Home > Oz Politics > Lasciate ogni speranza

Lasciate ogni speranza

February 28th, 2012

In the wake of the Labor leadership ballot, I tried to think a bit about new directions for public policy in Australia. My conclusion, in short, is that there aren’t any. I’ve hammered the point that Gillard is a policy-free zone, and even her supporters haven’t pushed back on this. I have to concede though, that while Rudd’s challenge speech was impressive in many ways, he also failed to produce much in the way of new ideas.

The problem isn’t just one for social democrats and Labor supporters. Abbott is the worst kind of poll-driven populist, and Turnbull, the only person on the conservative side of politics who has anything resembling a clue has been permanently marginalized.

Finally, there’s the policy elite represented by the Fin, the Oz and the various establishment thinktanks and policy talkfests. After thirty years, they haven’t come up with anything better than the tired old 80s agenda of market-oriented reform, competition and productivity, encapsulated in Workchoices, rejected by the Australian public in 2007 and totally discredited by the GFC.

The Greens are the best shot, but under current conditions they can’t hope to do much better than their current role of supporting a minority government and/or holding the balance of power in the Senate. That gives them the chance to make a small number of non-negotiable deamnds (eg carbon price), and to exercise some influence. But in broader areas like economic policy, they remain marginal. Even though they have some good ideas, they aren’t treated as serious players in this field.

The best that can be said is that, as long as the terms of trade continue to boom, the cost of missed opportunities will not be all that great. Australia remains a lucky country, run by second-rate men (and now also women) who share its luck.

By contrast, US politics seems to be opening up to the ideas of the left, at the same time as the Repubs are spiralling off into the Delta Quadrant. All in all, a lot more color, interets and hope than the drab prospects before us.

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  1. Dan
    February 28th, 2012 at 21:50 | #1

    I think it’s a nice problem to have.

    The reason political debate in the US is so… interesting (I choose the word carefully) is because basically that country is going off the rails. Ham-fisted misrule aside, it is simply the twilight of America’s economic dominance, and the social ideals underpinning American society – the American Dream, if you will – have been more successfully realised elsewhere (and I’m thinking of us here).

    Times of great upheaval always lead to inspiring renewals, and reactionary ossification.

    I could post for ages on the problems America faces but many people are writing far more comprehensively and convincingly on this already than I could hope to.

    Whereas Australia is in the luxurious position of facing pressing quandaries such as:
    -whether to build a bit of high-speed rail here and there
    -how much in the way of Commonwealth transfers to give to a vaguely secessionist state that already has money coming out its ears
    -whether gay marriage happens now or in the next year or so
    -where exactly to imprison little people who arrive on boats

    In all honesty the two biggest ticket items for me are tertiary education and skills (getting this sorted now will be crucial in coming decades) which I’m confident you don’t regard as falling under the Unimaginative Productivity Improvements umbrella; and delivering proper health and housing to Indigenous Australia, which inexplicably the guy on the street, who I’m sure is a decent enough fella, doesn’t seem to give much of a hoot about.

  2. BilB
    February 28th, 2012 at 21:51 | #2

    I pretty much agree with all of what you have said above.

    If you want something of interest that should be creating the need for new policy, watch this 24 minute hi def video. It is the most complete analysis of the subject that I have seen.


    I see this information and this technology direction and the reason for Australia to retain its vehicle manufacturing capability becomes all the more clear. The production techniques to be employed here offer a new start for our auto industry.

    The other area of policy that is important to me is the issue of electricity distribution system and its access from an independent energy broker’s point of view. The high efficiency solar energy system that I have been aluding to for some years, GenIIPV, will eventually be available, and with it will come an entirely new outlook on energy access. However full utilisation is only achieved with the complementary use of electric vehicles. Another waiting game.

    The real issue that should occupy policy makers and think tanks is what sort of economy is required to sustain millions of people but in an environmentally neutral manner? Any small gains in that direction can only be good for the planet.

    GenIIPV (or any equivalent which can provide all of the energy for a household of 4 from a single unit) is an important stepping stone. Commuter vehicles that are a third of the weight and material content of todays conventional vehicles which can run totally on electricity or alternatively consume just one tenth of the fossil fuel of todays cars are another waypoint. Rationalised accomodation that blends into the environment such as earth sheltered buildings or for the single person with no savings leverage http://www.gizmag.com/prefab-podhouse/21281/ offers Ikea like accomodation with minimal impact.

