The Business Council of Australia is running a hysterical campaign against trade unions, Getup! and the Labor Party, as if corporate Australia is facing an existential threat. Thats partisan rubbish.

Foreshadowing the Business Council of Australias announcing its intention to take a prominent stand in the next election, Andrew Bragg wrote in the Financial Review:

If the playing field isnt levelled, Australia risks becoming the Argentina of the twenty-first century: blessed with opportunity but captured by isolationists, special interest groups and quasi-socialists.

Although Im not sure who hes calling quasi-socialists (the Peron movement was mid-century), its a reasonably sound precis of Australias situation.

At the turn of the twentieth century, Argentina and Australia were vying for top ranking as the worlds most prosperous countries. Both were fabulously wealthy and were indeed blessed with opportunity. And as we know while Australia prospered, Argentina stalled economically.

But Braggs use of that analysis to support the BCAs unashamed campaign to throw its weight behind the Liberal Party defies both historical facts and economic good sense.

Drawing on comparisons between Argentinian and Australian history, Princeton University historian Ian McLean, author of Why Australia Prospered, showed how in Argentina a wealthy elite used its political power to shape the nations policies to its own short-term benefit. He wrote:

If a wealthy elite emerges early, they will likely oppose the extension of the franchise, offer limited support for universal and publicly-funded education, and secure an immigration program that suits their own labor requirements, thus reinforcing a skewed distribution of income and wealth in the community

With a little shifting of context, it seems as if its the Liberal/BCA platform thats taking us down the Argentinian path. We already have universal franchise, but in its hysterical reaction to Getup!, the BCA wants to tip the electoral field in its own direction, and has asked its 130 members each to contribute $200K to a fighting fund.

As a so-called business-expense that would be a tax deduction, meaning that for each such donation $60000 would be paid by taxpaying Australians. And the money doesnt belong to the corporate executives or board members: it belongs to the shareholders of these public companies. By contrast, donors to Getup! are spending their own money, and they dont enjoy a tax deduction.

When the publics money is used to support a ruling political partys election campaign, thats called corruption in most countries. And when its combined with attempts to muzzle voices of dissent, such as Getup!, thats the path to a one-party dictatorship.

On immigration, education and labour conditions, the Liberal/BCA platform is quite in line with serving the interests of corporations supposed labour requirements. We have an inflow of low-paid short-term foreign workers, lax enforcement of labour standards, a hostile attitude to trade unions, and a government that, for all its rhetoric, is allowing our education standards to slip.

A poorly-paid and under-educated workforce may suit corporations short-term bottom line, and may help the government get its unemployment figure down (slave economies dont have an unemployment problem), but as any first-year economics student knows, its a path that leads capitalism to its own destruction. The dynamic of capitalism rests on a well-paid workforce whose spending sustains economic activity, and when workers are well-paid there is an incentive for employers to make sure labour is employed productively.

Bragg is right when he refers to the risk of isolationism, but why is the BCA supporting the Liberal Party? The BCAs beloved party has turned its back on multilateral institutions such as the WTO, pursuing bilateral and small-group trade deals instead. And on climate change, with its parochial interest in supporting the coal industry, it is turning its back on the worlds most pressing problem.

His punchline is his reference to special interest groups. The Liberal Party, and its National Party colleagues, have form when it comes to protecting rent-seekers and special-interest groups. Health insurers enjoying an $11 billion public subsidy, irrigators stealing water, multinational firms and millionaires paying little or no tax, corporate owners of once publicly-owned monopoly utilities enjoying the benevolence of weak regulators Occasionally their best efforts fail, as when they had to yield to a commission on financial services, but they have to be given credit for trying.

Does not Bragg realize that his new employer, the BCA, is probably the nations most strident special interest group? Does he not realize that its bad form to publicly dump on your own employer?

The BCA has never been known for non-partisan objectivity. But its concerted attacks on unions, the Labor Party, and Getup! have an air of hysteria. On last Mondays 7.30 Report, BCA chief Jennifer Westacott seemed to be distressed, as if a mob of murderous bolsheviks were about to storm the Melbourne Club. Then two days later she said in an interview I will not allow retrograde, backward looking anti-business attacks to stand unchallenged.

There is no siege of the Melbourne Club. There is no anti-business mob seeking to destroy capitalism.

If there is a threat to our prosperity it comes from the ill-considered policies the BCA is promoting. An economic system that tends only to the interests of a privileged elite does not endure. Not only does it undermine the market forces that drive capitalism, but also it destroys capitalisms social licence and parties supporting it lose their political legitimacy. If the BCA doesnt realise that business needs a social license, it must have been too busy worrying about the unions, the Labor Party and Getup! to have noticed whats been happening at the commission on financial services.

Bragg is right. We have a lesson to learn from Argentina. In the early twentieth century while Argentina let privileged elites guide public policy, we in Australia often with a struggle developed institutions that were to save capitalism from its own destructive forces trade unions with a stake in the nations prosperity, a taxation system to fund public goods, an understanding that the benefits of prosperity should be fairly distributed, and a lively political culture with voices from every quarter. Thats why Australia prospered while Argentina languished.

Ian McAuley is an Adjunct Lecturer in Public Sector Finance at the University of Canberra and a Fellow at the Centre for Policy Development.