You reap what you sow


During the June prior to Senate changeovers, as June 2014 is, it is traditional for retiring senators to give a valedictory speech. Senator Ron Boswell (LNP Queensland) gave his speech on 17 June after 31 years in the Senate. Although never a cabinet minister, Boswell is renowned for fighting off a challenge from Pauline Hanson’s One Nation Party in 2004. Boswell’s television advertising in the 2004 election campaign was corny but apparently successful. The underlying message of the advertising was, however, very clever: ‘he isn’t pretty, but he’s pretty effective’. Even Senator Larissa Waters (Greens Queensland) tweeted upon Boswell’s announcement that he would not recontest his seat: ‘While I don't share Ron Boswell's views on most things, you gotta respect 30yrs of service.’

The Australian Democrats were formed in 1977 with former Liberal Party minister Don Chipp as leader. They saw themselves as a centrist political party and they claimed on a number of occasions that they would ‘keep the bastards honest’. Meg Lees, the leader of the Democrats in 1999, made an agreement with then Prime Minister John Howard allowing the passage of the GST Legislation, provided some goods and services were exempt from the 10% tax. It has been claimed that the Democrats never recovered from the internal division created by that decision and, by 2012, the Democrats were being written off by Crikey as a spent force. Today they seem to have two presidents, two websites (here and here) and they certainly have no members of parliament.

The Abbott government is currently going through a period of unpopularity similar in metrics to that of the Gillard government, if the opinion polls are to be taken at face value. In fact, opposition leader Bill Shorten ironically suggested at the recent Mid-Winter Ball that ‘much had changed’ in the past 12 months in federal parliament: the government is behind in the polls, the prime minister is being hammered over unpopular taxes and broken promises, unruly backbenchers, a leadership contender saying he’s not interested in the leadership, and so on. Is it that the policies and media teams of each government were/are equally inept or is there a reason that has considerably more logic to it sitting below the surface?

Lets go back to July 2013 when Waleed Aly, writing in The Monthly suggested:

Abbott’s attack on Gillard’s broken carbon-tax promise has made the sanctity of one’s word a litmus test for legitimacy, but he has no compunction about reneging on written agreements that no longer suit him

On April 27 2014, Business Insider reported

Here’s something you can expect to hear a lot about in the coming weeks: the moment when Tony Abbott said a Coalition government would introduce no new taxes.

The Prime Minister today did not deny reports of a new income tax under consideration as part of the Coalition’s approach to reducing the budget deficit. The reports suggest it will be a short-term “deficit tax”, mainly targeting higher-income earners.

If you follow the link above, you can hear Abbott say it at one of the multitude of press conferences at unsuspecting businesses — this time however he is strangely not dressed in the customary, immaculate hi-vis vest. Not all is lost — the language is appropriately mangled.

We now know that in addition to the ‘deficit tax’, there have been a number of alterations to existing financial arrangements that generally affect the less well off in our community. They include the $7 ‘co-payment’ for visiting a doctor, (with the possibly unintended side effect of a reduction in donations for medical research) the raising of the pension age to 70, and those under 30 seeking unemployment benefits will be required to wait 6 months before they are permitted to receive a welfare benefit from the Government.

It will probably be argued for years to come whether Gillard lied about the imposition of a carbon tax prior to the 2010 election — and at the end of the day it’s unimportant. The fact is that Gillard did say the words that there would be no tax on carbon — as reported frequently. The full response to the question by Bill McDonald (then with Channel 10 Brisbane News) is here (from about 2:20 on the video). Clearly, the full answer is too long for a 30 second grab (so loved by the electronic media) especially when the opposition leader seems to believe ‘win at all costs’ should be his overriding concern. Abbott ran hard on no new taxes for the entire period of the Gillard government — calling Gillard a liar on the issue — and while he probably didn’t suggest ‘the carbon tax’ was the reason for the dearth of anything decent on television on a Tuesday night, as reported in The Shovel, he did make a number of claims regarding the effects of additional taxation and how he would not impose new taxes while ‘fixing the budget’ (as recorded by the ABC’s Factcheck Unit).

