Broken promises and budget anger …

this chaotic mess won’t be fixed with the usual political script

That’s the headline for my latest piece in The Guardian. It’s over the fold

Broken promises and budget anger …

As its first full year draws to a close, the disarray of the Abbott government is obvious to all, and easy enough to understand in terms of broken promises from a government that came to office almost entirely on the basis of branding its opponents as liars. Only slightly less obvious, but much less well understood is the disarray of the entire political process, reflected in wild electoral swings, the success of ‘anti-political’ candidates and the breakdown of the assumption that a newly elected government can expect at least two terms in office.

This disarray in turn reflects the exhaustion of the project that has dominated Australian politics since the 1980s, and the rejection of that project by the electorate. Variously described as economic rationalism, microeconomic reform and (my own preferred term) market liberalism, the set of policies comprising deregulation, privatisation and competition policy was, in some respects, a necessary response to the economic breakdown of the 1970s. But whatever was useful in that agenda has long since been implemented, along with much that was harmful. What remains is an unthinking assumption on the part of the political elite that adherence to this agenda is the hallmark of good policy, whereas following the wishes of a democratic electorate is irresponsible populism.

In policy terms, the first year of the Abbott government followed a script that has been played out many times, by governments of both parties, since its first run under the Hawke government in 1983. Having been elected on a ‘small target’ strategy, with seemingly ironclad commitments not to cut spending on services or to engage in radical deregulation, the government discovered a budget emergency and appointed a Commission of Audit which recommended ditching all electoral commitments. This produced a ‘tough’ budget, which somehow managed to avoid imposing any significant pain on the kinds of people who make up Commissions of Audit.

According to the script, public hostility to the budget cuts should have dissipated over time, and strong economic outcomes should have produced an endorsement of the government’s policies. The tough first budget would have made room for some sweeteners in the leadup to the election, which would result, as usual in the return of the government for a second term.

But the script has stopped working.The benefits of microeconomic reform were always oversold. Our economic success over the years since the deep recession of the early 1990s was mainly due to good macroeconomic management and, to a lesser extent, good luck with the mining boom. The mining boom is over, and macroeconomic management has been rendered ineffectual by obsessive focus on budget deficits, with the result that unemployment is rising and real incomes are falling for many workers.

More importantly, the public, which stopped believing in the microeconomic reform agenda many years ago, is now punishing governments when they persist in pushing it. The obliteration of the (generally competent and otherwise popular) Bligh government in Queensland after it used the standard ‘budget emergency’ script to introduce a privatisation program was the first clear instance of this. Bligh’s successor, Campbell Newman, followed the same script to justify the sacking of thousands of public sector workers and is now facing the possibility of defeat himself. The Victorian state election result is yet another example.

The political class seems incapable of responding to this situation. The best evidence for this is a recent Quarterly Essay by one of the most acute observers among that class, Laura Tingle, accompanied by a shorter piece from a former minister in the Bligh government, Rachel Nolan. To quote Tingle “The things we are angry about betray the changes that have been taking place over recent decades. Politicians no longer control interest rates, the exchange rate, or wages, prices or industries that were once protected or even owned by government. Voters are confused about what politicians can do for them in such a world”

Tingle and Nolan can see the problem: after decades of experience with the policies of deregulation and privatisation, voters don’t believe that these policies have delivered the promised benefits, don’t want any more of these them, and would rather see them reversed than extended. But ‘governments don’t do that any more’. The alternative view, that, having failed to convince voters of the merits of their preferred approach, the political class should instead try to give them what they want, is literally unthinkable for them.

And this is the position of some of the most thoughtful of the insiders. Tony Abbott and his ministers, along with many of the Labor Party, are living inside a bubble where the problem can’t even be posed. In these circumstances, is it surprising that voters turn to Glenn Lazarus and Jacquie Lambie?

It is, of course, impossible to wish away the changes of the past thirty years. Equally, there is no reason to take those changes as permanent and irrevocable. The growth of the financial sector and the redistribution of power and resources to the top 1 per cent of the income distribution have not, as promised, delivered improved outcomes for all. In most developed countries, the outcomes have been disastrous.

