Changes to RBA Act will further entrench the depoliticisation of economic policy and reduce democratic accountability
Today, I consider the latest development in the entrenchment of neoliberalism in the Australian policy…
It is Wednesday and I have been tied up all day working on the MOOC that will be launched in early March. We have been filming a lot and it is starting to take shape (see below for more details on how you can enrol). So just a light blog day but that doesn’t mean what I am writing is trivial. The two stories demonstrate how far we have to go on the progressive side of the debate before we actually make progress. It is, unfortunately a repeating tale and it is hard to define a strategy that will get through the blockades that some progressives erect that sustain neoliberalism at its most elemental level. While the British Labour Party is aiming to reinvent itself by pitching its message at the worst element of the voters that it has lost in recent years – patriotism, flags etc – that sort of nonsense – progressives in Australia are revealing how regressive they can be.
Over the last several months by way of advancing Modern Monetary Theory (MMT) education initiatives, we have been involved in development a MOOC that will be launched in March 2021.
I am working with – NewcastleX – which is my university’s digital team to create the course material which will be available all around the world for free.
That is the philosophy of a MOOC.
The course – Modern Monetary Theory: Economics for the 21st Century – will start on March 3, 2021 and you can get all the enrolment details (it is free) from the link.
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By the way, the British Labour Party have tried this before when the then leader, Ed Milliband called on his party in 2012 to “embrace a positive outward-looking version of English identity” (Source).
Interestingly, in the 1980s, it was the Communist Party affiliated Labour members that were pushing this line.
Anyway, it can be summarised in one word – unelectable.
Opposition Labor Party leader has instructed his shadow cabinet (Source):
… to ensure all new policy proposals are offset with spending cuts … Mr Albanese is preparing Labor for a potential early election by ordering his top team to help restore the party’s economic credibility as it readies its pitch to form government.
Note the way the ideology just slips in uncontested – that the spending offset push equals restoring economic credibility.
Apparently, the Labor Party lost the 2019 federal election because it “spooked voters” with its spending proposals, which were constructed by the conservatives as a “risk to the economy”.
Let’s be clear.
A point that is not understood, is that the Labor Party set its own trap in a similar way that the British Labour Party did when, the latter proposed a substantial public spending campaign after previously conditioning voters with their ridiculous Fiscal Credibility Rule.
The latter created the view among voters that deficits were bad, that the government could not ‘max out its credit card’, and that public debt should not increase much.
With that framing being hammered out by the British Labour politicians endlessly in the years leading to the 2019 election, it was little wonder that the voters became wary of the Manifesto spending promises.
After all, the Party had conditioned them in sound finance principles and few voters would have been able to see through those principles as erroneous, ideological nonsense.
And so, the Australian Labor Party appears to be going down the same route, although it won’t even offer much by way of reform agenda to reverse some of the damage this neoliberal era has inflicted on the nation.
It comes down to this – all the Labor Party wants, it seems, is power. And they will do whatever it takes to get it.
The problem is that they don’t have a very good track record of knowing what it takes!
An Opposition spokesperson in Australia told the media at the weekend that:
… all policy proposals should consider options to minimise the fiscal impact and/or be fully offset by savings within respective portfolios …
So there is no conception that fiscal policy has to actually contract and expand to meet the context presented by the variations in non-government spending and saving decisions.
What contextual assumptions are the Opposition making to inform this policy position?
I would bet none!
They are just running scared and have neoliberal spokespersons on economic matters who, in their public statements and actions, rendered this party unelectable.
The Opposition leader was on the national news this morning complaining about the current size of the fiscal deficit in Australia and the small increase in debt (that the Reserve Bank of Australia is buying up anyway).
The framing is all neoliberal despite them saying otherwise.
The listener hears – big deficits, big debt. Bad.
They don’t hear progressive policies, even if that is the message the Labor Party thinks it is pumping out.
We are in a pandemic. The situation is very fragile and the hope that a vaccine roll-out will end the crisis this year are pie-in-the-sky.
