Failing upwards

I’ve been busy finishing the manuscript of my book, and dealing with policy issues as they came up, so I haven’t paid a lot of attention to the Liberal leadership saga. One thing that strikes me is that Josh Frydenberg has had exceptionally favorable coverage, apparently on the basis that he’s likable and popular. That’s fine, but if you’re going to appoint someone as Treasurer, shouldn’t a successful track record be a necessary (though not sufficient) condition? Morrison, for example, had a political success in stopping the boats (whatever the morality of the policy) and was generally seen as a successful Social Services minister (unlike his successor, who messed up the robodebt program). He didn’t impress as Treasurer, but at least his previous career justified giving him a go. And while he looks underqualified as PM, the alternatives were even worse[1].

Frydenberg has essentially had one ministerial job, covering environment and energy (though with various titles and temporary add-ons like Northern Australia). In this capacity, his big contribution was the National Energy Guarantee. It was a terrible policy, made necessary by the failure of Turnbull and Frydenberg to face down the denialists in the government. Designed to be all things to all people, it ended up being nothing to nobody. Frydenberg’s failure to secure agreement on the NEG was the proximate cause of Turnbull’s downfall as PM, and the policy was promptly abandoned the moment Morrison took over. In what possible world is this a basis for promotion?

 

fn1. Bishop was ruled out on tribal grounds. Her weakness as Treasury spokesman years ago was also held against her, even though she wasn’t obviously worse (in retrospect) than Morrison, and much better than Hockey. About Dutton, the less said the better. After that, it’s daylight.

51 thoughts on “Failing upwards

  1. Hi John I just read your latest article in the Guardian on the Carmichael Mine
    There is a new Book out by James Crabtree ‘The Billionaire Raj’
    Adani is mentioned there

  2. Frydenberg appointed himself Treasurer. As Deputy Leader he is entitled to choose his own ministry.

    As for Frydenberg’s “failure to secure agreement on the NEG”, it was overwhelmingly agreed to by the LNP party room. It failed because a handful of insurgents led by Abbott threatened to cross the floor and defeat it in the House of Representatives. But this would only have worked if Labor had also opposed it. Labor never actually committed to opposing the NEG. They just sat back and waited for Turnbull to lose his nerve, which he duly did, but that was hardly Frydenberg’s fault.

    Bishop was awful as shadow Treasurer not (just) because of her policy positions but because she couldn’t grasp even the most basic concepts. In government she had the good sense to choose a job that suited her skill set.

  3. That’s fine, but if you’re going to appoint someone as Treasurer, shouldn’t a successful track record be a necessary (though not sufficient) condition?

    Before becoming Treasurer (to calibrate the question a little):
    John Howard had a track record of two years as a Minister not in the Cabinet (first Minister for Business and Consumer Affairs and then Minister for Special Trade Negotiations);
    Paul Keating had a track record of three weeks as the most junior member of the Whitlam ministry (as Minister for Northern Australia);
    John Kerin, Ralph Willis, and John Dawkins each had significant Cabinet experience;
    Peter Costello had no ministerial experience;
    Wayne Swan had no ministerial experience;
    Chris Bowen, Joe Hockey, and Scott Morrison each had significant Cabinet experience.

    Now, I wouldn’t say that somebody needs significant Cabinet experience to be qualified for the Treasurership, but if we’re talking about other successful track record, what qualifies?

  4. I did enjoy my wife’s comment when Morrison had his government putting theirs hands up and down in parliament: “Looks like they’re practicing their Nazi salutes.”

  5. Ikono, the lyrics were “If you got a hundred dollar bill put your hands in the air,” so I though they were advertising their minimum bribe level. It was a bit of a worry that it got down to $10 and they were still putting their hands in the air.