Thanks to a combination of good luck, good management and a comparatively resilient commitment to fairness Australia has avoided much of the growing inequality and poverty seen in countries like the US and UK. Rather than mindlessly pursuing the deregulatory policy agenda of the 1980s, we should be looking for ways in which governments can in fact do more for voters in general, even if this means doing less for the financial sector and for wealth elites.

The Abbott government is clearly not up to this task, and Labor has a long way to go before it can begin to tackle it. But until the political class accepts the need to meet the wishes of the electorate, the chaotic mess before us will remain the norm in Australian politics.

108 thoughts on “Broken promises and budget anger …

  1. @J-D

    “But, as Kevin Bonham also pointed out, there have only been four governments in Victoria since 1955…”

    Cain Jnr/Kirner

    = 5

    “…while there have been seven one-term governments in other Australian States over the same period.”

    J. Tonkin

    D. Tonkin



    = 6

    Am I missing one, J-D?

  2. For more budget anger, consider being a scientist whose travel to international conferences must be approved by the Industry minister. For those not in the know, scientists need to travel to conferences for that is where they make the contacts which lead to Nobel prizes, among other obvious reasons. Can’t see how another scientist’s lab does the work you want to really understand, unless you are there in the flesh. Power point and u-tube only get you so far.

    Over the years I’ve met and/or known a number of scientists, some quite famous. Unless they are up there for public coverage, say as famous as someone like Brian Schmidt or Brian Cox, the average scientist is just quietly amazed they don’t have to pay the airport-to-accommodation taxi fare out of their own pocket when they are travelling for work. I can’t say I’ve ever met that attitude in the business world. I guess to the business person it is just a necessary expense of conducting business, whereas the scientist sees it as a cost to the research organisation they work for/in, and they feel morally obliged to keep tabs—or even to pay it on the quiet and not claim it back. Two very different worlds…

    Meanwhile, anybody for a $190 bottle of wine?

  3. @Nick

    That can’t be right. Dunstan (ALP) lost after one term in 1968 – when the federal government was LNP.

    As an aside, notice how many of those examples involved the midnight knifing? Maybe that is a factor. Australians prefer to knife their own elected leaders (rather than have faceless types do it in secret), that’s about the only exercise of democratic power they have left.

  4. @ Fran Barlow

    Reducing public debt entails increasing private debt and vice versa. Private debt constrains private spending

    Reducing public debt could be amortized by increased exports instead of by increased private debt, all other things stay equal say unemployment. Under specific inflation providing equilibrium and also with apropriate level of very progressive taxation, public debt can be reduced without imposing growth to private debt. Those were the times of post WWII
    Reducing public debt can produce growing unemployment instead of growth of private debt in times of low inflation. Low inflation signifies already slowing debt growth and it will keep slowing no matter what is happening with public debt.

    “Private debt constrains private spending”, Private debt could eventually constrain private spending but only when private debt stops growing. In other words, when paying off of old debts is faster then creation of new debt is how private debt constrains private spending.
    This comes from the fact that new debt is new money to be spent, hence growth of private debt mostly produces higher spending (more money in the system = more spending) Repaying of debts is destruction of money which means less money in the system if not replaced with new debt. This is what Ernestine is trying to say in response to you, i am just saying it in less academic wording.

    New credit = creation of new money. Paying off the credit = destruction of previously created money. When you incorporate this fact into your thinking then you can see that growth of private debt does not mean less spending, but it could mean exactly that eventually, like since 2008 because reduction of debt is faster then creation of new debt which creates recessions and depressions if not counteracted with growing public debt sufficiently.
    Knowing the facts about money, where it comes from and how is distributed, will make you not worry about budget deficits but about more important things, which is employment and prosperity.

  5. @ Ernestine

    When too much net debt is created then ‘the system’ stops to work (eg GFC – private debt in the USA, public debt in Greece, to give two examples). So, what is ‘too much net debt creation’?

    I do not think there is too much net debt creation problem. The problem is how is distributed in relation to financial economy and real economy. How much of new net debt there is can/will be countered by apropriate level of inflation if due to already existing high unemployment and low buying power there is no upward inflation preassure from new net debt to FIRE economy onto the rest of the economy.