Fiscal deficits will have to rise and be sustained for years if we are to overcome the crisis. Playing the ‘sound finance’ card at this time in history is the height of irresponsibility.
… who are meant to represent the least advantaged people in our society and should be the leaders of progressive thought and activism.
I have long struggled with this organisation and have dealings with them over a long period – none of which were satisfactory in any way, for reasons that follow.
The boss of ACOSS came out earlier this week in its so-called – Budget Priorities Statement 2021-2022 – calling on the government to impose a tax on pension income “to help fund aged-care services”.
This is a version of the ‘tax the rich to pay for services to the poor’ that many progressives think makes them out to be really nice people punishing the cats with all the cash and giving it, like Robin Hood in the fairy tales, to the poor.
I cannot believe this stuff survives.
Their proposal comes under their heading “strengthen the public revenue base to meet current and future needs”.
They claim that:
It will not be possible for future governments to properly fund aged care and health services for an ageing population as long as only 16% of older people pays income tax.
Which is false.
They repeatedly make these sorts of claims but nowhere do they analyse what the appropriate fiscal position should be. What is the purpose of fiscal policy.
They keep talking about the “fiscal cost” of a pension or something as if it was a ‘cost’. They never mention resource costs just the numbers that appear on bits of paper.
The Australian government is sovereign in its own currency. The fact that aged-care services are deficient in this country is not that the retirees have too much money and the government has too little money but, rather, because the government has made a political choice not to do that.
At any time of their choosing they could improve aged-care services by instructing its bank, the Reserve Bank of Australia to type numbers into bank accounts to facilitate the provisioning of the extra real resources necessary to accomplish that improvement.
ACOSS claimed that for the moment (yes: with low interest rates) the high fiscal deficit is not a problem but it will be in the future and so the government has to “strengthen our revenue base to ensure we can meet community needs”.
Most of the proposed policy agenda is sound.
But the framing takes us immediately into irrelevant dead-ends about how can we affords such plans and what do we have to sacrifice.
We must transition from this financial dead-end to constructing these sorts of narratives in terms of real resource availability and best use options.
Whatever they might be can be financially accomodated by government.
Taxing those who have worked all their life and are now enjoying the latter years of their life should only debated if the deprivation of this cohort’s purchasing power is desirable to reduce political power etc.
The cohort in question comprises ordinary workers and the top-end-of-town, hardly a homogenous group.
And if that all wasn’t enough, the South African government is claiming they cannot deal with the pandemic unless they pursue fiscal austerity and cut wages because they “do not have enough money”.
This is a sovereign currency-issuer we are talking about.
I could tell you about my experiences with the South African government but it wouldn’t leave us on a happy note.
So over to Mary Wilson for that.
This is what I have been listening to while working this morning.
I couldn’t not mention – Mary Wilson – who died on Monday (February 8, 2021).
She was a founding member of – The Supremes – in 1961, which were one of my favourite vocal groups.
They remain one of the greatest Motown Records acts and I recall singing along to their songs as a young (pre-teenager) when they would come on the radio (and in some cases my little crystal set).
The sound quality from that little radio receiver was very poor but the vibe was beyond comprehension.
It is hard to select one number to offer here such was the depth of their offerings.
So I just selected one that had a story attached to it that I can remember.
I recall travelling once from Northern California down to San Francisco by road and I had an old tape with me that was almost worn out. The only song that seemed to play reliably was this one – Where Did Our Love Go – which was released in 1964 and was one of several songs written for The Supremes by the team of – Holland-Dozier-Holland.
It was their first number-one release on US charts and I always loved it.
There was some subsequent controversy given that Mary Wilson alleged that the song wasn’t actually written for them and the – Marvellettes – had rejected the song as being to slow in tempo for their image.
There was also in-group conflict over who would sing it and the inner conflict was one of the reasons the group folded.
The Funk Brothers – were the studio musicians on the track and they were legendary in their own right.
So it played and was rewound and then played again and so on until I got to the Bay.
A great drive nonetheless.
RIP Mary Wilson.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.