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

contradictory policies « Previous | |Next »
October 15, 2012

Ross Gittens has a succinct account of the way that Australia's economy has been hit by two powerful, but opposing economic shocks: the expansionary shock from the resources boom and the contractionary shock from its accompanying very high exchange rate:

It's reasonable to attribute the Aussie's remarkable strength since the start of the resources boom predominantly to our high commodity export prices and vastly improved terms of trade.That makes it reasonable to expect the fall in export prices would lead to a commensurate fall in the Aussie, thus reducing its contractionary effect on our export and import-competing industries. But the historical correlation between our terms of trade and our exchange rate, while strong, can also be quite loose for fairly long periods. So it's not surprising the Aussie has held up so well.

Gittens says that is the Australian dollar could stay much where it is for years to come because those countries with the best growth prospects tend to have strong exchange rates whereas those with poor prospects tend to have weak exchange rates.

MoirAbudgetsurplus.jpg Alan Moir

Australia has a changing economy in a low growth global economy and the latter means lower economic growth for Australia. So the Reserve Bank lowers interest rates to stimulate the economy whilst the Gillard Government's attempts to save the budget surplus will contract the economy.

That contraction will provide more grist to the mill of the conservative populist movement as this movement stems largely from a decline in the economic and social status of the white lower middle classes and working classes which has been gathering pace sharply over the past five years.

Globalization has seen the squeeze on the middle class economic that is helping drive the conservative populist movement and increasing its volatility. Each right-wing populist wave--eg., Pauline Hanson--- as it recedes, leaves the Coalition Party several notches to the right from where it had been previously. Their rhetoric is built around a desire for a return to an idealized past, of a culturally and ethnically purer nation, a stable, traditional society, and a “moral economy” in which decent, hardworking people are guaranteed a decent job.

The white middle class feels embattled and threatened both economically and culturally with respect to the cultural world of conservative Christianity (both Protestantism and Catholicism). This culture is, to a very great extent anti-Enlightenment, and for convinced adherents of this tradition, much of modern Australian mass culture is a form of daily assault on their passionately held values.

The class resentments on the part of lower middle class and working class whites have largely been channelled into cultural hatred of the “liberal elites” and the increasing contempt for scientists and experts of every kind.

| Posted by Gary Sauer-Thompson at 3:03 PM | | Comments (9)
Comments

Comments

Murdoch's tabloid newspapers are behind this movement that built hysteria about asylum seekers, constructing new racist stereotypes of these people as criminals, as disease ridden.

They are not very sympathetic to the "undeserving poor". Aboriginal policy, lack of a softening in the hardline asylum seeker issue and the stricturing of welfare and education all seem to be becoming more surveillance and micromanagement prone in the never ending war against backsliding.
Not just the effete latte's and odd-bod nerds, but the unwashed, seem under increasing warrant of correction and discipline.

Associated with the nostalgia and social conservatism of populist right wing conservatism is the politics of austerity --the political desire to transform the Australian state from being recognisably social democratic, welfare to be downsized into the US model.

The shift is towards American-style workfare, for public-sector jobs to be turned into a second-class employment and for services, from school to healthcare, to demand that users pay more to get something decent. The future is American for the free market conservatives.

The return to budget surplus is a political goal given there is an election scheduled for the latter part of 2013

"So the Reserve Bank lowers interest rates to stimulate the economy whilst the Gillard Government's attempts to save the budget surplus will contract the economy."

Some argue that reducing the deficit is a necessary element in creating the conditions for interest rates to be lowered. Lower interest rates means that the currently depressed housing industry has a chance to recover.

Austerity is expansionary for these people.

"Austerity is expansionary for these people."

The argument by Stephen Koukoulas in Business Spectator is that as the government withdraws cash and activity from the economy....it is making room for the private sector to expand. This is the "crowding out" hypothesis and it is presented as fact, even though the IMF rejects it for Europe and says that fiscal consolidation typically lowers growth in the short term.

Richard Denniss in the AFR highlights the contradiction in the BIg Miners and Big Business stance about economic growth in Australia:

The faith of Australian policymakers and business leaders in communist China to keep delivering record growth is touching. Just as they assume the sun will rise tomorrow, so too do they believe those responsible for setting China’s exchange rate, making five-year plans and running their vast state-owned enterprises will keep doing a great job.
When it comes to Australian economic policy, of course, their faith in China’s ability to centrally plan is replaced with the certainty that only unfettered market forces can deliver growth and prosperity for Australia.
While public ownership of strategic assets and strict control of the banks may work a treat for China, the opposite is apparently the case here. Only by privatising government assets, deregulating labour markets and lowering taxes, we are told, can we deliver good outcomes for Australians.

Big Business' intervention in political and policy debate is premised on a fundamental philosophical confusion.

"Austerity is expansionary for these people."

Tell that to the unemployed women in Queensland

"...the political desire to transform the Australian state from being recognisably social democratic, welfare to be downsized into the US model."

For neo-liberals the state is regarded as an outmoded way of meeting needs, and a block to citizen action, business entrepreneurship and efficient service delivery.

Their ambition is to replace the “nanny” state with one that is “lean” and “agile”, focused on enabling action by others, but not providing services directly itself.