{"id":8007,"date":"2020-10-02T09:00:00","date_gmt":"2020-10-01T23:00:00","guid":{"rendered":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/?p=8007"},"modified":"2020-09-29T11:09:14","modified_gmt":"2020-09-29T01:09:14","slug":"budget-2020-we-need-a-strict-supply-side-focus-to-fix-this-government-induced-recession","status":"publish","type":"post","link":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/budget-2020-we-need-a-strict-supply-side-focus-to-fix-this-government-induced-recession\/","title":{"rendered":"Budget 2020: we need a strict supply side focus to fix this government induced recession"},"content":{"rendered":"\n<p>The dictum that&nbsp;\u201ca&nbsp;little knowledge is a dangerous thing\u201d&nbsp;rings&nbsp;very&nbsp;true&nbsp;in the run-up to the federal budget.&nbsp;Limited understanding of macroeconomics, in particular,&nbsp;has&nbsp;been&nbsp;evident from the&nbsp;mantra that the economy needs&nbsp;sizeable&nbsp;fiscal stimulus&nbsp;in the form of increased government spending&nbsp;to boost&nbsp;aggregate demand.&nbsp;&nbsp;<\/p>\n\n\n\n<p>High school and first-year&nbsp;university&nbsp;students&nbsp;of economics&nbsp;everywhere&nbsp;learn that&nbsp;hiking&nbsp;government spending&nbsp;counters&nbsp;recessions&nbsp;and lowers&nbsp;unemployment,&nbsp;as&nbsp;originally&nbsp;proposed&nbsp;by John Maynard Keynes during&nbsp;The Great Depression&nbsp;of the 1930s. But&nbsp;prescribing this as the&nbsp;excuse&nbsp;for a big-spending budget&nbsp;is&nbsp;seriously&nbsp;flawed&nbsp;in current circumstances.&nbsp;<\/p>\n\n\n\n<p>This\u00a0recession is not remotely related to any\u00a0previous\u00a0recession Australia has experienced.\u00a0Caused by government-imposed restrictions on\u00a0private\u00a0firms,\u00a0it has\u00a0first and foremost\u00a0shrunk\u00a0the\u00a0aggregate\u00a0supply,\u00a0or production side,\u00a0of the economy.\u00a0\u00a0\u00a0<\/p>\n\n\n\n<p>It has been as though the heavy boot of government has&nbsp;depressed&nbsp;a large, coiled spring.&nbsp;Lifting&nbsp;that boot by&nbsp;removing&nbsp;the restrictions&nbsp;would see&nbsp;an automatic rebound in economic activity, although&nbsp;given the&nbsp;pressure&nbsp;applied, especially in Victoria,&nbsp;the recoil&nbsp;would&nbsp;certainly&nbsp;fall short.&nbsp;&nbsp;<\/p>\n\n\n\n<p>That does not\u00a0mean,\u00a0however,\u00a0that\u00a0governments should\u00a0now\u00a0step in and\u00a0increase\u00a0unproductive\u00a0public\u00a0spending\u00a0to boost aggregate demand\u00a0as this\u00a0will\u00a0raise\u00a0other macroeconomic\u00a0risks.\u00a0<\/p>\n\n\n\n<p><em>Please click here to read the full &#8216;<a href=\"https:\/\/www.spectator.com.au\/2020\/09\/budget-2020-we-need-a-strict-supply-side-focus-to-fix-this-government-induced-recession\/\">Budget 2020: we need a strict supply side focus to fix this government induced recession&#8217;<\/a> article originally published at The Spectator, written by <a href=\"https:\/\/testblogs.griffith.edu.au\/asiainsights\">Griffith Asia Institute <\/a>researcher, <a href=\"https:\/\/experts.griffith.edu.au\/18543-tony-makin\">Professor Tony Makin<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This recession is not remotely related to any previous recession Australia has experienced says Tony Makin.<\/p>\n","protected":false},"author":14,"featured_media":8008,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":""},"categories":[1053,1055],"tags":[602,615,1268,1467,1457,1468],"class_list":["post-8007","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-australia","category-economies-and-development","tag-australia","tag-economy","tag-fiscal-policy","tag-recession","tag-tony-makin","tag-unemployment"],"acf":[],"modified_by":null,"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Budget 2020: we need a strict supply side focus to fix this government induced recession | Griffith Asia Insights<\/title>\n<meta name=\"description\" content=\"This 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