Latest Productivity Commission report – relies on and exploits our ignorance – to undermine our well-being
I had a sense of déjà vu this week when I read the latest release…
Regular readers will know that I have spent a lot of time writing about the demise of the Left political parties as they became subsumed with neoliberal economic ideology, which blurred the political landscape as the ‘centre’ moved to the Right. That topic was the focus of our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017). The neoliberal infestation has left these parties with declining electoral support, fractured internal organisations and cultures, and a seeming inability to abandon their flawed economic narratives. But there is a mirror image to this demise and that is playing out on the conservative side of politics. In Australia in the last week (but building for years) the far right conservative elements from within the government have brought down their own leader and our Prime Minister in a spiteful clash of ideologies between the more moderate elements in their party and the extremes out on the right. The internal tensions that drove this suicidal mission are being played out around the world. Think about the way that Trump is compromising the Republican party. Think about how Brexit is splitting Tory ranks in Britain. And so on. The problem for the conservatives is that citizens are realising that the neoliberal economic approach has failed to deliver on its promises. And that economic model is ‘owned’ by the conservatives. The adoption of neoliberal economics by social democratic parties is not part of their DNA. It is largely because their ranks have been infested by careerists who have come from the ‘elites’ and have little resonance with workers. The gaps in the policy space that these fractures have created is being occupied by extremist groups. It will be much easier for progressive parties to reclaim that space than it will be for the conservatives who are in the process of a death spiral. But to do that, the social democratic movements has to abandon every vestige of neoliberal economics – the concepts, policies and language and framing. That is the challenge.
In the last week, Australian’s watched the conservative party coalition tear itself to pieces in an unseemly leadership struggle.
The incumbent Prime Minister, Malcolm Turnbull was a moderate liberal (which in Australia means he is economically conservative – neoliberal but socially progressive).
He had knifed the deeply conservative Prime Minister Tony Abbott in an internecine coup in 2015. The close vote (55-44) in their Party Room (MPs) left deep bitterness.
Further, the Abbott gang (far Right) never accepted Turnbull’s type in the Liberal Party (conservative party) and thought he was a left-winger, which tells you how far right the centre has moved in the neoliberal period. Turnbull is no leftist.
The Abbott government had defeated the Labour government in 2013, which was largely the result of the Labor Party back-stabbing two of their own Prime Ministers within a space of 6 years.
The Labor Government had saved the nation from recession during the GFC with the introduction of a large and well-time fiscal intervention. By 2012, under massive attack from the conservative media and business over the rise in the fiscal deficit, Labor also began an austerity retreat which locked unemployment in at elevated levels and saw GDP growth slow.
The Abbott government played on the fact that the deficit had risen but, instead of acknowledging it was in the context of a deep negative private spending cycle, lied, and instead claimed the Labor government was “spending like a drunken sailor” – see ABC news story from May 28, 2015 – Fact check: Tony Abbott’s claim Labor spent like ‘drunken sailors’ in office is spin.
The Abbott government ran very hard on the deficit and debt story – the usual crude neoliberal narrative.
In the lead up to the 2013 federal election, Abbott and his Shadow Treasurer (Joe Hockey, a buffoon if there ever was one) started talking about Australia being in a “fiscal emergency” and a “debt crisis”
After taking office, and as Treasurer, Hockey told the National Press Club on December 23, 2013 that (Source):
… the current budget outlook is not sustainable … We want to get back to surplus as soon as we can.
The Murdoch Press pushed this line relentlessly.
Their first fiscal statement was a disaster (attempted austerity) and by 2014 it was clear they would have to seriously reverse direction as the economy was starting to tank.
On July 26, 2014, Hockey gave an interview on the New Zealand political current affairs show The Nation and Australia’s SBS public broadcaster (burdened with advertisements because it has to ‘pay its way’) reported on the same day – Hockey tells Kiwis there is no economic crisis in Australia.
Hockey told the NZ audience that “The Australian economy is not in trouble … There’s no crisis at all in the Australian economy”.
By 2014, the conservative Government’s narrative about fiscal emergencies and the like was buried for a time in the same way that George Osborne in the UK changed tactics in 2012 and put Britain on a slow-burn austerity rather than the slash-and-burn-austerity, when it was obvious that Britain would triple-dip and it would all be down to his incompetence.