  6. Given that the government appears not appreciate Prof Quiggins ideas on economics, are we mere chroniclers presented with a worrisome anomaly that could have the economy eventually run aground on hidden shoals sometime in the future?
    I imagine it is much more complex than this tongue in cheek thought would propose and there must be vast numbers of economists with JQ’s IQ and training of the sort who prevented the worst consequences of the Meltdown during Kevin Rudd’s time, working at Treasury.
    But from this point, things do become worrying as per JQ’s “Daylight” thesis, which I presume is what is seen when a person looks into an LNP minister or hard neoliberal economist’s ear. This is a given at least for the deranged cruelties inflicted by the Robodebt and massively expensive,Surveillance, Defence and Border Protection policies,
    As for more on seemingly opaqued FTA deals we must wait in hope of illumination from some kind passing economist in the night
    Who really benefits from our economy and what and who is missed out upon because of the subjective preferences of ideologized decision-makers?

  7. J-D . Obviously, when a new government comes in after a substantial period in opposition the most likely track record is successful performance as Shadow Treasurer – the case for Keating, Costello and Swan. Howard is a good counter-example, but, as was said of Dan Quayle in a similar context, Frydenberg is no John Howard.

  8. Keating was shadow Treasurer for just two months, from January to March 1983. Since the first month was the holiday season and the second month the election campaign it is a stretch to say he was a successful shadow Treasurer.

    Keating replaced the competent but unenergetic Ralph Willis as shadow Treasurer, in a futile move by Bill Hayden to hold off Bob Hawke. Labor had lost the Flinders by-election, which it had been expected to win, in December 1982. Hayden then came under intense pressure and Willis was sacrificed.

    Hayden thought, justifiably, that Keating would be better at taking the fight to the government in the Treasury portfolio. It was all for nought as far as Hayden’s leadership was concerned, but Hawke kept Keating on as Treasurer after Labor won the election.

  9. I have to agree with smith9 yet again.

    Those with good memories will remember Keating as so unimpressive is his first year as Treasurer he was thought to be simply a tool of treasury!

  10. Here we go, something that would take a bit of guts and imagination, given the Neanderthal and sheep-like bigotry Australians entertain toward anyone outside the charmed circle:

    https://www.theguardian.com/australia-news/2018/sep/17/push-to-raise-newstart-allowance-by-75-a-week?CMP=share_btn_fb

    Time to make amends to working-class Australians who are victims of neoliberal economics.

    People unemployed, since the 1970’s have been treated like partiahs, it has gone on despite many knowing unemployment is a feature of bad economics and automation, are contemporaneous to black people in the deep south of the USA.

  11. mate,
    neo-liberal economics means faster GDP growth and thus more employment for those you obviously have empathy for.

  12. “Those with good memories will remember Keating as so unimpressive is his first year as Treasurer he was thought to be simply a tool of treasury!”

    Obviously my memory is getting weak. I recall him being named as “World’s Best Treasurer/Finance Minister” quite early in his career. But maybe I have my dates wrong.
    (Stops to check Google)
    Yes, it was 1984 Euromoney Finance Minister of the Year, normally announced in September, by which time he’d served about 18 months. Not that I necessarily agree with Euromoney’s criteria, but they don’t appear to give the award to nonentities.

  13. It is good to see Prof Quiggin whacking a few schlubs concerning value and meaning. “Faster GDP growth” is like “how long is a piece of string” outside of any qualifying context. We have to know the human and financial cost of the GDP and how it is distributed and then employed and to what point.

    Some of you obviously missed a useful example from John Quiggin of all people in the Grauniad today involving factors involved with Adani. I could add a link but think hi-tech may confuse some within the readership

  14. Until December 1983 Keating did as he was advised by Treasury, or specifically its Secretary John Stone (who was later a Queensland National Party Senator and to this days writes letters to the Australian pushing some or other right wing cause). But Keating famously broke with Stone in supporting the floating of the currency and from then on was his own man.

