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March 3, 2005
Another economic post. This one looks at the economic profession who are accepted to be the expert commentators on this kind of event:
This may well have a big political fallout as Howard and Costello grapple with economic forces outside their control and go increasingly on the defensive.
How do the experts frame economic policy? What is in their frame and what is outside? We know that ecological sustainablity is outside the frame. We can look at the economist Alex Robson as he's written an op ed in The Australian.
Robson rightly says that despite Labor's best efforts, most voters won't suddenly conclude that the Coalition's key campaign themes were incorrect, that John Howard and the Coalition "lied" about interest rates. He then says Labor's recent policy statements and past actions have created the impression that it refuses to accept or does not understand four key points regarding economic policy.
These points are:
First, the only goal of monetary policy should be to maintain low inflation...Second, the focus on inflation should be accompanied by a commitment to refrain from political interference in, and micro-management of, the RBA board's decision-making processes...Third, the monetary policy framework should be supported by sound industrial relations policies. Heavy labour-market regulation tends to result in nominal wage rises in excess of productivity improvements...Finally, there should be a commitment to budget surpluses, reducing government debt and reducing the size of government as a proportion of overall activity.
Robson says that Labor's record gives the impression that it has performed poorly on all four policy fronts.
I'm not going to contest this charge in this post.
My concern here is with the way Robson frames economic policy. It is very narrow understanding. It is a neo-liberal one that is silent about infrastructure renewal, regulation to ensure competitive markets, a sustainable market, boosting research and development to build technological clusters, and reducing the trade deficit though more high tech exports.
Are not these issues the concern of economic policy? I would have thought so myself.
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Bang on. We have been treated to these narrow views for far too long. Now we are on the cusp of learning the reality of holding on to an inflexible ideology.
Just don't expect these 'experts' to change their spots too soon.