[LINK] Gittins on the IT record...
Tue, 10 Oct 2000 08:55:01 +1000
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.
>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.
>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.
>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?"