It has never been clear what ethical principles guide Josh Frydenberg’s politics. He appears to be a hollow man, especially with his recent declaration that he will look to the economic policies of Margaret Thatcher and Ronald Regan for inspiration to shape Australia’s economic future.
Australia is facing what is arguably the most severe economic challenge of all time. The malevolent combination of neoliberalism’s myriad failures and the impact of the COVID-19 pandemic have brought the Australian economy to its knees. Guiding the country out of this horror moment requires nothing less than a major restructuring of the economy and society. This will require a revolution in economic policy making.
It was abundantly clear, well before the bushfire crisis, and well before COVID-19 struck, that the Morrison government lacked the political intelligence, much less the political will, to address the growing crisis looming over the country’s economy. Donald Horne’s observation in the 1960s that Australia was governed by second rate people (see chapter 10 of The Lucky Country), is as apposite today as it was then.
That the current treasurer would assert (smirkingly, as he did on the ABC’s Insiders on Sunday morning) that Thatcherite policies and Reaganomics offer important lessons for getting the economy back on its feet is deeply worrying. If he is to be the initiator of the policies to meet the current economic challenges facing the country then we are in very deep trouble.
Thatcher and Reagan laid the foundations of what became the neoliberal economic holocaust that has been crippling the global economy ever since. Their policies were as simplistic as they were destructive: destroying trade unions, massively regressive taxation schemes, handing over public goods and services to private profiteers, removing legal constraints on rapacious private sector interests, dismantling the progressive redistributive mechanisms of the welfare state.
These disastrous achievements have led to grotesque increases in socio-economic inequality (a few rich people today own more of the world’s capital than more than half of the global population), persistent high unemployment rates, persistently low wages, the off-shoring of manufacturing industries, and terrible increases in social conflict and associated social problems (for example, surging racism, domestic violence, drug addiction rates, suicide rates, rates of depression).
And we must not forget that Reagan and Thatcher laid the foundations of the latest phase of predatory capitalism and set in train the chain of events that created the catastrophic global financial crisis of 2007/8.
Moreover, Thatcher and Reagan’s economic “reforms” gave birth to the socio-cultural conditions that have generated the kinds of populist politics now undermining the very foundations of representative government around the world. Ronald Reagan created the monster that is Donald Trump. Margaret Thatcher created the bombast that is Boris Johnson.
These factors, it seems, are attractive to Josh Frydenberg. Heaven help us!
If Australia is to survive the current economic disaster confronting the country, a completely new and different economic way of thinking is essential. We can start this by first looking back to a similar period in history, to rediscover ideas and policies to aid policy makers to get us through the huge challenges we are experiencing right now – and shall do so for the foreseeable future.
A first lesson is readily available in the economic history of Australia’s post-World War II government. The era of post-War reconstruction is one of the most innovative and effective moments in the history of Australian public policy. This has been superbly chronicled in what is arguably his finest book by Stuart MacIntyre (Australia’s Boldest Experiment: War and reconstruction in the 1940s, see especiallych. 4). Policies that emerged from this unprecedented period of public policy innovation include Australia’s successful immigration program and the Snowy Mountains Hydroelectric Scheme.
What is especially noteworthy about this era is the role of the government in initiating and directing the projects that would build Australia’s economy and society so successfully in the post-War years. Government, not the private sector, took the lead and set the Australian economy on the path to prosperity. Equally noteworthy is how conservative governments (including Labor governments) have deviated from this path, to the detriment of Australians’ standards of living and security. Neoliberalism has been the nail in the coffin of the kinds of policies that made post-War reconstruction so successful.
Post-war reconstruction in Australia is not the only example of how the state can lead in growing the economy and improving the living conditions of all its citizens. In his classic account of Japan’s “economic miracle”, Chalmers Johnson’s MITI and the Japanese Miracle recounts how the role of the state was absolutely crucial in creating the conditions for the Japanese post-War economy becoming the biggest economy in the world into the 1970s (see Ezra Vogel, Japan as No. 1). It might have remained so if Yasuhiro Nakasone, Prime Minister in the 1980s and pliant friend of Ronald Reagan, had not obeyed his mate’s advice to Reaganise the Japanese economy. It has been all downhill ever since.
It would be a gift to the Australian people if, with the forthcoming cabinet reshuffle, Frydenberg could be relieved of the treasury portfolio. Probably Dave Sharma would be the best of a bad lot to take on that job. He is clearly intellectually head and shoulders above the rest of the Liberal pack in the parliament. Jim Chalmers would do an even better job.
What Australia urgently needs is for governments to step up and initiate a wide range of infrastructure developments across the country. At the very forefront should be a huge increase in public housing development, following principles and policies recommended by the late Hugh Stretton (see for example his Housing and Government). Then the government must provide the conditions for Australia to become the world’s leading clean energy technology innovator. The country desperately needs a fast train network to connect first the eastern states and eventually extending through Adelaide to Perth. These and similar nation building projects are needed as never before.
Boldness has to become Australia’s economic friend as our politicians chart the course to lead the country into a post-COVID-19 future. Instead of being confined to the economic margins, the state must take its rightful place in the economic policy vanguard, moving the country onward and upward. This, of course, is the very opposite of the trajectory that a return to Thatcherist and Reaganite policies would result in. Indeed, it is a trajectory that would drag the country devastatingly down at this time.
Frydenberg’s childish nostalgia is therefore very dangerous. How alarming is that!