You could argue that Abbott, himself, came to power on a lie. His ‘promise’ to rescind the ‘carbon tax’ immediately was clearly not achievable. The legislation to remove the emissions trading scheme was before parliament in the middle of this year, some nine months after the election. Ironically while attempting to steer the removal legislation through the parliament, Abbott is attempting to reintroduce fuel excise indexation — a de facto carbon tax (the more you consume through either driving a greater distance or using a vehicle with higher fuel consumption, the more you pay).

While refugee boats have slowed, others will tell you that it is not solely due to Abbott’s ‘stop the boats’ promise.

The ALP’s report on the loss of the 2013 election blames disunity within the ALP, as well as some questionable campaign decisions, but notes that, if Gillard had led the ALP to the 2013 election, the result would have been worse. The mantra of broken promises would have contributed to the loss, along with a clearly identifiable division within the ALP. Abbott had a considerable part in crafting the message of ‘broken promises’.

Now that Abbott is the prime minister, there is apparently a higher standard of truth expected from him and his government. John Hewson, former Liberal Party leader and Abbott’s former boss, has been reported in the Fairfax Media as critical of Abbott’s approach:

His broadest critique is that Abbott, for four years his press secretary and political adviser, has failed to communicate a vision: “They had a chance with the budget to pull all these bits and pieces together; the end of the age of entitlement, fine; not supporting industry, fine; now pull it all together,” says Hewson.

“Where the jobs are going to come from, where the growth is going to come from, what Paul Keating called an ‘overarching narrative’. Have a consistent message.

“There’s no clear, consistent message, other than, ‘We have to cut and cut more and more just to get the budget numbers’, not with any reform purpose. It’s unfair and it’s inconsistent. A bit of vision is what’s really called for.”

Maybe the real issue with the ‘vision thing’ is that people really want to know what their politicians can deliver, rather than what they would like to deliver. Without getting into the semantics of ‘budget emergencies’; ‘class warfare’; ‘trickle up or down economics’ etc., are politicians failing the community by attempting to be too clever?

Ron Boswell’s campaign advertising from 2004 didn’t claim that he could fix everything — all it did was claim that he wasn’t pretty (true, he has a great face for radio) but he was pretty effective. As Larissa Water’s tweet on his retirement announcement suggested, 31 years in the Senate is a distinguished career, and if he wasn’t ‘effective’ (in the eyes of his political party) as claimed, he would have been removed long before being allowed to retire on his own terms.

The Australian Democrats came to prominence on the slogan of ‘keeping the bastards honest’. For a long time, they appeared to do just that. Rightly or wrongly, Meg Lees’ agreement to the GST created a lot of division inside the party and throughout the wider community, to the extent that the perception of the Democrats changed from one of keeping them (the two major parties) honest, to being just another grouping of the ‘bastards’.

Rudd called climate change ‘the greatest moral, economic and social challenge of our time’ until he lost the vote in Parliament. Then somehow it went away.

Gillard managed to legislate a response to climate change through the Parliament which wasn’t sold well by the Government of the day. By agreeing in interviews that the fixed price for carbon trading could be construed as a tax, it made her whole ‘there will be no carbon tax’ claim unsupportable. Certainly there were external factors at work as well, but the claim of lies over the introduction of a carbon price could be the bedrock on which all other claims had their foundation.

Abbott came to power on slogans: ‘no new taxes’; ‘stop the boats’; ‘fix the budget’, and the impression was that action would be immediate. The reality was that very few of his promises could be immediately implemented. You would have to wonder if Abbott and his campaign team ever wondered how they would ‘fix the budget’ without changing taxation or benefits; or commence the process of repealing the ‘carbon tax’ on Day 1 (as promised). This ABC opinion piece written the day prior to the election demonstrates some of the problems Abbott faced, and still faces, in matching the actuality with the rhetoric prior to the 2013 election. Clearly it hasn’t gone to plan — if, in fact, there was a plan.