  15. You could say that China since 1978 has pursued neoliberal economics, or at least economics that has been neoliberal compared to cultural revolution Maoist economics that they had before. And the Chinese economy has certainly grown faster than it did before. But there are counter-examples, like the neoliberal approach to financial (non)regulation that undoubtedly was a critical factor in causing the GFC. Its always possible to find examples that suit the political argument you are trying to make.

  16. John he got that gong , which Swan also got, after deregulation and the floating of the currency.

    He was very unsure of himself for about a year and thereafter as Smith9 was his own man.

    Stone never liked Keating for wanting to talk directly with those whom wrote the initial briefing note and not he. Stone was also highly insecure over Chris Higgins who was vastly superior in the economic understanding stakes

  17. Smith9:

    “You could say that China since 1978 has pursued neoliberal economics …”

    You could but you would be wrong, an obvious example being the fiscal stimulus in response to the GFC.

  18. ” In what possible world is this a basis for promotion?”

    The same world where, apparently, having a formal complaints process is a bold and novel idea

  19. fiscal stimulus in fighting the a possible depression is not neo-liberal economics???

    It is in my book

  20. @Hugo

    Economic arguments associated with the label neo-liberalism generally aren’t against fiscal stimulus. Rather, its proponents generally argue for “money to the right people”, e.g. cash to the average Joe is bad whereas subsidies to the business and tax cuts to the top quintile income earners are good.

  21. @nottrampis Unfortunately, we appear to speak different dialects of English, as I’ve noted previously. For the purpose of discussion here, could you write in my dialect, where I’ve already given a definition of neoliberalism. Although fiscal policy isn’t discussed , it’s implicit in that definition that neoliberalism is hostile to countercyclical fiscal policy. I’ll make it explicit now.

  22. @Tom,

    The neoliberal response to a recession is austerity; to “tighten the belt”, make the “leaners” pull their own weight and cutting red tape so the “lifters” can grow the economy unimpeded. It is Margaret Thatcher a generation ago or Theresa May now.

    Once decoded, this means immiserating the have-nots by slashing welfare, dismantling effective social programs, blaming the blameless for the state of the economy, tax cuts for business and the rich, and stripping away the regulations that ameliorate the worst features of capitalism.

  23. Thanks john,
    Strange how I know people who favour neo-liberalism I who favour that do not believe in your definiton. Neo-liberalism = classical economics is a bit silly but its your blog.

  24. Neoliberalism is common usage means precisely what Prof Quiggin says it means. From Wikipedia:

    “Neoliberalism or neo-liberalism refers primarily to the 20th-century resurgence of 19th-century ideas associated with laissez-faire economic liberalism. Those ideas include economic liberalization policies such as privatization, austerity, deregulation, free trade and reductions in government spending in order to increase the role of the private sector in the economy and society. These market-based ideas and the policies they inspired constitute a paradigm shift away from the post-war Keynesian consensus which lasted from 1945 to 1980.” ***en.wikipedia.org/wiki/Neoliberalism

    Nottrampis, I surmise that your friends who call themselves “neoliberal” are merely vague and incoherent butcherers of the English language. Birds of feather etc ….

    ps. Yes I know Wikipedia has its limitations, but it does quote reputable sources and plenty of other links make the same point.

  25. @Smith9

    Let me help you ***www.merriam-webster.com/dictionary/butcherers :

    ” Definition of Butcherer
    : one that butchers”

    Plural- s

  26. Hugo I give you Brad De Long.
    You really need to get out more often

    I thought most people thought of neo-liberalism as mainly involving micro-economics. We favour markets where markets are appropriate not when they are not eg. electricity.
    As for Austerity no-one has railed against austerity more than I when it is not appropriate, It clearly is not when nominal GDP is well below average as Wayne Swan and the current Government found out.
    It is when Nominal GDP is well above average as Keating found out.

    It is more than appropriate now in Australia.

  27. Billy Mitchell does a great job of explaining the neoliberal system and its threads, tentacles, fimbriae… here http://bilbo.economicoutlook.net/blog/?p=40359#more-40359
    In particular he describes the role supposed support and representative organisations, here ACOSS, in feeding into the continuation of the neoliberal doctrine and maintaining an apparent benign face to the world.

