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

neo-liberalism on the attack « Previous | |Next »
April 19, 2012

Joe Hockey goes to London and the Institute of Economic Affairs --"the UK’s original free-market think-tank” to call for the end of the welfare state in western democracies. Entitled The End of the Age of Entitlement Hockey says that for western democracies the party is over. The "party" is wanting a lifestyle we cannot afford but are quite happy to borrow from others to pay for.

RoweD.jpg David Rowe

The strategy is to reduce the size of government, because we need to give people, individuals, families, small businesses more control over their lives to be able to compete with our nearest neighbours in Asia. Hockey says:

Despite an ageing population and a higher standard of living than that enjoyed by our children, western democracies in particular have been reluctant to wind back universal access to payments and entitlements from the state....It is ironic that the entitlement system seems to be most obvious and prevalent in some of the most democratic societies...So, ultimately the fiscal impact of popular programs must be brought to account no matter what the political values of the government are or how popular a spending program may be.

Whose entitlements is Hockey referring to? Corporate welfare? The diesel fuel rebate? The welfare state? Or middle class subsidies--such as those for private health insurance and wealthy private schools? It's the welfare state of course.

Hockey was primarily referring mostly to Europe, Britain and the US, but Australia is placed in the context of its Asian competitors. He says that in contrast to Hong Kong with its low taxes and no safety net Western democracies:

have enormous entitlement systems spanning education, health, income support, retirement benefits, unemployment benefits and so on...In all these areas people are enjoying benefits which are not paid for by them, but paid for by someone else – either the taxes of those who are working and producing income, or future generations who are going to be left to pay the debt used to pay for these services.

Government revenue in these western economies still falls well short of meeting current government spending initiatives.The difference is made up by the public sector borrowing money. These entitlements have now begun to hang like a millstone around the neck of governments, mortgaging the economic future of many Western nations and their enterprises for generations to come.

What strikes me is not Hockey's candour in speaking out or his courage about cutting back on the entitlement culture in Australia. It is the hypocrisy. Few have done more to promote such a culture than the Coalition Government under John Winston Howard.

Secondly, whilst in opposition the Coalition has fought almost every effort by Labor to means-test or otherwise curb welfare entitlements. True, it has supported budget crackdowns on the proliferation of such benefits as the disability support pension, but it has opposed any move by the government to go after so-called middle-class welfare, such as the private health insurance rebate, the baby bonus or the family tax benefit. It has opposed paring back of subsidies to big miners and the fossil fuel industry, whilst attacking further subsidies for the automotive industry.

Hockey's neo-liberal policy is very clear: increase the incentives and support for business to get growth and profits back (ie., shoring up the private sector) and take a hard look at the welfare entitlements of the people. Some entitlements are better than others and those of the working people who depend on the welfare state for their well being will be subject to the pruning knife.

It is the continuation of the backlash against the welfare state and the push for a new political economic order in the 1970s; a backlash whose fundamental feature is fundamental feature is the disciplining and disempowerment of the working class.

Anytime there is a crisis in a nation state the neoliberals say the problem is the strength of the welfare state, it's the huge expenditures of the welfare state. Their practical aim is to redistribute wealth towards the upper classes. and ensure that it is concentrated there by restoring class power in a very narrow band of the political economic elite.

| Posted by Gary Sauer-Thompson at 6:54 PM | | Comments (13)


Not only have the Libs opposed Labor's (feeble) attempts to wind back middle class welfare, the Howard/Costello Governments were responsible for most of it in the first place.

Abbott and Hockey can be expected to follow the US Republican model: use the rhetoric of the protestant work ethic as a smokescreen to eliminate social safety nets, while leaving business's privileges in place and cutting taxes for the rich. It's a conservative project to overturn 75 years of social progress that originated in the USA and needless to say the Libs, bereft of original ideas of their own, will mindlessly follow.

It is ironic then that the economic practice of both Reagan and Bush, Republican heroes was big government and deficit spending.

freedom of the market is what neo-liberalism is all about. Neoliberalism will give you individual liberty and freedom, but it dumps social justice and environmental sustainability to do so.

We have moved from a position that assumed the neoliberal orthodoxy - the market provides the best solution to our problems – via the market crash - to a situation where once again, we are told the road to redemption is to unleash the vitality of the private sector.

