The commentary from Rod Cameron on Lateline last night was interesting. As Christopher Sheil observes at Troppo, the key insight is that Costello’s trashing of Howard’s record as Treasurer and criticism of his profligacy as PM is very dangerous for the government. It’s not hard to imagine campaign ads generously excerpting Costello’s money quotes. Another interest rate rise would also devalue the economic management card. And there’s some more interesting analysis from Dennis Shanahan (let’s give credit when it’s due) over at the Government Leaning on the Fence Gazette.
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. (And of course – it really is an abstraction – which is not to say that it’s immaterial or elusive – but it’s a point that the globalisation of national economies makes clearer – why else is our stockmarket going into reverse gear because of sub-prime lending in the States and the derivative markets in credit risk leveraged through merchant banks lending to hedge funds?)
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 govenment 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.
Good post, Mark, and yes, good commentary from Shanners. Howard may well have mugged himself by not laying out more of an economic agenda — as it stands the only major Coalition economic reform most punters will remember is the GST, Super de-reg if he’s lucky. As it is, his main response to Rudd’s framing remains fixed on the economic record of a Labor government twelve years ago and anti-union hysteria, neither of which are likely to dent Labor or Rudd’s appeal.
I heard an ABC radio report this week that China has stopped buying Australian wool and a scramble was on to find out why. Anyone know?
Rudd’s strategy is a good one. Sure whinging about petrol prices is a bit lame… but popular no doubt.
That’s it David. Rudd is just publicly whinging about what many Australians are at water coolers and in pubs after work, thus he hits a chord.
Howard/Costello aren’t whinging at all, but speaking about sunshine and roses. In all my life there is always a good whinge or ten in every conversation on anything, even sex, thus the disconnect between what the government is spruiking and the public and the connect between what Rudd whinges about and the public. Howard doesn’t get this, and it tells me apart from racism and fear, he really isn’t the “in touch” leader with the Australian people the pundits have made him out to be over the years.
Are we on the verge of a new political paradigm then? It’s the whingeing, stupid? Will Rudd’s Whingers be the new Howard’s Battlers?
Heh. Probably.
It’s a good analysis, though. The whole point of the phrase “barbequeue stopper” Howard coined is that you need to relate your political narrative as closely as possible to what people yack about in their everyday lives. But he seems to have lost the art.
Howard has coined a number of words over his time,and some experts felt that was a sign of engaged intelligence. But,let us not forget,that it could of been someones experience,where the friends around for a barbecue,just couldnt stomach the subject matter. If you start from there rather than the currency of language used more work ahead. For the words imply that the barbecue finished or transmuted into an abnormal barbecue ambience. I think Rudd and Howard are hoping people read into their statements something that will work-out as having meaning for them,as voters. And you will find by googling the word stopper in capitals,an amazing assortment of a list that is extensive..code perhaps as a secret society to recognise each other. So everytime you think about Howard you get BS. A long time still in terms of stoppers until the electorate says no more!? BBQ………..BBQ………BBQ……QBB…..
Peter Brent at Mumble has done a table on the Newspoll ‘economic management’ question since 1993. It seems throughout that year John Hewson outscored Paul Keating as an economic manager. From late 1995 to early 1996 Keating outscored Howard.
http://www.mumble.com.au/federal/newspollbetterecmang93-07.htm
Sounds to me a variation on the “5 minutes of sunshine” line that JWH(LR) ran in ‘96. The cleverness of that line is that it acknowledges that things are not too bad in general but individuals can identify with their own personal pain…..take your choice….interest rates, petrol prices, rent, groceries, child care etc. etc.
“The key insight is that Costello’s trashing of Howard’s record as Treasurer and criticism of his profligacy as PM is very dangerous for the government.”
Nope. Most people are already aware that Costello doesn’t like Howard and no more than 30,000 of them are likely to buy the book. All the rest is just background noise.
The Van Onselen/Errington book is actually quite sympathetic to Howard, though to call it “biography” is to do a great disservice to biographical exposition. It just confirms me in my opinion that no-one in Australia has attempted biography seriously since David Marr tackled Patrick White.
