As the Queensland election is buffeted off course by Cyclone Hamish and the oil spill, Lawrence Springborg has enjoyed more success in shaping the political message – Anna Bligh’s sos is being lost in the storm. There’s a conundrum here, as Bligh is not just more popular, but also arguably the better communicator, when not constrained by the dictates of the ALP apparat. I’ve taken a look at Pineapple Party Time at this phenomenon.
In other Queensland election reports at PPT, the latest Galaxy Poll is more bad news for Labor, the Leaders’ Debate was a bit of a fizzer, some think John Wanna may be a game-changer, and the two major party campaigns launch today.
Update: The Labor boat starts to leak.
John Quiggin wrote an interesting op/ed in the Fin Review today, which I imagine will eventually surface on his blog.
Quiggin picked up on recent remarks by Lindsay Tanner about discipline in the budget process. “Efficiency dividends” are much in the air at the moment, and Tanner appeared to be arguing that the cause of fiscal probity required a razor to be applied to public sector spending, with the goal of eventually returning the budget to surplus.
While Quiggin agreed that the latter goal was desirable, he suggested that “waste” wasn’t a high proportion of commonwealth spending, and argued that it made more sense to scale back the next round of tax cuts. The scheduled tax cuts are highly regressive, and give little or nothing to low and middle income earners. Nor is bracket creep a huge concern at the moment, and the rivers of revenue to be distributed have receded rapidly.
The government seems to be scaling back, or delaying a number of its commitments. While pension increases are apparently electorally sacrosanct, measures like maternity leave are on hold. Julia Gillard’s response to the Bradley review is a good example of this process at work. The government has accepted most of the review’s recommendations, but pushed out the implementation dates for those requiring large additional expenditure. The higher education sector is being told to hold its horses.
There’s something like a replay of the perennial tax cuts vs. services conundrum going on here. But it’s got an interesting new inflection when the quantum of money available is much reduced – focusing in on the economic benefits of spending against permanent tax increases for the upper middle and high end of the income spectrum. I’m inclined to think that there’s some residual defensiveness about the “economic conservative” label at work here. What, one might ask Kevin Rudd, would a social democrat do?
A lot of commentary in the US has focused on both the politics of Barack Obama’s stimulus package and on the TARP II bailout announced by Treasury Secretary Tim Geithner last week. In developments which somewhat parallel the Australian debate – such as it is – between the stimulators and the taxcutters (in truth, it might be a bit misleading to characterise it as one between Keynesians and Friedmanites), economists have lined up to give their verdicts one way or another. Perhaps it’s fair to say that no one is competely satisfied – for the stimulators, it doesn’t go far enough and much of the more immediate spending has been cut out to jump procedural hurdles Senate Republicans put in the way of passage. For the newfound apostles of fiscal discipline, it’s debt and deficit (though without the tendentious comparisons to Whitlam obviously).
To a large degree, most of this debate is highly ritualised. I thought Bernard Keane had a very interesting point to make today in a long Crikey piece where he argued that decision makers who are gleefully imposing a story or narrativising both events and their preferred solutions may be as much in the dark as the rest of us. The increased unpredictability of events, and of prescriptions as well as diagnoses in a time of crisis really foregrounds the artefactuality of sense-making work as people try to reduce uncertainty and simultaneously ensure that their preferred perspective becomes “common sense”. Aside from the really dire possibilities facing us all from a system which has precisely been characterised by distributed decision making and thus – by design – up until now resistant to centralised control, it’s been a fascinating study in both the sociology and social psychology of policy making.
It’s in no one’s interest, of course, to admit that they don’t quite know what is going on or that they’re frantically trying to impose a frame on the world economy for the intertwined purposes of politics and policy. Continue reading ‘Embedding the economy’
Anyone actually wanting to find out what the result of the much vaunted Senate scrutiny of the Rudd government’s fiscal stimulus legislation can now do so by reading the Senate Committee report. Peter Martin has more.
Speaking of Peter Martin, he’s posted a couple of interesting links on the same topic today – to Ross Gittens’ claim that Malcolm Turnbull’s opposition is “humbug” and to a study Treasury is said to be relying on to support the contention that bonus money will be spent.
Picking up on Reserve Bank governor Glenn Stevens’ remarks about “borrowing to invest” and not being afraid of a deficit if there are good policy outcomes to be had, eight prominent economists (including a couple of blogging ones) have written an open letter to Kevin Rudd making suggestions for a further fiscal stimulus under three headings of policy – Superannuation flexibility, Building the nation and Preparing for climate change. The text is here at Troppo (one of the authors is Nicholas Gruen).
There’s been a bit of press coverage this morning, and no doubt it’s a worthy thing to stimulate debate by proposing substantive policy measures rather than just advancing critique. It may be an even worthier thing to shift the terms of the debate, regardless of the merits of the proposed policy directions. We don’t see enough of this sort of initiative.
