Gerard Henderson admits he was wrong

 

Some two months after I pointed out to Gerard Henderson that his SMH article contained a series of factual errors, he responded to my request for a correction with an email to me which is reproduced in full below in blue.

My original post is here: http://tinyurl.com/9lb6ueq

As with his misunderstanding of Budget data, Mr Henderson fires a series of accusations and comments at me on things I didn’t say.

Mr Henderson says I offered a “courageous defence of Gough Whitlam’s economic record”. Sorry Gerard, but no where did I outline a view of the economic record of the Whitlam Government – I merely pointed out that you made a bunch of factual errors which could have misled your readers.

Next, Mr Henderson, rather humiliatingly for someone of his importance, asked me to recall a meeting I had with him, “when in 2007 you were writing with The Age”. Well, I have never met Mr Henderson and have never worked at The Age.  I do know that Jason Koutsoukis did write for The Age around that time and may have met Mr Henderson. In 2007, I was living in London, heading global economic research for TD Securities. I can’t be sure, but suspect Mr Henderson is confusing a couple of woggy Greek names – Koukoulas, Koutsoukis – what’s a few letters here and there. Yasou!

Mr Henderson then, for some reason tells me that I worked for Prime Minister Gillard and now Market Economics. I am not sure why any of that is relevant to his reply, other than to acknowledge that my understanding of Budget and economic facts is up to date and vastly superior to his.

Only after that does Mr Henderson start to address the concerns about his factual errors.

In doing that, Mr Henderson said he relied on a 1982 occasional paper from the RBA for his data. Hhhmmm. That’s a bit like relying on a sharp pencil and a pocket calculator for some econometric regressions. Mr Henderson says “statistics are revised from time to time. I will make corrections where such are necessary.”

Well, the numbers used by Mr Henderson are wrong.

For Budget numbers, I rely on the Treasury Budget papers here –  http://tinyurl.com/9r4sw6b . I have no knowledge of the dusty old source book Mr Henderson relied upon.

But in any event, Mr Henderson’s defence of his errors crashes badly. Even that factually flawed source book doesn’t support his “facts”.

In looking at the increase in government spending in 1974-75, Mr Henderson’s source book said the rise was 45.9% which in his view “is close to 50%”. Close enough is good enough for our Gerard. Just to repeat, the correct figure is 39.6% which relative to 50% growth is, in today’s dollar terms, worth around $36 billion in a single year.

On the next error, Mr Henderson admits he is wrong. His source has the figure as 4.2% of GDP. Mr Henderson said:

• “In my SMH column I made an error by giving the figure as “more” than 5 per cent – the reference should have been to “less” than five per cent. I concede this error. You should concede that this is a minor error.”

Well Mr Henderson, I concede nothing. Importantly, the actual figure is 3.3% of GDP which is at least 1.7 percentage points lower than the more than 5% quoted, which in turn is equivalent to at least $26 billion today’s dollar terms in a single year. Another huge error.

Next Mr Henderson argues that his old book shows a Budget deficit of 4.2% of GDP in 1974-75. The Budget documents show a surplus of 0.3% of GDP. A simple error from Mr Henderson. A trifecta of mistakes – a surplus, not a deficit.

These elementary, school-kid like errors are surprising for someone of Mr Henderson’s standing and experience.

He covers up for these errors saying that I missed the theme of his article that the Whitlam Government was a disastrous economic manager and lost control over the economy.

I made no judgment of the economic credentials of Whitlam – one way or the other. I merely was pointing out to Mr Henderson that the facts he was using to support his case were wrong and this risked misleading his readers.

I am pleased Mr Henderson has acknowledged his errors and I trust he will pay more attention to detail in his future work.

____________________________

Mr Henderson’s email to me.

Dear Stephen

What a thrill to hear from you on 8 August 2012.  And lotsa apologies for the delaying responding to your courageous defence of Gough Whitlam’s economic record.  Alas, I have been busy of late.  So I valued your reminder of my tardiness sent on 23 August 2012.