But the damage in both cases was done in terms of credibility. The message was being rejected in the electorates.
By 2015, Abbott and Hockey were gone in a ruthless internal coup that saw Turnbull take over as PM and the right-wing of his party start plotting to destroy him.
That plot came to fruition last week.
After taking over, Turnbull moved policy closer to the extreme right position – to stop the sniping right-wingers. There was no vision just political expediency.
He abandoned any attempt to deal with climate change. He tightened the harsh treatment of those seeking refugee status. His government talked tough about cutting migration.
But the Right wasn’t to be satisfied. Despite the increasing unpopularity of the conservative government they wanted the Government to fund the construction of new coal-fired power stations, to abandon the Paris climate accord, and to give massive tax cuts to corporations.
They want actual cuts to immigration, major cuts to foreign aid, more police powers to spy on citizens, etc.
The ‘free market’ message had become lost in a blur of popularist-right style policies, of the type we have seen emerging more vehemently everywhere in the advanced world.
The right-wing insurgency that unseated Turnbull last week but still failed to get their own leader installed as the new Prime Minister, was in the media last week promising major concessions to energy policy, which would have led to a significant rise in the fiscal deficit.
While that is not my concern – the point is that any semblance of fiscal rectitude was being jettisoned so confused was the message the conservatives were pushing out.
It is the same sort of confusion that Trump has brought to the Republican Party. How can they stand up now and claim that the US has a fiscal emergency when Trump is promising a massive fiscal expansion?
And in Britain, the crisis in conservative politics is being played out within the Brexit arena. The Tories are so riven with division over the EU issue that they are incapable of coherent government.
The fact that a guy like Jeremy Corbyn is electorally viable demonstrates how far gone the conservative forces are in Britain.
The aftermath of last week’s coup in Australia will be long-lived. The conservative political forces in Australia are deeply divided between the conservative social and economic camps and the conservative economic-socially liberal camps.
There are deep hatreds which will continue to play out.
The Right managed to unseat Turnbull but their ‘man’ failed to take the leadership. Lies were told. Lies were spread. The right-wing media was manipulated, and, in turn, was manipulative, in the cause of cleaning the social liberals out.
They failed. But only just, which means that the divisions within the ranks are substantial and cannot be easily marginalised.
There is more to come.
The point is that these struggles are a sign of a wider problem for conservative parties. In the same way as the traditional Left-style, social democratic parties are now struggling, the conservative side of politics is fracturing.
As one commentator noted at the weekend (August 24, 2018) – Liberal Party’s civil war isn’t over – it’s part of a global battle:
Internationally, people are reclaiming the idea of national identity; there is a blowback against globalisation; a rejection of political elites and politics-as-usual; immigration, free trade, energy policy have become defining issues.
Politics is becoming increasingly polarised and fractured.
It is disrupting democracies, redefining ideological boundaries; trade barriers have gone back up, borders have been strengthened.
In Australia, the slide in support for the two major parties, Labour (ALP) and Liberal-National Coalition (CLN) has been noticable since the 1980s, when the economic narrative shifted to the modern neoliberal obsession with fiscal surpluses, privatisation, diminished scope and quality of public services, real wage cuts, and the rest of it.
The following graph shows the picture.
The Other category includes various extremist parties such as One Nation, which is the typical anti-immigration, conservative social policy, confused economics type party.
The following graph shows the valid voter turnout in British general elections from 1922 to 2017 (note there were two elections in 1974 – February and October – the second election was to sort out the hung parliament from the earlier election).
The graph shows that valid voter turnout was relatively stable over the period before the late 1980s. After that time, there has been a substantial decline.
And I could go through a raft of national election results in recent years and the same messages would resonate. The traditional political messages are failing.
The conservative media manipulation is failing.
The problem is that citizens have worked out that the neoliberal economic approach has failed to deliver on its promises.
They know that because energy prices are rising as a plethora of privatised energy companies gouge consumers with ridiculous price hikes and deliberately withdraw supply to fix prices in the markets so they can make higher profits not only from the product delivery itself but also from the speculation in financial derivative products linked to the energy product.
