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June 6, 2004
There was an article in last Friday's edition of the Australian Financial Review (subscription required) that touches upon our theme of empire. Written by Stephen Bell, it addresses the role played by the Reserve Bank in Australia. Bell says:
'For years now globalists and neoliberals have been putting out the message that "globalization" and the need for "national competitiveness" meant governments have little policy discretion. Budgetary policy, taxation, welfare and even microeconomic policy are said to be constrained by a "golden straitjacket." Governments are supposed to win over fickle, footloose investors and defer to herd-like financial markets that can punish nations overnight for straying from the path of economic virtue.'
This powerful message has come from Canberra neo-liberals and various international commentators who make their living from spinning popular economics.
Bell says that we have been conned. He says that the wide varietion in tax, welfare and microeconomic policy regimes around the world is strong evidence that governments still have a good deal of policy discretion --if they choose to use it. Many states don't so choose.
Bell says that the Australian Reserve Bank has carved out a distinctive policy approach that challenges the neoliberal thesis about policy convergence. The policy path meant that the Reserve Bank has had to fight to become independent of government control during the 1980s; to pursue its multiple goal statutory charter of low inflation and full employment in the 1990s in the face of the neoliberal preference for low inflation-only objectives; and to avoid the hawkish crunching inflation through a harsh recession favoured by the othodox international monetary authorities.
Hence there is room to move.
But let us not get too carried away with thsi independence. The Reserve Bank still used unemployment and labor insecurity as disciplinary instruments to crack then contain inflation.
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