Kevin Rudd: Australia’s champion prime minister of rhetoric

Certainly, the current financial crisis proves there are still many flaws within the international economy, but those on the Left (including Rudd) are fibbing when they pretend they can simply save the world through greater government intervention.

In the end, deficit spending is just another form of protectionism as Western nations seek to meet the needs of their democratic populations while maintaining leadership within international relations. When debt levels become completely unsustainable, it will be interesting to see what the powerful Western nations will do to reaffirm their influence against rising powers less willing to embrace democratic traditions.

So Rudd should realise that so-called neoliberal trends actually did offer a policy approach that endeavoured to uphold national and international economic needs through the ongoing promotion of the international economy, notwithstanding that growth was increasingly fuelled by higher levels of debt, with China benefiting most in terms of manufacturing employment.

What is left in this new form of protectionism is just what is best between government spending or tax cuts, another important source of competition between centre-left and centre-right politicians and their supporters.

On America’s recent $US825 billion plan, which includes about $550 billion in spending and $275 billion in tax cuts, opinion is divided. While Paul Krugman noted that “public spending provides much more bang for the buck than tax cuts”, especially when the option of interest rate cuts is gone (New York Times, January 25, 2009), Daniel Mitchell (a senior fellow at the Cato Institute) continues to argue that the best stimulus is to downsize government and implement a flat tax.

But even centre-left political parties will make policy decisions with political considerations. As noted by Henry Ergas (The Australian, January 27, 2009), the Rudd Labor government’s $4 billion assistance plan for the building industry, “with commercial property accounting for some 12 per cent of the investments made by Australian super funds, reductions in commercial property prices would also have an impact on the funds and especially on those that have been negligent or tardy in writing down the value of their property investments”.

In the end, Labor will merely tinker at the edges in its willingness to provide a greater level of government intervention when compared to the Coalition, unless of course freer trade is rejected and higher taxation rates begin to emerge in more powerful and influential Western nations.

Just as I previously suggested in On Line Opinion (September 16, 2008), Rudd is Australia’s champion prime minister when it comes to offering rhetoric rather than intellectual honesty about the difficulty of finding policy decisions that address the many strengths and weaknesses associated with freer trade.

Rudd needs to focus on the future rather than making supposed intellectual claims about the past, as if he would have done anything differently or better.