They know that because their wages growth has been flat for some years (decades in the US) while CEOs around the world pocket huge pay deals that appear to be disassociated with the performance of the companies they control.
They know that because a phalanx of high-paid, big talking company executives (banksters etc) exhibited deeply corrupt and incompetent behaviour, taking advantage of the financial market deregulation and ‘light touch’ oversight of the sector, yet hardly anyone went to prison.
Indeed, most of the companies were bailed out by governments, with the top executive salaries mostly protected, and as soon as they were safe they resumed their relentless attack on government deficits.
They know that because their communities are being starved of funds for local government services.
They know that because schools and hospitals are in decay.
They know that because their jobs are becoming increasingly precarious and socio-pathological bosses bully them knowing there is a huge idle pool of labour to draw upon.
They know that because the likes of Herman Van Rompuy still thinks he has enough credibility to poke his nasty presence into the Brexit debate and tell the elected British government that it should do a deal that the EU likes.
Remember him – the former pontificating President of the European Council – who in a – Speech to the European Parliament – on March 13, 2012 said:
One front is fiscal consolidation. Another is the growth and employment agenda. Some claim that these two are contradictory. It is our job to make sure that they are not.
Van Rompuy’s narrative was just hollow rhetoric designed to reinforce the smokescreen the Troika were creating to hide the fact that they were demolishing prosperity in Greece for decades to come.
The Troika wrecking ball approved by Van Rompuy and others has torn Greece to shreds.
His period as EC President was a disgrace by any progressive measures. An austerity enforcer who rehearsed mindless neoliberal-speak and was not punished when the policies he oversaw failed badly and delivered hardship and tragedy for an entire nation.
For a recent review of the disaster that the Troika created in Greece see the Barron’s article – Greece’s “Bailout” Was a Disaster for Greece (August 24, 2018).
We read that:
Since 2008, the economy has shrunk by a quarter, and more than 400,000 Greeks have emigrated. House prices are down 43%. Bank credit to the private sector has contracted by a third. Fixed capital formation after depreciation has been consistently negative since 2010. More than €70 billion ($81.4 billion) worth of assets, including infrastructure, housing, and business plant and equipment, has been destroyed because of a lack of maintenance-a staggering loss for a €180 billion economy.
That sort of devastation has been inflicted on communities everywhere in degrees. Nothing quite as shameful as the Greek slaughter but still shameful.
And people know it.
They feel it.
And they sense the injustice as corporations make huge profits on the back of a complex web of state subsidies (in one form or another) and their executives continue to parade their largesse.
Workers on flat wages and diminishing purchasing power know that productivity growth is being stolen from them by the unfair distributional arrangements that have emerged over this neoliberal period.
A reckoning of one sort or another is working its way out – and the decline of the conservative political fortunes (mirroring the decline of the traditional Left) is a manifestation of the tensions associated with the reckoning.
The ABC commentator I cited above said that in Australia, the “public is increasingly fed up with politicians, especially the two major parties”.
The “widening gap between rich and poor … has proved fertile ground for political extremism, and the worst of populism”.
He quoted a British political scientist who sees “does not see populism as the enemy of democracy, but in many ways its essence”.
Those left behind are now being heard after too long being ignored by the so-called left progressives, and their belief in open borders and free trade.
Hillary Clinton called them “the deplorables”; this is the deplorables’ revenge.
And this is the nub of the issue.
The neoliberal economic model that the conservatives pushed has failed and that has created massive issues for the continuity of their side of politics.
But by mindlessly copying the model – the Left has also left the door open for more extreme groups to enter the political fray and invoke invalid causalities – for example, migrants steal our jobs – and run a sort of identity warfare.
Some elements of the conservative side of politics are attracted to that sort of narrative. In Australia, the recent coup attempt was run by politicians who had been building their standing in the debate by singling out “Sudanese criminal gangs” after some unemployed and alienated youth created some havoc by fighting and stealing.
Never mind that the ‘gangs’ had lots of whites also involved.
Never mind that the root cause of the alienation was the biased way in which government cuts back (and the resulting unemployment) impacts on certain demographic groups.
The problem is that these extremist groups also channel the sort of economic policies – concern for equity, jobs, public services, etc – that have, historically, been the core business of the social democratic parties.