    Then comes the issue of occupation and sustenance. On that, I think that the “global free trade” concept has nearly outstretched itself and is primed for a GFC like correction. Populations need to have a nominal (minimum) “home effort” content level in many of the products that are consumed within their borders. Failure to achieve this minimum level will lead to a widening wealth and living standard gap.

  3. Dan
    February 28th, 2012 at 21:52 | #3

    I’d add mental health and disability insurance, but those issues seem to have the buy-in of various conservatives too, as well they should.

  4. Chris Warren
    February 28th, 2012 at 22:06 | #4

    Australians – provided they have a job, decent conditions and wages, and time off to watch sport and visit family etc. – don’t want policy. Policy is for special interests.

    Australians do not want to consider that their current circumstances may come to an end and also do not want to pay more tax to save for tomorrow. They certainly would not dream of restricting their appetites if it benefited someone else or the future.

    Economists are the worst offenders in this regard, particularly Martin Ferguson, (BEc. Hons).

    In order to have real policy – get rid of modern economics.

  5. Patrickb
    February 28th, 2012 at 22:58 | #5

    I’s be interested in why you think we in Australia have better realised the “American Dream”. In my opinion that dream emerges from a culture very different to ours for reasons of history, society, politics and economics. I don’t think it’s possible to even have the “American Dream” anywhere else but America. Perhaps I misunderstand you?

  6. Dan
    February 28th, 2012 at 23:17 | #6

    Yeah, sorry – that’s a fair cop.

    I was talking specifically about:
    a) ‘the land of opportunity’, insofar as the practicalities of social mobility are concerned
    b) the affluent middle-class suburban idyll

  7. Sam
    February 29th, 2012 at 00:50 | #7

    This is all quite unreasonable negativity. This term has seen a number of progressive reforms. We’ve had the carbon tax, plain cigarette packaging, the NBN, a moderate windback of middle (and upper) class welfare. The term before we had an appropriately sized fiscal stimulus sufficient to avoid recession. The mining tax I’d call a draw. And Australia was already a pretty successful welfare state, with a Gini in the low 30′s, universal healthcare, the dole, the pension, free education K-12, guaranteed below-market credit for higher education after that. By contrast, if America shows more prospect of reform, it’s because they’re starting with virtually nothing.

    There are more things I want our government to do. I’d want fast rail, a higher carbon tax (this might happen automatically, if all goes to plan), a higher mining tax, proper action on the Murray, better environmental protection all-round, removal of the baby bonus, universal dental, gay marriage, more well-targeted foreign aid. But I see no reason to believe Labor isn’t capable of doing these, given what’s been accomplished already.

    Cheer up John!

  8. Alan
    February 29th, 2012 at 01:40 | #8

    Gillard promised the mining industry a freeze on the level of the mining tax. She is resolutely opposed to gay marriage. The Wentworth Group tells us she has already gutted the MDB plan. She is giving ambiguous answers on the limited dental commitment signed with the Greens when the minority government was formed. It’s a charming shopping list but you will not get it from this prime minister.

  9. PeakVT
    February 29th, 2012 at 05:48 | #9

    All in all, a lot more color, intere[s]ts and hope than the drab prospects before us.

    Do you live in Australia or Belaurus? Sheesh.

    As Dan mentioned above, politics in America is interesting for reasons that aren’t all that enviable. Implementing a carbon tax, lowering inequality by about 0.10 gini points, and providing more-or-less universal health insurance would represent a dramatic leftward shift of policy in the US. Instead, the US is basically re-fighting the last 80-ish years of progress, and the good guys are having a tough-time holding the line. Trans-vaginal ultrasounds? Entirely too colorful and interesting for my tastes.

  10. John Quiggin
    February 29th, 2012 at 05:53 | #10

    Sam, I agree with all the points you mention as past (Rudd) achievements, but as for the future, what Alan said. I’d add the abandonment of the Education Revolution and the Gonski Review to the list.