As I recall, we last met in Sydney when in 2007 you were writing for The Age and were one of “The-Guardian-on-the-Yarra”’s principal barrackers for Rudd Labor and principal opponents of Peter Costello’s economic record.  It all seems a long time ago now.  Since then you have worked for Julia Gillard and the most prestigious Market Economics – which even devotes space to me on its (prestigious) blog. A (continuing) brilliant career, to be sure.

As you will recall, you wrote on your Market Economics website on 8 August 2012 that I had made some factual “howlers” in my Herald column of that day concerning the Whitlam government’s economic performance.

You ignored the thesis of my column – which was that Gough Whitlam lost control of the economy in 1974.  Perhaps you have not read about such economic disasters as Jim (“call me Doctor”) Cairns, Tom Uren, Clyde Cameron, Rex Connor and – of course – Mr Whitlam himself.  In any event, you focused on statistics.  My focus, on the other hand, was on economic performance.

Here is the apparent disagreement between us:

▪ I wrote that in 1974-75 Commonwealth outlays increased by close to 50 per cent.  You say that it was 39.6 per cent.  Phew. What a relief. Good to know that Gough Whitlam and the team increased spending by only 39.6 per cent in a single financial year.

▪ I wrote that in 1974-75 spending increased by more than 5 per cent of gross domestic product in just one year.  You say it was 3.3 per cent.  Well, that’s alright then. Whoa, indeed.

▪ I wrote that taxes in 1974-75 increased by close to 30 per cent. You say the correct figure was 30.5 per cent and suggest that I was only “largely right”. This seems like a quibble to me.  But it’s good to know that taxation increased by only a third in a single year.

▪ I wrote that in 1974-75 the budget deficit increased substantially. You say that there was a budget surplus in 1974-75.

Unlike the ABC, I am always willing to make corrections and issue clarifications.

As indicated in my Sydney Morning Herald column, the principal source for my comments on the Whitlam government was John Kunkel’s article “`It Was Like a Lunatic Asylum’: Remembering Labor’s 1974 Budget” which was published in the December 2004 issue of The Sydney Institute Quarterly. Over the years I have also relied on the statistics contained in W.E. Norton The Deterioration in Economic Performance: A study of the 1970s with particular reference to Australia (Reserve Bank of Australia, Occasional Paper No 9, September 1982). 

I make the following points:

▪ According to Table 4 A 2 of W.E. Norton’s book, Commonwealth outlays increased by 45.9 per cent in 1974-75 (See Page 95). In my SMH column. I rounded this up to “close to 50 per cent”.  In my view, 45.9 per cent is close to 50 per cent.

▪ According to Table 4 A 2, spending increased by 4.2 per cent of the GDP in 1974-75 (see page 95).  In my SMH column I made an error by giving the figure as “more” than 5 per cent – the reference should have been to “less” than five per cent. I concede this error. You should concede that this is a minor error in view of the fact that I was pointing to what any reasonable commentator would concede was a huge increase in spending in just one year.

▪ According to Table 4 A 2, the deficit amounted to 4.2 per cent of GDP in 1974-75 compared with 0.6 per cent in 1973-74. In my SMH column I wrote that the deficit increased substantially in 1974-75.  You maintain that the 1974-75 budget was in surplus.

As you know, statistics are revised from time to time. I will make corrections where such are necessary. My problem is that your focus on minor points overlooks the big picture.  Namely, that Whitlam Labor lost control of the economy in the middle of his three year term.

As you should be aware, such Labor identities as Bob Hawke, Paul Keating and Peter Walsh hold the view that Mr Whitlam was a disastrous economic manager.  This was a principal motivator for Messrs Hawke, Keating and Walsh – among others – when Labor occupied the government benches from March 1983.  They wanted to prove that – unlike during Mr Whitlam’s time –  Labor could run a competent and reformist government. And they did.  Your email of 8 August 2012 overlooked this central point.

Best wishes

Gerard Henderson