Below is the last Saturday entry for 2019. We’ll be back on Saturday 11 January.
ABC’s Saturday Extra
Over the Christmas-New Year Period Saturday Extra will be re-broadcasting past programs. You can catch up on their website in case you miss the re-broadcasts.
Creative fiction for holiday reading: Frydenberg’s MYEFO
If you’re after a work of creative fiction for the holidays, the government’s Mid Year Economic and Fiscal Outlook could keep you engrossed. Somehow, in spite of all evidence to the contrary, the economy is bound to pick up in the second half of this financial year and into next year. Labour productivity, employment and labour force participation “are assumed to converge to their potential variables”.
It makes no acknowledgement of climate change risk: the assumption for the farm sector is that there will be “average seasonal conditions”. Tax cuts will boost household spending, even though most people seem to have wisely used them to pay down debt.
Treasurer Frydenberg’s press release on the MYEFO is as upbeat version of one of those old Soviet five-year plan propaganda statements. Painting a more realistic picture Danielle Wood and Kate Griffin, writing in The Conversation, outline Five things MYEFO tells us about the economy and the nation’s finances.
In spite of the Coalition’s economic mismanagement, the Australian economy will probably limp along avoiding a “recession” (two successive quarters of negative growth), but it’s only our high population growth that produces GDP figures consistently in the black. For the economy’s ability to provide improving material living standards it’s GDP per capita that counts. Drawing on IMF data Tim Colebatch, writing in Inside Story, reveals that our per capita GDP growth in 2020 is expected to remain the lowest out of twelve advanced economies.
Anyone believing in the Coalition’s economic competence would be disillusioned to read the MYEFO section on housing, where it asserts that higher housing prices should “provide a boost to confidence and household wealth, as well as increasing borrowing capacity”. It’s urging people to regard house price inflation as an increase in wealth and to borrow against that imaginary gain – as if we don’t already have dangerous levels of household debt. Government debt bad, household debt good.
As former Finance Department Deputy Secretary Stephen Bartos points out in The Conversation – Surplus before spending – the government’s obsession is a “surplus for the sake of surplus”.
It’s as if the only thing that counts in economic management is keeping the cash account in balance – an obsession distracting us from the economy’s structural weaknesses. If we were simply going through a cyclical downturn, Frydenberg’s exhortation to go out and spend would make good sense, but our poor economic performance is more probably a result of a run of 27 years without structural change.
The main reason the government’s precious surplus will be smaller than forecast in the April budget is that taxation receipts are down. It’s worthwhile to skip over the pages of propaganda and to look at the tables on Pages 44 and 45 explaining how taxation receipts have fallen. Revenue from income tax has held up, but revenue from GST – the main source of Commonwealth untied grants to the states – is down by $2 billion. Expect to hear from angry premiers over the next few months.
Polls and surveys
We are probably in a break from regular polling, but there are two opinion surveys which may provide some leads when people want to talk about something other than the weather or the cricket.
The USA and Australia are different
The United States Studies Centre has released the results of a major survey Public opinion in the age of Trump: The United States and Australia compared. We are alike in many aspects – we both believe our societies are meritocracies, we believe in free speech, and we love each another madly.
They find many differences, mostly confirming what we pick up in pub conversations. In comparison with Americans we’re much more in favour of tough gun laws, we’re more in favour of women having access to abortion, we’re more in support of using taxes for health care, education and social security, and not many of us have a positive impression of Donald Trump. (There is no question about what Americans think of Morrison but we can guess that he would find support in America’s Bible Belt and in coal mining states).
The most telling findings are about the extent of political polarisation in the two countries. On issues such as climate change, minimum wages, free health care and whether hard work is the path to prosperity, the gulf between Republican and Democrat supporters is far greater than the gulf between Coalition and Labor supporters.
One finding that goes against economic wisdom is that Republican and Coalition voters are much more supportive of tariffs on imports than Democrat and Labor voters. So much for the conventional wisdom that parties of the “left” favour intervention in the economy while parties of the “right” support free markets. Maybe it’s that parties on the right are more likely to see the state as having the power to intervene to help secure privileges for their cronies and mates.
