Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Mariana Mazzucato comments on the role of the innovative state - and the unfortunate reality that we currently lack anything of the sort due to corporatist thinking:

(T)hanks in part to the conventional wisdom about its dynamism and the state’s sluggishness, the private sector has been able to successfully lobby governments to weaken regulations and cut capital gains taxes. From 1976 to 1981 alone, after heavy lobbying from the National Venture Capital Association, the capital gains tax rate in the United States fell from 40 percent to 20 percent. And in the name of bringing Silicon Valley’s dynamism to the United Kingdom, in 2002, the government of British Prime Minister Tony Blair reduced the time that private equity funds have to be invested to be eligible for tax reductions from ten years to two years. These policies increase inequality, not investment, and by rewarding short-term investments at the expense of long-term ones, they hurt innovation.


Getting governments to think big about innovation is not just about throwing more taxpayer money at more activities. It requires fundamentally reconsidering the traditional role of the state in the economy. Specifically, that means empowering governments to envision a direction for technological change and invest in that direction. It means abandoning the shortsighted way public spending is usually evaluated. It means ending the practice of insulating the private sector from the public sector. And it means figuring out ways for governments and taxpayers to reap some of the rewards of public investment, instead of just the risks. Only once policymakers move past the myths about the state’s role in innovation will they stop being, as John Maynard Keynes put it in another era, “the slaves of some defunct economist.”


- And Ross Gittins describes how an obsession with balanced budgets and tax tinkering is preventing Australia from even discussing meaningful social and economic goals.

- Of course, that will sound all too familiar based on the Harper Cons' treatment of Canada. And Carol Goar surveys some of the crazy policy choices which have led us to be grossly overreliant on unstable resource prices, while Trish Garner notes that poverty remained endemic even a supposedly strong economy prior to the resource bust.

- Murray Mandryk recognizes that the Wall government's determination to favour private consultants rather than building a strong public sector workforce is thoroughly counterproductive. And Paul Hanley laments the waste of $1.4 billion of public money on a carbon-capture scheme which is both dirtier and more expensive than renewable alternatives.

- And finally, the CLC rightly blasts the Senate for refusing to apply either second thought or any apparent sobriety in rubber-stamping an anti-labour bill which all parties agree contained serious errors.