    Since most of the new net debt is usually to housing industry which then puts upward preassure on other wages creating inflation but only under condition of already low unemployment. In high unemployment conditions, no amount of new housing will put upward preassure on wages in the whole economy, only in FIRE sector, this new net debt will become unsustainable.
    Apropriate inflation of wages of the whole economy is necessary for new debt to be sustainable. And such apropriate wage inflation can handle any ammount of new net debt.

    Also in times when housing boom an economy can escape demand for materials by importing and get influx of imigrants to avoid upward wage inflation on the whole economy such new net debt will become too much.
    I am starting to consider that MV=PY becomes uncalculable due to abillity of 5 major currencies to be accepted by rest of the world without limits. Y is not inside one economy but considers the whole world supply. There will be no inflation if supply is from the whole world, not from one country – globalization of dollars, Euro, Yen means increasing demand is amortized by whole world. Can’t create inflation by new money untill the whole world is filled with it.

  6. @Nick

    On your first point, I slightly misrepresented what Kevin Bonham said.

    When people were talking about Victoria’s electoral history before this year’s election and saying there had been no one-term government in Victoria since 1955, they were relying on evidence from just four Victorian governments — obviously the recently defeated Victorian Coalition government was not part of the evidence base: at that point it had not yet been determined how many terms it would run for.

    On your second point, the missing entry from your list is the SA one-term ALP government from 1965 to 1968, led first by Frank Walsh and then by Don Dunstan.

  7. @Megan

    None of those seven examples of one-term State Governments involved a midnight knifing. Six of those them had the same Premier from beginning to end, and in the seventh instance Frank Walsh was obliged to retire on the grounds of age by the rules of the SA ALP at the time.

    I can’t find a single example (in Australian State politics) of a government party choosing to dump its own leader in its first term in government and then losing the next election — that is, before the current Victorian instance. It has happened, only not in a first term.

  8. The destruction of CSIRO and indeed of science itself in Australia proceeds apace.

    I have to admit to a bit of transient Schadenfreude at the expense of the scientists at one point.

    “CSIRO staff are treated as commodities, whose function and requirements are essentially interchangeable with any other public servant.” – Staff spokesman.

    At this point I thought, “Yeah, welcome to the world of the rest of the un-special public servants. Now you know what it is like to be treated like sh** like all base grade public servants have been for the last ten years or more.”

    But this transient and ungracious Schadenfreude passed and my more abiding thought was “If we destroy science we destroy our economy and all progress.”

    It’s worth undertaking a thought experiment. What gave us the progress of the modern world? Three prime candidates are capitalism, democracy and science plus technology. If we consider the case the Soviet Union, it had neither capitalism nor democracy. It did however have science and technology. It did manage to run a polyglot nation or perhaps even an empire for about 90 years. It recovered from WW1, survived the depression, tooled up and armed for WW2, defeated Germany (the world’s second industrial power at that time) with very little help from Western Europe or the USA until 1944. It then recovered and ran (shambolically it is true) until 1992.

    The Soviet Union did this all without capitalism and without democracy but with science. If there is one materially imperative element to modern life it is science and its attendent technology. Democracy is a social and moral imperative. Capitalism is now becoming an impediment to further progress not an aid.

    Destroy science and we destroy our civiization for sure.

  9. agree. so next step will be to change (reform?) the electoral system to try and weed out these troublesome inependents.

  10. @Ernestine Gross

    “Tony Abbott and his ministers, along with many of the Labor Party, are living inside a bubble where the problem can’t even be posed.”

    This applies to almost the entire Western economic fraternity.

  11. “change (reform?) the electoral system to try and weed out these troublesome inependents”.
    good luck with increasing confidence in the system thereby.
    imo the answer to “troublesome independents” is not to reform the electoral system so as to “weed them out” but rather to address or reform the corrupting practice of major party influence peddling with the distribution of minor party/independent preferences. -a.v.

  12. @Ivor
    It depends on whom you include in the ‘Western economic fraternity’. For example, would you include people with training in law or accounting? Would you include so-called ‘market economists’? Would you include everybody who ‘made money’?