Scots don’t talk bullshit
The Economist has an article Who are the biggest bullshitters? It’s paywalled, but non-subscribers can see its summary chart and read enough to get its gist. Thanks to Harry Frankfurt who wrote On bullshit, “bullshit” is in the philosophers’ lexicon, “bullshitters” being “individuals who claim knowledge or expertise in an area where they actually have little experience or skill”. The full academic paper can be downloaded from the IZA Institute of Labor economics.
Out of the eight Anglophone countries studied Scots are least likely to bullshit, while Canadians and Americans are most likely to cover their lack of knowledge with fabrications, and we Australians are just behind those North Americans. (Does the Scots’ low bullshit rating in comparison with England help explain why they didn’t vote for Johnson?) Boys are far more likely to bullshit than girls (is anyone surprised?) and the rich are more prone to bullshit to cover their ignorance than the poor. The tentative explanation lies not in deliberate lying, but in the probability that blaggers over-estimate their own knowledge.
Another election in Europe
Writing in The Australian Janet Albrechtsen reports on the UK election as if it was a resounding vindication of Boris Johnson’s Tories’ ability to sense the nation’s overwhelming desire to cut itself off from the rest of Europe and to have nothing to do with progressive politics. Chris Uhlmann‘s report in the Sydney Morning Herald saw it a revanchist victory for a working class throwing off the chains of progressivism. Most other media focussed on Johnson’s landslide, which delivered Conservatives 365 seats in the House of Commons (the UK equivalent to the House of Representatives) and only 203 seats to Labor.
It will be months before there is any solid analysis of the results. For now the only firm figures are the vote and seat count, and the story they tell does not align with Albrechtsen’s and Uhlmann’s gut reactions.
The table below shows parties’ votes and the swing from the UK’s 2017, identifying the four parties that had a definite “leave” stance. Other parties were either “remain” or in favour of a second referendum.
There are three strong messages, two of which are evident in this table.
- Pro-Brexit parties failed to gain majority support
The four pro-Brexit parties won only 46.5 per cent of the vote. That aligns with a a EURef2 poll taken just before the election, finding that a 47-53 split between “leave” and “remain”. Johnson’s claim of a firm mandate for Brexit has no basis.
As explained by Amanda Taub, writing in the New York Times, Johnson’s victory is due to a successful marginal seat campaign and, above all, to the way Britain’s first-past-the-post system has given the Conservatives a disproportionate parliamentary advantage. Columbia University’s Jeffrey Sachs, writing in Project Syndicate – The UK’s electoral system failed – writes “If the UK had a national proportional vote system, as almost all of continental Europe does, it would be heading for a second Brexit referendum and staying in the EU”.
- It was a typical European election vote
Although Johnson and “leave” campaigners capitalised on an English sense of exceptionalism and the difficulty many have in understanding that their country is geographically and historically part of Europe, the vote was very similar to the vote in other European democracies. The dominant right wing party held its vote (its small gain was offset by losses in far-right parties); the traditional social-democrat party did badly, and other “progressive” parties almost made up for Labour’s loss. Were it not for Britain’s first-past-the-post system, the Liberal Democrats would probably have done far better at Labour’s expense, because many Liberal Democrat supporters, repulsed by the idea of a Johnson victory, would have considered a Liberal Democrat vote to have been wasted, and have reluctantly voted Labour. Britain’s Labour Party is in deep trouble.
While the voting pattern was similar to that of other European countries, the outcome wasn’t, because Britain (like Australia), has a tradition of winner-take-all politics, and its political system seems to fall into turmoil when a party cannot command a parliamentary majority, as demonstrated by the experience of the minority May and pre-election Johnson governments. More inclusive democracies on the European mainland deal with multi-party situations more maturely with formal or informal coalitions reaching across left-right and other divisions.
