Yesterday I had an article in the Canberra Times, saying that we are already in a per-capita recession (last quarter had real growth of 0.1% and population growth of 0.4%), but that the government should stop trying to “save” us.
In short, my argument is that there are real problems in the economy and this recession is the price we have to pay. Politicians can force us to wear helmets, pay tax and go to school… but they can’t pass a law that forces the laws of economics to change.
By trying to “save” us, the government will only make the situation worse. Continued bail-outs will prevent the market from adjusting and build more moral hazard. Activist fiscal policy will waste money and distort the economy for no real benefit.
What we need now is exactly what we needed before the recession and what we will need after the recession — tax cuts and a more flexible labour market.