Anyway. What Howard did or didn’t do as Treasurer, nearly a quarter of a century ago, is about as relevant to the forthcoming election as the political machinations of the later Ming Dynasty – Costello’s commentary notwithstanding.
Labor will win because this government is tired, bereft of ideas and curling at the edges like 20 year old wallpaper in a dingy early opener. In that respect, Rudd has cleverly positioned himself as the heritage-approved renovator rather than the rapacious urban developer and the good times continue to roll. Steve Bracks’ departure throws the whole scenario into sharp relief. A man nearly 20 years younger than Howard chooses to walk away from political power because he’s smart enough to know that it’s the sensible thing to do.
Howard is looking more 88 than 68 tonight.
Geoff, while I take your other points, I think there’s a distinction between the “Howard and Costello don’t like each other” meme where Rod Cameron is 100% correct that no one would give a stuff whether he’s invited to dinner a deux with John and Jannette, and the “Howard is a worry as PM on economic policy” stuff which really might have an impact in Labor ads. People don’t need to read the book for that one line to be turned into something damaging.
I see Bryan P at Ozpolitics has called it for Howard. Well sort of: he shows the trend line in the Coalition’s TPP since March has improved such that if it continued, it would sneak home in a December election. Well, maybe the PM will hang on till January, just to ensure himself of a working majority!
More seriously, Bryan tries to graph the ‘Sawford formula’. Supposedly, governments lose if two or more of unemployment, inflation and interest rates rise over a term.
Is there a more ludicrous attempt to reduce elections to economic prognostication? Let’s even assume voting is a simplistic knee-jerk of the ‘masses’ to macro-economic shifts.
Imagine a government leading the economy impressively, out of a deflationary depression where interest rates were dropped to Japanese style levels. Almost certainly the CPI and interest rates will be higher, and employment improvements might even lag. The ‘formula’ says the government is doomed.
Saw that this morning Graeme the trouble is that it depends on everything going right between now and election day for the Government. It certainly takes no account of mistakes, stuff ups, political disasters, interest rate rises or rats deserting a sinking ship.
I think it’s old news, Mark. As V.O and Errington point out, Howard has been deploying funds to his perceived electoral advantage for 11 years. How are people supposed to react to this supposedly explosive “revelation?”
“He’s a bastard for wasting money on our baby bonus when he could have followed the Treasurer’s fiscally prudent advice and have been investing in national infrastructure all these years”
I don’t think it’s a vote-changer and I think you could be reading a bit much into the “bio.” It’s actually pretty lightweight. At one point the authors feverishly assert that poor old Hu Jin-Tao is the mastermind of the “most murderous regime in history.” They also claim that the reason that Howard doesn’t like academics is because his brother, Bob, is an academic and Bob left the Liberal party to join Labor. I’m not totally convinced.
Geoff, I haven’t read the bio and can’t say I’ll be rushing out to buy it (and your review makes me less inclined to). I’d still have thought a direct quote from Costello might be damaging. Anyway, that wasn’t the main point of the post – which is why it’s not developed at any length while the other arguments are.
Mark – you seem to alude above that the government has in the last year hasn’t played the ecomonmic cards well. They have confused their focus by announcing a big spending budget and launching policy directed at cultural issues (like the Naional Indigenous Plan).
For years they have rallied around a few macro-economical indicators: interest rates, unemployment, and inflation and they have formed the key of their ecomomic narrative. I guess this is all obvious but they turned all the focus in the last election onto interest rates and pracitally said “all that matters in the economy is interest rates”. As we all know, interest rates bottomed out a year or two ago and they are on the rise again.
I wonder if the Libs have thought about the fact that they crippled their own economic message by overplaying it at the last election. Thus, they have tried to turn attention away from the economy because by their own test they are failing? Are they afraid of a negative campaign based around interest rates in the weeks before the election and have been trying to head it off? Or am I just giving them way to much credit?