Waleed Aly’s piece in The Monthly claimed that Abbott ‘has no compunction in reneging on written agreements that no longer suit him’. Isn’t that the root cause of Australians’ current opinion of politicians? Rather than ‘promise’ whatever it takes to win and then reneging, wouldn’t Abbott (and his predecessors) have been better off taking a leaf from Ron Boswell’s campaign and suggesting they will be effective in responding to issues as they arise? Surely Australians deserve more information than could ever be contained in a 30 second sound bite — which seems to be the current ‘gold standard’ for truth in Australian politics?

After all, as John Maynard Keynes is reputed to have said ‘When the facts change, I change my opinion — what do you do, sir?’

What do you think?

Do you know a con-artist when you see one?

After many pieces about many issues, I’m ready to have my say about Abbott himself. So sit back with a beer, or a glass of your best red, and come along for a short ride. 

I won’t bother going over his broken promises and lies. There are many other people already doing that. The only point to make is that condemning Abbott for deceit is a ‘lay-down misere’. (For those who don’t know that expression, check out the rules of the card game Five Hundred.) 

The people have now seen through Abbott. He gave indications of his real self over the years, with what became known as ‘Abbottisms’, but I think many people simply accepted these as the gaffes that most politicians make at different times. He did give clues that he couldn’t be believed, such as the famous interview with Kerry O’Brien in 2012 when he explained that we should only trust his scripted remarks. 

And at his swearing-in as prime minister he said:
 
We hope to be judged by what we have done rather than by what we have said we will do.
 
That has also registered with the voters and they are now judging what he has done

Abbott says these things because he obviously can’t think on his feet. Someone like Keating always had a quick answer and could turn defence to attack with well-aimed barbs. Abbott is incapable of doing that. His thinking is obviously slower. He does not retain the facts of a situation to draw on quickly when making a reply. He is hopelessly reliant on his preparation — his scripted remarks. I think the lack of retention even creates difficulties when he has been well prepared beforehand. Once he has to leave his script or briefing behind, it appears he can’t remember all of it and still flounders for what he can recall and what words he is supposed to use. That gives rise to the slow speech and the repetition of words and phrases as he tries to dredge something up from what he can remember of the briefing. 

The electorate knows now that they were conned, and they don’t like it. Australians can usually detect bulls**t and know to take no notice of bulls**t artists, or sometimes to be even a touch sympathetic towards them because the poor buggers can’t help themselves. But when a bulls**t artist becomes a con artist, that is an entirely different matter, a major crime because it takes advantage of our egalitarian and trusting nature. 

Australians are used to politicians’ bulls**t and accept some level of it in the context of elections. John Howard said recently, Australians will accept change and reform by government if they can see that it is in the national interest and is ‘fundamentally fair’, even if it was not part of the bulls**t promised before the election. 

Abbott, however, took this to the next level. He said different things to different audiences. He said one thing one week but something different the next. He got away with it because most people heard or read little about the inconsistencies. (Thank you mainstream media for not giving those inconsistencies the prominence they deserved.) On his overseas visit in June, he had the gall to tell President Obama that the increase in the petrol excise was like a carbon tax. When his predilection for telling different audiences different ‘truths’ extends to foreign leaders, then this is a man that even foreign leaders cannot trust. 

His bulls**t includes that he hadn’t even said the bulls**t in the first place; that the electorate had not heard him properly, that it had misunderstood. One of the greatest crimes a politician can commit is to call the electorate ‘stupid’, which is basically what Abbott has done. 

Abbott has lost credibility, not just because he lied to the electorate but because the lies were part of an elaborate con which has now been laid bare and he has effectively told the electorate so by telling voters they weren’t listening to what he actually said. That should make it next to impossible for Abbott to recover. 

