16/12/2010 - 00:00

Clark a ‘dismal scientist’ ahead of his time

16/12/2010 - 00:00


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Warnings on the negative effects of ever-increasing taxation have been ignored by our nation’s politicians.

AS the last days of the first decade of century 21 drew closer, State Scene decided to canvass the new century’s most distinguishing and debilitating trends.

There were many contenders; not least the declaration of war upon disunited Western civilisation by growing bands of fanatical Islamists.

It’s important to note that although this new world war was declared before September 11 2001, like December 7 1941, 9/11 will go down in infamy, meaning it’s appropriate to regard it as the opening gambit.

There’s also the so-called Global Financial Crisis, which was really a North Atlantic financial crisis, just as the 1997-98 Asian Financial Crisis was Asia-centred, not global.

Unlike 9/11, however, the North Atlantic shemozzle was self-inflicted with its major culprits being American and European bankers, politicians, and their huge cohorts of well-paid advisers who lacked courage to speak-out and instead safeguarded their big-paying jobs.

After several weeks of contemplation, however, I began focusing upon another, now long-overlooked, catastrophe that needs highlighting – namely the growing trend towards state hand-outs and constant boosting of taxes to pay for ever more foreign aid to corrupt governments, massive outlays on silly programs like pink batts in ceilings, and Canberra’s serial intrusion into state affairs.

In effect, it’s Canberra bureaucratic duplication gone mad.

Another reason for focusing upon the hand-out madness and ever-higher taxing is that this is likely to be with us well into the second decade of century 21, and probably well beyond.

If so, the Islamists will have done for them what they so passionately seek.

Then, a few months ago, on a State Library new acquisitions shelf I noticed a sizeable paperback titled Australia’s Economy in its International Context. Below that was written, ‘The Joseph Fisher Lectures, Vol. I, 1904-1956’.

Who, I wondered, was Joseph Fisher? And what were these Fisher lectures that commenced in decade one of century 20?

The preface read: “This two-volume collection brings together the first 53 Joseph Fisher lectures in economics and commerce, presented at the Adelaide University every other year since 1904.

“Funds for the lectures, together with a medal for the top accounting student each year, were kindly provided by a £1,000 endowment to the university by the prominent Adelaide businessman Joseph Fisher in 1903 – before his death, to avoid 10 per cent going to the government.

“Since the average adult male wage is now well over 200 times greater than it was in 1903 in nominal dollar terms, that endowment represents more than $500,000 in terms of today’s spending power.

“An additional sum of $10,500 was donated to the Adelaide University Centenary Appeal in 1974 by Trustees of Settlements made by Joseph Fisher.

“The lectures, which are free and open to the public, have been published by the university as stand-alone booklets, and copies distributed at the fund’s expense.

“The lectures are mostly on economic issues and reflect Fisher’s interests in liberal markets and non-interventionist government.

“They have stood the test of time extremely well, while also providing a reminder of the events and concerns that were prominent at different times during the past century.”

Clearly, long-forgotten Joseph Fisher was a very sensible as well as patriotic and civic-minded gentleman. Australia is damn lucky to have had him; it’s a pity there aren’t a few like him in our parliaments.

I next scanned the titles of each lecture and was delighted to see Australia’s greatest economist, one I’d long admired, the now late Colin Clark, delivered lecture 18 – ‘Australian Economic Progress Against a World Background’ – way back in 1938.

Before reading on I scanned Clark’s brief biography and was surprised to learn he’d taught at the University of WA’s economics department that year, where I, along with three of WA’s last four premiers, later studied.

Several thoughts promptly came to mind.

Firstly, why weren’t we ever told the great Colin Clark taught where I was studying what’s still called ‘the dismal science’?

Did any of our lecturers known Clark preceded them? It would seem not.

And lastly, did UWA’s archives have any documentation I could study about Clark’s brief Perth stopover?

Since the last question was the most important, I contacted the archivist and was pleased to learn a Colin Clark file survives.

Moreover, she kindly welcomed me to visit and read it, which I’ve done.

Now, a substantial part of the file deals with Clark’s decision to leave Perth for Brisbane, where he remained until 1952.

According to University of Ballarat economist Alex Millmow, in a recent economics conference lecture (‘A Prophet Without Honour: Colin Clark and Australia’), Clark’s decision to take the Perth position became a turning point in his career.

“Clark ran three times as a [British] Labour Party candidate and was invited to run again while working in Australia,” Professor Millmow says.

So, if he’d decided not to stay in Australia [meaning, firstly, Perth] he may well have entered the British Parliament and no longer concentrated on economics.

“In Perth, Clark also appeared before the WA Basic Wage case and argued for a substantial increase which was granted,” Millmow continues.

“It took the Commonwealth government’s attention.”

Soon after, Queensland premier Forgan Smith offered Clark the directorship of his state’s Bureau of Industry, which he accepted and also became state statistician and financial adviser to the Treasury.

“Clark had been recommended to Forgan Smith by Hugh Dalton, later a chancellor of the exchequer in the Attlee Labour government,” Professor Millmow says.

“Forgan Smith had to secure Clark’s early release from teaching at the University of WA.”

Which, of course, he did.

But of greater importance was Clark’s relationship with a later Labor premier, Edward Hanlon, who Professor Millmow says, “was gravely apprehensive about the state readily expanding social services and nationalising enterprises after World War II.

“Hanlon told Clark how history had shown that high taxation and high government spending always led to inflation and, in turn, the decline of civilisation.

“Clark went off to investigate the claim. Two years later [1945] Clark came up with his famous ratio [that taxation should not exceed 25 per cent of a nation’s gross domestic product].”

Under the Rudd-Gillard Labor years this ratio has hovered around the 28 per cent mark, and shows no sign of declining.

In fact it’s more likely to exceed 30 per cent before coming back to below 25.

Clark wrote an article for the Economic Journal, outlining his controversial hypothesis.

“If a nation did engage in over-taxing he predicted, that after some lag, there would result rising inflation,” Professor Millmow wrote.

“In other words, it was high and rising taxation that stimulated rising prices and that rising government expenditure is the main cause for this rising taxation.”

Labor premier Edward Hanlon’s, and several times British Labour candidate and internationally famous economist Colin Clark’s, joint concern and insights into the impact upon society of ever-increasing taxes is a warning now so wantonly ignored.

If nothing else this shows how far Labor has degenerated from the days of premier Hanlon and his farsighted internationally acclaimed adviser, Dr Clark, both of whom were concerned about Australia’s long-term future, unlike present-day Labor, plus so many other, politicians who look only to the next vote-buying election.



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