    At present, IMHO, the general public seems to have a better understanding of contemporary economics (as defined in the economic literature) than those who make laws and regulations which affect ‘the economy’. To illustrate, using a broad brush, the general public perceives the May 2014 budget as ‘unfair’ (because it reduces the relative wealth of the already relatively poor). This amounts to an objection to continuing with the wealth redistribution from the bottom to the top. There is plenty of empirical research, long term (eg Thomas Piketty) and medium term (eg the past 30 years) which is consistent with the general public’s perception of there having been an increase in wealth inequlity and it should not continue. Furthermore, the public ‘anger’ is neither an expression of wishing ‘socialism’ nor an expression of wishing public debt to grow without limit. On the contrary, it seems to me to be an obvious source of anger if those in power who say they want a ‘market economy’ and ‘freedom of choice’ don’t seem to know that, to the best of our theoretical knowledge, having policies that reduce the wealth of a segment of the society (to the point of potential starvation, eg not giving any money for six months to young unemployed nor gainful employement) strongly contradicts the minimum wealth condition in the theoretical models that make precise the idea of ‘a market economy’ and ‘freedom of choice’. That is, they are hearing nonesense. I can’t vouche for every member of the general public putting it quite this way. But the long hand (thousands of daily life examples) takes to long to write down.

  13. @J-D

    I hadn’t considered it like that. That makes more sense. Though to be pedantic, that still works out to ‘1 in 5 Vic governments is a first-termer’. Since the Australia-wide average in the last 60 years is much the same (8 in something like 37 state governments), I’d suggest that’s maybe more than enough datapoints to gauge how infrequently it occurs?

    Which I guess all boils down to – to the extent that there’s federal influence in state politics, Abbot’s is a particularly unpopular federal government. That combined with the Liberal’s blatant hypocrisy over Shaw not long after the Thomson affair went down federally, plus Napthine’s unmistakably dodgy signing of the East West tunnel contracts (a majority of Victorians are polled as wanting it, but I don’t think a majority of Victorians appreciated it being foist upon them a few months out from an election the Libs were tipped to lose, nor Abbott’s pathetic last minute attempts at blackmailing them into voting for it) was more than enough to seal their fate.

    Megan, thanks for the heads up. Fascinating to read last night about all those state governments. Dunstan and Steele Hall’s in particular. Dunstan lost with 52% of first preferences, and 54% of the two-party preferred vote. Hall was so embarrassed that he’d only won with 43% of the vote (and obviously under a lot of public pressure) that he reformed SA’s Playmander system to ensure it never happened again – even though that virtually guaranteed a LCL loss at the next election. Hence, his became the very next 1-term state government in Australian history. Didn’t know any of that beforehand.

  14. @Ernestine Gross

    To put it simply the public knows in the case of the last Australian budget, that it is “being sold a pup”. (From an old swindle, where one would be sold a bag purportedly containing a piglet, but which actually contained a puppy.)

    At a fundamental level, the public does NOT know the path that capitalism is on. Theorists like Sweezy, here speaking in 1982, have known the path that late stage or Monopoly-Finance capitalism is on and have been proved remarkably prescient.

    “Let me digress for a moment to point out that the fact that the overall performance of the economy in recent years has not been much worse than it actually has been, or as bad as it was in the 1930s, is largely owing to three causes: (1) the much greater role of government spending and government deficits; (2) the enormous growth of consumer debt, including residential mortgage debt, especially during the 1970s; and (3) the ballooning of the financial sector of the economy which, apart from the growth of debt as such, includes an explosion of all kinds of speculation, old and new, which in turn generates more than a mere trickledown of purchasing power into the “real” economy, mostly in the form of increased demand for luxury goods. These are important forces counteracting stagnation as long as they last, but there is always the danger that if carried too far they will erupt in an old-fashioned panic of a kind we haven’t seen since the 1929–33 period….” – Sweezy.

    John Bellamy Foster and Robert W. McChesney write of the above quote;

    “There could hardly have been a more far-sighted description of the contradictions of U.S. capitalism, pointing ahead to the Great Financial Crisis of 2007–09, and to the conditions of severe economic stagnation that arose in its wake. These warnings, however, went unheeded, and no resurrection of the stagnation debate occurred in the 1980s.”

