Running on empty

Monday, 5 August 2013 

Political leaders have to manage economic circumstances that we’re confronted by. We don’t manage the global economy.

Penny Wong on Insiders 4 August

So many decks, so much clearing.

The start of the election campaign has at least confirmed it will be what it always was going to be on, the economy. Even the Daily Telegraph couldn’t keep up the pretence that asylum seekers would be an issue with its “representative” sample of Western Sydney voters, whose concerns over cost of living, health and education seemed no different from what the nation as a whole has been telling pollsters. Maybe Western Sydney tells us about nothing more special than the current state of Labor/Liberal insecurities.

But having decided it will be on the economy, we now have to find out what that means. It is not exactly clear.

The government enters this election with what appears a confused economic message. On the one hand it seems to be saying that it was its stewardship that meant Australia avoided a recession through the GFC. On the other hand it is warning that a Chinese slowdown will mean unemployment will rise whatever it does.

This seems contradictory if the economic debate is still seen in the old way. However, the common theme running through the message is a new way economic policy is being viewed, namely that government is not responsible for the state of the economy, rather just for protecting the electorate from the worst of it.

This is a marked change from how government economic policy has been discussed in the past. For much of the last century, the state of the economy was supposed to be a consequence of government policies. This was despite world economies running largely in tandem across much of the developed world irrespective of whether centre-left or centre-right parties were in power. This was a legacy from when the economy was seen as a battleground for competing political interests representing business and organised labour. The erosion of that representation has eroded the content of this economic debate and the pretence of control over the economy.

There was understandably some reluctance by political circles to recognise the increasing difficulty of governments maintaining this pretence. It became fashionable for the last twenty years, for example, to see such loss of control still as a result of a deliberate policy of liberalisation, and a result of a philosophy, as described by the left, who tend to overstate ideology, as “neoliberalism”.

In Europe and the US, any sense of political control over the economy under the guise of liberalisation has been fatally undermined by the GFC. Far from opening up to the capital markets, governments have tried desperately to control them. This is especially clear in the EU where political control over the capital markets, currency and the banking system has seen both a proxy nationalisation of the financial system and increasing fusion between the political class and financial markets towards what looks increasingly like a financial bureaucracy such as found in China. Nevertheless, despite the undermining of liberalism, this erosion on the political system is seen through the prism of the financial crisis.

In Australia, as usual, things are clearer. Hawke/Keating’s opening up to global financial markets is still seen as “neoliberalism” rather than the fag end of Labor’s historical project as it was. However, the further undermining of the pretence of political control to be replaced by a more technocrat approach has been more clearly occurring within the political system itself under Rudd.

Several commentators have made the point that Bowen’s downbeat Economic Statement and the limited capacity for hand-outs is an unprecedented way to enter a campaign. It isn’t really. In 2007, Rudd surprised commentators by refusing to match Howard’s spending promise through his declaration that “this reckless spending must stop”. The fact that a few months later Rudd had no problem pumping the country’s largest ever stimulus into the economy showed that this wasn’t understood by voters as some political or economic philosophy, but simply a way to make Howard’s promises look like narrow political opportunism.

The widespread acknowledgement that government has limited control over the economy was something that the Gillard government never got (among other things). It continually felt responsible for the state of the economy and defensively talking it up. This especially came out in its commitment to a surplus, which was widely disbelieved, and rightly so, as it had little control over it. One of the fixes of Rudd’s return has been to quietly step away from responsibility for the surplus, saying it depends on what happens internationally. Indeed one of the unnoticed features of Bowen’s Economic Statement has been that in line with a surplus “over the cycle” and the gloomy near term forecasts, Labor has allowed for a passive in-built stimulus that has pushed the surplus timing out.

Gillard and Swan’s adherence to a surplus was widely seen as a political mistake. Yet curiously few seemed to have commented on the other group that still commits to a surplus, the Coalition. It is here where they are vulnerable. A surplus commitment irrespective of the state of the economy is in reality an ideological response from the Coalition rather than a practical one. It is a sign of the internal branding pressure from Australia’s last political party that put Abbott where he is and would have probably kept him there, no matter how good Turnbull’s polling numbers.

Labor is vulnerable too of course. Its transition to a technocrat model over the last six years has hardly been smooth, nor appropriate for what is supposed to be about managerial competence. Surprisingly Abbott made rather little of the “Labor chaos” theme in his campaign opening comments. Nevertheless the Coalition is vulnerable to an anti-politics attack of threatening uncertain times even more so because of ideological agendas. Rudd has spent the last weeks on issues such as asylum seeker policy that has more to do with his own side than the other (or the electorate). There is rather little time, but his re-election would rely on him bringing the real meaning of his period as Labor leader out into the open.

