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Book review: Econobabble – How to Decode Political Spin and Economic Nonsense

The timing of Richard Denniss’ book Econobabble could not be better, as there’s nothing like a looming election to turn up the spin and bring out the economic nonsense. Consider this your go-to-guide for measuring any policy announcement or general posturing.

The beauty of it lies in the combination of intelligence and wit. Being an economist himself, Denniss brings to the topic an astute understanding of the basic principles and how they have historically proven – or in some cases disproven – their veracity.

He makes it clear that there is a lot of econo-speak that comes out of governments, think tanks and industry lobby groups that is anything but science. Sometimes it’s deliberate obfuscation, sometimes it’s a wilful abuse of language, sometimes it’s simply erring on the side of wishful thinking.

Denniss takes a forensic and scientific approach to deconstructing the various furphies and nonsense that has been touted widely across several major areas – climate change, unemployment, debts and deficits, the myth of free trade, the myth of free markets, and the sometimes murky nature of economic modelling.

In digging into the actual data around coal mining, for example, he shows that claims it is a major employer and generates vast wealth for the nation are wrong. The numbers just don’t add up.

Looking into the oft-bleated claim that regulation constrains the free market, he demolishes the notion it even exists. Industry groups and companies like regulations that they like, he notes, such as laws protecting intellectual property or laws preventing unfair competition or laws that force us to buy their products (think everything from bike helmets to licensed electricians or compulsory superannuation).

He also tackles some of the underlying messaging in the reporting of econobabble, such as when an industry group or politician says they don’t want to support a particular progressive move because “it will scare the market”.

“Markets don’t have feelings – rich people have feelings,” he says.

“While markets are real, it is absurd to suggest they have ‘feelings’, ‘needs’ or ‘demands’. Markets are a place where buyers and sellers of a product come together…

“Rich people, on the other hand, do have feelings. And rich people who have billions of dollars worth of shares in a company often have very strong feelings. They have feelings about government policies and they have feelings about tax rates.”

His analysis also takes in some of the claims we hear most often repeated by many industry groups and governments that argue for policies that hold no advantages for the majority of us.

He also takes the position that government spending on education, healthcare and community services is worth it, because it benefits the entire community. It is also valuable for governments to generate policies that ensure market outcomes that do not compromise our future, our values or our environment.

Denniss says that, actually, this is the type of country the majority of us actually want to live in.

“If we want a different country, we can certainly afford it,” he says.

At the end of the book are some simple steps that should be followed by anyone with a vote as they consider the various glossy promises and sparring positions that are going to inundate us over the next month or two.

They include “don’t stay out of economic debates – they matter” and “do call out the bullshit every time you hear it”.

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