Not a Ponzi Scheme - Worse

Describing stupid government policies as Ponzi schemes understate the problem.

Yes. Ponzi schemes are bad. They exploit the under informed. Government schemes don’t exploit the under informed. They exploit everyone. But Ponzi scheme participants are volunteers. Not so much with stupid government policy because citizens, tax payers, voters, don’t get a choice. The are dragged in by the government’s monopoly on the use of force.

This context is important to understand because there was an otherwise WONDERFUL op-ed written this week in the Australian by former senior Commonwealth Treasury official Daniel Pearl - This protectionist Ponzi scheme will only end in tears.

Pearl was describing the idiotic and insane Future Made In Australia policy recently announced by Prime Minister Anthony Albanese and his rusty (yes rusty and rusty as in impaired by lack of recent practice) side kick Dr Jim.

Read the whole thing if you can. However, writes Pearl:

If patriotism is the last refuge of the scoundrel, protectionism is the last resort of desperate governments. Anthony Albanese’s A Future Made in Australia initiative, under which billions of taxpayer dollars will be lent to corporate chancers, should be renamed A Future Made in a Focus Group.

and

Protectionism is also a trap, a policy addiction that, once it takes hold, is almost impossible to reverse. We lived through this in the post-World War II era. Protectionism was intended to be limited, but as more sectors clamoured for and obtained assistance the malaise inevitably spread. As we know, it took decades of economic decline, the stagflation of the early 1970s and years of gradual tariff reductions from the early ’80s to free ourselves from protectionism’s hold.

Hey Albo! Gough Whitlam and Jim Cairns called. They asked for their economic policies back.

But this policy folly should not surprise. It was foreshadowed in Jim Chalmers’ infamous Christmas 2022 Capitalism After the Crises essay where Dr Jim where he wrote of

reimagining and redesigning markets

with

coordination and co-investment.

The only problem was that no-one thought the Albanese government was crazy enough to pursue it. But when it comes to crazy policy, there seem no depths our governments are unwilling to plumb.

This grand idea was likely a product of the influence of one of Chalmer’s “favourite economists”, Mariana Mazzucato, a leading proponent