However, never write off a con artist. Even when they seem down and out, they will still be scheming, still telling lies, still running the con. And don’t forget, the con is not just being run by Abbott. He is only the front man. The con is part of the master plan of Abbott’s handlers and supporters. 

Even the budget was a con and will likely lead to another con. 

The MYEFO and the budget are basically political documents (which I will explain in a moment). It is only the PEFO (Pre-election financial outlook) that comes out with purely Treasury estimates. The PEFO last year showed a budget deficit of about $60 billion over the forward estimates (four years). But when Hockey put out the MYEFO that had grown to $120 billion, largely from the proposed abolition of the ‘carbon tax’ and other decisions by the Abbott government. By the time of the budget, with the drastic cuts contained in it, and foreshadowed by it, the deficit over four years was reduced to — you guessed it — $60 billion dollars. This is the old ‘sale’ trick: if I increase the price of my $50 item to $100 for a week or two and then ‘slash’ it to $50, I can tell people they are getting a 50% reduction, and I haven’t lost a thing, just suckered in the punters. I think Abbott and Hockey may have learned that from their business mates. 

What helps make MYEFO and the budget political, rather than just economic estimates of finances, is the choice of forecasts offered to the Treasurer. The Treasury, as with the making of most economic predictions, bases its forecasts for the forward estimates on a number of variables and provides the range within which those variables are likely to operate: for example, GDP may grow anywhere between 2.25% and 3.00% and so forecasts based on 2.25%, 2.5%, 2.75% and 3.0% may be considered. But instead of Treasury economic experts saying 2.75% is our best estimate, it is the Treasurer who decides which set of forecasts to use. 

Just after the budget, there were some financial experts suggesting that the budget estimates were ‘conservative’ or, in other words, on the low side of the potential range of future growth. Why are they low? — because that is the range that Hockey selected. 

Why would he select the lower growth forecasts? — because it helps justify the ideologically driven cuts. They divert attention from the real underlying reasons for the cuts and allow the debate to centre on the ‘finances’: whether or not a commentator believes or contests the figures, they are still debating the figures, not the ideology. 

Also it lays the ground work for the next con. If, prior to the next election, the economy is performing at 3% growth or better, as is quite possible, Abbott and Hockey will claim all the credit, even though this may well be within the range of forecasts originally presented by Treasury. They will say, yes, our first budget was tough but look at what it has achieved. And now because of that, you can all have a tax cut (including big business of course). 

Although I have no evidence, I have a gut feeling that Wayne Swan, when he was Treasurer, made the opposite mistake: he tended to adopt the more optimistic forecasts. Why? — because Abbott had also conned him. The constant Abbott attacks on Labor’s economic management may have conned Swan into thinking he could disprove that by using the upper range of forecasts. In his case, when the real growth did not quite match the forecasts he used (although perhaps still within the Treasury range of forecasts), and revenue was less, he was left open to more attacks by Abbott and the opposition. It was a con that led to a win-win for Abbott. If Swan had adopted the lower forecasts he could have been attacked for ‘slowing’ the economy. Nice con if you can pull it off — which Abbott and his side did with the help of the media. 

I also think Abbott’s whole persona is a con: not just the makeover that was undertaken to make him appear more presentable on television, but take a look at his body language. 

He walks with an exaggerated swagger, a style of walk often described as using more space than is necessary for normal locomotion. The only other world figure I have noticed who walks with a similar style is Putin but I don’t think Abbott is in the same poltical power league — although he may like to think he is. 

The swagger is most often associated with machismo and arrogance, although it has also been linked with narcissism. Abbott tries to play up the machismo but may not realise he is also displaying arrogance. Since the election, Abbott has once or twice tried to suggest that he can be a caring and sympathetic prime minister but people will not hear that message while he continues to swagger. 

