WAYNE SWAN. The blindness of affluence and the need for a more inclusive form of prosperity.

This is a repost from 15 November 2016.

Just over two years ago I was in New York working with Larry Summers and Ed Balls to prepare a report for the Center for American Progress on inclusive prosperity. One morning I had the opportunity to walk the High Line and on the side of an old brick building was a large advertisement which read “the French aristocracy never saw it coming either.”

It was yet another reminder of the ground swell of support sweeping around the world for a more inclusive form of prosperity and it’s been an image seared in my mind ever since.

In early 2015 the Inclusive Prosperity Commission Report was published. Its first paragraph concluded that growing inequality is a threat to “the political system and for the idea of democracy itself”.

I don’t find it politically comforting that growing inequality is now more openly analysed and discussed because I fear that those who need to understand its impact the most are blindly oblivious to its consequences.   Nowhere is that more obvious than here in Australia.

The IMF has been warning for some time that we ignore the distributional impacts of globalisation and inequality at our peril yet the Abbott-Turnbull Liberals went to the last election with a $50 billion handout for multinational companies and radical proposals to undermine the voice of working people.

If you’re looking for reasons for Trump’s victory look no further than the potent combination of powerful vested interests dictating policy and some progressive elites shoving their orthodoxies down working people’s throats.

If you’re a truck driver in Logan or a steel worker in Wollongong you’re constantly told to work harder for less while tax cuts go to the top end – you’ll suck that up for a while because you have to. If you are a Medicare or Centrelink worker your wages have been frozen for 3 years and many of you are on the hunt for second jobs. All the while you see progressive issues like same sex marriage dominate the discussion nationally and the interminable debate about immigration bubbles away. These issues make you uncomfortable and give rise to constant muted grumbles, because your priority is secure jobs and wages.

But, once the orthodox economic crusade reaches a breaking point and your job has been sent off-shore or made casual, or you otherwise get tossed on the economic scrap heap, it’s like a drum of kerosene dumped directly on the smouldering social issues and you have an inferno of white hot rage erupting from large numbers of the working class base. Our party has a proud record of progressive social reform but we must always have at the forefront of the policy battle the economic interests of working people.

The Australian business elite (aristocracy) suffer from the blindness of affluence. The winners from our prosperity just don’t see poverty and injustice anymore let alone the persuasive case that a fair society produces a more prosperous economy.

They don’t understand that ignoring inequality leads us down a policy route to greater inequality. There is a small but growing group lead by Gina Rinehart and Rupert Murdoch, the oligarchs if you like, who are increasingly forcing their influence from the top of the stairs and seeking to have disproportionate control of our democracy.

There are some good people in the business community but there are also a noisy minority who only look to the immediate consequence of economic reform on their own business. This group preaches productivity and competitiveness for the economy as a whole but they’ll never support it if it has a negative short-term impact on them.

As I warned in my 2012 Monthly essay, The 0.01%: The Rise of Vested Interests, Australia’s fair go is today under threat from the business elites. To be blunt, the rising power of these business elites or vested interests is undermining our equality and threatening our democracy. We saw this most obviously in the ferocious and highly misleading campaigns waged against resource taxation reforms and the pricing of carbon pollution.

After the 2010 election, the corporate right mobilised against Labor as never before. Our removal of WorkChoices, the implementation of the Fairwork Act and the advent of minority government emboldened the business community.

Fair industrial laws combined with our powerful Keynesian response to the Global Financial Crisis became a lightning rod as Labor was seen to be mounting a full frontal assault on the dominant conservative narrative of the past 30years – trickle-down economics.

They commenced an ongoing campaign to delegitimise and destroy the labour movement and through those actions the Australian Labor Party.

We’ve seen this demonstrated time and time again over the last three years by the Liberals’ attempts to shift the tax burden onto working people via a GST and the attempts to dismantle the social safety net and Medicare.

