In my previous post, I reproduced Brian Davey’s piece from Open Democracy, which expressed skepticism about the capacities of the political system to deal with complex phenomena, permeating all sectors of the economy and lifeworld, such as climate change. I agree with the diagnosis, but I think that a different mode of politics could find solutions.

There are three similarities between the design of the CPRS and the American Health bill (and for that matter, the US cap and trade bills):

(a) Both started out with an ambit, seeking to find the limits of giveaways and concessions to political and particularly corporate constituencies; rather than from the position of a solution;

(b) Similarly, both come with implicit rhetoric that any action is a good start, and a messy compromise can later be made purer and more effective;

(c) Both seek to accommodate existing interests and shift behaviour only at the margins, rather than constructing a new frame which would require actors to reconfigure behaviours, and create new actors (and destroy or reshape old ones).

In short, this sort of approach to governance is inherently conservative, in that it seeks to match political imperatives to already existing situations, rather than to transform the situation politically. This tends not to work, for reasons which are fairly obvious. Yet, notions like ‘nudge’ and using quasi-markets to achieve social ends are the hallmarks of postmodern progressive policy wonk-dom.

In an interesting parallel, Andrew Norton recently typologised different sets of beliefs on the Australian right, while a number of writers in Salon, riffing off Ed Kilgore’s article in The New Republic, pointed to an ideological split in the American centre-left. However variously characterised, there’s a difference between what Glenn Greenwald calls corporatism and social democracy. Kevin Rudd has often described himself as a social democrat. But I think he’s more of an undifferentiated statist, with a vague notion that the power of the state should be used for doing good. Hence, we don’t have any particularly strong political direction from Labor on climate change (the actual choice, domestically, now lies between The Greens and the Coalition, as the middle path of tinkering begins to fall to bits).

Among other things, the lesson we should learn from the failure of Copenhagen is that a weak and conciliatory strategy designed to buy off as many special interests as possible (particularly through compensation for the right to future profits, which is now – quite bizarrely – represented as if it were a property right) leads not just to a milquetoast solution but also to political failure.

Michael Lind is quite right to suggest that American progressives need to reflect on their ideological differences, exposed by the defeat of Bush, and I think we need to, as well. In so doing, we also need to recover a sense of the possibilities of progressive politics, and not to rest content with a vaguely progressive desire to steer social and economic forces and actors this way or that. The times demand something much more urgent, and something which would require the spending of political capital, some of which needs to be used to take on the vested interests of polluters. But if Australian progressives were to frame the choices more sharply, and offer genuine action on climate change, my bet would be that would pay a political dividend.

Update: The third part of the ‘After Copenhagen’ series, on domestic politics, has now been posted here.

But perhaps, although he presumably wouldn’t welcome the Bishop meltdown, Malcolm Turnbull isn’t too worried about the level of triviality in the great economic management debate. The budget deficit yardstick went missing yesterday (that was so… last week) and Turnbull might not like to be reminded of his inconsistency and constant contradiction – whatever happened to that “economic narrative” we apparently were awaiting from him? Anyway, Malcolm Turnbull doesn’t think there’s much of a global financial crisis any more – because he hasn’t heard of any “big events”. Presumably events only happen if they’re on the front page of Australian newspapers. He might like to check out the leading indicators of the credit crisis which suggest we’re not exactly back to normality. But so parochial are our political leaders and media that debates about the restructuring of global finance and the dangerous leadership interregnum in the United States are apparently off our radar.

But there’s another disconnect happening in the economic sphere too. The 7 30 Report last night made much of the “grim summer of 2008″. Yet pundits were somewhat taken aback that retail spending actually increased in October. What could this mean? Here we need to remember one of the big lessons from the 2007 election campaign – political traction is gained through focusing on the lived economy rather than the sorts of numbers that excite economists. There’s a dialectic at work of bits and pieces of news and impressions being filtered through personal experience and anecdote. Most folks are also not going to be crying tears about big losses by bankers. If employment holds up reasonably, and the Rudd government can continue to shape public perceptions that times are difficult but everything that can be done is being done, confidence in the consumer sector may be more resilient than anticipated. Interest rates led stimulus of $600 a month over three months for those with a 300k mortgage won’t hurt, and neither will tax cuts and the Christmas fiscal package.

