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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

economic prosperity + anxiety « Previous | |Next »
October 17, 2007

Alan Woods argues in The Australian that if we are looking for an economic explanation for why the Government is facing defeat in a buoyant economy, then market reform is the area where we should start.

More than two decades of economic reforms and globalisation have created a new, more flexible economy, with upward mobility, rising aspirations, dramatically changed industrial and institutional structures, shifting patterns of employment and family life, dramatically changed family finances and greater individual responsibility. Economic reform and globalisation have been overwhelmingly beneficial, as our economic prosperity attests, but they have also created unease, uncertainty and insecurity, as rapid change always does.

So there is fear and anxiety as many Australians have high debt and they fear the effects of a rise in interest rates.

inflationC.jpg
Alan Moir

Economic explanations are not everything , but Woods is right about this. The tax cuts lauded by the neoliberal economists---such as Sinclair Davidson and Alex Robson---won't really help to ease the underlying anxiety caused by rapid economic change.

Ours is a time of low inflation, low interest rates and rising asset prices, which have encouraged a huge rise in household gearing and debt. Wood says that so far this debt isn't a problem, because debt is concentrated in households best able to service it, and households are benefiting from rising asset prices.

Fair enough as far as it goes. But, as we live in a climate of rising interest rates, our unease increases. It becomes a general anxiety about economic management and the future.

| Posted by Gary Sauer-Thompson at 8:09 AM | | Comments (15)
Comments

Comments

Still getting past the shock of the thought that Wood is anything but the most slavish of Tory apologists.
Will eventually get to read article mentioned, but for now will content myself withmention of the inclusion of the post and the general sentiments seemingly contained within.

I've been reading about this all day. The only people who think the booming economy is a uniformly good thing are Paul Kelly and possibly his cat. If he's got one. And if he did it wouldn't count as a person anyway.

The Great Holiness of The Economy used to be as dazzling as a giant mirror ball for a nation of pot smokers, but it's just not anymore. Tax cuts are part of the economic management narrative, which is both dull and demonstrably misleading.

We used to talk about CPI increases. Those were heady days.

Lyn,
John Langmore Choosing wealth or wellbeing in the Canberra Times says:

There have been 15 years of relatively rapid economic growth, for which there is widespread appreciation.
Though most have a general sense of material wellbeing, at the same time there are widespread insecurities and fears. Many Australians worry about job security. Opinion polls show that the proportion of those who prefer higher public spending on health and education to lower taxes has risen steadily since 1990 to a substantial majority. Services for which most respondents are willing to pay quite a bit more tax or a little more tax include health and Medicare, primary and secondary education and the environment.

He says that while most Australians are optimistic about their personal futures, their confidence in the future quality of life is declining.

It's not a very well argued op ed.

Lynn
Ross Gittens ends his op ed in the SMH thus:

So, with most people getting savings of between two and three cents in the dollar, you have to conclude that, despite the unevenness, low, middle and high income earners have been treated roughly equally.

What all this tells us is where Howard stands on budgets. To him, nothing beats a tax cut when out to garner votes. Economic conservatism doesn't come into it. The punters can take their chances on crummy hospitals and schools - they should be using private hospitals and schools, anyway - and take their chances on interest rates, too.Question is, will Kevin Rudd see it much differently? I suspect not.

If we take the trended AES results in considerations of voting decisions then policy comes out on top. Rather than looking for external effects like the economy, security, etc, etc; losing an election may be as simple as bad policy. And there has been enough bad policy (and lack of good policy) from the Howard government to suspect that this could be the cause for their current lack of traction in the polls.

Cam,

The same pattern happens whenever people are asked what concerns them. As much as I hate the hackneyed 'out of touch' it seems to be true. Government policy revolves around a particular economic theory, but people's lives revolve around human stuff like health and education.

Lyn,
we seem to be returning to the 1980s where the arguments were the effects of liberal capitalism are the disolving of social cohesion, the hollowing out of democracy and increasing unease and dissatisfaction with a market mode of life.

Of course, globalisation triumphalists say that the reason that citizens have not got happier as they have become more prosperous is due to human nature.It is not a consequence of globalization. Moreover, happiness is not a goal of public policy and so government intervention is not warranted.

Paul,
Happiness these days is being aspirational: aspiring to an air-conditioned McMansion in an outer suburb and caring only about how to pay off the enormous mortgages that have been acquired. As a result, personal debt, house prices and mortgages have all increased significantly, so that large numbers of households are now exposed to even small increases in interest rates.

No doubt further interest rates rises will make such happy aspirationals decidedly unhappy.

Lyn,
Howard and Costello know that their battlers are starting to do it tough, are anxious and unhappy in their world of high debt and reliance on appreciating housing assets. Their response is simple it might be bad under us, but it'll be worse, far worse under Labor, they tell worried voters.

Under Labor the whole house of cards will collapse around them. Remember the high interest rates under Keating?

At Mawson Lakes in Adelaide, out on the flat northern plains where temperatures soar in summer, is a vile new Mac mansion suburb.
Apparently the houses are so crude as to environmental and power conservation values that local power utilities are demanding that this suburb be singled out for electricity cuts over the nasty summer upocoming.
To loosely paraphrase John Lennon; "happiness" may indeed, be "a warm air-conditioner".
I suppose others have also noted yesterday's "naming" by a sort of self-appointed HUAC flying squad of (worse still) "communists" (gasp!) in the prospective up coming government?
Phwoooaarrrr !??!

Paul,
yes throw lots of money at the battlers and run a scare campaign--this time about unions. It's very graphic. How potent?

Well, listening to Costello and Howard yesterday was the most stupid thing I thought I had ever heard. Stuff I hadn't heard since the 'seventies.
But listening to Hockey tonight proclaiming Fukuyama-like that the need for unions was over had me doubled up on the floor.
No, I thought. As long as there are people like Hockey about there will be a pressing need for ordinary people to stick with unions.
Smear campaigns?
Apparently Labor has lost some percentage points this week in response to the Liberal Sturm und Drang campaign. Never over-estimate the intelligence of the public.

Paul,

The coalition and Shanahan will derive great joy from today's numbers, particularly the prefered prime minister ones. I suspect that the most significant thing about the results is the psychological boost they will give the coalition, especially the (sarcasm warning) oh so reliable Galaxy.

The McMansion set is a complete mystery to me. Social cohesion doesn't seem to be their thing. Their homes are like fortresses with sky high concrete fences, moats and drawbridges would not look out of place. Have a look at a few floorplans and you find that the master bedroom with ensuite and parents retreat is usually as far from the kiddy bedrooms and separate entertainment areas as they can get.

I don't think the real scare campaign has started yet. Lord knows what it will be this time - surely we've run out of migrant groups to pick on? Maybe the cost of power to run all those air conditioners under Labor?

And Lyn, What about the cost of all those Union Nuckle Dusters....Sheeeezz! We'll be Bankrupt

And broadband Les. Don't forget the broadband. Are the tailor still running or are we too late for that now?