Posted by The Piping Shrike on Monday, 5 August 2013.

Filed under Tactics

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Comments

11 responses to “Running on empty”

  1. Bill on 5th August 2013 10:03 am

    ‘Shrike’. You said the date was likely a compromise between internal/external pressures. I interpret that as ‘Rudd had a say’, (probably wanted to go much later?) and the party were saying ‘we’ve probably about peaked?’

    Do YOU think this is the optimal time/ would YOU have gone later?

    I’d be interested in your pros and cons of both now/later.

  2. Bill on 5th August 2013 10:08 am

    Sorry, I meant to add there ^ that you ruled out Turnbull. Maybe the Labor party didn’t /were worried they might install him (now they CAN’T). Do you think THAT was a significant factor in their decision?

  3. atomou on 5th August 2013 12:07 pm

    Bill, I think the “balance” is a point between the reality and the myth of the “tent solution.”
    Between crass pragmatism and its consequences (always nasty).
    Between Rudd and his nemesis, or, rather, nemeseis (plural thereof).
    Between a hung parliament and a Lib avalanche (Zeus forfend!)
    Between comfortable weather and hot weather.
    Between one Oz holiday and another. (Cup Day, Grand Finals, etc)
    Between crap and crap!

  4. The Piping Shrike on 5th August 2013 4:21 pm

    Think it would have been better to go later. Only risk was Abbott being replaced but think that would have been very unlikely. Think it was internal pressure.

  5. atomou on 5th August 2013 4:34 pm

    Doubt it’d make any dif, shrike. They’re both coming at the electorate with utterly bullshit policies. I mean, “Tent City 2” is telling the tent-o-philes to shove their settlement crap already and I think that O’Neil is just being kind to Rudd in not telling him what he really thinks until after the election. This is probably why Rudd chose the earlier date, feeling that O’Neil couldn’t hold his poo much longer! When ya gotta go…

  6. The Piping Shrike on 5th August 2013 5:21 pm

    O’Neill approached Rudd on this. In fact the risk with the PNG deal lies in why PNG wants it.

    But probably timing won’t make that much difference.

  7. Riccardo on 5th August 2013 11:58 pm

    The ‘american’ thing is cliched, but can see clear evidence of the ALP turning into the US Democrat party, with each new leader required to build a personal campaign platform within the party. Gillard may have been the last faction based leader.

  8. atomou on 6th August 2013 8:44 am

    No dif shrike, re who approached whom. For both it’s a case of blatant opportunistic crooks: “You rub my back and I’ll…”
    A crooked deal between crooks only has a short life span and when the use-by date runs out you wouldn’t want to be standing near them! And this deal’s use-by date is -by sheer coincidence- around about Yom Kippur day (Day of Atonement)… the day Gillard didn’t want to deal with the Orthodox Jews. Perhaps it’s a divine intervention of some sort (The God of the Jews giving Rudd the raspberry) but I’m not that sure that gods ever listen to any mortals; not since the Romans pinched them from the Greeks, anyway.

    Interesting observation Riccardo, about the ALP morphing into US Democrats. Looking at them a bit closer, I can see it now, as well. The Rudd rules of the game -“you’ll make me your leader and I’ll stay your leader until I lose an election”- is straight out of the US board game of politics. And, of course, there’s also the alacrity with which they (and all govnt’s) jump whenever the yanks tell us.

    It all works towards making the leader of the ALP personal and presidential, so personal, in fact, and we mustn’t confuse the “personal” with the “intimate” that the leader is now personally asking for $10 from all his parishioners. I could see the dolefulness in his eyes as his brain mutters to his mind, “this was a broad church once, the poor box should be bursting with coin but o God, I know it won’t this time!”
    Same look behind the smile when he did a selfie with shaving nick!

  9. Caught in Howard’s “neoliberal” trap :The Piping Shrike on 7th August 2013 7:50 am

    […] Running on empty […]

  10. invig on 18th August 2013 2:03 pm

    What you’re missing Shrike is the difference between vision and pragmatism, and the electoral desire for both. The economy needs to be managed well in order for vision to be realised. Coalition supporters are content to equate ongoing economic function with vision because they are free market, socially conservative. For them, vision = more of the same, please.

    Labor supporters differentiate vision from economic health because they see the latter as a means to achieve the former. This was Gillards mistake (with the surplus promise) in misunderstanding their constituents. It was also however unavoidable since they have no coherent vision that does not involve wrecking the economy required to support it.

    So they took ‘the fifth’ and hoped no one would notice.

  11. The Piping Shrike on 19th August 2013 9:38 am

    Elections in Australia are pretty well never won on being “inspiring”. See my latest post.

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