But I do wonder if the economists stop and think about the political feasibibility of their proposals.
Continue reading ‘Fiscal stimulus: Eight economists and a few politicians’
It’s hard to know whether to blame the pollies or the press gallery more for the sorry standard of political and economic debate in this country. Did that golden age Paul Kelly used to talk about when Paul Keating had everyone trained to cross swords on the arcana of economic levers actually ever exist? Anyway, as non-farm growth fell into negative territory and the Reserve Bank cut rates again (moving them back into an expansionary posture), all eyes were on Julie Bishop’s cat claws, and her non-performance was at the centre of the parliamentary stage.
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. Continue reading ‘Economic and political disconnects (and the sociology of knowledge)’
No doubt because Malcolm Turnbull has demonstrated his stunning grasp of economics yet again by claiming that the Commonwealth budget going into deficit is some sort of yardstick of economic failure, there’s been an immense amount of commentary on Kevin Rudd and Wayne Swan’s willingness to utter the word “deficit”. The latest instalment in the saga is documented by Peter Martin here – Rudd’s conceded that Australia may have to sustain a “temporary deficit”.
Just as Turnbull is privileging politics over economics, so too the Rudd government’s tactics are – in part – about politics. I’m surprised, though, that there hasn’t been a lot of sensible discussion about what they are up to politically. Guy Beres provides a corrective:
In short, Kevin Rudd’s personal approach to the economic situation as Prime Minister seems to revolve around straight talking, with a cautiously pessimistic bent. If things could get worse, then the Prime Minister seems to want to make it clear to everyone that they should be prepared for things getting worse. Rather than trying to create an oasis of blissfully ignorant confidence at the head of government – something the Howard Government probably would have done in the same position.
It was not without significance that Wayne Swan chose to release the Mid Year Economic and Fiscal Outlook on Wednesday – the day the news cycle (and the attention of political junkies) was focused on the election of Barack Obama. Whether or not you think Swan’s timing was calculated, it’s significant in that the shape of Australian politics also morphed – although in a minor key compared to what were world-historical events in the United States.
Laura Tingle, writing in today’s Financial Review, mapped the new political terrain neatly – the post-election “blame the Howard government” game is over. We’re no longer talking about the legacy of interest rate rises (and what about that “always higher under Labor” line?) and inflation. We’re no longer bemoaning the lack of investment in human capital and infrastructure in the Howard years and seeking to rectify it while the good times last. Because we’re about to find out what “beyond the mining boom” is like without the luxury of its dividends to spend in the cause of diversifying our economic base and an ambitious innovation strategy.
As Wayne Swan said, it’s the time for hard choices.
It remains true that we’re much worse placed to weather an economic downturn because of the policy laziness and wasteful spending and disinvestment of the Howard years than we might be. But it’s now up to Labor to demonstrate it can steer us into a better future. In many ways, opportunities for reform and a change in philosophy present themselves in a recessionary climate – as Paul Keating would know well – and Kevin Rudd’s statements today about avoiding “extreme capitalism” in the childcare sector mean more than they say on the surface. There are going to some shifts in economic thinking ahead – and some of the neo-Keynesian signs of the global financial crisis’ wake will write themselves into our economic narrative in this country as well.
Continue reading ‘The day politics changed’
As I’ve commented before, it’s always a bit difficult to keep track of Malcolm Turnbull’s economic narrative du jour. At least with Emo Man Brendan Nelson, we could always rely on undiluted populism with not even a minimal pretense at making any sense. Turnbull’s supposedly better than that, but in the lead up to the budget we had accusations that Labor were wimping out by not cutting spending aggressively enough, followed in very short order with claims that the surplus was unnecessarily large. We’re being treated to something comparable now, with the switch apparently flicked randomly between solemn appeals for bipartisanship, insinuations that the fiscal stimulus package is too big, loose language – subsequently repeated – about the global financial crisis being “hyped”, and now I think the beginnings of a “don’t spend the surplus” theme.
Jacques Chester, I suspect, has pinged what’s going on with all this:
It’s a lawyerly way of arguing. Pick an argument, any argument, that might be plausible, and throw it at the judge. You never know, it might stick.
