Economic debate in Australia has descended into a narrow debate driven by pseudo-economic nonsense that is stifling ideas about nation building, according to a new book.

Australia Institute Chief Economist Dr Richard Denniss says rather than having an open debate about the kind of country we want to build, we are having a closed debate that extends little further than the details of tax reform.

Chief Economist Dr Richard Denniss says Australia has descended into a debate of ‘Econobabble’

In his book ‘Econobabble’, he says that rather than having a democratic debate about our national priorities, we are having a technocratic debate about things like the merits of capital gains tax concessions.

“Australia is one of the richest countries in the world, living at the richest point in world history. While poverty and disadvantage dominate the lives of many Australians, collectively we have the resources to solve any problem we want,” he said, writing in The Age newspaper.

“We could spend as much on education as Finland does. We could spend as much in child care as France does, Dr Denniss said.

“Or we can collect as little tax as Singapore does. These are choices we face, and their consequences are extremely important.

“But rather than have an open debate about the kind of country we want to build, we have a closed debate about tax reform,” he said

Dr Denniss says that ‘the markets’ are used to scare the public into accepting the need to cut corporate tax rates just 12 months after we cut spending on health and education.

He says Econobabble plays a central role in convincing the public that there is no alternative to the policies that have done nothing to close the gap between rich and poor, men and women or indigenous and non-indigenous Australians.

“Econobabble is so powerful it has made the choices made by northern Europeans vanish from our policy debates. Norway has accumulated a trillion dollar sovereign wealth fund by taxing fossil fuel extraction in the way Australians were told would ‘drive investment offshore’,” he said.

“Denmark has one of the highest shares of tax-to-GDP in the world and yet it is one of the richest countries in the world. Northern Europeans work shorter hours and take longer annual holidays than Australians and their economies have not collapsed.

“Of course, we may not aspire to having more leisure, high labour productivity and a world-class education system.

“As a nation we may instead prefer go down the road of lower taxes, less public infrastructure, fewer public services and the approach outlined by Joe Hockey in his speeches on the ‘age of entitlement’. It’s actually up to us, not ‘the markets’.

“There are no easy choices and no magic puddings. It’s up to you what kind of society you want to live in and the price you are willing to pay for it.

“Clear speaking economists can play a role in helping people understand the choices they face, and econobabblers can play a role in concealing them,” he said.

Dr Denniss said Economics was like a tyre lever.

“It can either be used to solve a problem or to beat someone over the head,” he said.

“Unfortunately, over the past couple of decades politicians and self-described business leaders have primarily used economics as a tool of mass confusion to conceal the scope of the policy options we face and persuade us to “take our medicine”, no matter how bitter or ineffective it may be.”

“Done well, economics should both broaden the menu of policy ideas we can choose from while helping us to understand the costs, and benefits, of those choices.

“Done badly, economics excludes people from the conversation through cryptic nonsense and belittling elitist language. I call that ‘Econobabble’.

“Proposals to simply increase tax and invest more in our health and education systems are, we are told, ‘reckless’. And government proposing such ‘fiscally irresponsible’ policy change would ‘spook the markets’ and we would be ‘marked down by the rating agencies’ Dr Denniss said.

He said one of the main reasons public debate makes so little sense these days is that our airwaves and newspapers are full of people using pseudo economic nonsense and jargon when they could use plain English.

“Those who really understand economics can explain it in plain English, which raises the question of whether the econobabblers understand much economics, or if they are deliberately being confusing,” Dr Denniss said.

Laurie Nowell
AMES Australia Senior Journalist