  11. Gaz
    February 29th, 2012 at 06:11 | #11

    I’m with Sam on this. Cheer up, John!
    If the Rudd and Gillard governments demostrate anything, it’s that internal party turmoil does not necessarily prevent things from getting done.
    It’s instructive that when Abbott criticises the ALP, its invariably for things they’ve actually done.
    If they have a problem it’s that they’re too reactive to perceived criticism or opposition, eg the misguided decision to postpone the CPRS when they guessed support for it was waning, the cave-in to the mining lobby, pandering to homophobes on gay marriage, accepting Abbott’s “burn the witches” approach to fiscal policy etc.
    I’ve lost count of the number of times people have said to me that we need someone like Keating – not because of his policies per se, but his ability to take the message to the people rather let people like Barnaby Joyce and Tony Abbott set the agenda.
    I’d like to see Gillard start ripping into Abbott and Co instead of acting like a judge at a cake-baking competition where she has to be nice to everyone.
    There are plenty of one-liners for the TV just begging to be said.
    Here’s one: “I care about your children. Tony cares about Gina Rinehart.” There, that wasn’t hard, was it? Maybe we could have a “Slogans for Julia” competition.

  12. Troy Prideaux
    February 29th, 2012 at 07:20 | #12

    Like John, I’m not a fan of the economic policies introduced and implemented since the 80s, but relatively speaking, we are in good shape. Whilst some might call the lodge “boganville” and whilst our politics might appear less exciting or more agricultural than the US, we can certainly be assured that our democracy is much much stronger and less corrupt.

  13. Brad Adams
    February 29th, 2012 at 07:50 | #13

    I think the best hope lies with Labor’s up-and-comers (particularly Shorten and Combet) rather than with the Greens. As a couple of commenters have pointed out already, the disability insurance scheme, the rollback of middle class welfare, the carbon tax (especially when it becomes an ETS), and the mining tax are steps in the right direction. They mightn’t go as far as they should, but not going all the way is very different to going the wrong way.

  14. rog
    February 29th, 2012 at 08:07 | #14

    The mothballing of the Henry Review and Gonski report does not auger well for the future. It may well be that Gillard is focussing on a majority govt 2013.

  15. Dan
    February 29th, 2012 at 08:42 | #15

    @Brad Adams

    The Greens’ role is to pull the Overton window left and keep Labor somewhat honest to its social-democrat roots. This works better when they hold the balance of power in the senate, and even more so when they are needed to form government!

    The old conservative smear about The Greens’ agenda running the country, while obviously a major exaggeration, has a grain of truth. This is a good thing, and of course they do actually represent significant numbers of voters.

  16. Tom
    February 29th, 2012 at 08:45 | #16

    The biggest problem in my opinion is that large corporations holding too much power in Australia such as banks and mining industry etc. With the “big 4″ deciding not to follow rate cut of the RBA because they want to keep their profit margin is not a good sign; as it is a threat to the effectiveness of monetary policy and the reduction in the power of public to control the market in case of market inefficiency occurs.

    Large corporations also have too much power in influencing politics through the use of garbage mainstream media, e.g. mining tax. Right now Australia is in a good shape but if the current situation continues it will not be long until the general public vote against themselves and turn Australia into “America II”.

  17. Dan
    February 29th, 2012 at 09:09 | #17

    This just came through my media portal:

    “The Australian: Time for the Labor Party to get back to business
    29 February
    LET us assume for a moment that the blood-letting inside the Labor Party is finally over. If it is, then now must surely be the time for the government to turn its focus to developing a new reform agenda to boost economic growth, drive productivity and encourage companies to become more efficient, innovative and competitive.”

    Yawn. Precisely the dull-as-a-really-dull-thing big-ideas-that-are-not-big-ideas that John mentioned in his post. Is this really all they’ve got?

  18. Ram
    February 29th, 2012 at 09:11 | #18

    So I see the scoreboard… 71-31 Gillard. Is Rudd really that unlikeable?

  19. m0nty
    February 29th, 2012 at 09:13 | #19

    I can’t help but feel this post is sour grapes from an unrepentant Rudd supporter.

    The Gonski review has come at an unfortunate time where it ran into two roadblocks, both put up by Gillard: no school was allowed to lose funding as per the terms of the review, which was rather dumb; and the government is in the middle of a valiant effort to deliver a budget surplus, so the prescription of more funding is not going to fly at the moment. Health is running into the same problems. Reform under Gillard is rather difficult to continue while they commit to black ink.

