Former Federal Treasurer Peter Costello, AC, has launched the second edition of Free Market Economics by Associate Professor, Steven Kates.
Kates of the School of Economics, Finance and Marketing wrote the original book as the text for the economics course he was teaching in just 12 weeks at the start of the Global Financial Crisis.
Free Market Economics is critical of the notion that output and employment are influenced by total spending in the economy.
In this thoroughly updated second edition of the book, Kates looks at economics from the perspective of an entrepreneur making decisions in a world where innovation is continuous, and the future is unknown and being created before it can be understood.
It is a world in which no government can possibly work out where the path to recovery actually lies.
Over the past 30 years various Australian governments have drawn on Keynesian theory to justify stimulus packages in times of economic downturn but Kates argues the approach is a misdiagnosis of the problem which leads to the application of the wrong cure.
At the recent launch, Costello explained the political expediency behind the enduring popularity of the Keynesian approach.
“It allows you to spend for political benefit under the guise of doing something for the economy,” he said.
“Free Market Economics is a very good book which tells you in theory what we know happened in practice.”
The Chief Economist for the Australian Chamber of Commerce and Industry for more than two decades, Kates was also a Commissioner on the Productivity Commission.