One other interesting habit of Abbott’s body language is the use of his left hand in handshakes, when he grasps the other person’s wrist or forearm. Allan and Barbara Pearse in The Definitive Book of Body Language describe this handshake as the ‘double hander’. It is normally a sign of sincerity and closeness and is seen as an ‘intention movement’ towards a hug: the left hand can be placed over the other person’s hand, or almost anywhere along the arm up to the shoulder, and more rarely on the other person’s back. It is usually used between people who are close, not with total strangers. The book states:
 
… if the person who gives you one doesn’t have a personal connection with you, look for the hidden agenda. It’s common to see politicians greeting voters using double-handed handshakes and business people do it to their clients without realising it can be business and political suicide, putting people offside.

The Pearses suggest that it is easier for us to control our hand signals than it is to control the body language signals portrayed by our legs. On that basis, I would suggest that Abbott is deliberately trying to conceal his arrogance (the swagger) by artificially portraying sincerity (the double hander). In terms of body language these could be called ‘contradictory signals’, which may be another reason why people generally have an uneasy feeling about Abbott — they cannot interpret these signals when they offer two conflicting images of the man behind them. 

An opposite interpretation is that Abbott is basically insecure and out of his depth, so deliberately adopts these postures to hide his true nature. The following video may suggest that he is not as assertive and confident as he likes to suggest. 

 

I leave that one for you to consider. 

Either way, his public persona, as well as his public policies, are a con. 

So now, do you know a con artist when you see one? 

What do you think?

The accidental prime minister


Our current prime minister assumed office on 18 September 2013. He was elected as leader of the opposition on 1 December 2009, taking over from Malcolm Turnbull who lost the leadership spill by one vote. Joe Hockey, the current Australian treasurer, also stood for election as party leader and opposition leader in the internal Liberal Party election but was eliminated in the first round.

At the time of Abbott’s election, the ALP, with Kevin Rudd as prime minister, was planning the introduction of emissions’ trading legislation. Turnbull was intending to allow the legislation to pass, with amendments; a view that was not generally supported in the Liberal Party. The amendments had been negotiated with the ALP and were ready to be passed through the parliament.

As they say, the rest is history. Abbott became opposition leader and instituted a number of three word slogans such as ‘no new taxes’, which resonated with a significant proportion of the Australian public. Rudd subsequently was removed from office resulting in Julia Gillard becoming prime minister. She won the 2010 election with the assistance of some independent MPs but was subsequently replaced during the first half of 2013 by Rudd (whom she had deposed three years earlier) in a failed attempt by the ALP to retain power at the 2013 election.

This piece is not going to be another ‘where did the ALP go wrong’ monologue — rather it exists to ask the question: is Tony Abbott the accidental Prime Minister, due to not only the ALP’s ‘impressive’ ability to shoot itself in the foot, but a much better than expected reaction to Abbott’s slogan-based ‘promise the earth’ form of politics?

Abbott led the Liberal/National Party coalition to what could be called a thumping victory at the 2013 election. The LNP gained 18 seats with a swing of 3.61% of the vote and understandably, in the eyes of the LNP, Abbott could do no wrong. For a considerable period prior to the election, the polls suggested that the LNP would have received a higher vote than the reality on 18 September. The discussion on whether Rudd’s re-elevation reduced the margin can be had another day.

The Political Sword has commented before on the period of inaction immediately following the 2013 election. However, what we didn’t contemplate at the time was that, rather than attempting to reduce the heat and tension in Australian politics, there was actually a ‘we won — what do we do now?’ paralysis surrounding the newly minted Government, despite the probability suggested by pre-election polling that Abbott would walk into Kirribilli House — like Howard, Abbott prefers to live in Sydney.

Prior to the election, Abbott claimed repeatedly that he and his coalition was ‘ready to govern’. In this transcript of the ABC’s AM program, Abbott claims:

“Look, we are ready to govern. We've got a clear plan. On day one, there would be no mining tax, no carbon tax. In week one there'd be a debt and deficit reduction taskforce. In month one, we'd start the tax reform debate that Australia really needs and has substantially missed out on.