    My hope is that once the MRRT comes online it will provide a budgetary cushion like the GST did for Howard, allowing Gillard to belatedly address the various reviews and start implementing the better recommendations. Until then, it’s steady as she goes.

  20. Ikonoclast
    February 29th, 2012 at 10:19 | #20

    Chris Warren wrote; “In order to have real policy – get rid of modern economics.”

    This is correct and the single most pithy observation in this thread. To expand on it, we must get rid of modern, orthodox, neoclassical economics and free market fundamentalism. Even this is only an interim goal. The final goal must to get rid of endless growth capitalism (which is physically unsustainable and morally indefensible) and replace it with a sustainable and more cooperative system.

    The final catalyst for change will be a set of “salutary disasters” which will occur as both natural systems, and our economic system which depends on them, fail in a rolling series of major crises.

    Only when the failure of the system is rubbed right in the faces of the complacent and propagandised multitudes will there be pressure for real change. Only when petrol shortages and food shortages impinge on the majority of the population (as they soon will even in developed countries) will people realise the seriousness of the situation and the dreadful impasse we have been brought to by our maladaptive economic system.

    To believe Australia is in a good position is to be blind in the extreme. We are actually in a very bad position both financially and (what is more important) in terms of real world resources. Australia now has the highest prices in the world for a large range of goods and services, stagnant wages and a private debt mountain of enormous proportions. We are at the end of protracted real estate and assets bubble and the inevitable de-leveraging crash is imminent for the Australian economy. On top of this we have neoclassical economics and the austerity ideologues in charge of both political parties, public debate and public policy. This means we can be sure that precisely the wrong policies will be put in action and worsen the crisis when it arrives.

    On the real resources and real production front we face multiple problems. We are giving away our minerals for a relative pittance to line the pockets of a few wealthy individuals and cartels. Manufacture is being hollowed out and our food production systems are in serious trouble. The competence of the public service and public enterprise has been deliberately destroyed to allow a one-off wealth transfer to rich individuals. Our ability to govern and plan effectively and to provide essential services is already seriously compromised. At all levels, Australia is a house of cards about to collapse.

  21. Dan
    February 29th, 2012 at 10:33 | #21

    But there’s a negative side as well.

  22. PM
    February 29th, 2012 at 10:58 | #22

    The Gillard / Labour policy direction has always been clear.

    Get the budget back into surplus. Nothing else really matters.

  23. Paul Norton
    February 29th, 2012 at 11:13 | #23

    Ikonoclast @20 is on the right track. Here’s some reading full of policy ideas worth considering and devating:

    Gilding, P. (2011), The Great Disruption, Bloomsbury Press: New York.

    Jackson, T. (2009), Prosperity Without Growth: Economics for a Finite Planet, Earthscan: London. docID=1034683833.

    Spratt, S., A. Simms, E. Neitzert & J. Ryan-Collins (2009), The Great Transition, New Economics Foundation: London. Viewable online at http://neweconomics.org/sites/neweconomics.org/files/Great_Transition_0.pdf34.

  24. Troy Prideaux
    February 29th, 2012 at 11:21 | #24

    @Paul Norton
    That link didn’t work for me?

  25. Paul Norton
    February 29th, 2012 at 11:36 | #25
  26. Tom
    February 29th, 2012 at 12:31 | #26


    I agree with you 100%, but suggesting these changes is not possible without the general public realising that they are reading and listening to garbage propaganda (news??) written like a twelve year old creative writing without any facts. It gets hopeless to suggest getting rid of modern neoclassical economics when the public don’t even bother to find out the truth behind manipulated news, how can you expect them to find out the truth behind manipulated economic theories with biased graphs and data? And what’s more? “Socialist” can actually be used as a swear word to attack someone, or am I missing something here in English language?

  27. Uncle Milton
    February 29th, 2012 at 13:17 | #27

    Francois Hollande, the Socialist Party candidate in the French presidential elections, who is favoured to win by the polls, has proposed a 75% tax rate in incomes above 1 million Euro. Even for the French Socialist Party this is remarkable, and a sign of the times. The strongest criticism has come from the far-left candidate who wants a tax rate of 100%.

  28. Ernestine Gross
    February 29th, 2012 at 13:44 | #28

    The report by Spratt, S., A. Simms, E. Neitzert & J. Ryan-Collins (2009), The Great Transition, New Economics Foundation: London, contains an outline of the state of affairs and how to improve these by 2050.