Commentators who overlook the deep cultural, constitutional and institutional differences between the UK and Australia will hasten to draw “obvious” inferences for our political situation, but there is a pattern emerging in European elections. While social-democrat parties are losing support, liberal and green parties with progressive policies are doing well, and claims of a swing to the right are overstated. Our Labor Party would do well to analyse and learn from this trend. The Guardian’s Katherine Murphy reports on and quotes from Shadow Treasurer Jim Chalmers: “you don’t beat populism of the right with populism of the left” and building a bigger constituency of support “begins with a bedrock of economic credibility”. Also our journalists would do well to stop assuming that Australia is permanently locked into a dysfunctional winner-take-all two-party “Westminster” system.
- It was not a national election; it was a set of elections in a collection of states curiously called a “united” kingdom.
That’s a story told by maps of the voting pattern. There is a rich set of maps in Geographical by Benjamin Henning of the University of Iceland – Mapping the 2019 UK general election. They all tell much the same story about deep geographical divisions. Many of the seats picked up by the Conservatives had low turnout. (Nationally turnout was 67 per cent, down only a little from 2017.)
Capitalism and its discontents
Capitalism in two flavours
Capitalism rules the world, but it comes in two styles – a liberal meritocratic form as operates in democracies and a state-led political model, as exemplified in China.
Writing in Foreign Affairs, Branko Milanovic of the London School of Economics traces the development of both forms of capitalism and their vulnerabilities. Liberal capitalism for a time operated on a social-democratic model, its destructive excesses kept in check by the power of organised labour, but the emergence of a self-perpetuating upper class coupled with growing inequality “represents the gravest threat to liberal capitalism’s long-term viability”. State-led political capitalism has had extraordinary economic success, and “has brought into question the idea that “there is a necessary link between capitalism and liberal democracy”, but it too has led to extraordinary levels of inequality and depends on continued delivery of high rates of economic growth.
He calls for simple but basic reforms in western democracies to preserve the political legitimacy of liberal capitalism:
To achieve greater equality, countries should develop tax incentives to encourage the middle class to hold more financial assets, implement higher inheritance taxes for the very rich, improve free public education, and establish publicly funded electoral campaigns.
Lech Wałęsa on capitalism and democracy
Those on the “right” tend to hold a Manichean political world view, believing that anyone who has stood up against Soviet-dominated communism in eastern Europe must be on the side of the governments that took over after communism’s collapse in 1990 and will line up as a champion for capitalism.
One who bravely challenged Soviet-dominated communism is Lech Wałęsa, the electrician in the Gdańsk shipyards whose Solidarność (Solidarity) movement challenged the authority of the Polish Government in the 1980s. In 1990 he became the first President of post- communist Poland.
Speaking at Harvard’s Kennedy School, Wałęsa made it clear that he is no supporter of Poland’s authoritarian government. He spoke against populism, nationalism and xenophobia. He called for a remodelling of capitalism and democracy, but warned that unless people take care such remodelling won’t necessarily be in the direction of liberalism. He urged the US to re-establish a degree of global moral leadership as it did in the postwar era.
What drives a house price boom (and bust)?
If you have a taste for slow, carefully-explained and clear economics (not as slow as cricket but clearer), you could spend an hour listening to Joseph Walker – The Jolly Swagman – interviewing Amir Sufi of the University of Chicago. Sufi explains the respective roles of irrational behaviour (“behavioural factors”) and easy credit in fuelling housing booms. It’s a timely warning in a country with household debt at 200 per cent of GDP and a government spruiking and subsidising housing speculation.
Breaking political logjams
Nicholas Gruen, writing in The Lowy Institute’s newsletter The Interpreter – We’ve already had our very own Brexit – notes that there is political stasis in Australia’s democracy. It’s “stasis because, at least when seeking votes, each party hews to a small target strategy on policy while probing for ways to misrepresent and catastrophise their opponents’ policies and purposes”. He presents a strong case for citizens’ juries as a way to break logjams on politically difficult issues, bringing in voices and considerations from outside the political system – people who do not have the impediment of investment in established positions on policy issues.