Within three months, we'd be looking at small business reforms. So look we've got a clear plan to get our country back on track.”

Without being too cynical, some ten months after the election the ‘mining tax’ and ‘carbon tax’ repeals still have to get through the parliament; the ‘debt and deficit reduction taskforce’ report is missing in action; and, there seems to be little if any headway on a ‘tax reform debate’ except for a bit of ‘kite flying’ about raising the level of the GST from 10% to 12.5%.

Soon after the election, the rhetoric started. Despite the public comments of Joe Hockey, Michael Pascoe wrote in a syndicated article across Fairfax media:

It's yet another case of politics overshadowing economics: while newbie Treasurer Joe Hockey insinuates otherwise, the final count for the 2012-13 federal budget is an outstanding achievement, a monument to a skilled Treasury performance in very difficult circumstances. No, seriously.

Pascoe went on to suggest:

After that exercise, the economy is not strong enough to handle further severe fiscal contraction just yet. And that's why Joe Hockey is letting the deficit run this year, never mind his political rants, announcing that he will trim the budget by all of 0.4 per cent. Big whoop.

Given the challenges facing us a little further down the track, the structural deficit does indeed have to be tamed with a mixture of genuine tax reform and entitlement restraint, but not just yet.

By the day of the federal budget, Hockey had again played the ‘budget emergency’ card — it’s a pity that he didn’t fool many, including Peter Martin, Fairfax’s Economics editor, who discussed the ‘entitlements’, from strategies such as clothing and vehicle expenses, work related expenses, donations, negative gearing and structuring income and taxation affairs after considerable advice from taxation and accounting professionals.

“Pain all round” will be the rallying cry of the night. Joe Hockey says his first budget ̶ tonight ̶ will hit everyone from high earners to politicians to Australians too poor to pay to see the doctor. All of us will have to “contribute budget repair”.

Except that we won’t.

Another one he didn’t convince was Greg Jericho, writing in his ‘Grogonomics’ series in The Guardian the day prior to the budget announcement that ‘Slamming on the fiscal brakes isn’t [a] smart way to keep the economy moving’. Jericho’s article (with the customary number of graphs) goes on to demonstrate the point, finishing with:

Last week in a photo-op with the secretary of the Treasury, Hockey suggested he did not think the budget would “detract from growth at all in the short-term”.

This would please the OECD which warned the government in its latest economic outlook, issued last week, that due to difficulties from the decline in the mining sector “heavy front loading of fiscal consolidation should be avoided”.

Pascoe, Martin and Jericho each state in their articles that various economists had advised the current Australian Government that severe budget cuts will weaken the Australian economy.

So, instead of altering existing arrangements, such as the apparent need to obtain a new general practitioner referral each year to see a medical specialist about a chronic condition, or looking at negative gearing, donation thresholds and so on, the government introduces a $7 co-payment on the ‘universal free heath care system’ known as Medicare. Hockey responded to criticism of the $7 co-payment for routine GP visits ‘by saying doctors could instead take a cut to their Medicare rebate without requiring patients to make up the shortfall.’

Despite the co-payment not being required until July 2015, the government’s lack of ability to actually sell a message without a three word slogan has ensured that general practitioners are already seeing significantly fewer patients.

Keperra Medical Centre practice manager Lisa Thorne said patient numbers had dropped by at least 100 per week — equivalent to the workload of one full-time doctor — since the Federal Government announced the introduction of the co-payment, despite it not due to take effect until July, 2015.

There is some other evidence of Hockey’s ‘budget emergency’ beginning to affect consumer spending with new car sales falling, house prices falling, and a significant drop in consumer confidence.

Hockey is not the only Minister that hasn’t changed approach from when he was in opposition. Let’s quickly look at Scott Morrison, responsible for ‘border protection’, amongst other things.

As early as October 2013, the ABC Fact Check unit was questioning Abbott and Morrison’s use of terminology in regard to refugee boats.