    Overall I agree with the message in their report, even though I don’t come from the Pollani literature but from the axiomatic Arrow-Debreu methodology and the usage of empirical data.

    Spratt et al write: “Essentially, orthodox economic theory assumes the infinite consumption of finite resources.”

    I do not know the ‘orthodox economic theory’ which assumes infinite consumption of finite resources. Neo-classical microeconomics textbooks start off with a statement to the contrary. The Spratt et all statement about ‘orthodox economic theory’ is explicitly inconsistent with the Arrow-Debreu model and all subsequent work using this methodology.

    MMT is the only theory I’ve come across which implies something close to Spratt et al assertion regarding ‘orthodox economic theory’. . But MMT is not ‘orthodox’.

    Perhaps Spratt et al have in mind an economic theory that is implied in the rhetoric of some political movements and the behaviour of policy makers (eg competitive behaviour among treasurers as to who among them lives in a local economy that has the highest (lowest) value of some macro-economic variables.

  29. Sam
    February 29th, 2012 at 14:32 | #29

    @John Quiggin
    Rudd didn’t have much to do with means testing the health insurance rebate. It’s true the NBN was conceived of during his term, but it was rather a haphazard political response to his failure to negotiate with Trujillio’s Telstra (itself an entirely foreseeable result). Nevertheless, it’s good policy. This is emblematic of the way the Rudd/Gillard governments have done things; not well, not elegantly, but usually doing the right thing after all alternatives have been exhausted. History only remembers the policy outcome, not the political $%^* fight leading up to it.

    I think you underestimate the benefits of having a moderately centrist government with vague progressive leanings which occasionally takes advice from independent reports. After all, reality has a well-known liberal bias. And I’ll say this again, the present position matters as well as the trajectory. Australia really is an incredibly successful welfare state.

    Update: And as always, Gillard has made it as difficult for her supporters as possible. Axing the solar hot water scheme at 60 seconds notice? Disgraceful.

  30. Jill Rush
    February 29th, 2012 at 15:01 | #30

    The interview about the Finnish education system on Lateline was instructive. It put forward the proposition that there are key values which lead to excellence. The Coalition has hi-jacked the values debate in recent times so we talk about education in terms of choice and funding rather than equality and excellence. Julia Gillard talks of her passion for education but has failed dismally in reframing the debate and she is unlikely to back the Gonski report either with a weak Minister to put the case.

    if this is viewed by Labor as a key policy issue there is not much hope for any other. in backing down on solar panels while committed to a carbon tax it looks like money is the value.

  31. rog
    February 29th, 2012 at 15:06 | #31

    Fairness and equality have lost their meaning; MPs need to be reminded of the importance of these two principles in western democracy.

  32. Ikonoclast
    February 29th, 2012 at 15:28 | #32

    To continue, and follow the general line of debate above:-

    My basic premise is that our modern capitalist-consumerist society, backed by science and technology, will not change fundamentally until impelled to by exogenous pressures. This form of society has shown itself to be spectacularly successful, resilient and adaptive… up to a point. In a sense, it can transform much but it cannot transform itself. And it certainly cannot escape natural limits (best exemplified by the laws of thermodynamics).

    This capitalist-consumerist system is so far showing itself to be unable to adapt to the certain knowledge of the impending near limits to growth. The financial and production logic of capitalism requires endless growth in practice despite what it might or not claim in its current representative ideology of neoclassical economics.

    Therefore, I essentially hold (at least now at this late stage of triumphant global corporate capitalism) that it is a hopeless task to attempt to reform, transform or replace capitalism from the inside, that is to say from the inside of corporate capitalism. And in socio-economic terms there is no longer any “outside”. There is nothing significant, in human socio-economic terms, outside of global corporate capitalism. All that remains outside is “nature” or more precisely in our global case, the biosphere; that collection of physical and biological forces outside of or partially interacting with human socio-economic systems but within which the human socio-economic is always a contingent sub-system. Capitalism will be ended by the limits of the biosphere.

    Broad society and dominant ideology will not “come on board” to this reality until shocked and decimated , in both financial and demographic terms, by a series of salutary disasters. Capitalism and consumerism will be destroyed in the collision with real limits.