    This economic stagnation is now our WHOLE future in my opinion. The developed world has followed a long term trend towards zero growth from the relatively high growth of the sixties to the low growth and indeed stagnation of the present. The US is still growing (just) but Europe has stagnated since the GFC and Japan has also stagnated. Europe and Japan will never grow again and the US will soon cease growth. Australia has ceasedf growth about now, at least in per capita terms is also never likely to grow again.

    This long term trend to stagnation is implicit in, indeed systemically embedded, in late stage or Monopoly-Finance capitalism at least in the case of the already developed nations. CHINDIA and maybe even the BRICs avoid it for now by having cheap labour to be exploited or a relative plenty of natural resources remaining compared to the near global limits on resources. Though Russia is stagnating right now due to low oil prices (these prices probably being engineered by the USA for this express purpose).

    It’s a perfect storm of unfortunate influences on the economy. Late stage Monopoly-Finance Capitalism naturally tends to stagnation. The phenomenon of “secular stagnation” is real at least in the sense of “demographic stagnation”, meaning ageing and the end of population growth in the developed nations. We have an ossified ideology of neoconservatism in the West where no new ideas and even many good old ideas are inconceivable to the ruling elite and thus totally inadmissible in public debate and policy formulation. Then we have the limits to growth which we have already overshot in sustainability terms. Resource shortages, substitution costs and climate and environmental damage are becoming an ever larger drag on the economy.

  15. @rog
    Rog, sorry for any confusion. I was referring to your point re the fall in disposable income with the productivity angle rather than actual spending.

  16. Hi,

    this chaotic mess won’t be fixed with the usual political script

    …as per JQ.

    No, the usual political script it won’t fix the ‘problem’ because the entire global economy is being utterly smashed by the ecological crisis.

    From an environmental perspective it is of no concern whether you choose to attribute total ecological destruction to capitalism or finance capital when any honest consideration of the ecological vandalism in the USSR and the PRC shows that environmental destruction is absolutely the consequences of industrialism. Different political systems, same ecological outcome.

    Remember this:

    All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his, real conditions of life, and his relations with his kind.

    Yesterday’s verities don’t apply any more. The shift from the politics of the industrial age to the politics of the present and future requires an engagement with ecology, with the science of ecology, and a subsequent renewal of rationality and democracy. Real, informed, educated, democracy.

    It seems reasonable to also recall this:

    Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living. And just as they seem to be occupied with revolutionizing themselves and things, creating something that did not exist before, precisely in such epochs of revolutionary crisis they anxiously conjure up the spirits of the past to their service, borrowing from them names, battle slogans, and costumes in order to present this new scene in world history in time-honored disguise and borrowed language.

    On reflection, why bother conjuring up ‘up the spirits of the past’ when the whole of our present and future is nothing if nothing if not an unlimited field of play? To whose ghosts do we owe allegiance.

    The dead are many.

  17. The Conservatives blame a hostile Senate and a failure to sell the message .Alternatively some normal people in the Senate blocked policy that cant be sold anyway. There are some stunned participants because the might of the Murdoch empire has failed to control events .

  18. It’s official: America is now No. 2.

    “The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.

    As recently as 2000, we (USA) produced nearly three times as much as the Chinese.

    To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

    This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

    Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power. Britain was the workshop of the world before she ruled the waves. And it was Britain’s relative economic decline that preceded the collapse of her power. And it was a similar story with previous hegemonic powers such as France and Spain.

    This will not change anything tomorrow or next week, but it will change almost everything in the longer term. We have lived in a world dominated by the U.S. since at least 1945 and, in many ways, since the late 19th century.” – MarketWatch.

    The New American Century is over after just 13 years. Having said that, China scarcely faces a smooth path. Pollution, climate change and resource limits will hit over-populated China hard.

  19. @Ernestine Gross

    In general I do not disagree but, there are two ways of “making money” as you put it, and two types of “market economy’ and two types of ‘freedom of choice’.

    Capitalists deny this – that just parade their concepts of making money, market economy, and freedom of choice as if these are first principles.


    There are two ways of making money 1) by your own production; 2) by accumulating the production of others.