In the 2000 days I was Treasurer, I learnt a bit about what we need to do to defeat the survival-of-the-fittest trickle-down agenda pushed by the Tea-partiers in the Coalition and their plutocratic allies. I enthusiastically supported my party’s decisions not to take a backward step on the 2014 Budget. We stood up and fought the attempts by the Liberals to criminalise Labor’s progressive policies by persecuting Labor through the trade union (Heydon) and pink batts (Hanger) royal commissions. We opposed outright the outrageous proposals in their audit commission.

Growing inequality in the developed world is a direct consequence of the voice of working people being crushed and that’s why Labor must never support the conservative agenda to split or dilute trade union participation in the Labor Party.

In office and over the last three years, Labor has fought for the big structural reforms required to secure growth with equity. At no stage has the business community backed sensible proposals which are in their long-term interest; reform of negative gearing, a sensible price on carbon, the Gonski education reforms, to name just a few.

We see now in Australia, like in the rest of the developed world, that capitalism is dominated by a plutocratic family model backed up by an over-powered and overpaid financial and corporate elite. They want an economy run by the rich for the rich.

My party should more explicitly call out this behaviour for what it is; selfishness and greed camouflaged as a growth agenda for all. These people aren’t seeking consensus they’re seeking to dominate our democracy.

Many thought Donald Trump would probably lose the election but his election is the final warning to both parties, but especially to Labor. Without a strong inclusive agenda we’ll end up like the US Democrats, or worse, end up like the British Labour Party fractured and shattered.

A strong trade union movement and a strong Labor Party is the only antidote against the poison of politically inspired trickle-down economics which erodes living standards for ordinary people.

Tackling inequality isn’t a technical problem; protecting working people is our historical task and shared prosperity has always been our party’s sacred mission.

We won’t win the battle of ideas unless we are steadfast and consistent in the presentation of a progressive framework and a framework for a greater voice for working people.

We must never let vested interests divert us from the core message and never operate under the illusion the plutocrats operate in the national interest.

We don’t want to end up as a country ruled by a new plutocratic aristocracy where in the words from Bruce Sprinsteen’s Badlands; Poor man wanna be rich, rich man wanna be king, And a king ain’t satisfied, till he rules everything.


John Laurence Menadue is the publisher of Pearls & Irritations. He has had a distinguished career both in the private sector and in the Public Service.

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14 Responses to WAYNE SWAN. The blindness of affluence and the need for a more inclusive form of prosperity.

  1. Avatar slorter says:

    The emphasis should be on guaranteed jobs with a liveable wage! Get off the neoliberal cheap labour philosophy that permeates both the left and right of the political spectrum!

  2. Avatar Wayne McMillan says:

    Wayne You have highlighted some of the serious problems facing progressive parties and ordinary working people, however you have failed to take consideration of the underlying ideologically blinkered, flawed economic theories that have caused the problems. Larry Summers and Co are part of the problem not part of the solution. Unless we see some major changes in economic thinking at the base theoretical level economic policies will never deliver the goods. Your party and other progressive parties are still clinging to flawed economic theories and their models that have proven to be at best erroneous and at worst disastrous for long term job growth and prosperity. Your political friends and their advisers will need to take a serious fundamental rethink of all their economic proposals, before real change will occur. At the moment I can’t see any political party ready to make the paradigm shift in economic thinking to bring about real and lasting change for ordinary working folk.

  3. Avatar Milton Moon says:

    I’m old enough at ninety to see through the dimming glaucoma that we live in a greedy and unfair world. Maybe not in the time I have left but ‘heads will roll’ and no one can say they haven’t been warned. Thank you Wayne Swan for passing the message on and to John Menadue for his Pearls and Irritations.

  4. Avatar Susan says:

    Yes, but I think it is a mistake to point to stronger unions without discussing the situation and representation of those running small businesses, including farmers. The combination of neo-liberalism, globalisation and technology change is transforming relations between different economic participants, making precarity a majority experience. If Labor continues to speak primarily for the unionised worker (who of course still needs representation), the small business employer will continue to vote (against their own interests) for the conservatives, who these days really only serve the wealthiest groups.

