Goodbye 2010

Well, 2010 is over and it’s been a year of contradictions for me. In personal and family terms, things have gone very well, starting with the birth of my first grandson, James in March. Then there’s my literary offspring Zombie Economics, which seems to be going very well, and my election as a Fellow of the Econometric Society (quite a big deal in the academic circles where I move, if not exactly a barbecue-stopper among family and friends in general).

Politically on the other hand, it’s been a year of frustration.

The problems began in December 2009, with the half-baked compromises and evasions of the Copenhagen summit, followed by Malcolm Turnbull’s one-vote loss of the Liberal party leadership to Tony Abbott. But the real disaster came early in 2010 with Kevin Rudd’s unaccountable failure to go to a double-dissolution election over the Libs’ obstruction of the emissions trading scheme. From then on, Labor seemed determined to pile on the own goals, first dumping the ETS altogether and then dumping Rudd himself for Julia Gillard, who rapidly proved to be a policy-free zone. Things were just as bad, or even worse at the state level, where Labor governments’ desperate pursuit of privatisation and PPP schemes has proved politically suicidal in the past, and seems certain to do so for both the Queensland and NSW governments.

The story was equally depressing internationally. Despite the catastrophic failure of the financial system, and of the whole market liberal ideology, centre-left and social democratic parties seemed unable to put forward a coherent response, and instead we have had the disaster of ‘austerity’. Obama in particular has been a huge disappointment in this respect. In the 2008 campaign he seemed ideally suited to articulate a message of hope. But after negotiating an inadequate stimulus package in early 2009, he has barely mentioned the issue of unemployment, leaving it to the financial sector to take him from both sides, directly exerting its power while channeling the anti-finance anger into the Tea Party movement which has helped to elect pro-finance Republicans.

Still, there were some hopeful signs as the year ended. Despite the miserable performance of our political leaders, the evidence on climate change continued to accumulate and Australia still looks like getting some kind of carbon price. More importantly, global business seems to have concluded that a carbon price will come sooner or later, resulting in continued investment in renewable energy. And the long-hoped for economies of scale seem to be coming to bear at least, with sharp drops in the cost of solar PV and continuing falls in the cost of wind turbines.

As far as the broader issues of social democracy and market liberalism are concerned, the negative message of ‘austerity’ is a double-edged sword for the advocates of market liberalism. Advocacy of pain can work surprisingly well, in political terms, as a short-run response to crisis, but it has far less long-term appeal than the story that free markets would bring universal prosperity, a story discredited by the financial crisis. The British Conservatives have demonstrated beyond any doubt that they are the same old “nasty party” that was voted out in 1997. The US Republicans have gone ever deeper into Fox News delusionism on every kind of issue. And the European right now relies heavily on tribalist and xenophobic resentments, forces that are ultimately doomed by the fact that individually, we all want and expect the kind of mobility that generates those resentments.

76 thoughts on “Goodbye 2010

  1. Jarrah, I was just interpreting what was law in 1911 in respect to imperfect markets, price fixing, barriers to entry, and the effects of horizontal and vertical integration, etc. none of which you seem to raise but like to rave on. And speaking about markets, the news just gets better and better for NSW Labor as the latest job figures show the state unemployment rate to be at 4.6 per cent.

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