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Where is Australia’s balanced political commentary?

By Chris Lewis - posted Monday, 1 September 2008


As Paul Kelly suggested in The Australian (October 3, 2007), “the role of intellectuals and media is to expose lies and promote truth”.

Really? Then Kelly and others representing the economic Right - those consistently advocating freer trade and smaller government - need to lift their game.

Yes, as Kelly argued last October, Australia’s political leaders since the early 1980s have made many policy decisions which have helped ensure that Australia remains one of the most prosperous nations in the world.

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And Kelly’s attack on the simplistic Left last October, although unfairly directed at Julian Burnside, Raymond Gaita and David Marr, is probably justified as few of the Left recognise the immense difficulties that all Western governments now face when balancing national and international economic considerations.

One has only to read the articles consistently put forward by professors Manne and Brett in The Monthly about the meanspiritedness and lack of vision by the Howard government, and the immense potential of the Rudd Labor Government to fulfill Australia’s various needs. It did not matter that the Howard government had outperformed many Western nations on a number of economic and non-economic measures, including lower unemployment levels and a greater proportion of GDP being spent on helping Australia’s most vulnerable workers and families.

More recently Manne has downplayed his admiration for Rudd to declare that the success of the current Labor Government has been complicated by offering policy change “in a conservative-populist era like our own” and in such “testing economic times” (The Monthly, February, 2008).

But if one looks to Australia’s economic Right for the truth, one should also be dissapointed.

Scholarly truth - which highlights both policy possibilities and limitations in our struggle to find better policy solutions - can only come about through extensive study of the facts and arguments from a variety of perspectives, an approach that appears to be lacking among the simplistic Left and Right.

While I too have sought (in four separate Quadrant articles) to demonstrate the extremely difficult task now faced by all Western governments in such a competitive world, in terms of both defending the Howard government’s efforts and downplaying the rhetoric of Labor before the 2007 federal election, it is misleading for the economic Right to make out that all is well.

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An astute political commentator should be able to anticipate the strengths and weaknesses of any policy trends. While I am a passionate supporter of liberalism and believe that a world of effective liberal democracies is more likely to lead to greater co-operation, judgments have to be made about whether policy trends are better for the majority of people or for just a select few.

After all, 16 years of higher economic growth has not hidden the harsh reality for Australia that domestic consumption has been aided by much higher levels of private debt.

The truth is that politics remains a dirty game even in a rich nation such as Australia. In an era where both Labor and Coalition governments have committed Australia to maintaining similar levels of government outlays as a proportion of GDP, this has meant a much tougher battle between interest groups regarding a variety of old and new economic, social and environmental policy needs.

While Kelly notes that policy convergence between Labor and the Coaliton has reached its zenith given bipartisan support for a pro-market economic policy, and that “intellectuals tend to be suspicious of nationalism and romantic about internationalism”, it is precisely the difficulty of appeasing both national and international aspirations that will result in immense problems for Western nations if recent policy trends continue.

Kelly notes that inequality has been offset by Australian governments encouraging income redistribution via the tax-transfer system and retention of the social safety net, as child-related payments and assistance to help low-income families have increased from 60 per cent of the OECD average in 1980 to 160 per cent by 2001. But how much evidence does one need before admitting that ongoing economic reform towards lower taxation rates and labour market deregulation will reduce the purchasing power of workers through lower wages and higher user pay principles?

Australia’s simplistic Right have become so dogmatic that they appear incapable of offering balanced commentary.

Take a recent blog by Janet Albrechtsen in The Australian (August 20, 2008) when she attacked the trade unions as having little relevance given that they represent just 19 per cent of Australia’s workforce.

Is Albrechtsen part of the Right who will only be happy when the wealthy have complete control over the have-nots? Why else would she defend the wages of Australia’s corporate elite (The Australian, May 23, 2008), but mock the effort of public sector unions to get a 15 per cent pay rise over three years for Victorian teachers in May this year (The Australian, August 20, 2008).

What will Ms Albrechtsen have to say about my own trade union (the CFMEU) getting a 15 per cent rise over three years from 2009 for workers in Victoria’s building industry? After all, why should Australian businesses have to pay me $25 a hour (plus overtime rates and holiday pay) when corporations based in China can hire at least ten labourers for the same cost. After all, we should just buy cheap cars and televisions and marvel at non-democratic China’s incredible infastructure while we Westerners struggle along as best as we can to meet our many policy needs.

And if the trade unions are obliterated, Australians can look forward to building contractors reaping a greater share of profits while much work is passed onto workers at minimum wages, a possibility that, from my own observations, is already becoming evident.

Who cares if many young Australians face record home unaffordability, and that many pensioners struggle to meet their everyday needs as food prices, rent and utility prices go up at an alarming rate.

And dare I mention my own whinging given that the price for the same dental work on the same tooth at a dentist last week has gone up 40 per cent in just two years.

