Whitlam again

Henry Ergas sure got stuck into the Rudd government this morning:

How can it make sense, for example, to reduce labour market flexibility just as the economy heads into recession? And having increased the effective cost of labour, is it wise to then subsidise investment, further distorting relative factor prices and accentuating the substitution of capital for labour, exactly as happened with the investment subsidies many European governments provided in the late 1970s and early '80s?

As for the emissions trading scheme, if the main emitters are not reducing their emissions -- as the Government's 5 per cent target assumes -- why go it alone? Far from serious reform, is this not merely costly symbolism, with the pain disguised by subsidies thrown at each possibly affected group, entrenching the fantasy that no matter what harm it does to the economy, government can ensure no one is worse off? "Every man a winner": speak of fiscal illusion.

Nor is the Government's penchant for nation-building any better thought out. Now in tatters with the Telstra fiasco, the scheme is based on the false premise that vast new projects are what this country needs. But whatever Australian politicians lack, ribbon-cutting opportunities are not among them. Rather, our infrastructure suffers from the fact that having willed the ends, we persistently misuse the means, including by sacrificing maintenance for ambitious, poorly judged but electorally popular new projects.

I just hope if it is Whitlam redux we don't see Rudd followed by Fraser redux.