  28. Mitchell says the best way of reducing unemployment is government job creation programs. According to Mitchell government training programs that provide unemployed people with useful skills are neoliberal.

    Which just goes to show that the most useful definition of neoliberal is “stuff I don’t like”.

  29. @Smith 9
    I read Mitchell’s post through again and consider that the content deserves a better judgement than your facile line above.

    What he does say is “However, we can train people until the cows come home, but, if there are not enough jobs available all that is accomplished is that the jobless queue is shuffled’.
    Perhaps it could be more simply expressed as the old “10 dogs and 9 bones” syndrome.
    I wonder if it is MMT that you don’t like?

  30. Poselequation

    Mitchell might be right that there is no point in training people if there aren’t enough jobs. Or he might be wrong. But for him to say that government programs to train the unemployed is neoliberalism, is preposterous. Government programs to assist the unemployed are the very antithesis of neoliberalism, at least according to the Wikipedia definition of neoliberalism that Hugo provides upthread.

    If neoliberalism can include government programs for the unemployed as well as laissez faire, deregulation and austerity, then the word is meaningless.

  31. I might add most unemployment programs are aimed at facilitating the market. They make market create solutions at a faster rate. I.e. employers find suitable employees much faster
    That would make the definition meaningless me thinks

  32. @ notrampis:

    “That would make the definition meaningless me thinks”

    It doesn’t matter that you find the definition meaningless. Neoliberalism in the economic sense is a reaction to the post- WWII praxis of Keynesian economics. It explicitly rejects Keynesian ideas like fiscal stimulus.

    If Brad DeLong has an outlier definition of neoliberalism it is of no great import. In any event you have not provided a link to Brad DeLong saying that fiscal stimulus is a neoliberal idea.

  33. Sorry to tell you this but given there were few examples if any of liquidity traps post WW11 then Keynesian stimulus becomes as meaningless as the definition!.
    There were plenty of examples of fiscal stimulus post WW11 but they had no Keynesian theory behind them.

  34. @nottrampis

    Don’t change the subject. Please link to Brad DeLong saying that fiscal stimulus is a neoliberal idea.

  35. I believe most of the confusion about the definition neoliberalism is due to the confusion on what is fiscal stimulus. I won’t repeat what Hugo posted about the definition of neoliberalism, however I must point out that the same Wikipedia page, it mentions:

    “United Kingdom
    During her tenure as Prime Minister, Margaret Thatcher oversaw a number of neoliberal reforms including: tax reduction, reforming exchange rates, deregulation and privatisation.”

    Its worth noting the definition of fiscal stimulus is:

    “Fiscal stimulus refers to increasing government consumption or transfers or lowering taxes.”

    https://en.wikipedia.org/wiki/Stimulus_(economics)

    As lowering taxes counts as fiscal stimulus, and significant neoliberal figures support tax cuts, by definition neoliberals are not against fiscal stimulus. My point stands in my previous post, that neoliberalism are not against fiscal stimulus. Their concerns are simply that fiscal stimulus to the average Joe is bad and fiscal stimulus to the business and top 1% is good.

    If Brad DeLong prefers to call himself a neoliberal as nottrampis suggests, then I guess he is one of the above.

  36. The Keynesian fiscal stimulus only refers to a situation when there is a liquidity trap however I will add id monetary policy is impaired. you use monetary policy in most cases not fiscal policy.

    Using fiscal stimulus when the economy is say merely in recession is a lot of things but it aint Keynesianism.

  37. @Tom,

    Neoliberalism also involves downsizing Government, so a strongly neoliberal government will cut tax (usually for the wealthy and big business) but also cut overall government expenditure, hence no stimulus.

    But the essence of neoliberalism, like that of any “ism”, is a thing of ideas. The levers of Government are rarely controlled by hardline ideologues.

