Thursday, November 06, 2008

Central planning for failure, bad forecasts and bad decisions

I keep laughing/crying at the irony of it all. The more that central planning fails, the more that the "planners continue to plan" (to paraphrase Reagan).

In a time where budget forecasts are proven to be wildly inaccurate, where the governments plans have to finally be revised, and where the public get to see how wrong they were, it seems that Kevin Rudd is boastful and proud. Only days ago, he promoted the idea of central planning on the radio.

To summarise the latest developments:

FUTURE tax cuts, major road and rail projects and the reform of federal-state relations are on the budget chopping block as the world financial crisis strips $40billion from Rudd government revenue.

Only pensioners will be spared in next year's budget, with the Government's commitment to raise payments to them threatening to push the budget into deficit.

Now if you take a look at past budget's, especially 2005-06 and 2007-08, you can see all kinds of reports that were eagerly reproduced in the media, predicting a steadily growing budget surplus. Those forecasts aren't worth the paper they're written on, yet Canberra plans to splurge $200b a year based on them.

And when the forecasts fail, governments never slash welfare or spending on arts, culture, sports, but instead they abandon the tax cuts and spending on areas which even I approve of, like roads and rail,

Treasury estimates that the surplus will drop from a budgeted $19.7 billion next year to just $3.6billion, and will fall to $2.6billion in 2010-11.

"If international conditions were to deteriorate further, then there could be more to come," Mr Swan said.

Reagan himself told Americans that they were forced to choose, between self-government and between a system where we elect a group of elites in a far-distant capital to make decisions for us. Central planning is a dirty word. It is the reason the Soviet states all collapsed after 30 years of experimenting with it (and it had nothing to do with a lack of elections or democracy).

Ask yourself, are you too stupid to decide for yourself ?