There are certainly some straws blowing in the wind over the past few days, which in the way of these things, either represent columnists in The Australian flying kites for the opposition to grasp, or reciting lines fed to them by the Coalition. Continue reading ‘Malcolm Turnbull haunted by Paul Keating’
I can’t recall where I read this, but someone in one of the many interesting things written about the global financial crisis suggested that “Keynes” (of whom we’ve heard more lately than we’ve heard for a long time) might be a useful heuristic to understand what’s been happening rather than a real source of inspiration for policy responses or analyses. With all the calls for a new Bretton Woods, emanating from Gordon Brown (and Kevin Rudd), what appears to have been overlooked is that Keynes’ proposals at Bretton Woods itself were substantially modified to ensure the effective independence of the US currency from the financial architecture it put in place – something that’s explained quite deftly here. So, even at the height of “Keynesianism”, we never really had the rule-bound constraints on capitalist behaviour which the man himself had wanted to see. Similarly, there’s no great novelty in pump priming as a tool of macro-economic management and it’s better understood as a pragmatic mode of state intervention, which has been adopted as a tactic of governance, rather than as a paradigm shift in economic practice. Again, there are significant differences between Keynes’ own ideas and the “neo-Keynesian synthesis”.
However, I think we can now advance a few hypotheses, however tentative, about what’s occurring – in terms of both political economy and the sociology of knowledge.
Continue reading ‘The state of capitalism today III’
One of the most puzzling lines Malcolm Turnbull came out with as shadow Treasurer earlier in the year was his claim that Labor had talked inflation into existence. This was part of some sort of complex juggling act which allowed the Coalition to try to claim that all had been going swimmingly until November 24 2007, and that Kevin Rudd and Wayne Swan had been jawboning the Reserve into raising interest rates and/or exaggerating the need for a $22 billion surplus. It was an appalling political theme because it was too confused to be simply communicated, and left Turnbull wide open to charges that he was out of touch with the strains folks felt from higher prices.
Now he’s at it again.
On the news last night, this grab from Turnbull’s appearance on Insiders featured prominently:
And Kevin Rudd has hyped up this crisis or this financial crisis by saying it’s a rolling national security crisis.
If you read the quote in the context of the whole interview, it makes more sense – because Turnbull’s making a reasonable point about accountability to Parliament (which Andrew Bartlett also makes in somewhat different terms). But the politics are just awful – it allowed Wayne Swan to quickly swat Turnbull away, again making him appear as if he was out of touch and disconnected with what voters are feeling and fearing.
Continue reading ‘Malcolm Turnbull’s faith based economics’
Just before last year’s federal election, I read Neal Blewett’s Cabinet Diaries. The book is a good read, but I was also interested in reminding myself – in the dying days of the Howard Era – what a Labor government felt like. One of the things that really jumped out at me was regular discussions around the Cabinet table about assistance for the unemployed, and several of Keating’s measures to stimulate the economy were targeted to people on the dole, among others. Those with longer memories might recall Labor’s opposition to Malcolm Fraser’s “fight inflation first” austerity regime in the late 70s. Mike Steketee has a very good column today which shows just how much things have changed in the era of the deserving poor (and not so poor) and the undeserving poor. He rightly points out that some of the pensioners receiving payments will have substantial assets and incomes of up to $66000, and self-funded retirees with incomes up to $50000 for singles and $80000 for couples will also receive the one off payments. It would be very hard to argue that they are the folks in the community doing it toughest, and as Steketee suggests, there’s no guarantee the money will be spent rather than saved.
What we’re seeing here, I think, is a combination of Kevin Rudd’s very conservative personal values and political calculation.
Continue reading ‘The stimulus package and fairness’
Peter Martin is reporting that the government will be releasing an economic stimulus package today which will include something on pensions – to be announced at around midday. He suggests about $5 billion will be pumped into the economy. [Update (dk.au): the total is $10.4bn or 1% of GDP]
I wouldn’t be at all surprised if Steve Fielding was tipped off about this – it might contextualise his about face on voting for the alcopops tax and the Medicare Levy changes.
This is the fiscal policy two step following up the Reserve Bank’s 1% cut in rates – which is still a tad contractionary.
The Fin Review ran today with a cover story on Peter Costello’s legacy – not on the Liberal leadership but as Treasurer. It appears to be an article of faith – based on a questionable analogy about the supposed damage a move away from Paul Keating’s legacy did to Labor in opposition (and one, incidentally, pushed by PJK himself to journos and commentators) – that they have to hug John Howard close to their chest. So Peter Costello is routinely dubbed by Liberals as “Australia’s best Treasurer”.
The IMF didn’t think so. The Fin has obtained leaked Treasury documents prepared for discussions with IMF officials last year. The upshot of the story can be summed up by its tagline – “Peter Costello’s fiscal policy was potentually more damaging than any other period since the Whitlam years”. IMF wonks were deeply concerned about a stimulatory budget and fiscal policy at a time of economic over-heating, and the article by Paul Cleary concludes:
… from 2003 onwards, Costello executed a sustained expansion of fiscal policy during a sustained upswing in the economy. Looking further back, his predecessors had only engaged in such a policy during recessions. The result of this outbreak of bad policy in the last years of the Howard government is likely to be a long period of inflation and weak economic growth, and it may take some considerable time, and pain, to get the balance back in the right order.
Continue reading ‘Peter Costello’s legacy’
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