Guy Beres » Federal Labor

Ideology is such a lonely word

Guy — Thu, 26 Feb 2009 11:07:47 +0000

Kevin Rudd’s 7700 word essay on the global financial crisis, published in this month’s edition of The Monthly, was a remarkable contribution to serious political debate by a sitting Prime Minister. What isn’t remarkable given its length and lack of humor is that it appears to have gone down like a lead balloon. Mentions of the essay in the media seem generally restricted to pointed criticisms of it from members of the Opposition or their sympathisers. A few journalists (such as The Australian‘s Matthew Franklin) have even had a go at “Julie Bishoping” the Prime Minister, on the somewhat flimsy pretense that 26 words of the essay’s 7700 words were almost identical to a passage that appeared in an recent Foreign Affairs article. Err… ouch [wet noodle limply falls to ground].

For the benefit of those who haven’t splashed out on the magazine, I am going to try and offer a hopefully more level-headed summary over the fold.

If I was going to try and distill the key message in Rudd’s essay down to a single argument, it would be that the global financial crisis has delivered the tangible basis necessary for social democrats to push their natural agenda. Kim Carr was unhelpfully exaggerating when he suggested on radio today that “no one’s job is safe”, but the emotion of the comment sits smugly alongside the current mood of the nation. Every day seems to bring some new economic bad news, some new unfortunate turn of events that will result in financial trauma for some. If the public of Australia had every reason to think during the Howard boom years that there is no reason why the good times could not last forever, the last six months have surely smashed that expectation completely.

In his essay, Rudd describes the current crisis as (p.22):

… the culmination of a 30-year domination of economic policy by a free-market ideology that has been variously called neo-liberalism, economic liberalism, economic fundamentalism, Thatcherism or the Washington Consensus.

This assertion seems like a bit of a distortion; I think it’s fair to say that the neo-liberal consensus created the conditions necessary for the current crisis to eventuate, but that would be the extent of it. Rudd goes on to highlight a more tangible manifestation of this (p.23):

In the United States, the pursuit of financial deregulation crossed the Rubicon with the repeal of the Glass-Steagall Act, which had been established in the wake of the Great Depression. In the heady bubble years of the 1920s, American commercial banks, whose traditional function was simply to take deposits and make loans, plunged into the roaring bull market, trading on their own account, underwriting new stock issues and participating in reckless speculation. When the stock-market bubble burst in 1929, it took commercial banks with it, causing a devastating chain reaction which affected the entire economy for a decade.

…

After a $300 million lobbying effort by the financial-services industry, Glass-Steagall was effectively repealed in 1999, removing the prohibition on commercial banks owning investment banks. The door was now open for the creation of huge financial-services conglomerates.

Someone who has maintained a closer watch on the financial services industry than I have over the last few decades would be probably be in a better position to judge if this event really was the straw that broke the camel’s back. This nevertheless seems an incisive point. If the global economy is underpinned by the smooth functioning of banking systems in the world’s financial centres, is it really a good thing that they have been given a license to gamble the prosperity of the world on the rise and fall of global financial markets? Is it a good thing that banks are permitted to trade widely in financial instruments that are based on ill-offered loans? Does anybody seriously believe that these are not, given recent months, rhetorical questions only?

There are a few points in the essay in which Rudd does get a little bit political. When singing the praises of the “social democratic project”, the Prime Minister is careful to highlight the Hawke and Keating (but not Whitlam) Governments as prime examples of social democracy in sublime flight (p.25). Many of us would of course recall things seeming a little less than sublime at the time. After pointing out, correctly, that neoliberals have had their beliefs tied in knots by this latest crisis (e.g. particularly with respect to part-nationalisations, pp.25-26), Rudd makes an attempt at tying the Liberal Party in closely with the neoliberal school of thought (pp.28-29). It is a bit of a half-hearted attempt, to be honest; of the nine demarcated passages in the essay, just one makes any substantive reference to Labor’s direct political enemy. This passage also represents the weakest part of the essay, and somewhat over-emphasises the extent that our local Coalition schmucks actually endorse the neoliberal agenda in the American sense. No neoliberal government worth its stripes would have presided over the massive welfare churn machine that the Howard Government presided over during its decade in office.

The essay concludes with Rudd lauding the role of government (p.29):

How could it possibly now be argued that the minimalist state of which the neo-liberals have dreamt could somehow be of sufficient potency to respond to the maximalist challenge we have been left in the wake of this most spectacular failure of the entire neo-liberal orthodoxy? Government is not the intrinsic evil that neo-liberals have argued it is. Government, properly constituted and properly directed, is for the common good, embracing both individual freedom and fairness, a project designed for the many, not just the few.

Fine words – but words that now need to be transmuted into action. Governments like those lead by Barack Obama in the United States and Kevin Rudd locally need to deliver on the promise they are offering. Here’s hoping that the next significant step in this new “social-democratic project” that Rudd spruiks in his essay is constituted of something more than mere words.

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Senator Penny Wong – unfashionable but right?

Guy — Mon, 23 Feb 2009 11:28:30 +0000

Senator Penny Wong has an exceptionally erudite column in today’s Sydney Morning Herald that – I think – does a remarkable job of cutting through the crap on both sides of the climate change issue. With all the hubbub in recent weeks about a mooted further government review of the proposed emissions trading scheme, and the Coalition amusingly promising a stronger scheme but declining to outline what that scheme might amount to, one could be forgiven for being confused about what the hell is happening on climate change.

Wong’s column goes some way towards dispelling this. On one front, she mounts a defense of the government’s scheme and the much-publicised low targets:

By starting to reduce our emissions from next year, Australia will be putting a cost on carbon pollution before some competitor economies. We are doing this because we know it is in our interest to take action now and encourage the rest of the world to do the same. But there is no point in putting a cost on carbon pollution in Australia if it simply results in jobs and emissions being exported to countries that do not yet face a carbon price.

