Cabinet Leak Triggers Panic in Group of Eight. (September 15, 2012)

The spectre of the promise of a balanced federal budget continues to hang over the Gillard cabinet like the sword of Damocles and when The Australian reported this past August that Cabinet had "imposed an across-the-board clamp on an estimated $2bn-a-year in federal grants, after [it] received its latest updates on the budget position, the Group of Eight reacted in terror responding with a letter, a copy of which somehow fell into the hands of The Australian, pleading that Ms Gillard and her cabinet consider the consequences.

Noting that it takes years of training to produce high quality researchers and "researchers whose contracts end are likely to seek employment overseas or will take up alternative employment, [and] in either case, Australia will lose some of its best talent; a waste not only of the opportunities they might have created but of the considerable investments, particularly by your government, made in developing their world-class expertise."

The letter continues:

The world does not stop still even if Australia decides to do so and once a research lead is lost, it is difficult to regain. Moreover, world class research builds on international co-operation and robust relationships require trust, confidence and continuity - none of which can exist in a stop-go funding environment. The uncertainty created by a freeze would encourage even those researchers not at immediate risk to look for opportunities in other countries but there would be other, broader consequences.

There is of course the suspicion that cabinet is testing the waters to see what effect various cuts will have on the disposition of the voting public. Unfortunately it's a fair bet that cutting university research funding will have about the same degree of repercussion on the distribution of votes  as a feather landing on a blancmange.

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Matthew O'Brien is an associate editor at The Atlantic covering business and economics. He has previously written for The New Republic.

"How would you like to outperform the stock market by 8 percentage points a year? This isn't some Madoff-style pitch. It's what economist John Maynard Keynes did over a twenty-year period that spanned the Great Depression. As Jason Zweig of The Wall Street Journal points out, it's an investing performance that puts Keynes in very elite company over the past century -- Warren Buffett company, to be exact. But more importantly, understanding how Keynes outperformed the markets so much explains why he mistrusted markets so much.

    "His investing acumen explains why Keynes was skeptical of markets and favored public spending."

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