Laura Tingle had an interesting piece on political memory. in Quarterly Essay recently, and my response (over the fold) was published in the latest issue (paywalled)>. Tingle is the most insightful observer of Australian politics writing in the mass media, but she has always taken the inevitability and desirability of market liberal reform for a granted. I detect a bit of a shift in the latest piece, but that may be wishful thinking on my part.
Quarterly Essay response
Laura Tingle is right to suggest that memory is a problem in Australian politics. But, for most of the Australian political class, the problem is not amnesia. Rather, like the Bourbons, they have learned nothing and forgotten nothing.
The key word here is ‘reform’. As Tingle observes, “reform” remains a fetish word, at least for the political class. Its continuing magical power can be seen in the recent ‘National Reform Summit’, jointly sponsored by our rival national dailies, The Australian and the Australian Financial Review, along with the inevitable participation of consulting firm KPMG (which helpfully notes its affiliation with KPMG International ‘a Swiss entity’).
The content of ‘reform’ is generally taken to be self-explanatory. Obviously, for example, anyone who suggested a tax reform that would require higher income earners to pay more income tax, or a productivity reform that involved more leisure, would not have been welcome.
As Tingle observes, the term ‘reform’ has become ‘a hollowed-out word which you attach to anything voters won’t like in the hope that it will make you appear a strong and decisive government’. The problem lies in her implicit contrast with an earlier era in which there was a consensus around a reform agenda based on ‘an obligation to explain and advocate’.
The memory of this golden era of reform is what gives the word ‘reform’ its continuing magical power, at least in the political class. But it is largely mythical. Reform has been a top-down process, imposed without any serious attempt at persuasion, from the very beginning. The floating of the dollar, generally seen as the starting point of the microeconomic reform era, was announced following late-night meetings between Treasurer Keating and senior Treasury officials, the content of which is still disputed.
By the early 1990s, the phrase ‘economic rationalism’ had entered the public lexicon, thanks to Michael Pusey’s book Economic Rationalism in Canberra. The era of explanation and advocacy was well and truly over, replaced with a sharp divide between the political class and the public. As Tingle observes (with implicit reference to the political class), to argue against economic rationalism was to invite ‘ridicule or contempt’. By contrast, among the public at large ‘economic rationalist’ became, and remains, a term of abuse.
The results were seen in National Competition Policy (NCP), a deliberate and successful attempt to institutionalise economic reform with an end run around the political process. A carefully selected committee, appointed to analyse an obscure area of commercial law, produced recommendations which turned into an intergovernmental agreement, backed with huge and financial incentives and penalties. By the time NCP came to the attention of the ordinary voter (through, for example, the contracting out of local government services) it was a fait accompli, impossible to challenge through any democratic process. ?The upsurge of support for Pauline Hanson was not only due to John Howard’s dog-whistle attacks on ‘political correctness’. It owed at least as much to the (correct) perception that ordinary people no longer had any say in the crucial issues of economic policy. Tingle recognises this, but, like the rest of the political class, treats this as an unalterable fact about the world rather than the result of specific (and misguided) policy choices.
As Tingle observes, citing her previous essay Great Expectations ‘Our politicians still speak in the language and play to a set of expectations formed at a time when our economy was heavily regulated. Politicians once had the power to set interest rates and to protect industries from overseas competition. There were mechanisms in pace to set wage rates for the whole country. That all changed with the deregulation of the economy (emphasis added)’. The use of the passive voice here is striking. It’s as if the deregulation of the economy were some kind of natural disaster (or, perhaps, a piece of good fortune) rather than being the result of policy decisions made by the very politicians who are unwilling to live with its consequences.
Seen in this light, the core of the essay is a demonstration of the contradiction at the heart of the reform agenda. The central idea of reform is that governments should get out of the business of regulating economic and social outcomes, and should instead provide the legal and institutional framework within which market forces can do the job. On this basis, it makes sense, for example, that the Department of Finance should outsource most of its work to private contractors, confining itself to high-level policy.
Unfortunately, as we have seen, this seemingly neat separation does not work well in practice. Generic managerialism and incentives are not an adequate substitute for knowledge of specific policy domains and an ethos of public service.
The loss of memory, then, is not a remediable problem in our current political systems. It is inherent in the whole direction of public policy since the 1980s. It is scarcely to be expected that an ideology based on attacking the competence of government to do anything will produce anything other then incompetence in government.
Our real problem is not amnesia regarding the past. It is the golden glow of memory with which our political class still surrounds what they remember as the glory days of the 1980s and 1990s.