    @ Nottrampis,

    I’ll take your ongoing refusal to link to Brad DeLong saying fiscal stimulus is a neoliberal prescription as a sign that you made up that claim.

  38. @Hugo,

    Fiscal contraction and tax cuts at the same time does not offset each other in neoliberalism. Have you already forgotten about the theory of expansionary austerity? Since in their view, cutting government spending is expansionary and so is tax cut . Neoliberals are more in favor of fiscal stimulus than perhaps even Keynesians.

  39. I should be more clear in my comment above, “Fiscal contraction and tax cuts at the same time…”

    should be

    “Cutting government spending and taxes at the same time…”

  40. Robert Skidelsky (Money and Government) certainly contradicts Nottrampis’ view that Keynsian fiscal stimulus is confined to ‘liquidity trap’ (zero lower bound) cases and not to be used otherwise in response to recession or depression. I know of no Keynsian proposition that monetary policy is somehow preferable to fiscal policy – on the contrary, fiscal action is more direct and more effective. Monetary policy is the anaemic guess-and-hope prescription of those afraid the unemployed and the lower classes might benefit from fiscal action.

  41. “Neoliberals are more in favor of fiscal stimulus than perhaps even Keynesians.” Yes, if you define austerity as stimulus. Equally, I suppose you could claim that homeopaths are in favor of modern medicine, if you define “modern” as “developed in the late 18th century”.

  42. I think folk might be getting led astray by wrongly thinking Trump is a neoliberal. Trump isn’t neoliberal, he has stimulated the private sector with tax cuts, an increase in federal spending and engaged in protectionism.

    Of course there is room for debate on what constitute neoliberalism just as there is with any “ism”. No “ism” is a list of commandments carved in stone. However if you define an “ism” too broadly it becomes meaningless and completely useless as a descriptor or analytical tool.

  43. chrishod,
    err the reason Keynes preferred fiscal to monetary policy in very bad times is the liquidity trap because monetary policy is no longer working.
    In his day deflation caused a liquidity trap as real interest rates rose
    In normal times he clearly preferred monetary policy.

    I would advocate reading the General Theory except it is IMHO Keynes worst work in terms of trying to read the damn thing.

    Keynesians advocate austerity in very good times and stimulus in very bad times.

    Neo-liberals have never adopted classical economics at all. The reason why balancing the budget is usually recommended alah Washington Consensus are lax fiscal policy by most countries.

    Lax fiscal policies are not keynesian policies! the 70s should have taught most people that

  44. I challenged the proposition that Keynes(ians) are hostile to use of fiscal tools other than in ‘zero bound’ liquidity trap. I cited, most recently, Skidelsky’s new book in illustration. Now nottrampis repeats the proposition – but with no citation or illustration, other than suggesting the General Theory. That, like many other Keynes writings, illustrates the working of stimulus with plainly fiscal examples. (The digging out and filling in of holes is notorious: not as a recommendation, but as at least direct and effective. Other examples come to the eye: and nearly all are of fiscal action.)
    Nor is stimulus reserved for ‘very’ bad times. Demand shortfall requires stimulus tailored to the need; shibboleths like ‘very’ are just excuses for inaction, in the same way that monetary preference is just an excuse for avoiding action that will benefit the unemployed and underemployed.

  45. I agree chrisod. The implied definition by nottrampis, that neoliberalism is approximately equal to Keynesian Economics squared, is patently absurd. If anything, neoliberalism is approximately equal to the inverse of Keynesian Economics. Two (probably overlapping) examples of the inverse approach are neoliberalism’s emphases on pro-cyclical rather than counter-cyclical fiscal policy and on supply-side economics rather than demand-side economics.

    For those who need it, here is a good article explaining the differences between neolberalism and Keynesian economics, and indeed between neo-Keynesians and post-Keynesans.

    https://www.researchgate.net/publication/241645271_From_Keynesianism_to_Neoliberalism_Shifting_Paradigms_in_Economics

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