    Further, climate change and the long term health and resilience of our environment need to be a priority. If Trump’s voters see action to preserve our environment as threatening their interests it is because they have not been provided with a convincing positive narrative about how renewable energy and more sustainable practices are going to directly benefit them. Labor need to be generating that narrative.
    Finally, the socially progressive agenda that Labor has supported should not be abandoned. Labor needs to stand for justice and fair play for all, not just for those who belong to a union. Focussing on the latter just makes Labor look like a lobby group. I agree that it would be better if socially progressive policies could be supported without them dominating the media. The media is a player in this, and they should be challenged when they work to distort the conversation (though I’m not sure how Labor can win on this, given the stranglehold that conservative players have on the MSM).

  5. Avatar Chris Mills says:

    I concur with Wayne Swan’s conclusions on social inequality. A strategic risk, being ignored to our peril.

    This is a link to an interesting site (copy and paste it into your browser):


    The ‘fact checkers’ proved the statement that in the USA, the top 25 Hedge Fund Managers make $11.6B, more than all of the kindergarten teachers, 158,000 of them, who made $8.6B.

    Trump that!

  6. Avatar Geoff Davies says:

    Good Wayne. And good on you for saving us from the GFC.
    Now you need to grasp the depth of the problem. Mainstream economics is highly misleading pseudo-science. There is not just one flaw, there are several that are quite fundamental.
    The most central is that economies are far-from-equilibrium systems, not near-equilibrium neoclassical systems. They are wild horses, not a rocking horse. It means there is no justification for expecting unfettered markets to be efficient, or to deliver a desirable result. The whole neoliberal ideology is disposed of.
    Some other flaws are summarised here: https://betternature.wordpress.com/2012/06/21/eight-elementary-errors-now-on-steve-keens-debtwatch/
    I think the answer is to harness and guide markets using incentives, disincentives and rules – nothing new there. If we do it coherently instead of grudgingly or perversely we may mitigate many problems faster than we thought possible.
    My short book Sack the Economists gives a longer account, covering money, banks, feral financial markets, misuse of GDP and other topics: http://sacktheeconomists.com
    More of my writing at https://betternature.wordpress.com

  7. Avatar Glen Tye says:

    I appreciate Wayne Swan’s clear analysis of the damage of growing inequality in our decreasingly egalitarian country and the importance it be understood.
    Labor leaders must be seen to turn their attention to the parties historical roots and clearly emphasise the critical importance of secure jobs, wages & conditions for all workers rather than concentrate on tangential (to the majority) second or third order issues promoted by progressive elites.
    Acknowledging its foundations in the union movement the party must call out officials who sacrifice their members interests for personal gain or power as indicated in the recent revelations concerning the HSU, the ‘Shoppies’ and CFMEU.
    Our progressive party needs to enunciate a clear vision that members are proud to support and promote and that officials regularly point to as our reason for being. A vision that emphasises sensible economic management; secure full-time jobs, wages and conditions; building infra-structure that promotes growth and provides jobs; social policy that truly assists the least well off or able in our community – this is the way to win back support.

  8. Avatar Colin Cook says:

    Excellent, just a great manifesto.
    BTW, Wayne says, ‘ it’s like a drum of kerosene dumped directly on the smouldering social issues’. Over 100 years ago in his classic, Progress and Poverty, (Ch. HOW MODERN CIVILISATION MAY DECLINE) Henry George wrote, ‘‘To put political power in the hands of men embittered by poverty is to tie firebrands to foxes and turn them loose amongst standing corn.”
    He was positing that in an unequal democracy, democracy produces very nasty results not simply that inequality is bad for democracy.