In his Lateline interview Hockey says that mean testing the private health insurance rebate wasn't a problem because it led more people to seek the more expensive entitlement of the public hospital system.

The Private Health Insurance Rebate is entirely different to an aged care pension or a disability pension or other pensions and in Australia we have come a long way.... If you reduce the Private Health Insurance Rebate - just let me finish. If you reduce or remove the Private Health Insurance Rebate, you are simply pushing more people onto the public hospital system, which means they have an entitlement to universal health care, which means that the entitlement system grows. So sometimes governments actually have to spend money to reduce the overall cost to taxpayers of a universal entitlement.

Some entitlements work to reduce other entitlements so that is okay.

Those who are employed on various insecure work arrangements - casual, contract or through labour hire companies, on low wages and with no benefits--are going to feel the brunt of the Coalition's rolling back the welfare state.

These are the working poor and around 40 per cent of Australian workers are in insecure work due to the changes by neo-liberalism to make the labour market more flexible.

Ken says:

Abbott and Hockey can be expected to follow the US Republican model: use the rhetoric of the protestant work ethic as a smokescreen to eliminate social safety nets, while leaving business's privileges in place and cutting taxes for the rich.

Hockey's argument is that there needs to be more cuts to welfare because Australia needs to better align its system to those of its Asian neighbours, which have lower taxes but far less generous welfare benefits.

Thanks, Gary Sauer-Thompson; another good post.

"The Market" is looking pretty tired as a justification for the neocons' privatisation, deregulation, low-(corporate)tax and small government agenda. In the wake of the GFC, it really should have no credibility at all.

And yet there are still very few economists who are prepared to acknowledge that "the free market" (a) doesn't exist and (b) would be monstrous if it did. They just continue to parrot the textbooks of yesteryear without ever trying to think.

What we learned from the global financial crisis is that if there is a conflict between the well being of financial institutions and the well being of the population, the government will choose the well being of the financial institutions; to hell with the well being of the population.

As Mark says, the conservatives feel bold enough now to proclaim the inevitability of the 'race to the bottom' which they once derided as scare-mongering. Welfare policy is impossible to develop in isolation from the labour market, so if Hockey is now using Asian countries as the benchmark for welfare it follows that he must also use them as the benchmark for wages and working conditions. After all a job paying $2 an hour is better than no job at all, amirite? Especially when half the population will barely be able to read or write thanks to the merit sorry money-based education market Abbott wants to introduce. Look at all those Filipino workers getting $8 a day and consider yourselves lucky - we have to be globally competitive you know.

Busy, very busy, just had enough time to see the post and glance at the comments so if others have mentioned this and I'm being repetitive, my apologies.
This link is relevant to the topic.

Bill makes these comments:

"The claims by both Erixon and Hockey reflect a stunning ignorance of macroeconomics and the choices available to government and the sources of macroeconomic problems under different monetary systems....
On the one hand, the level of ignorance about macroeconomic matters displayed by these commentators is stunning. On the other hand, one could easily assume they know exactly what the story is but are choosing to mislead their audiences because if they disclosed their true agenda they might not get the same support...
The hypocrisy is staggering"

The whole thing is worth a read, hey, why not bookmark the blog?

Hockey's “Europe is bad” narrative--- is traditionally an American one: those big-spending, cradle-to-grave welfare (socialist) countries stifle innovation and job creation and make for boring, conformist societies.

Hockey took reframing Australia's political culture by ending the age of entitlement. further-- looking after yourself into old age should be done the Asian way.

Only its not just Europe. It is also the US these days that has huge budget deficits, is in debt big time, and is living way beyond its means.

Hockey's argument is that the welfare system and its entitlement culture is the cause of the Eurozone woes. He ignores that the US Government had to bail out Wall Street. So has Europe. The GFC doesn't exist for Hockey.

Sam I think Hockey is trying to play the same smoke and mirrors game as the Republicans in Washington: try to trigger a sense of existential crisis justifying radical social transformation, while pretending their own party had nothing to do with it. I suspect there's been a lot of soul-searching in the Liberal Party concerning the 2007 election outcome, and they've concluded WorkChoices was good policy poorly sold. Thus the softening up begins now for the changes an Abbott Government will introduce - all for our own good of course.