical care, education, food and shelter.  Battler bailout should be limited to alleviating real hardship and should come in forms that encourage a culture of robust self-reliance, such as income-contingent loans'.


Time to stimulate supply, March 2009
'Australia has done more than it can sensibly afford to stimulate demand.  What is needed now are policies to stimulate supply'.


Time to deregulate labour, March 2009
'IR rollback is the surest way to ensure that Australia fully shares other nations' experience of serious and prolonged recession.


'The question is whether Australians want a mild recession or a serious recession'.


The lessons of history, April 2009
A brilliant book distils the lessons of Hoover and Roosevelt in the Great Depression.


The ecology of financial crisis, June 2009
'This is the best economic analysis I have seen in 30 years'.


How so wrong, September 2009.
'How did economists get the global financial crisis so wrong?'


Strangling the golden goose, March 2010


Books


Great Crises of Capitalism, March 2011
Visit the book's website here.