  9. Avatar Jim KABLE says:

    Good onya, Wayne! Fits with my own feelings as when living many years abroad and returning for brief visits during the “relaxed-and-comfortable – alert-but-not-alarmed” Howard years – and noting the growing worship of wealth as the “aspiration” – the huge salaries and bonuses to so-called CEOs – the drives to protect “shareholders” against ethical business practices. Profits before society – especial profits sailing off overseas or to those bloated by possession of mining leases on Indigenous land (always was – always will be). And the guest-worker mentality of employing 457-visa cheap labour (as revealed on recent ABC current affairs) and the destruction of TAFE and properly accountable public education in favour of “for-as-much-profit-as-possible” private providers! I think of pikes and pennants in the street as the people move en masse to clean out the Augean stables of (if I may be permitted a mix of metaphors) pigs-with-snouts-in-the-trough-of-public-money-for-vested-interest-anti-citizen parliamentarians – and think it is merely the social historian and social justice perspective from my professional teaching life that drives those visions – but now I see you see it too and my heart is gladdened that something might happen to turf out these rogues who have abandoned their democratic roles for self-enhancemenbt!

  10. Avatar Adam says:

    A bit disappointed that this blog (to me) weakens an important central point with partisanship. Growing inequality is a problem we need to address, but no-one has easy answers.

    Clearly the LNP have some serious failings, but I remember the unwillingness of the Labor government to preserve the value of pensions, and the fate of the Minerals Resource Rent Tax, which was a good idea but not well implemented.

    One reason for Trump’s rise is a rejection of politicians who are playing the system for personal gain. Tony Burke ripped into Brownwyn Bishop over her use of helicopters, only to have it emerge that we paid for his family to travel business class to Uluru. The excesses of various union executives have been highlighted by the Health Services Union scandals. Turnbull has questions to answer over some aspects of his finances, and Shorten’s dealings with Theiss John Holland raise significant questions. Both major parties have questions to answer. Sadly, it’s not just Murdoch and Reinhardt on the gravy train.

  11. A clear and concise synthesis. In an ideal setting it would be wonderful if our political and economic hit men had a stronger scrupulous sense of purpose and ethos to enact policies to protect and safeguard the long term prosperity and welfare of this nation and its citizens. Unfortunately, the long term welfare of the nation has been sabotaged by political sycophants who for over two decades have been influenced by the elitist economic lobbyists whose policies appear to be coincidentally similar and congruent to the re-shaping of global public policy for the narrowest of interests. It is paramount that we rationalise as to why our Govt has complied to the influence of ratifying the Trans Pacific Partnership earlier this year, and its role in supporting ‘illegal’ military offensives against foreign sovereign nations. It is also perhaps worthwhile contemplating as to why, for over two decades that our Government has endorsed and facilitated the disaggregation and privatisation of state, national utilities, infrastructure allowing ‘foreign owned corporations’ to dilute the sovereignty of this nation, just as WA Premier Colin Barnet, Hon. Dr Mike Nathan and their political sycophants are threatening the privatisation of yet another state asset. With CEO’s and the neo politcial dergue such as these, I fear the nation is on course to become a third world- ‘hole in the ground’ in the not too distant future. With a myopic long term Political lack of vision – it’s as though the inept political power brokers are all too happy watching the proverbial ‘ship go down’, as the remains of Australia’s long term automotive and whitegoods manufacturing industries smoulder into a heap. #Innovationcatastrophe #trainwreckAusGov #AnzacspiritFail Australia could do far better if we had more people who share Dick Smith’s vision. Keep it Real !

  12. Avatar Nic Hastings-James says:

    Spot on , we need to end this madness based on greed

  13. I am delighted you see the facts Wayne, keep at it.

  14. The demonization of the un- employed and those on welfare is rife. We need jobs, jobs that pay enough to support a single income family. I would impose a tith on all mineral/gas exports. The royalty system has failed us in Qld. Ten percent of all gas exported going to the state would enable power stations a cleaner/cheaper heat source, although not totally a “clean” source it is substantially cleaner than coal. I believe the abundance of gas should have us all driving has powered vehicles. The closing Ford & Holden manufacturing should be Govt assisted to develop This would provide cheap electrical supplies to industry and the general pup luv . The Steam/coking coal tith could be on sold at a reduced price to the steel manufacturing industries of NSW & SA to keep them financially viable, if the tith was country wide they would also be getting their iron ore at a reduced price. The rapid loss of industries/manufacturing within Australia in regards to a percentage of GDP is staggering. I believe a tith on exports rather than the present Royalty system would create jobs. Just a plebs thoughts.

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