And whatever people think about these so-called “big polluters”, the fact remains that many Australians are employed in these industries.

We are embarking on an economic transformation to create the low pollution jobs of the future, but it is a transformation that will take time.

Wong then goes on to reiterate the case for action:

We can do nothing – and lock in more emissions growth. Current projections show emissions would be 20 per cent higher by 2020 than they were in 2000 if we choose not to act.

Alternatively, we can initiate the scheme to ensure we are 5-15 per cent below where we were in 2000 by 2020. The scheme will result in emissions being up to 30 per cent lower in 2020 than if the scheme is rejected. The scale of this transformation cannot be brushed aside.

Make no mistake – Senator Wong has to sail the government’s emissions trading boat on a profoundly tempestuous sea. She and the Rudd Government are facing formidable attacks from the left; the government’s targets certainly seem on first consideration to be pathetically low. The government is also under considerable pressure from conservatives and indeed polluting industries to water down the plan, or to scupper it altogether given the economic crisis that the world still finds itself in. If the nation emerges from all of this political and economic turmoil with a functioning apparatus to reduce emissions – even if it is a little weak to start with – Wong will have done an amazing job.

The first cut is be the deepest. Yeah sure, there was Rod Stewart, but before him, just remember it was Cat Stevens.

ELSEWHERE: Harry Clarke also thinks Penny Wong is on the right track.

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Federal Labor, meet rock and hard place

Guy — Mon, 16 Feb 2009 09:37:35 +0000

Recent developments in Victoria and the ongoing economic turmoil being experienced worldwide have placed Labor in a difficult position with respect to its pre-election policy program. On the one hand, the Prime Minister, Treasurer Wayne Swan and Finance Minister Lindsay Tanner have felt compelled to act and act in a significant way by pushing Australia into public debt for the first time in some years with their $42 billion stimulus package. On the other hand, the Rudd Government was swept to office in November 2007 with one of the more ambitious (and expensive) programs of policy reform pushed out into the electorate in recent elections. Whether we are talking about Federal Labor’s so-called “education revolution”, the proposed national broadband network, or the government’s mooted overhaul of federal-state relations in health policy, we are talking about reforms that if correctly implemented, should result in a noticeable improvement in the affairs of the nation.

Considering the profound impact of recent developments, we might well ask whether the Rudd Government, its budget outlook now bleak, is seriously still in a position to deliver on all (or… any?) of its really big promises? The government’s emissions trading plan has, of last week, been sent off to another review by the government’s Economics Committee. The national broadband network, dogged by delays and controversies over wrangling with Telstra, could perhaps best be described as resident in limbo. Today the interim report of the National Health and Hospitals Reform Commission threw up a rather radical proposal for a new public dental scheme, funded by a substantive increase to the Medicare levy. Proposals like this might have got a guernsey by a bold government in a period of strong economic growth, but realistically what chance do they have of getting up when the government’s budget is so under the pump and the future uncertain?

It would seem almost certain that the Rudd Government is going to be heading into the 2010 election with a handful of its most visible 2007 election policies in rather troubled train or else abandoned altogether. While Federal Labor can hardly be blamed for the financial crisis furrowing the brows of leaders all over the planet, if they do not deliver on their promises in the lead-up to the next poll (or else have a bloody cogent explanation!), one could hardly blame some voters for calling them out and giving the Coalition their vote.

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Beazley would have been an excellent and yet hopeless choice

Guy — Mon, 21 Jan 2008 22:49:18 +0000

For many folk, I suspect, Kim Beazley was the erudite, often eloquent Prime Minister we for some strange reason never had. Despite his faults and his occasionally eccentric verbosity, one always got the sense through his speeches and the way that he communicated that he cared about the nation and firmly wanted Australia to be a fairer place for the less fortunate. His record speaks for itself in electoral terms, but in a slightly different time, perhaps, Kim Beazley would have been the sort of Prime Minister who brought conservative Australia and progressive Australia together under the one umbrella. He was often criticised by the left for being on the wrong side of certain emotive issues (e.g. asylum seekers in particular), but all the same, he was rarely accused of having his heart in the wrong place.

I certainly did not agree with Kim Beazley on every issue, but my first instinct upon reading stories suggesting that he could be our next (and last?) Governor-General was that it would be a great choice, and wonderfully apt given his years of often thankless public service. That thought was immediately followed by a pretty obvious political realisation: the Rudd Government would be committing political suicide by making such an overtly party-political appointment. One of the strongest and most convincing arguments against the government that the Rudd Opposition took to the polls in November last year was that federal politics was mired in cynical sludge. The Howard Government’s WorkChoices policy package was rammed through without a specific mandate from the voters, and backed by millions of dollars of taxpayer-funded propaganda. The AWB scandal reeked of incompetence, for which nobody from the government was willing to take responsibility. Rudd had effectively promised to restore an air of decency to public life in Canberra not observed for some time. The appointment of someone like Beazley – until recently one of the most visibly partisan political figures in the country – to any position of repute would have completely and utterly undermined this approach.

I am therefore not surprised at Rudd’s fairly brusque dismissal of the whole idea reported in today’s press, and am pleased that the Prime Minister has not been inspired to indulge in some forbidden fruit on this occasion. The government is currently is carrying with it a considerable amount of good will, owing of course from its election victory and the lack of any seriously embarrassing or controversial decisions made so far. This sort of political capital is not easily replenished, and the government would be loathe at this stage to squander its good position on such a triviality. On related news, it was good to hear Foreign Minister Stephen Smith appoint two career diplomats to represent Australia in France and Ghana a couple of weeks back. Long may this professional and diligent approach to public appointments continue.

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