The latter have thus given up its core space to the extremists who have mixed it with a nasty cocktail of xenophobia and identity politics.
The conservatives are also struggling in this way. They know that the failure of the neoliberal economic model is becoming obvious to most of us and so you get characters like Trump disregarding all the deficit/debt scaremongering and using old fashioned pork barrel politics (spend where you want to garner votes) to gain and sustain power.
They have also intensified the sort of xenophobia and social conservative policies that they have never been far away from anyway.
The problem for them is that they ‘own’ the economic model that has failed. They have been the parties that historically aim to tilt the game towards the corporates. They are the deregulation ‘freedom’ parties. It is hard for them to distant themselves from that legacy.
But that legacy is not part of the DNA of the social democratic tradition. The recent dalliance by these parties with neoliberal economics has damaged this tradition.
But the lacuna left by the now obvious tensions among conservative polity – split between pragmatists who just want to retain power and the hard-core ideologues who hate free choice, hate strong trade unions, are mostly climate change deniers, and make promises to corporates while they network playing golf or whatever – presents a massive opportunity for the progressive side of politics.
So far, there is hardly any sign that the Left will rise to the occasion.
Think about “the deplorables”.
Think about Australian Labor politicians claiming they will deliver a bigger surplus and more quickly than the conservative government.
Think about British Labour, who told the people who have endured years of disastrous austerity that “Sound finances are the foundations on which everything else is possible” (Source.
Think about British Labour that are being advised by mainstream economists who use a theoretical framework that has categorically failed to comprehend what has been going on the last 30 years and which just reinforces the narratives that the people know has delivered rising inequality, flat wages, bank crashes from incompetence and criminality, and all the rest of it.
I recall reading this UK Guardian article when it came out (September 17, 2014) – Parachuting political careerists into safe seats is a poisonous practice.
The sub-heading is apposite:
The conveyer belt ride of many candidates from private school to elite university to party politics is confirmation that our political system needs a radical overhaul
The author noted that at the 2013 Labour Annual Conference there was an event “What is a Working Class MP and How do we Get More of Them?” which for a ” political party purporting to represent the views of the working classes running talks for its members on exactly what a working-class person looks like” is some statement.
She is politically active in mid-20s and noted she had “spent the past couple of years in the company of a great many wannabe MPs of my own age, many of whom … openly talk about the safe seat they are hoping for in the future”.
She was “shocked by the almost complete lack of any motivation to shake up the system.”
The demographic is disturbing.
The “wannabe MPs”:
… laugh and joke over expensive pints of real ale in London about how the Labour party is an excellent choice for a political career … These ever-smiling, nakedly ambitious graduates straight out of PPE at Oxbridge are the faces of future Labour, lecturing me weekly on why local people in the north usually don’t know what they really want and need a representative who knows how to work within the Westminster elite to decide for them.
That might sound harsh but it is the crisis that social democratic parties everywhere have to address.
What is required is that the social democratic parties renew themselves through grass roots activism and people who align with workers not bosses. The trend in social democratic parties to careerism among advisors and politicians drawn from the upper income tiers of society has to be reversed.
The progressive social policies that are core to social democratic parties has to be married with an economics that allows those policies to be advanced.
The neoliberal wedge that has compromised the Left side of politics is now clearly splintering the conservative polity in a way that is possibly terminal.
After all, it is their economic model. The adoption of neoliberal economics by social democratic parties is not part of their DNA. It is largely because their ranks have been infested by careerists who have come from the ‘elites’ and have little resonance with workers.
The gaps in the policy space that these fractures have created is being occupied by extremist groups. It will be much easier for progressive parties to reclaim that space than it will be for the conservatives who are in the process of a death spiral.
But to do that, the social democratic movements has to abandon every vestige of neoliberal economics – the concepts, policies and language and framing.
That is the challenge.
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.
This Post Has 13 Comments
Why not get it published in “The Australian” [rhetorical]?
There are some signs that the Australian Labor party (ALP) may be starting to reject neoliberalism, though the shadow Treasurer (Chris Bowen) has promised to return to surplus. Some argue Labor know that all the debt and deficits stuff is nonsense but they are are painfully aware that if they break with the mainstream narrative they will be targeted by their right wing Coalition opponents as well as most mainstream economists,
If that is more or less correct the ALP could if they are elected, as seems likely, focus on progressive policies and do what the Coalition has done: dialled down the rhetoric and get on with the job.
