Labor must respect economics or be mugged by reality
The redesign of the stage-three tax cuts, which the prime minister seemingly had to be dragged kicking and screaming to accept, was the government’s strongest moment in three years.
Economics is not an ideology. Belief in economics is not blind faith. Respect for the laws of economics is like respect for the laws of nature – you defy them at your own peril. Economics is an empirical science concerned with cause and effect. It behoves you to take it seriously because we’ve seen, time and again, that it works.
The greatest error of the Albanese government’s first term was failing to take economics seriously. Over and over, the government (at times unfortunately aided by Treasury) snubbed its nose at economics, dismissing it as textbook esoterica. Policy after policy, claim after claim, offending economists to their core.
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Steven Hamilton is assistant professor of economics at George Washington University and visiting fellow at the Tax and Transfer Policy Institute at the ANU.