The problem with OzPolitics (and it’s not that much of a problem really) is that it’s all graphs and stats. The trend lines don’t necessarily mean anything: they don’t predict the future any better than tea leaves or the BOM. That’s not to say they don’t make interesting reading, but Howard still has the ability to “Tampa” with this election somehow…
Shanahan’s point is a good one, but it’s not until we can start seeing the porch lights turned on and the baseball bats brandished that I will feel confident about Rudd’s chances at election time.
mick, they’ve got little option now but to talk up the macro-economic indicators because interest rates is one of the ones that really does have a visceral impact because it directly affects people’s finances (and although it’s often pointed out that many people aren’t affected because they own houses outright or rent, that argument seems to ignore the fact that interest rates on credit cards and personal/car loans that aren’t fixed move as well). They may well try to suggest that interest rates will be “even higher” under Labor but it’s dangerous ground for them now. I imagine all we’ll get is blather about unions.
Rudd’s Whingers are definitely in the ascendency.
They don’t have a vested interest but I thought I might pass on some foreigner’s observations.
3 different overseas based analysts have been through Melbourne and Sydney recently.
All are amazed by the strength of the economy here and the resulting power of the $Aussie.
They have been amazed by the signs of extravagant spending .This is something wasn’t much in evidence to the same extent over the previous 10 years.
The revaluing of property and the rerating of the dollar aren’t directly linked but reflect the idea that the overseas customers the economy services or supplies aren’t going into economic reverse any time soon.
They have also noticed a “swagger ” among some of our population but this has not been accompanied by any increase in courtesy – unfortunately the reverse seems to be occurring.
Comments describing Sydney prices as being “Tokyo like” should stimulate some thought- sure they show that the market is well priced but that some services will therefore be unavailable to many and hence the space opens up for Rudd to say the benefits of this economic strength or unevenly available. It is a little like having an argument among the shareholders of a gold mine.
Overall the visitors suggested we may be seeing a once in a generation rerating of the economy’s strength – think of us a Asia Pacific”s Ireland perhaps.
Peter Martin on the Housing Summit.
I think it’s more likely that Howard looks down upon the whole public educational establishment because of his own outstandingly ordinary academic achievements. It’s a kind of defence mechanism … the best way to overcome an incipient sense of inferiority is to belittle the institutions that rated him inferior.
Ken, Don’t think that link was a success, but Bjelke Petersen was always bagging people with academic results as being too impractical and lacking common sense.
See Salary Anne Atkinson has just been
awardedpresented with an Honorary Degree, too“For years they have rallied around a few macro-economical indicators: interest rates, unemployment, and inflation and they have formed the key of their ecomomic narrative. ”
Indeed.
After 20 years of getting the general populace to understand the market economy and what it means, governments in general I think are still too preoccupied with what are essentially technical economic terms. Geroge W Bush the other day asked Americans to “look at the economy”, it was “large”, “flexible”, and “resilient”. (I noted these quotes over at Chateau VVB). But really, what are people going to make of such a pronouncement, or of the standard indicators even if they understand them better now than 20 years ago?
To me it’s the old “well they tell me the economy is going well but I can’t see it” thing. If a government can’t make it real for people, don’t be surprised if the people turn off.
Economic literacy probably makes you an elite, you know. Ooh.
What I don’t understand after reading your post Mark, is that Howard keeps scoring well on the polls as far as being able to manage the economy. Despite the fact that Newspoll shows Labor still in solid lead mode, Howard is still preferred to Rudd over who would manage the economy better. This led one poll researcher to the conclusion that Labor’s lead was soft and that if it came to the crunch, enough people would vote for Howard to get him over the line at election time.
But I’m wondering if this attitude is just a hangover of the stereotype epitomised by Margaret Thatcher when she said ‘Labour always spends more money’? I mean, voters might be in a mood for a government to start spending more money on them after years of massive budget surpluses and a general run-down on national infrastructure and now WorkChoices. Perhaps the poll result could be interpreted as the public saying well yes, the Howard gov. is certainly very good at scrimping and saving but we want a little more than that?
There seems to be a perception in the government and government supporters that the voters who don’t think they are personally doing so well are simply ungrateful whingers who are too dumb to see how good they have it, rather than people for whom the current boom is really not working so well.
Also, they have forgotten that those selfish voters have kids and grandkids, friends and neighbours who they actually care about. If some of those aren’t doing so great or won’t be able to afford a home it affects their perception of the economy.