I could also be naive of course.
There is no doubt in my mind that the ALP understand MMT.
Someone like Wayne Swann, certainly does.
Understanding MMT does not change somebodies value system.
Those elected representatives, whether they understand MMT or not, see themselves above the masses and taking care of the poor rather than giving the underclass autonomy to live a dignified existence by ensuring social mobility.
So can anyone tell me why Morrison is right of Dutton, who I tend to see as a Morrison wannabe?
The ALP appeasers should take some note of the fate of Turnbull, the appeaser par excellence.
In adopting the neoliberal budget balance narrative they are showing weakness to the attack dogs and cutting themselves loose from their support base.
The private sector balances in most western economies are now negative or near negative and this means that recessions and stock market crashes are not far away in time.
How the neoliberals will deal with yet another stock market crash and recession should reduce their credibility and reign duration further and make room for new ideas.
Buffoon is too kind a word for Joe Hockey.
“… social democratic parties renew themselves through grass roots activism and people who align with workers not bosses”
It’s nice to hope that the deplorables may one day somewhere bring in an administration with their interests at heart – although it hasn’t happened anywhere yet, ten years after the GFC. The bosses might have been the crassest exploiters in the 19th and 20th centuries but post-GFC, is it not the asset-rich with all their unearned income who hold more power than ever? I know they’re often the same people but shouldn’t any new lefty rhetoric focus as much on the landlords as on the bosses?
Yes, the careerists with their college degrees pursuing their careers, a generation or more removed from the their parents who worked a job for a living – they’re the problem.
I just listened to Italy’s Salvini being interviewed recently about the Morandi Bridge collapse. I think I pretty much understood that he was saying things like Italy needs massive public investment in infrastructure and that EU rules preventing this must be jettisoned, that Italy needs more nationalisation and the state should not be afraid to run public services, that Italy needs to invest in more public servants, that the state needs to play its proper role in Italy that it has neglected for years. Who that was progressive economically could disagree with him?? And yet with Salvini comes a whole lotta anti-immigrant baggage, and I wonder about his feminist credentials…. This is the politics that I fear will arise everywhere unless all our Labour Parties get their act together big time.
Lets rename right wing to the wrong wing because they are always wrong about everything.
Anthony Molloy says:
“…is it not the asset-rich with all their unearned income who hold more power than ever? I know they’re often the same people but shouldn’t any new lefty rhetoric focus as much on the landlords as on the bosses”?
The one gleam of light I see in John McDonnell’s otherwise benighted and reactionary approach to macroeconomics is his advocacy (longstanding I gather) of a land value tax. Keynes’s “euthanasia of the rentier” was too gentle – nothing less than “expropriation” will suffice now! After all, it was they who overtly declared war on the rest of us (in 1971, as embodied in the so-called Powell memorandum, quaintly titled “Attack of American Free Enterprise System”, which exactly mapped-out the subsequent rise of the plutocracy to its current complete political ascendancy in the US).
The one shining light is the UK Labour party. Yes there are problems and the Blue Labour brigade are all in a tissy but they don’t like change. Just look at the 2017 snap election called by the Tories. Starting with a 20 point plus lead over Labour, they called a short election because they thought they would wipe out the opposition and have a bumper majority to boot. In fact Labour caught up and the Tories had to bribe the DUP, to cling onto power, despite adopting Ed Milliband’s 2010 Labour election polices.
So for all their faults, Jeremy Corbyn & John McDonnell have dragged UK politics firmly to the left. Just look at the lies and smears in the Tory media.. This just shows how frightened they are of a Corbyn Labour victory.. there is hope, there is a real alternative..
It always makes me laugh to think of Italians being anti-immigration.
I mean, historically, Italians never, ever migrated in huge numbers to seek better economic opportunities in other countries!
Oh no, never, ever! ; )
More seriously, the sad fact is that if the people are not offered genuine left wing politics, they will instead chose those of the right. But the establishment sees even right-wing populism as less of a threat than genuine socialism, so they are actually relatively relaxed about it, compared to their rabid and regular propagandising against the left.