The abstract economy: 'You've never had it so good ...'

The big puzzle for many political commentators ever since Rudd’s election to the Labor leadership has been how the government can be so far behind in the polls when all the economic indicators are so rosy. It’s been a puzzle for the government as well with ministers such as Tony Abbott almost boiling over in frustration.

I’ve been critical of Dennis Shanahan’s commentary on polling in The Australian in the past, but let’s give credit where it’s due. Shanahan recently wrote a fine piece of analysis which goes a long way to explaining this apparent dysjunction:

But the real success for Rudd was that he crafted a narrative on the economy that convinced people Australia is not in the golden age of economic growth we've been told we are and that he cares about people who cannot get what they want. Beazley's argument of crisis simply didn't wash with unemployment at 30-year lows, real wages rising, inflation low, interest rates relatively low and with labour shortages the biggest problem facing the economy. Howard and Peter Costello were able to argue from the general across to the specific: that is, the economic fundamentals were the best they had been for decades and therefore ordinary people were better off.

Rudd inverted the formula. He argued instead that there were too many people who couldn't buy a house, there were people who had gone broke, petrol prices were high, young married couples were working two jobs and child care was eating away the second salary, and there were individuals who couldn't afford what they reasonably wanted. Rudd's argument from the evidence of specific cases - undeniable ones - was to then ask if this was all happening, how could the economy be so good.

It is a logic that is attractive to individuals, accessible to them, and that recognises people's pain no matter how company profits, real estate values or consumer spending rise.

This was Rudd's first battle plan: convince voters not only that the Government was old and tired but also that it was not answering individual needs on expectations of material benefits, wasn't helping young people buy a house and didn't care about rising prices.

There are a number of key points here. First, it's right to say that Beazley just played to the government's strengths by claiming good news was terrible news. The better strategy is to reframe the economic headlines.

In the Keating era, we got used to measuring our progress by watching key indicators - even some now totally ignored ones like the balance of trade. But Keating had a compelling story as to why they made sense - we were asked to accept some pain in order to modernise the economy and globally integrate it.

With Howard and Costello, there's no sense of national purpose articulated - just a narrative of "you've never had it so good" which follows on logically from the "relaxed and comfortable" goal stated way back in 96. The economy, to most voters, is just an abstraction.

Unless there's a story as to why these indicators matter to all of us as a nation, voters are going to look to their own hip pockets, and they've been encouraged in doing so through the sort of rhetoric the government have used to announce tax cuts and middle class welfare.

The second factor, and perhaps the "affluenza" debate is a distorted mirror of this, is that we are seeing, both through trends like the explosion in personal credit and drawing down property equity and also through the increased visibility of conspicuous consumption, the conditions emerge for a story to be told about how the benefits of prosperity are very unequally distributed. There's only a certain amount of time that you can convince people that they're "aspirational" before they realise that for many the aspirations either don't arrive or bring their own headaches in their wake.

This takes us to what I think is the most important point, and one I haven't seen made in other commentary.

When Clinton won in ’92 through tactics which were organised around the slogan "it's the economy, stupid", the knock out punch was actually delivered not through the intonation of a litany of negative indicators, but through demonstrating that George H. W. Bush didn't get how ordinary people experienced the economy. This was particularly evident in one of the debates where Bush showed his frustration openly, and responded to questioning from punters by droning on about macro-economics.

The Howard Government faces the same dilemma - if the narrative frame has been altered such that people believe they should have it better, any recitation of news about "economic sunshine" becomes deeply counter-productive. One of Clinton's many exceptional qualities as a politician was his ability to project empathy for ordinary citizens. That's something Kevin Rudd understands well.

This also, I think, explains the dysjunction between Howard's positive poll marks on economic management and the awful performance of the Coalition on voting intention. "Economic management" may not be, as Paul Kelly argues, a "predictor of the primary vote trend" if voters think the government is getting the headline figures right but that that those headlines mask an indifference to their own plight.

Bill Bowtell, a former Keating adviser, wrote recently in a response to Peter Hartcher’s Quarterly Essay that there is a very important distinction between the economy of the economists, politicians, pundits and statisticians, and the “lived economy” of voters. Howard knew this once when he attacked Paul Keating over “five minutes of economic sunshine”. But the government appear to have forgotten this insight.

It’s all well and good to criticise Rudd’s measures on issues such as monitoring supermarket prices and housing affordability, but voters have become more and more sceptical of big ticket promises and economic jargon over the course of the Howard era. What they want to hear is that their leaders feel their pain, or just their frustration. This election year, it’s the empathy, stupid.