If Howard perceived this he could just get up and say “I understand that young people can’t afford houses and grocery prices are up blah blah blah. We are doing blah blah blah to make sure the benefits of the economy reach everybody”
That misperception by Howard and Co could mean they keep amplifying the wrong message right through to election day
Bugger. Sorry, I meant this.
I still think that the economist from Macquarie Bank got it right when he said that the economy has been better for Howard than Howard has been for the economy.
mark says:
No. The “dysjunction between Howard’s positive poll marks on economic management and the awful performance of the Coalition on voting intention” is not explained by Rudd’s novel economic “narrative” or “frame” or some such pundit waffle. The bucks-votes dysjunction would have happened anyway sometime in this term, whatever the candidates interpretation (only pundits seem to pay any serious attention to political spin.)
Macroeconomic prosperity (or austerity) remains the best general predictor of govt (or Opposition) voting intentions. The econometric model of swings in the electoral pendulum is currently the best social science model on offer. That is the model I use when predicting elections. It has been successfully guiding residents of the “Strocchiverse” since the early nineties.
The Cameron-Crosby paper on AUstralian financial-electoral conjunctions model, poignantly titled “Its the economy, stupid“, predicted almost 2/3 of federal elections since WWII:
Federal politics does not always track headline macroecnomics figures:
The relevant factor here is govt. incumbency (or oppo. “outcumbency”). Duration in office is not a striaght forward linear function. It seems to follow some kind of parabola, no doubt described by a polynomial function of some largish degree.
A first term govt has a greater than .5 probability of achieving a second term in office. The electoral popularity curve’s asymptote seems to be somewhere in the third term. A third term govt seems to have a less than .5 probability of achieving a fourth term in office.
Howard’s govt is well past its use-by date. The ALP’s popularity explained by the voters concurrent attraction to the novelty of Rudd’s nerdy personality and aversion to the antiquity of Howard’s nasty politicality. This seems to be simply a function of time on the job. Rudd is a new, fresh face and a safe pair of hands. Howard is old, stale and now seems to have feet of clay.
Pro-LN/P voting intentions began to slide towards parity with the ALP once Latham resigned in early 2005. They were neck and neck for most of Beazley’s tenure. They fell off a cliff once Rudd was elected leader in late 2006.
Neither of these voting variations were brought on by any startling new economic interpretations. The voters like Howards policies but are tired of Howard’s politicking. They were looking for someone who could continue the policies but present a less devious and dastardly politics. Rudd seems to fit the bill perfectly.
Its not rocket science but its not tea-leaf reading either. Nobel prizes await those who can make superior quantiative models. Fish wrapping awaits qualitative punditry.
Only political train-spotters care about Costello’s opinion of Howard’s efforts as treasurer over two decades ago. The public know what they’re getting after a decade in power, and they like it.
Whether they like it enough to forgive WorkChoices is the only question.
Another indicator of the Howard government’s policy competence falls by the wayside.
Not so easy to blame those evil labor governments now.
No, the people of Australia are interested in what Costello says about Howard not because of events of 20 years ago.
On the contrary, the people of Australia are interested in the depth of hatred and suspicion that infects the Coalition.
As Howard use to say when he was on top of his game: “Division is death.”
Say no more, Jack.
…writes, Jack, but after discussing “the electoral popularity curve’s asymptote” he moves onto some novel variables:
“The public know what they’re getting after a decade in power, and they like it.
Whether they like it enough to forgive WorkChoices is the only question.”
Latest opinion poll (Morgan, released last week) has Labor ahead 59 to 41. Centrebet odds are Labor $1.65 Coalition $2.25.
The public must really, really hate WorkChoices’s guts.
Or maybe they hate one or two other things as well.
Mark on 29 July 2007 at 6:03 pm
Didnt take long to run out of factual and logical responses there, did it mark? You made an elementary blunder missing the key paper on your topic, which even had the same name as your post! Perhaps you should hire a research assistant. Or maybe just hold fire before banging out a blog without bothering to do even a cursory study of the scientific literature.
Just out of interest, are you familiar with econometric models of psephology? They have a better predictive record than pundit-waffle.
