[LINK] Gittins on the IT record...

[richard@auscoms.com.au]

Linkers, 

I didn't notice until yesterday evening that the SMH's economics editor Ross
Gittins isn't impressed by arguments linking the $au with IT/R&D spending. 

http://www.smh.com.au/news/0010/09/text/business4.html

Points:
[snip]
>In this line of argument we see eminent men committing schoolboy howlers: 
>the simple projection of recent trends, forgetting that exchange rates, 
>like most other economic variables, move in cycles; the search for sexy, 
>structural explanations for boring, cyclical phenomena; the ability to 
>live for 25 years in a world of floating exchange rates and increasingly 
>globalised financial markets without learning that such markets are prone 
>to overshooting and change their flavour-of-the-month every 30 days.
>
>Here's a question for the Chief Scientist and his mates: were our dollar 
>to go back up, and were Wall Street to tire of its fascination with tech 
>stocks, would that invalidate your case for more research and innovation? 
>No? Then why introduce spurious arguments? Stick to science, mate.
>
>To be fair to the scientists, the business lobby groups into whose bad 
>company they've fallen are also using the silly new economy/old economy 
>line. But they're not silly enough to believe it. They know that, when it 
>comes to getting what you want out of governments, whether your economic 
>arguments are sensible or stupid is beside the point. What matters is
>whether the pollies believe you've hoodwinked enough of the punters.
[snip]
>The business lobbies' habitual mendicancy has blinded them to the 
>incongruity of the argument they're running. Their contention is that, as 
>a class, Australian businesses aren't sufficiently innovative.
>
>Whose fault is this? The Government's, of course. It hasn't been providing 
>sufficient "leadership". And what form should this leadership take? 
>Provision of government grants or tax breaks. Business would just love to 
>be more innovative but, unfortunately, it's so heavily taxed that it lacks 
>the incentive. Yeah, sure.
[snip]
>But I have a rival explanation: 15 years of micro reform have so far 
>failed to eradicate our businesspeople's deeply ingrained rent-seeking 
>culture and replace it with an enterprise culture. They're still motivated 
>more by a desire to minimise their tax than to maximise their profit.

I have to agree here. When I hear arguments that governments should pay business
to become more profitable (by investing in "innovation"), I ask "isn't that what
the business should be doing already?"

RC