  33. BilB
    February 29th, 2012 at 16:12 | #33

    The Great Transition is an interesting document.


    In order to have any kind of a meaningfull discussion there will need to be an equivalent document written in the following languages


    Once you are in posession of these then common ground can be identified and discussions on mutual need can get under way, with a view to creating an new document that might include the greater human understanding.

  34. John Quiggin
    February 29th, 2012 at 16:13 | #34

    The NBN was in fact emblematic of the way Rudd did things, and something that would certainly not happen now – faced with obstinate resistance from Telstra, Rudd steamrolled them, ignoring the ideological objections to public ownership. The same with the stimulus – Rudd at least had the nerve to go big, something that will not happen with either Gillard or Abbott. Unfortunately, Rudd was inconsistent in his boldness, and it deserted him when he needed to call a double dissolution over the ETS.

  35. Tim Macknay
    February 29th, 2012 at 16:34 | #35

    Strangely enough, in hindsight Rudd’s (and Gillard’s) fears regarding the ETS seem to have been well-founded. Much as it is easy for those of us who support a carbon price to accuse them of timidity, subsequent events have shown that the ETS actually is political poison, and pursuing it in the absence of bipartisan political support has been at the cost of severe, possibly fatal, political damage to the Government. That said, I support the policy.

  36. Sam
    February 29th, 2012 at 16:38 | #36

    I’d say the carbon tax was “something big.” An initial price of $23/tonne is pretty bold, and probably higher than the average price we would have gotten under Rudd’s original ETS. Plus, it’s going to rise. This was steamrolled through in spite of histrionic shock jocks, entrenched special interests, and ill-informed populist outrage.

    Anyway, none of this introspection changes what Australian progressives ought to do in a compulsory preferential voting system. Vote 1 Green, preference Labor ahead of the Coalition, and keep up the lobbying pressure from the Left.

  37. Alan
    February 29th, 2012 at 16:40 | #37

    The problem with the ETS is not intrinsic to the policy, it is actually the way it has been implemented by our super-implementer. First Gillard shirt-fronted Rudd into abandoning it. Then she put forward the direct action plan in co-operation with Tony Abbot, akthough fortunately that was a matter of wide public knowledge. Then she put forward the citizens assembly idiocy. Then she promised there would not be a carbon tax. Then she legislated a carbon tax.

    If you were writing a manual on how not to implement a policy it’s hard to think of anything you could possibly add.

  38. Alan
    February 29th, 2012 at 16:41 | #38

    ahem ‘was not a matter a wide public knowledge’

  39. Sam
    February 29th, 2012 at 17:11 | #39

    Couldn’t agree more Alan. But we got a good result in the end. Similarly with the NBN. I watched in amazement as Rudd and Conroy axed the perfectly sensible OPEL program and then continued to insist for a year, against all evidence, that Trujillio could be reasonably negotiated with. When it finally became clear that the man wouldn’t accept anything less than a legislated unregulated monopoly, they cancelled the whole FTTN bidding process on a technicality about SMEs. The NBN was literally Rudd’s last option which went totally against his own 3rd way free-market ideology. Nevertheless, it’s good policy, and this is all that matters.

  40. Alan
    February 29th, 2012 at 17:21 | #40

    We have a good carbon plan while it lasts. Unfortunately the superb implementation by Gillard has completely destroyed popular support for the policy and it will be repealed when the Coalition wins the election. I am aware they will not initially control the senate, but policies without popular support do not last long under governments opposed to them.

  41. rog
    February 29th, 2012 at 17:27 | #41

    @John Quiggin Yes, threat of the DD was a bridge too far. But you do have to admire the guy, despite the obstacles he just did it.

  42. Sam
    February 29th, 2012 at 17:42 | #42

    I’m more hopeful on this one. I don’t see how a populist like Abbott can cut any taxes, given that they’re addicted to middle class welfare.

  43. Sam
    February 29th, 2012 at 17:48 | #43

    they’re => he’s.

    Also, a lot of the carbon tax revenue pays for tax cuts and pension increases. His supporters are know-nothing populists; that’s why they’re against the carbon tax in the first place. They won’t take too kindly to his trying to take back that largess.

  44. Alan
    February 29th, 2012 at 17:53 | #44

    Bush II inherited a surplus. He cut lots of taxes. He expanded middle class and corporate welfare. He raised military spending. Then he cut taxes some more. His successor did not inherit a surplus.