I note that you have not claimed bragging rights to correct electoral predictions on-line. Maybe its time for you to emigrate to greener intellectual pastures. The “Strocchiverse” is relaxing border controls these days. Pretty much anyone can get in these days, so you should have no trouble at customs.
mark says:
I apologise to anyone who was offended by my dabbling with quantitative methods. I meant “peak”, not “asymptote”. Are you suggesting that electoral popularity does not on a average peak in the second term? I thought that was the genesis of the old saw about “mid term slump”, occuring after about four years in office.
The fact that Rudd has a nerdy persona whilst Howard plays nasty politics should not be a “novel variable” to anyone, especially mark. Not so long ago you were falling over yourself to agree with me on this point. Why the change of tune?
Nor should the fact that Rudd’s freshness is an asset and Howard’s staleness is a liability be controversial. Every dog has its day.
Certainly,I find no good much at all in the Liberals,only those of a certain income would be accepting Rudd as a safe bet.Do not underestimate the cruel divisions that are the Labor family.Why is a union paying for a policy on climate change,and ready to spend a $million on advertising.Researchers could use that money and if the workforce was willing to put in some voluntary time building a few things,then independent of non-gauranteeable Kyoto agreements and carbon trading could fire up a quicker result.The state and federal ALP cannot go on forever leading workers up a garden path that means workers and the community carry the brunt of responsibility whilst international financing gets the good image for complying.If it is also worthless advertising, again, that levers who wins, then there will be less emus running across the land and the ostrich has gone beyond the myth..a pheasants arse indeed. I visited the Bull Pulpit to see what it thought of Clinton,and all the previous Presscys.Australians seem to prefer being manipulated.
Jack, I agree with you about that, but I’m merely pointing out that it’s not an observation that neatly fits your claims to be doing quantitative modelling (and I’d quibble with that word in this context anyway). We’ve already had the argument about why I think these sorts of predictive models are of very little use in psephology, and indeed why epistemologically there can be no “prediction” of an unrepeatable event, and I don’t propose to have that argument again.
Mark on 29 July 2007 at 8:25 pm
My observation of the electorates exhaustion with Howard’s “politicality” fits very neatly with Fair’s econometric models of US presidential elections:
Fair’s model apparently has an 80% success record. It also has a “war” variable, which has less bearing on AUS elections. It has been criticised for lacking a “fiscal policy” variable, mainly to cover the efficacy of targetted electoral bribes.
mark says:
Your epistemological principle proves too much. According to the theory of evolution all events are unrepeatable. It follows from that there can never be any scientific prediction. That epeistemological prediction is a recipe for intellectual futility.
“Economic management” is meaningless as a category upon which to judge governments. I am sure that most people give the government the tick in this box because of the nature of incumbency. There may also be a growing and belated realization that in a modern, globalised world governments don’t “manage” economies. They are major actors within economies, just as the business and household sectors are.
Sure governments can influence growth at the micro level through industry policy. But the big macro lever – control over interest rates – is held by the Reserve Bank. And even then, borrowing costs are overwhelmingly influenced by outside forces. The big fall in rates through the 1990s was a legacy of globalisation and inflation targeting. The influence of fiscal policy in demand management is over-rated, and while Howard and Costello have made a fetish of budget surpluses, anyone who knows anything about economics will tell you it is not the size of the budget balance that matters but the change from one year to the next. If we were to go into recession, it would be entirely appropriate for the budget to go into deficit. But of course, Rudd has been wedged on that one and dare not tell the truth for risk being seen as economically irresponsible.
In fact, there is a good case to made that Howard’s economic “management”, such as it is, has represented one of the greatest wasted opportunities of modern times. He has had the great good fortune to govern in a particularly benign economic period internationally, with growth here buttressed by the biggest commodities boom in at least a century. Yet he has frittered away that windfall on middle class welfare and expensive exercises in creating wedges and putting out political fires to maintain his own grip on power.
