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Debating the stimulus and the rights of the needy

By Tristan Ewins - posted Thursday, 12 March 2009


This February, Kevin Rudd’s Labor Government passed a formidable stimulus package through the nation’s parliament amounting to $42 billion. Included was money for social housing, school infrastructure, and home insulation. Without going into detail, this stimulus provides a good start in minimising the global recession’s domestic impact for Australia.

Perhaps, though, it does not go far enough. As veteran economics journalist Ken Davidson explains:

The collapse in private-sector demand must be replaced by a corresponding increase in government spending to avoid lower economic growth and higher unemployment.

On this basis, the $42 billion package introduced to the Parliament by Treasurer Wayne Swan was about half that necessary to sustain non-inflationary growth without rising unemployment over the next four years.

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Finance Minister, Lindsay Tanner, meanwhile, has argued for a cap on new spending of “2 per cent of GDP” (some what in excess of $20 billion).

Considering the substantial share that welfare reform should comprise in the upcoming Budget, surely there is scope to provide for other initiatives beyond this “self-imposed cap” (many of which, in themselves, would contribute to economic stimulus.)

Options include building the National Broadband Network, modernisation of public transport, more ambitious social housing programs, and essential infrastructure in areas such as water and renewable energy.

Also, regardless of abstract economic principles, there are many other areas which are central to our real quality of life. Such areas include: more hospital beds, quality of aged care, better nurse to patient ratios, universal provision of health care including dental health (socialised-medicine and not-for-profit community providers), support of public, participatory and community broadcasting and media; provision for community groups, education programs and public libraries.

Of course, some of these might not be able to be realised quickly enough to provide the immediate stimulus we need. But considering the possible depth and length of the recession, such measures could nevertheless be integral to our response. Failure to invest in infrastructure and education now will impact negatively on productivity and capacity into the future and will feed into a “recessionary spiral”.

A global crisis

Around the world governments are facing the reality of financial and economic collapse. Critically, reflating unsustainable speculative “bubbles” - whether in housing or elsewhere - is not the answer.

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In a ground-breaking essay on what he calls the new “global social democratic consensus”, Walden Bello supposes the financial meltdown has critically discredited the neo-liberal ideology. For years, the systematic stigmatisation of socialism and social democracy has been so entrenched that even the most progressive voices had to compromise with the neo-liberal ideology in order to be taken seriously. But today Bello believes there is a “fluidity” unknown for the past half century or more. Bello supposes a new global economic order, promoting equity, as well as environmental and social conditions upon trade. And yet he also believes that Global Social Democracy (GSD) needs to orient itself towards further democratisation of economic decision-making.

But Bello is uncertain what the ultimate consequences here will be. He queries:

[Will] government ownership, intervention, and control be exercised simply to stabilise capitalism, after which control will be given back to the corporate elites?

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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