Current events are underlining the fact that economies rely on the creation of shared realities and that the “laws” of economic behaviour are shaped and varied through perception and sentiment. The Rudd government will be hoping that the retail figures are also an index of how those perceptions are being constructed among voters and consumers in Australia now.

Barack Obama’s victory represents a watershed in American history, but it will also have ramifications around the world. Before I head out to celebrate I thought I’d just bash out a few quick notes on some of the policy implications for Australia of this momentous turnaround in the state of US politics:

Climate change

Today’s election result heralds the rise of Green Keynesianism. The US economy is in the toilet and smart economists are advocating direct investment over a more consumer-based fiscal stimulus. Democrats in Congress got a head start last year with the Green Jobs Act, and elements of the President-elect’s energy and environment policies look a lot like a ‘Green New Deal’. This from Time Magazine:

He wants to launch an “Apollo project” to build a new alternative-energy economy. His rationale for doing so includes some hard truths about the current economic mess: “The engine of economic growth for the past 20 years is not going to be there for the next 20. That was consumer spending. Basically, we turbocharged this economy based on cheap credit.” But the days of easy credit are over, Obama said, “because there is too much deleveraging taking place, too much debt.” A new economic turbocharger is going to have to be found, and “there is no better potential driver that pervades all aspects of our economy than a new energy economy … That’s going to be my No. 1 priority when I get into office.”

Calls for a Green New Deal are also starting to gain traction in the UK – and the UN. This can only help the chances of Australia’s version of the Apollo alliance, which released the ‘Green Gold Rush’ report last week calling for investment in green-collar jobs growth.

The Obama campaign’s target for emissions cuts was 80% by 2050 – a fair way ahead of Oz Labor’s as-yet-unaltered election promise of 60% by 2050. With the Arctic ice-sheet melting rapidly even an 80% target is too low for a developed country like the US, but it should certainly give Professor Ross Garnaut reason to revise his pessimism about the likely outcome of the Copenhagen round of climate negotiations. It’s worth noting that the Obama campaign’s climate and energy platform specifically called for 100% auctioning of permits.

Afghanistan

I might leave the analysis of this point for one of our more foreign-policy inclined fellows. Suffice to say that Obama’s win means that US activity is likely to be ramped up in Afghanistan, and given that we’re still there, that will have implications for Australia.

Behavioural economics and ‘choice architecture’

Obama has quoted the ideas put forward by behavioural economists Thaler & Sunstein in Nudge, which looks at ways in which a more nuanced understanding of how humans behave in markets can enable policies which are more flexible than top-down regulation, yet better at addressing common market failures than a free-market approach. Sunstein and Thaler have both been consulted by the Obama campaign. This from the Guardian on Thaler and the Dems:

He “talks a lot” to Obama’s camp, especially the chief economics adviser, Austan Goolsbee. “We gave Goolsbee the book when it was still in proof. He read the whole thing and just lifted some parts.”

Of course, as this post argues, its important to remember that the policy tools informed by behavioural economics can be used towards either progressive or conservative ends.

Multilateralism might get inspiring again

The amazing Ben Brandzel sent an email around a few days before the election listing 43 policy proposals from the book of Obama that kept him motivated while working on the campaign in North Carolina. This was his favourite:

“Save millions of lives and win allies around the world by doubling foreign assistance to cut extreme poverty in half by 2015, and accelerate the fight against HIV/AIDS, tuberculoses and Malaria.”

I can imagine that some UN staff might feel a lot like John Robertson did after the election of the Rudd government – i.e. ‘at least this lot don’t want to kill us’. Regardless, the US’ newfound commitment to multilateral cooperation on serious global problems is about to make the lives of everyone working in international development a little more (there’s that word) hopeful. And that’s got to be a good thing.

Just as an aside, it will be interesting to follow the relationship between progressive think tanks & the new administration. Expect to see the traditional influx from conservative think tanks to Republican administrations mirrored on the Democrat side this time around. John Podesta has been put in charge of the transition phase, which means he’ll play a key role in building the new government. Former Whitehouse chief of staff under Clinton, John is the founder and CEO of DC-based think tank the Centre for American Progress. I met a bunch of very switched-on CAP people when I was in Washington earlier this year – they’re an absolute ideas-factory. Check out their policy platform for signs of things to come.

What does regime-change in the US mean for Australia, and the world? I’d love to hear your thoughts in the comments…