Labor is doing a good job moving the economic debate away from macro-economic indicators to the real world of shopping for groceries, paying rent, educating kids and filling up the car. But Rudd should also be able to find ammunition in the fact that net foreign debt has doubled since Howard came to power (remember the debt truck?), we have run a trade deficit for five years despite a 50-year high in our terms of trade and our interest rates are second highest in the OECD after New Zealand. Yes, the unemployment rate is low, but we have run out of skilled workers because of a lack of investment in education and training. Productivity has slowed, infrastructure is inadequate and we are unable to growth the economy much beyond 3 pct per annum without generating inflation pressures (which partly explains why rates have gone up four times – with number five due next week – since Howard’s rates lie in the 2004 election campaign.)
One of Howard’s great supposed strengths, then, is exposed as a mirage. His other, national security, is even more flimsy, given the Iraq fiasco and his outsourcing of our foreign policy to an incompetent and corrupt cabal in Washington.
Just why would anyone vote for this man again??
Mr Denmore, you seem a little confused. On the one hand you reckon grocery prices is a ‘real world’ issue, but then you seem to be worried about ‘middle-class’ welfare, which essentially puts cash back in the hands of consumers (albeit in the inefficient manner of The Churn). Is your preferred model to simply not tax the middle-class so much in the first place, directly alleviating household expense pressures?
Another interesting thing about your post is the reference to slowing productivity. Why do you think that has happened? Not enough capital out there for investment in plant/equipment, etc.? Or just the economy soaking up more and more marginal workers (ie. the low-skilled)?
Cheers
BBB
In my humble opinion one issue could get Howard over the line easily. That would be the whole greenhouse issue.
If he was to implement a modest scheme that hit the pockets of people then compared it to the pain of the ALP’s 60% reduction target?
I see that pledge of 60% as the next “Tasmanian loggers” for the ALP in this election. The intransigence of the eastern States on the water distribution may also play into Howards hands as well. Rudd ids playing it reasonably smart by letting the States run most of the negative issues for him, but unless he actually stands FOR something rather than talking about reversing some things, some of the time, maybe, he may end up standing for bugger all.
I would also expect an outbreak of factionalism to hit the ALP fairly hard the nearer a victory looks for them. Julia has been kept away from treasury which calls her credentials as a manager into question as well.
I wouldnt be ruling a Lib win out just yet, they look tired and stale, but I havent seen any great efforts by rudd to differentiate himself from Howard, that may be his undoing.
Bingo, Baingo – you’re assuming the answer to the real world economic concerns like rising grocery prices is on the demand side of the equation – cutting taxes, increasing subsidies etc;
Nominally an economic liberal, Howard through his policies has in fact increased the duopolisation of Australian business (Woolies/Coles; Shell/Caltex; Qantas/Virgin; Fairfax/News Ltd; Telstra/Optus), with a resulting increase in producer pricing power.
What we need is greater liberalisation of product markets. But Howard, as a result of his ideological obsessions, has been focused entirely on freeing up a labour market that already works efficiently and fairly.
As to productivity, Howard has stifled entrepreneurship and increased regulation – again at complete odds with his public image as a liberal. And he has frittered away from the windfall from the commodities boom, instead of investing it updating the nation’s social and economic infrastructure.
Just to hammer home the fertile ground for Rudd in this ‘real economy’ vs ‘macro economy’ argument, check out this survey from The Herald Sun:
Thanks Mr Denmore. I must say I agree with parts of what you’ve said. Howard is indeed only nominally an economic liberal. And as you suggest investment in infrastructure (whether it be schools, roads, etc) is much lower than it should be given the Commonwealth’s relatively good fiscal position.
Not at all. It’s definitely part of the solution, though. One other part is improving conditions for business investment, thereby increasing marginal productivity, real wages and the purchasing power of ordinary workers. No doubt this is why you are in favour of lower company and capital gains taxes.
Agree 100%. And bring on the liberalisation of education and health markets! Depressingly, I fear you will have many special reasons for excluding these key markets…
This line is a travesty when you consider that we continue to have over 4% unemployment. How is 4% under-utilisation efficient? Wages in many areas are above their market-clearing rates. This is a human tragedy of massive proportions. Wealth re-distribution may be morally defensible(to a degree). But meddling in the labour market is a really braindead way to achieve it. It’s no more rational than looking after the low-paid by implementing retail price controls. Ask the low-skilled unemployed, some of the most vulnerable members of the community, about the ‘fairness’ of exclusionary minimum wages.
