THE Treasury chief, Ken Henry, has re-entered the tax debate, issuing an extraordinary call for economists and tax experts to ''put down their weapons'' and get behind proposals such as the resources super profits tax. . .The horror! Henry goes on:
''Whenever an idea is ventured publicly by a person, whether that person is a policy adviser or whether it's a government minister, there's at least a handful of academics who will contest it,''
In response, Warwick McKibben, director of the Australian National University's research school of economics and member of the Australian government's Reserve Bank Board, took strong issue with the idea that academics need to get in line behind government policy proposals (emphasis added):
''I've seen it on both sides of politics - this is not a partisan comment at all. But for governments, government ministers who are seeking to get ideas legislated, it is unbelievably frustrating, incredibly frustrating.
''It is a great strength of economics as a discipline … But I think there are occasions on which economists might, at least for a period, put down their weapons and join a consensus.'' . . .
''I'm not going to comment about the resource super profits tax but I will talk about the emissions trading scheme. Most academic economists accepted, at least behind closed doors, that it was a sound policy idea. Yet there were no end of academics who wanted to say for example, it's not bad, but a carbon tax would be better. That did not increase at all the chances of a carbon tax being legislated. All it did was reduce the chance of an emissions trading scheme being legislated.
''In the way in which political debate occurs in Australia, such statements do enormous damage to the prospects of sensible reform. There are times when it would serve the national interest if economists could just call a halt to the war for a while.''
[McKibben] said he was stunned by a call from Mr Henry on Monday for academics to ''put down their weapons'' rather than nit-pick over government proposals such at the emissions trading scheme. ''I don't know whether Ken was fingering me but there weren't too many other people out there arguing against an ETS,'' he said.I do not share McKibben's credulity. For many in the climate debate, consensus on bad policy is indeed better than trying to arrive that policies that will actually work. And leading argument seems to be that if only those pesky academics would fall in line, we could more quickly implement those bad policies. Hmmm ... if only we had a list of pesky academics, we'd know who to ignore . . .
''I have enormous respect for Ken Henry but he can't believe that you should have consensus because it is better to have bad policy that everyone agrees with than eventually get good policy that will work."
''The ETS was a flawed scheme. Had the government got it through it would be dead by now because of the financial crisis.
''I also disagreed with the scale of the stimulus package … It wasn't evidence-based policy; they panicked. The government rammed those decisions through the economy even though they were fraught with risk. No one was consulted about an alternative view and if you did say anything you were attacked by the Treasurer and the Prime Minister in public.''
H/T Stochastic Trend