Maybe I should throw in the towel and accept the reality that lawyers, doctors and dentists should get more and pay less tax because they have utilised their talent, and that the less skilled or battlers should just accept their fate in this world of greater global competition.

But true supporters of capitalism (and liberalism) overseas appear light years ahead of Australia’s simplistic Right in recognising that the redistribution of wealth in Western societies is needed to both enhance equality of opportunity and consumption possibilities.

For instance, Morgan Stanley’s Stephen Roach (The Globalist, June 19, 2007), although stressing that greater protectionism will lead to significant economic and financial market turmoil, noted that a drift away from freer trade will occur in response to the “unfettered strain of capitalism and globalisation that has been so dominant over the past decade”. By 2006, the labour income share of the industrial world’s national income had reached a record low of 53.7 per cent while profits climbed to a record 15.6 per cent. Roach’s concern is also evident by real compensation per hour in the US for the non-farm business sector rising by just 1.4 per year from 2001 through 2005 compared to 3.1 per cent in terms of productivity growth.

So how long will Australia’s simplistic Right continue to deny the difficulties ahead? It seems that it will be until Australia experiences relative economic decline and governments are forced to respond, perhaps through significant deficit spending. Remember, even US governments have increased their spending to help the vulnerable and low-income workers from 13 to 16 per cent of GDP between 1990 and 2003.

Certainly, there is a need to ensure that the Australian economy remains competitive and attractive to investment. This is a prime reason why I argue that both centre-left and centre-right governments are needed at times to correct the excesses of each other.

But contrary to what Australia’s economic Right may suggest, Australian governments will long have to address the needs of the majority. Fortunately, Australians are astute enough to temper the pace of any economic reform. With the Australian economy booming, it was always unlikely that the majority was going to accept the open promotion of AWAs which clearly favoured employers.

Quite simply, bargaining power is increased through a right to collective bargaining. As Bruce Einhorn noted in BusinessWeek (July 25, 2008), even though Chinese workers cannot form independent unions and can only “criticise the government’s labour policies at their peril”, the All China Federation of Trade Unions (representing the government) forced Wal-Mart to sign a new collective bargaining deal guaranteeing workers in two Chinese cities (Quanzhou and Shenyang) a pay rise of 8 per cent in 2008 and again in 2009.

Of course, such a development hardly diminishes the immense advantage that China and other developing nations will long have in labour cost terms when compared to Western nations.

But while Kelly calls for Labor to further lower corporate taxation (The Australian, August 9, 2008), although he hardly ever offers any advice about how or why Labor can help battlers address record home unaffordability and a higher cost of living, it remains to be seen how long such an approach will allow Australia to meet a variety of domestic policy needs, especially if Australia experience an economic decline.

For those political commentators of the simplistic Right who are obssessed with global economic realities, they downplay the effects of greater income disparity in terms of reduced purchasing power opportunities in the belief that higher aggregate wealth will increase, and that any inequality can be offset by greater income support from government.

But for myself and others who believe that the facts suggest that all is not well, there is a need to take on the simplistic Right just as much as the simplisitc Left. In other words, balanced political commentary based on the facts should be the name of the game rather than childish accusations that greater government intervention is another push for socialism, as suggested by Albrechtsen.

The days of awakening may be coming soon. As Colin Barr noted on the CNNMoney online site (August 14, 2008), though rising inflation does lead government officials and employers to oppose large wage rises, a view aided by rising unemployment levels, things are likely to get worse for many American households which may lead to the further impoverishment of workers.

And with lending practices so important to any capitalist economy, the US government is unlikely to ever allow Fannie Mae and Freddie Mac, the two mortgage giants, to collapse, thus providing a scenario that will probably lead to greater demands for regulation as the US taxpayer bears the huge cost.

Greater protection and regulation will probably have a negative effect on the growth of the international economy, although the US, EU (25 nations), Japan, Canada and Australia still comprise about 69 per cent of world GDP (nominal terms) in 2007 compared to 13 per cent for the four largest developing economies (China, Brazil, Russia and India) with their large population.

Freer trade does remain the best way for promoting peace and prosperity, but it will never follow the same recent policy trends should the majority of Westerners experience hardship.

For now, Australia does remain a lucky country. Though it has adopted significant reform in recent decades to maintain a high standard of living, its fortune to benefit from the Asian economic boom is indeed masking the difficulties that have already confronted many other Western nations as any reliance upon high levels of debt begins to show obvious policy limitations.

It is time that the simplistic Right wises up to discuss the difficult issues, or they too will remain just as simplistic as the far Left.

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About the Author

Chris Lewis, who completed a First Class Honours degree and PhD (Commonwealth scholarship) at Monash University, has an interest in all economic, social and environmental issues, but believes that the struggle for the ‘right’ policy mix remains an elusive goal in such a complex and competitive world.

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