From today’s Crikey email:
Amidst all the shadowboxing between Kevin Rudd and John Howard about Hayek before Christmas, one obvious fact seemed to disappear from view. Howard is a not a neoliberal but a big government conservative.
The Howard government has rarely met a regulation it doesn’t like, or a middle class welfare benefit it can’t use to advance its social engineering objectives, or a rort for the “bush” it doesn’t want to trumpet from the rooftops. In fact, many economists have spilled much ink arguing that many of the government’s policies fundamentally distort markets and market signals for behaviour. The government still shows no sign whatsoever of embracing markets as a solution to climate change.
Andrew Norton made the argument in the Weekend Australian that there are good reasons for Howard’s political pragmatism when it comes to high levels of government spending and market distorting programmes.
Howard may be undergoing a forced conversion to fiscal discipline late in the electoral cycle, but only if he needs to do so to make a case on interest rates. Peter Costello must be wary of the spendometer being wheeled out again for the next campaign launch.
The irony is that Labor MPs such as Lindsay Tanner, Craig Emerson and Bob McMullan have been among those most prominently pointing to Howard’s multiple departures from economic orthodoxy. But will this critique need to be downplayed lest the “market fundamentalist” charge rebound on Labor?
It would probably be possible to fudge it, but there are risks in portraying Howard as a market fundamentalist. It’s perfectly possible to argue that Howard’s governing strategy favours already powerful interest groups and employers over “all of us”, without getting into the finer details of neoliberal political economy.
Howard would see his advantage as lying in the realm of values. This is the ground Labor now seems to want to fight on.
But the Latham/Howard contest was in many ways an argument between values and the economy. Howard ran on his economic record, while Latham wanted to talk about the fruits of prosperity. It looks like these positions will be reversed in 2007. Have Rudd Labor forgotten the consensus among Labor MPs and commentators from the Latham wash-up that ceding ground on the economy was deadly?
Elsewhere: More on the “political case against big government conservatism” from Andrew Norton on his blog. And Andrew Elder has another take on Rudd’s strategy.
Mark, the Weekend Australian link doesn’t work.
Thanks, Steve, fixed now.
As an economic dry I’d much rather Howard’s big taxing, big spending conservatism than a Labour Government, any day. We could have had Mark Latham – that would have been fun!!.
As I’ve said, Labor are playing a clever game in bringing down a long-serving leader, emphasising both the theory and the practice of Howard’s long-serving government and trying to force wedges between the two. The Liberal period in opposition 1983-96 was dominated by exchanges like Andrew Norton’s appearing every week in the Oz and elsewhere, and to send them back there it is necessary to break down the image of solidity around Howard. You see intellectual contradiction, I see a pincer movement.
What if the Labor government was economically dry?
What do you understand by the term “economic dry”?
For years the big spending has been based on the big taxing by the Howard Government. There is a political spiel that the GST is a states tax and a reluctance by the Feds to count it in their figures even though it was bought in by the Federal Government in their parliament and is run under their legislation.
They never earnt the tag as the Highest taxing Government in the History of Australia by actually doing anything towards justifying the Small Government rhetoric which Liberal Party gums flap incessantly.
Interesting analysis, Andrew E, but I still don’t see how attacking Howard for betraying “market fundamentalist” principles enables Labor to run on economic orthodoxy itself, since “market fundamentalism” is meant to be bad.
And just a correction – the Hayek stoush continued well after Rudd became oppo leader. There were op/eds by him and Howard in the Oz in the weeks before Xmas.
I always thought that the Razors of this world we offended by big taxing and big spending Government. But that only applies when Labor is in office obviously. Funny thing that!
Step 1: Coalition economic credibility is weakened after a few interest rate rises and an inability to afford the big-ticket porkbarrelling that has won the past three elections for the Coalition.
Step 2: More thoughtful speeches by Rudd, Swan, Tanner, Emerson et al. which create the appearance of a united and consistent front on economic policy while keeping their options open, with a few key repeated and vague phrases becoming cliches without undergoing serious analysis. This is not a recipe for Rudd to go all Friedmaite, it just means he has to appear solid and consistent while his opponents lose it.
Step 3: Late 2007 polling shows Labor would be more consistent on economic policy than the Coalition.
Step 4: The election.
The Hayek stoush will continue well into the future. It is fair to say that Rudd fired the first shot with his Monthly articles and has entrenched that principle in the politico-economic debate going forward.