National economies cannot be compared to household budgets

by Richard Denniss in The Australian Financial Review

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Originally published in The Australian Financial Review on May 21, 2013

Contrary to the speeches made by many politicians, national economies are not like households. Indeed, the household management analogies that politicians often use to explain their approach to budgetary policy are rarely useful or appropriate. The way the Coalition is using the analogy is simply bizarre; they seem to have confused micro-economics and macro-economics. While all oppositions seem convinced that they possess superior micro-economic skills, history suggests that the differences in the performance of political parties has more to do with the selection of their pet projects and hobby horses than some fundamental disparity in organisational ability.

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