In January 2014, UNHCR was questioning the legality of the boat turn back policy.

Spokesman for the United Nations Refugee Agency (UNHCR) Babar Baloch says the organisation is seeking an explanation from the Australian government over reports a number of asylum-seeker boats have been returned to Indonesian waters.

Mr Baloch said the UNHCR found a policy of "pushing" back asylum-seeker boats "very concerning".

"Any such approach would raise significant issues and potentially could place Australia in breach of its obligations under the Refugee Convention and international law," he told ABC radio on Saturday.

February saw headlines regarding claims that Australian Border Protection had forced refugees into lifeboats and ensured they returned to Indonesia. Morrison acknowledged the Australian government was behind the lifeboats turning up in Indonesia during March, around the time he stopped the regular press conferences regarding border protection issues.

UNHCR, through spokesman Thomas Vargas, told the Australian Government in April:

“There’s no reliable information that connects the drop in registration numbers at the UNHCR with the policy that Australia is implementing,” he told reporters in Jakarta on Tuesday.

The (people) smugglers are not going to go away, they may just find a different way of doing things.

That's why countries need to work together.

Unilateral solutions and even bilateral solutions are not going to solve the problem.”

The public relations disasters listed here by senior government ministers demonstrate that either they don’t follow the direction of the prime minister or the prime minister believes that his process of ‘promising the earth then delivering nothing like it’ is a valid process. Similar disasters have been made by other senior ministers and there are countless examples should an internet search be carried out in specific areas of federal government responsibility.

The rationale behind claiming that Abbott is the accidental prime minister is this. Clearly, he and his senior ministers still believe they are in opposition and are demonstrating they are great with the rhetoric but clearly don’t understand the ramifications of their statements — something best left for opposition parties that don’t have to implement their pronouncements.

Abbott left the country late in May for what was effectively a ‘round the world tour’, calling at Jakarta (to mend fences with the Indonesian President), attending the D-Day remembrance ceremonies in France (and generally reported as an afterthought in the Australian media as the conclusion to the reporting of a magnificent speech by Queen Elizabeth) and then to Washington DC where he cancelled meetings with economic leaders who will be in Brisbane during November for the G20 meeting. Abbott’s only ‘newsworthy’ input, apart from the obligatory shots showing him meeting foreign leaders and mangling the French language as expertly as he mangles his native English, was that he somehow linked D-Day to the rescinding of the ‘carbon tax’ rather than looking at the historical significance of the event.

Was it a coincidence that Turnbull (Abbott’s immediate predecessor as Opposition Leader who lost the 2009 leadership by one vote) was being accused of a leadership challenge while Abbott was out of the country? While the machinations of the removal of Gillard by Rudd occurred on live television immediately following an overseas trip, the conservative side of politics also has form in this area. NT Chief Minister Terry Mills was on a ‘trade mission’ in Asia during March 2013 when he was ‘sacked’ by his party room and told of the fact by telephone, and there was the resignation of Ted Ballieu as Victorian premier in the same month.

The LNP won the 2013 election with a two party preferred vote of 53.49%, but, if an election was held today, the polls are telling us (at the time this was being prepared) that the ALP would receive a similar level of support as the LNP did in 2013. Turnbull was more popular than Abbott in September 2012 and apparently still is.

No one apart from the LNP leadership can state with any certainty that Abbott was or was not ‘meant’ to lead them to power, but there seems to be a concerted effort to make his remaining time as Prime Minister as difficult as possible, with constant leadership speculation as well as a number of senior government ministers, including Abbott himself, ‘opening their mouth to change feet’. Both sides of politics have demonstrated they will sack a leader should they see a political advantage — and while Turnbull’s ‘popularity polling’ numbers are significantly higher than Abbott’s, it is reasonable to assume the speculation will continue.

Was Abbott meant to be the LNP’s choice and do they now realise they picked a lemon? Would Turnbull or anyone else be any better?

What do you think?