    And, Abbot has seen what ignoring a mandate from the electorate can do to your electoral standing.

    Many of the discussions in this thread are frankly weird. They start with Gillard has implemented X or will implement X. The evidence shows that the implementation mantra is actually pretty silly. The discussion turns effortlessly to some other topic and what a superb implementer Gillard is.

    So let us try a thought experiment. Give me one case of something that Gillard has implemented well, preferably without alienating the electorate.

  45. Alan
    February 29th, 2012 at 17:55 | #45

    And the obvious solution to the largesse problem is for Abbott to continue the largesse, repeal the carbon tax, and blame Labor for any economic problems.

  46. Chris Warren
    February 29th, 2012 at 18:04 | #46

    BilB :The Great Transition is an interesting document.

    Hardly, over 120 pages of half-understood religious, poetic concepts with about 1 regurgitated good idea every 8-10 pages.

    What did it amount to?

    4 day week,
    Inheritance tax,
    co-operatives/employee shares
    restrict advertising
    local currency based on hours
    robust domestic economy with trade as icing on ther cake,
    tax ‘bads’

    It was an agonising read. I would have hoped thet people would expect a bit more rigor and analysis than this unrealistic pap.

    And to pander to Hayek’s ‘socialist calculation’ canard, is indicative of the level of understanding of these jesters.

  47. BilB
    February 29th, 2012 at 18:36 | #47

    OK, I have only scanned it so far, but it seemed to at least register the issues. I’m going to have to face the “agony” of reading it all.

    My comment was really that (and regardless of the wisdom of the content of document) that any document that broad is valueless without concensus, your take on it making the point.

    Take the title and the intention, and there needs to be a compilation from all of the opposing philosophies before there can be any progress on the very necessary task opf transitioning to a sustainable civilisation.

    The only other alternative is to push the resource consumption accellerator to full on in the hope that this will result in a population decemating global conflict from the ashes of which might arise a wiser significantly reduced sustainable human population.

    If Australia’s resource extraction is any indication, the latter is the current most likely outcome.

  48. Sam
    February 29th, 2012 at 19:00 | #48

    Well the Australian Coalition has historically been more keen on balancing the budget than the American Republicans. I also wouldn’t be too confident in predicting the balance of power in the 2016 senate. Or the 2016 public’s feelings about climate change for that matter.

    As for a successful, non-alienating policy? Cigarette plain packaging. After a bit of public shaming and arm twisting, they even got it one passed with bi-partisan approval. How’s that for implementation skills?

  49. Chris Warren
    February 29th, 2012 at 21:05 | #49

    @Ernestine Gross

    The Cobb-Douglas function, over a time-scale, only makes sense if you assume infinite consumption.

    Any function with (1+r)^n as a factor seems to imply infinite consumption.

    any form of production seeking to deny or avoid a falling rate of profit, necessarily implies infinite consumption.

    It seems pretty clear that “Essentially, orthodox economic theory assumes the infinite consumption of finite resources.”

    Neo-classical microeconomics textbooks generally start from dreamt-up convenient postulates – often including an assumption of non-satiation and preferences based on moving onto higher iso-curves that head off to infinity.

    This also suggests that “Essentially, orthodox economic theory assumes the infinite consumption of finite resources.”

  50. BilB
    February 29th, 2012 at 23:29 | #50

    Chris Warren,

    Economic theory allows for failure of an entity, opportunity, resource, market and even a government. The Cobb-Douglas Production Function was developed at a time before resource depletion became a recognised possibility, and this would suggest that the Function is incomplete.

    It is past time for economic theories to round off, become complete in being able to quantify the economic activity from zero up to a peak and then back down to zero again. This would almost certainly result in the necessity to fully extract the resouce and optimally command its consumption throughout the life of the resource for greatest return (think gold rush). Here is one such attempt.


    But as it stands economic theory in free markets views failure as a weakness rather than a natural flow.

    “Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off”

    Heaven forbid that there should ever be a “win,win” outcome.

  51. Adit
    February 29th, 2012 at 23:39 | #51

    @Ernestine Gross

    Following on, I don’t think it wise to form or take a stance on any national policy using arrow-Debreu methodology since, for aggregate analysis, it is invalid.