These comments about duopolisation are also misconceived. Duopolies in themselves do not, have not and will never increase producer pricing power. The number of suppliers/purchasers in a market matters much less than is often assumed. This is why that that most evil of duopolies, Coles/Woolies, has not been unable to maintain the real prices for its products: As has been pointed out before, since at least 2003 nominal prices for groceries have not kept up with the CPI. That is, the relative positions of Coles/Woolies vs individual consumers has gotten better for the ordinary consumer since 2003. Now, how can this be if Coles and Woolies have ‘producer pricing power’ as you claim? Do you think this the outcome of choice for lazy duopolists?
Cheers
BBB
Mr. Denmore
There are many perfectly rational reasons to oppose Workchoices, but I have not encountered the “it ain’t broke, don’t fix it” line before.
Please explain.
Bingo Bonga,
Thanks for your considered response. To your point about the pricing power of the Coles/Woolies duopoly, I refer you to my post above about the increase in the cost of food staples relative to the CPI.
I don’t agree with you in principle that pure economic liberalism should extend to health and education, an argument I attribute to a naive belief in the efficiency of market-directed outcomes.
Free, universal healthcare and education are the bedrock of a civil social democracy. If we start applying the profit motive to these goods, we risk destroying what little social fabric we have left.
The great irony is that Howard is intent on winning his ideological war in these areas, nominally for economically progressive reasons, but in fact to achieve socially conservative ends.
In all other areas, he serves the interests of the capitalist class against consumers.
Thanks Mr Denmore (it’s ‘Bingo Bango Boingo’, though) I suspect we have reached a philosophical impasse on the benefits of markets. We will never see eye to eye. Two tiny points before I go:
(1) The Herald Sun data does not change my point about duopolies. A longer term view of supermarket prices shows that they did not maintain their real value from 2003 to 2007 (this is from an Australian Consumer Association ‘typical basket’ study, and I note that the ACA are often vociferous critics of the supermarket chains). Since the Coles/Woolies so-called ‘duopoly’ existed since before that time, I hope we can agree that any recent rise in some components of the CPI is very unlikely to be due to any ‘producer pricing power’; and
(2) The fact that you use the term ‘free’ in relation to healthcare and education shows that we live on different planets. There is simply no such thing as free education or free health. Anyway, the main game is in the method of delivery, not funding source (ie. privately provided universal education can be funded through taxation). As I’ve asked others before: why are you willing to trust your food supply (and your pharmaceutical supply!) to private enterprise, but not all of your healthcare?
Cheers
BBB
Is economic management really make or break in terms of success at the polls?
In 1996, the economy was recovering under Keating, albeit too slowly, and like Rudd today all Howard offered was forward momentum and the excision of everything you hate about the incumbent.
In 1998 the main economic achievements were offshore, the proposed GST was lied about, and Labor got 51% of the vote.
In 2001 and 2004, the issue was national security: first bin Laden and the Tampa, then Mark Latham.
No opposition leader has ever won on the purely technocratic terms of economic management (besides, the idea that the best thing government can do is get out of the way tends to undercut any credit for good economic news). Opposition leaders win when framing their appeal in terms of a cultural shift. Menzies in 1949, Whitlam ‘72, Fraser ‘75 (OK, so he went into the election as PM but the principle stands), Hawke in ‘83, Howard in ‘96 – all of them promised a cultural shift, a new way of looking at things rather than just a new set of faces or a new way of doing things.
Even Keating’s appeal to Labor in ‘91 with the Placido Domingo stuff promised a change being as good as a holiday and a new way of doing things whhile staying in government.
Howard’s themes in ‘96 talked about buying your own home (stop that bitter laughing), civility in public discourse (I said stop it) and an end to political correctness, relaxed & comfortable etc.
Beazley and Crean never offered any profound cultural shift. They thought they were the incumbent, having to compromise to get legislation through, the small target (rather than making the government the target, as Rudd is). This is understandable for the only Labor leaders who spent more of their careers in government than opposition: it’s also understandable why they never made it to the Lodge (except for dinner).