    There are two types of market economy 1) capitalist market; 2) market socialism.

    There are two types of freedom 1) capital enjoys one regime of freedom 2) labour suffers a different regime of freedom.

    You have to get behind the labels and look at the actual content.

  20. @Ikonoclast

    Nice comment Ikon. I’d like to think (and maybe I’m being hopelessly naive) that at some point people will realise what is exactly in their best interests, and vote for it.

    I like to think that after the sacrifices and teamwork of WW2, that it was necessary, and even natural, for the ruling class to be nicer and fairer. And for a little while, they even took the advice of good economists. Reading J K Galbraith, sometime in the 60’s the Yanks were faced with the decision to improve society, or reduce taxes, and they chose to reduce taxes. The pace really picked up under Reagan, as did the policy of blaming the poor for their predicament and being tough on crime.

    And by now the right have gone full feral to the point where Gina wants people to work for $2 per day. And most people are convinced that if we don’t head down this route the sky will fall. And of course the right will try their best to make the sky fall if anyone stands up to them.

    Depressing or what.

  21. @Ikonoclast

    This is right. Even without looking at the Soviet Union and its offshoots, you can observe a vast set of variants on capitalism, ranging from laissez-faire to social democracies where the state takes more than half of all income, all of which have delivered substantially improved living standards over a long period*

    * Not always environmentally sustainably but, as I’ve shown in dozens of posts now, the big environmental problems we face could be largely resolved without much of an impact on living standards

  22. Yes, commentary from my conservative mates ranges from “how about those nut cases in the Senate” (they do represent the community, que?) to “watch out what Shorten will do to your super”.

    Not that any side is immune from sophistry.

  23. you can observe a vast set of variants on capitalism, … all of which have delivered substantially improved living standards over a long period*

    For some – not for all. For a few decades – not for ever.

    Socialist growth can improve living standards for all, and for ever.

  24. Yes it does raise a lot of thoughts, Ike.

    For starters the dominant economy tends the exploit and command the greater share of resources. What does that look like in the Chinese context.

    The Chinese govt has the objective of raising the living standard of its people, the US govt (republican) has the objective of reducing the living standard of its people. The Chinese govt has a national growth plan, the US govt does not.

    There used to be an index for an international comparison of the “nationalmdegree of automation” for which the US and Japan routinely held the highest rungs. That figure is now buried in the mire of the “productivity” political football, but automation is the primary performance multiplier which underpins standards of living. There are many other factors these days but automation, along with the average age of machines, is a good identifier of the fundamental competitive strength of economies. If the US looses position on this factor then it will be on a downward spiral from which it will be difficult to recover from especially considering the fractured nature of its political overhead.

  25. Whether it’s China, India, the US, the EU or wherever, it’s still trans-national corporations which rule the world and when China has been sucked dry of resources and the residents no longer tolerate becoming a toxic waste dump, the corporations will move on to the next continent ripe for exploitation and environmental destruction – Africa.
    If the US was economically disadvantaged in a serious way by China becoming #1 it could only be a good thing for world peace but it has massive IP and other investments in trans-national corporations which will keep it wealthy wherever they set up camp. Wealthy enough to remain a meddling superpower that is but not to improve equality back home.

  26. @Nick

    According to Dunstan’s own detailed account in his memoir Felicia, Hall supported boundary change before the 1970 State election because the LCL was certain to lose without it (because the inexorable growth of metropolitan Adelaide was spreading into electoral districts which had once been predominantly agricultural and fundamentally transforming their demographic character); he does not support the view that Hall was motivated by ’embarrassment’ at winning the election with a minority of the vote.

    On the more general point: some time in the last few years, I compiled a more extensive data set of Commonwealth, State, and Territory elections, but unfortunately I seem to have lost it. As best I recall, however, what I found was that governments facing an election after less than five years in office won about three-quarters of the time. That does mean that one-term governments are unusual, but not nearly as unusual as people have been suggesting recently, which was my original point.

    The pattern is also less striking given that I also found that in Australian elections generally governments win somewhere between three-fifths and two-thirds of the time. Apparently in Australian elections it’s an advantage (although far from a decisive one) to be in government already, and to be a government that’s been in office only a short time does add to the advantage, but not hugely so.