  52. Adit
    March 1st, 2012 at 00:16 | #52

    Back to jq’s comment “But in broader areas like economic policy, they remain marginal. Even though they have some good ideas, they aren’t treated as serious players in this field.”

    This is an important point… I get the impression from public debate and my own experience rhat there is a general feeling in the electorate that the greens, while “good” for the democratic process, are ultimately unelectable because they can’t “manage the economy”.

    Even a cursory glance at their policy agenda would reveal that they would do more for the future of the Australian economy than any other party on the ballot. I would like to see the greens speak up more on these “broader areas” and lead the discourse…I think their ideas on these matters would resonate with the Australian public more than fringe (but no doubt important) issues such as gay marriage/meat production/environment…

  53. Ernestine Gross
    March 1st, 2012 at 11:33 | #53

    @Chris Warren

    Chris Warren, I don’t agree with your post @49 p 1
    1. The function you show is not the Cobb-Douglas production function. See http://en.wikipedia.org/wiki/Cobb%E2%80%93Douglas_production_function.
    2. The Cobb-Doublas production function is an aggregate production function with only two factors of input. The conditions under which it can be shown that an aggregate production function can be constructed from many (decentralised) production functions are not trivial even if there is no fiat money in the economy. But the application of C-D functions typically involves national accounting data (ie monetary values).
    3. The function you give looks like a compound interest formula to me with unspecified parameter values. As long as n is finite there is not even a suggestion that compound interest implies infinite consumption (even if r is strictly positive).
    4. The assumption of ‘non-satiated preferences’ does not imply what you claim it does, namely “Essentially, orthodox economic theory assumes the infinite consumption of finite resources”. In a multi-period context, non-satiated preferences of an individual says no more than that a person wants to live (and consume) as long as possible.

    Does the term ‘orthodox economic theory’ refer to misunderstandings?

    I realise this post goes outside the topic of the thread in a strict sense. On the other hand, politicians are bombarded with promoters of ‘economic theories’. I felt obliged to respond to Chris’ post.

  54. Ernestine Gross
    March 1st, 2012 at 11:48 | #54


    In reply:
    1. I referred to the Arrow-Debreu model and subsequent work using this methodology (eg up to and inclusive incomplete market models).
    2. The point of me referring to these models was to rebut the claim that orthodox economic theory assumes infinite consumption.
    3. The models referred to in 1. above are analytical models. Policy makers seem to look for prescriptive models.
    4. “Aggregate analysis” may be the problem.

    It seems the problem is with the term “orthodox economic theory”.

    PS: Regarding the boundaries of the thread as @3, p2.

  55. Charles
    March 1st, 2012 at 19:37 | #55

    You know John your part of a great Australian tradition, the great whine.

    So every body does nothing and your not going to vote etc. and so on.

    In the end it all gets very dull.

  56. Freelander
    March 2nd, 2012 at 03:23 | #56

    To expect policy leadership from politicians in the moderndemocraticc era seems a forlorn hope. Increasingly the specialization required to rise above the other scumm seems to now make the likelihood that they have capacity for creativepolicy thinking remote.

  57. Chris Warren
    March 2nd, 2012 at 08:09 | #57

    @Ernestine Gross

    Its amazing how pundits in the blogosphere head-off in all manner of weird directions.

    1. I never said that (1+r)^n was Cobb-Douglas. I would have hoped that people would have had enough knowledge to see immediately that Cobb-Douglas only makes sense in you assume infinite consumption. How else do you allow for constant returns to scale if profits are reinvested?

    2. Whether this is an aggregate production function is irrelevant.

    3. (1+r)^n is a standard production function used, for example, by Piero Sraffa, in “Production of Commodities by means of Commodities”. Even as an function of interest it still implies either infinite consumption, infinite inflation, or declining r [Marx's point].

    You cannot have a interest function without a prior production function, and the interest function can not contradict the production function.

    4. People wanting to consume as long as possible, in terms of commodities, is the same as consuming as much as possible.

    I am dismayed at the lack of rigor displayed by those who seek to practice “orthodox economic theory” or Keynesian practices in the long run. They run the economy into a debt-ridden bog and eventually into a GFC.

  58. Ernestine Gross
    March 2nd, 2012 at 20:49 | #58

    @Chris Warren

    My reply is on the sandpit

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