Variously called classical economics, neoclassical economics, trickle-down economics, neoliberalism, a new wave of economic thinking swept Australia. Keynes was gone, Hayek and Friedman were the rage. We were told that free markets were the only way. Governments were a hindrance. Everyone should learn from the efficiency of corporations and markets. Planning was unnecessary because free markets would solve all problems.
Today, an estimated three million Australians struggle below the poverty line. How can it be that one of the wealthiest countries cannot eradicate poverty?
Countless Royal Commissions into market failures and blunders by independent regulators. Living costs soaring for consumers even as SMEs are driven out of business by unsympathetic banks and power supply that is not only costly but unreliable. A tide of hardship, homelessness, precarious incomes and work conditions being felt by ever more people.
Complaints can be heard everywhere even as the political class offers no solutions. It is probably fair to say that causes abound, so many that Australia may be said to be in a structural, systemic, quicksand that will not be remedied easily.
Does the political class really want to eradicate poverty? No one has said so. Political strategists, particularly on the conservative side, have said that the only aim is to achieve 50%+1. That puts the progressive side in a box because of budget constraints and an independent central bank that has said in the past that the main focus of its considerable powers is financial system stability and not helping government spending.
And there are many other independent regulators whose activities are shielded from rigorous scrutiny from public and parliament by the insistence “don’t politicise them”.
Signs abound of a dysfunctional economic system becoming entrenched. The central bank continues to cut rates even though they themselves admit it will probably be ineffective in improving the economy and raising wages. They seem to have run out of ideas even as they cling to the “inflation targeting” idea. Very few central banks worldwide actually believe in inflation targeting. More recently, some commentators, including famed investor Mohammed El-Erian, have said that cutting rates achieves only further inflating an asset bubble, which in turn benefits only those who are already asset rich. If there really is an asset bubble in equities and property that need to stay inflated by continuing central bank action, our superannuation savings may not be that secure.
Statistics and some economic forecasters contribute to the myth that all is well with the economy. Emphasis on GDP growth in public debate is setting a low bar for politicians. All they have to do is ramp up immigration. Some observers, not widely reported, have noted that on a per-capita GDP measure, the economy is already in recession.
The central bank may also be supporting the myth by its interest rates cuts if it hopes that the resulting “wealth effect” could lead to a “trickle-down” effect, even though these are not supported by historical data.
And a number of observers have complained that some economic forecasters, particularly in the central bank and Treasury, are consistently over-optimistic when forecasting future economic figures, for reasons which are probably not baffling.
Words like “corporate state” and “corporatocracy” are being used by some observers. They believe that real political power has shifted from voters and the ballot box, to the corporate class, through many untransparent links with the political class.
A corporate culture seems to have taken hold following the mantra that corporations and markets are most efficient. Large numbers of people with corporate backgrounds have been enlisted into the public service, into regulatory agencies, into the management of political parties, even the media like the ABC. When these corporate minds move on, they will look to corporations for possible future work, the so-called political “revolving door”. Can we expect their primary loyalties to lie with the public, or their possible future employers? Indeed, there is anecdotal evidence that many new graduates look for first jobs in the public sector because that will improve their CVs when they eventually look for corporate jobs. Can we expect them to be impartial in their advice to parliamentarians?
Those who are looking for solutions might perhaps also look at what the hordes of very-well paid corporate lobbyists can say or promise to politicians, they operate in lawless territory; the common practice of offering lucrative jobs, contracts, professional fees, to family members of politicians and bureaucrats, all perfectly legal; the also-common practice of big lucre after decision-makers voluntarily or involuntarily leave office, Barack Obama was reportedly given a $70 million book contract, Tony Blair has become a substantial multi-millionaire, and it is not unusual to be paid hundreds of thousands for a one-hour speaking engagement.
Concerned citizens may also want to look at wealth funds, private equity, opaque trusts, venture capital funds, all of which can be used to mask the true identities of wealthy beneficial owners.
So, some people may well be justified in complaining that they are being left behind but who will carry their complaints? The main media is overwhelmingly owned and controlled by corporations, some multinational. The last bastion of democracy, the ABC, is being reminded not to ask too many questions by the threat of privatisation, of budget and staff cuts, of more government-appointed “efficiency” reviewers whose main source of income derives from corporate work.
And in case some people really do want to complain vigorously, they may well remember that they may be labelled “extremist” or “radical”, which in turn can carry some personal risks. After all, a secret but possibly substantial part of security and intelligence operations, in the US and possibly here, have already been outsourced to corporations, who very probably have access to all the data in their life story, including all their medical records.
(The writer was a deputy editor in the Straits Times newspaper in Singapore)