  27. China is not that foolish, SG. Talk to anyone on the subject of Chinese investment. It is very easy to send money to China. Getting money out of China is the exact opposite. Chinese interests are served very well by the West.

  28. I am not expert in international economics, but I think there is another major problem with the previously orthodox free market economic ideology – globalisation and tax avoidance. It really is now cheap to ship things around the world. Yet the benefits of free trade may not exist for some countries or industries. In a globalised world there is no guarantee that any amount of restructuring will make a particular job viable in a high wage country. Nor will the financial benefits of the restructuring be received by those restructured. If the profits are dropped out in some distant tax haven, say Luxembourg, there seems very little benefit at all to the workers or taxpayers in a high wage country from liberalisation. They will lose their jobs, and their tax burden will go up. So they are correct to oppose it. If we are to have a global economy, we also need effective global taxation.

  29. One big reason Europe emerged from obscurity to beat everyone else in the empire building game over the last 3 – 400 years is that there bankers and financiers became more powerful than kings. Another reason was the European scientific style (its admission of ignorance) .Capitalism could then be used full throttle for empire expansion – most of which was done by companies .I imagine the Chinese leadership wants to harness the power of capitalism without risking becoming dependent on, and then abandoned by, mega companies .

    A world government to protect us from amoral growth maximisation would be good. Because of carbon a green one is needed now.

  30. I agree with you, Vegetarian, Ernestine hit the nail on the head in recognising that the world operates on neither Keynes nor efficient markets, it operates on a hybride system as JQ has also identified on a number of occasions. To JQ’s credit he has many times sought input for alternative economic thinking.

    We are in desperate need for a new economic definition that optimises for public well being, market performance, environmental stability, and sustainability.

    I do not see any attempt to find a “unified economic theory”. There is another thrash around of the old arguments going on here

    I haven’t delved heavily into the arguments but at first glance it is the usual samo-samo, no new insights.

    So hows about it economic thinkers? Lock away your Marx, Keynes, Hayek and your Friedman. Clean sheet of paper. What are the fundamentals for sustained economies to be stable, energetic, fair, and robust in a climate shifting world?

    This should not be about dumping everything that we have, it is principally about bringing the political narrative to a more common focal point in order to minimise the extreme waste we experience with every change of government.

    As Ernestine Gross points out, the public intuitively knows what is right and fair. We need new words for our politicians to use to reflect those that everyone else use, AND as JQ also suggests in the header.

  31. Brilliant analysis (in The Guardian) as usual, Professor, thanks very much.

    The political class just doesn’t get it.

  32. @J-D

    Interesting. This is worth a read:

    Jenni Newton-Farrelly: The Fairness Clause In South Australia

    j_d: “the inexorable growth of metropolitan Adelaide was spreading into electoral districts into electoral districts which had once been predominantly agricultural and fundamentally transforming their demographic character”

    Also relevant were Playford’s SA development policies, which had directly parachuted large numbers of Labor-supporting skilled workers from other states into regional and rural districts…

    The LCL had identified those issues in the very early sixties, and I’m pretty sure they played some part in getting Walsh/Dunstan into power in the mid-sixties in the first place.

    But I’m inclined at this stage to believe both versions of events. It doesn’t come across to me as an either-or equation.

    Faced with huge public backlash, as well as Governor Bastyan strongly advising both parties work bilaterally to sort things out…

    …and seeing the longer term realities of changing demographics in SA, and the writing on the wall for the LCL if it refused for much longer to move with the times.

    That said, I don’t believe Hall thought ‘the LCL was certain to lose in 1970’ without electoral reform, and I can’t find any evidence to support that view. Since Labor won in 1970 with a reduced first preference vote, but a 7 seat majority compared to the previous hung parliament under the 1955 boundaries – if indeed Hall had thought that the LCL would benefit in 1970 from the changes, he badly miscalculated to say the least.

