Monday, March 2, 2009

It takes a global financial crisis (GFC) to...

1. Make government function efficiently. In our department budgets have been slashed, people are not being hired, travel expenses are coming down, but the same work is being done. What a way to improve the productivity of government.
2. Send very large but inefficient companies bust. They had so much power to keep doing what they were doing, holding back innovation, adopting new business practices last, but now they're broke, and the efficient guys remain. There will be plenty of slack to be taken up by young innovative companies. Also, rumour has it that Pacific Brands has wanted to cut back their workforce for a while now, but needed the GFC as an excuse.
3. Teach generation Y about the budget constraint. When I was teaching economics to first years they had trouble comprehending that individuals have limited budgets and must choose between various consumption options. A common response was that I just spend what I need, when I need. Maybe now their family funded credit cards are being reined in, and students will start get better results in first year economics.
4. Shelve poor infrastructure investments – I’m thinking of the Northern bypass tunnel here. No one has the money to build this kind of rubbish.
5. Make us all expert economists. The amount of rubbish in the media lately, and the number of unqualified and irrelevant experts is astounding.
6. Actually make people worried enough to pay off their credit card. Hundreds of dollars in interest payments and fees weren’t enough incentive – thanks GFC.
7. Reduce global emissions
8. Prevent new mining operations on environmentally sensitive sites.
9. Decrease politicians pay (US only)
10. Decrease outrageous CEO pay (US only)
11. Give us the cooking practice we used to pay for – for free in our own homes every night!

Can you think of anything else?


  1. Arguably more holiday/family time....

  2. I would dispute points 1 and 2. What about the US government bailing out the largest automakers and financial institutions because they are considered "too big to fail".. makes the practical application of free-market economics much less meaningful if you ask me.

  3. Good point there about the big guys going bust - but plenty still will.

  4. The second point for me is not so cut and dry unfortunately. I agree that that is the way it should be, the car industry is a great example. The government is doing all it can to stifle innovation.