(John Menadue has been a strong advocate of citizens’ juries on health care – an area of public policy burdened with the inertia of legacy thinking and the power of established professional, bureaucratic and financial interests.)
2019 a year of mixed fortune for press freedom
Paris-based Reporters Sans Frontières has produced its 2019 worldwide roundup. The number of journalists killed this year is at its lowest level in 16 years, but that’s the limit of good news. Journalists are still being killed in countries not at war (particularly in Latin America), and there has been a 12 per cent increase in the number of journalists imprisoned for their work: China, Egypt and Saudi Arabia stand out in this regard.
2019 was another tough year for refugees
The UN has held a Global Refugee Forum. Its summary of proceedings is a typical UN document – generous in fine words and light on specifics – but it does suggest some priorities, including development of policies “to enable refugees to become active and contributing members of the communities in which they live”, and an expansion of access to education for refugees’ children, including integration of their education into national systems. Secretary-General Guterres’ statement reminds the world that there are 70 million forcibly-displaced people, 25 million of whom (Australia’s population) are refugees. Many of the world’s poorest nations have no choice but to let refugees pour over their borders from neighbouring countries.
Let’s stop building hospitals
Toby Hall is CEO of St Vincent’s Health, the owners or operators of 6 public hospitals and 10 private hospitals. You might imagine that in that role he would be relentlessly campaigning governments to allocate more funds to new hospitals, but on the ABC website he has an article The surprising truth about Australian hospitals — we don’t need so many. Hospital stays will be shorter, and “the emphasis of our healthcare system will be providing primary and ambulatory care in localised clinics and in the comfort of people’s homes”. He cites as an example Denmark, which at the turn of the century had 99 hospitals; today it has 32.
The force of petro-masculinity
Is there a relationship between denial of climate change, racism and misogyny? Writing in Millenium: Journal of International Studies Cara Daggett has an academic article (available in full text) Petro-masculinity: fossil fuels and authoritarian desire, in which she finds that the three are related, and suggests that “fossil fuel systems provide a domain for explosive letting go, and all the pleasures that come with it – drilling, digging, fracking, mountaintop removal, diesel trucks”. She goes on to write “Whether it is the Proud Boys who proclaim white, Western chauvinism, or the coal rollers who revel in conspicuous pollution, Trump’s brand of fossil authoritarianism feels good because it bursts the constraints of liberal, Western hypocrisy”.
Drawing on Daggett’s work Megan MacKenzie of the University of Sydney suggests that politicians’ fragile masculinity may be the biggest obstacle to climate action.
Can Scott Morrison at least pretend that he and his government care?
Morrison’s “constipated stubbornness” on climate change
Morrison’s extraordinary reluctance to link bushfires to climate change is not just about party room numbers. It’s also about an “inflexibility of mind which does not allow him to see either political opportunity or policy grunt” writes Laura Tingle on the ABC website – Bushfire emergency reveals Scott Morrison’s leadership failure not just climate policy vacuum. “Having lost control of the discussion about bushfires and what to do about them, there is little sign that Scott Morrison knows how to correct his language, or his apparent grasp of a response back to something that is reassuring, rather than contentious.”
Spot the difference between Scott Morrison and Jacinda Ardern
No points for nominating gender or geography: these are a bit too obvious. Writing in the Sydney Morning Herald columnist and academic Jenna Price considers their reactions to tragedies and hardships that have afflicted both countries. “Ardern is a natural when it comes to showing that she and her government care. The Coalition, led by Morrison, had to hire empathy consultants to help them with ‘getting the tone of voice right and getting the narrative right’ around the drought.”
In case you’re making your own Christmas cards and are running horribly late, or if you want a reminder that there are places where people enjoy a cold smoke-free Christmas , here is a collection of copyright-free pictures of Weihnachtsmärkte or Christkindlmärkte – street markets held during the Christian season of Advent in a tradition dating back to their initiation in Dresden in 1434.
Saturday’s Good Reading and Listening is compiled by Ian McAuley
Watch out tomorrow, Sunday, for Peter Sainsbury’s Sunday environment round up.