  33. Btw, j_d, let’s take this to sandpit if you want to continue shall we? I really like JQ’s post and everyone’s commentary, and don’t wish to derail it any further…

  34. Face, palm, *ouch!*
    That was my reaction to hearing PM Tony Abbott on the TV, waving away Koch’s question about misleading voters and breaking promises; Abbott said he didn’t accept the premise of the question at all (about misleading voters prior to the election). He then went on to explain how the GP co-payment was extensively discussed before the budget. Koch interjected, saying “But not before the election…” and Abbott just re-iterated how there was ample discussion before the budget, blah, blah, blah. The budget was in May 2014, the election in Sep 2013: Sheesh!

    How can you reason with someone who categorically denies all the facts before them? The transcripts of their own words? Honestly, this current government is unforgivable: I hold the Liberal party directly responsible for this trammelling of Australia’s political system, and I am not in a forgiving mood.

  35. @Donald Oats

    How can you reason with someone who categorically denies all the facts before them?

    You can’t. There are people loose in the world who are sociopaths, psychopaths and otherwise in possession of a personality disorder. Some of the most cunning are narcissists. My view is that in specific epochs certain human subjectivities are more advantageous than others. In pre-industrial periods, when communal sharing was a valued personal ability, then those capable of sharing and other communal values flourished.

    The current neo-liberal epoch, which may indeed herald the end of history, is one in which the psychologically deranged flourish. Hence Abbott and Morrisson, Hunt and Pyne, Hockey and Bishop and so on including the barking mad religious right.

    There is no cure or political manoeuvre that can rid us of this pestilence of the privately educated, privileged and deranged class.

    The trick to dealing with the personality disordered is to set boundaries and vigorously tend them. They need to have their heads kicked until such time as they retreat into private life.

  36. @Donald Oats
    “How can you reason with someone who categorically denies all the facts before them?”
    You keep slashing until their arms and legs are gone. Monty Python’s black knight is the perfect metaphor of Tony Abbott and I think he is balancing on bleeding thigh stumps ATM.
    He refuses to see how ridiculous he has become. Even worse is that 38% of the electorate still refuse to see it.

  37. @Salient Green
    Indeed: “’Tis but a scratch.”

    Still, he has the scrappiness of a junkyard brawler, so he is not to be counted out of the fight: biting, gouging, scratching, the low blow—heck, even making the floor slippery by bleeding—all are tools of trade for this midnight mauler.

  38. Salient Green :
    @Donald Oats
    Even worse is that 38% of the electorate still refuse to see it.

    It’s truly amazing that anyone could still support the LNP. Really the only things they’ve done is (possibly) “stop the boats”, as if stopping a few desperate refugees wash akin to saving us from the Mogul hoards, and reversing previous government policies that (a) raised revenue and (b) demonstrably cut emissions. Weird.

  39. @Fran Barlow
    I note your fullish commentary on “The Glugs of Gosh” and the underlining sentiment therein.
    I appreciate how you would find it tedious: it scans and rhymes, an old fashioned skill; and is thus death in the eyes of the modern poetry critic.
    Furthermore, it’s funny – it’s a joke with a message; a satirical cartoon. Poetry has to be serious.
    For those with a short attention span, tedium can be relieved by taking the book one poem a day for a fortnight.
    For readers not familiar with the Glugs or mired in negativity, Dr Lyn Gallacher (PhD, English Lit), ABC Radio National presenter of The Book Show might change your mind at:
    and download the audio.

  40. Adding to the question of broken promises, we could also start a list of ones they’ve made after the election…and broken since then. Now that PM Tony Abbott has dumped the GP $7 copayment and introduced a reduction in the medicare payment by $5, allowing GP’s to recoup it on a discretionary basis, where does the money to fund the $20 billion dollar medical research centre(s) come from? In the above linked article, PM Abbott is complaining about the need to improve the budget as his justification for introducing the $5 cut to the medicare rebate for GP visits, but that leaves the medical research fund hanging. So, which lie is it, which lie is being broken now? My head spins trying to keep up with it all.

  41. @Donald Oats
    Apparently the rationale for the ‘new’ co-payment policy is to “encourage doctors to spend more time with their patients”.

    W. T. F.

  42. Jungney and Donakd Oats, those comments (43 >) frame the leadership situation perfectly there is little more that can really be said. Thanks for you observations.

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