The Piketty divide: Part 2


The Right (and I include big business in that) is scathing of Piketty’s conclusions, and of his re-introduction of the role of government into economics. Please forgive a few longer quotes to illustrate the venom of the Right:

Louis Woodhill, a software entrepreneur, claims Piketty has his numbers wrong:

… Piketty’s painstakingly researched numbers are worthless because they ignore the existence of the modern welfare state. Our various welfare programs redistribute a huge percentage of national income and, therefore, for the purposes of Piketty’s comparisons across time, they redistribute the beneficial ownership of capital. … Labor has little to do with economic growth. Capitalism is about capital and knowledge. … Anything you tax you get less of and Piketty’s system would impose huge taxes on accumulating and maintaining assets, which are what drive GDP. Under American capitalism, the ultimate arbiter of ‘common utility’ is the market. … expressed in the form of voluntary offers to buy and sell, into an optimum allocation of resources and an efficient coordination of efforts. When Piketty talks about ‘common utility’, what he means is, ‘common utility as judged by progressive French intellectuals like me.’

In The Wall Street Journal:

Not that enhancing growth is much on Mr Piketty’s mind, either as an economic matter or as a means to greater distributive justice. He assumes that the economy is static and zero-sum; if the income of one population group increases, another one must necessarily have been impoverished. He views equality of outcome as the ultimate end and solely for its own sake. Alternative objectives — such as maximising the overall wealth of society or increasing economic liberty or seeking the greatest possible equality of opportunity, or even … ensuring that the welfare of the least well-off is maximised — are scarcely mentioned.

This last quote on the reaction of the Right, from an opinion piece in Forbes magazine, is quite frightening for what it reveals about the thinking of the extreme Right in America. (I originally thought it was satirical and it took me a few reads to take it seriously. If anyone can show me this really is satirical, I will be much relieved!)

Piketty drops Karl Marx’s name over and over again in this book. Enough to make you think that he’s hiding something. Such as the possibility that he is shilling for Charles Darwin. [that is, for social Darwinism in relation to the role of government]

One of the deadliest threats with which government has ever had to contend, over the entire pageant of human history, was the immense wealth and mass affluence generated by the industrial revolution. The usual metrics point to the exponential growth of goods and services from 1750 until 1914 if not 1929. Exponential growth of what we call the private or ‘real’ sector of the economy — everything that is not government — means that government also has to grow exponentially in order even to be detectable. Moreover, one can ask: if exponential real sector growth occurs over the long run, what possible need could civilization have for government. … World War I was a keen effort to lure the masses away from their pursuits in the real sector to pursuits in the government sector, which is to say trench warfare. In the offing, the real sector took a big hit … But it remains the Great Depression that has proven the best thing that has ever happened to government in modern times. To this day, memory of the 1930s is still there in the global psyche, convincing people that the market cannot go unchecked, that government has to be nice and big in order for there to be prosperity and economic justice. Cui bono — who benefited — from the Great Depression? Government did. … Signals got mixed, capitalism got the blame, and we haven’t been able to imagine life without government since. The challenge of the 21st century will be to see if we have the courage and the foresight — for we certainly have the means — to permit government to expire.

I won’t critique those comments from the Right but leave them to stand alone and you can judge for yourselves. But you can see what progressives are up against: ‘greed is good’ and ‘no role for government’, even ‘no need for government’.

The Right also like to point out that Piketty himself may become rich from the success of his book.

Here in Australia, Piketty does not seem to have hit the headlines. He is being discussed by local economists. John Quiggin, for example, has suggested that Piketty may be a little pessimistic about the possibility of success in introducing taxes on wealth because measures are slowly developing internationally to eliminate offshore tax havens.

But Piketty has not been a major topic in popular media or among politicians — a few articles over a few days and then, like old news, apparently forgotten.*

Why? Perhaps one reason is that inequality has not been seen as a major issue in Australia, as it has in France, the UK and the US, and has not reached the level it has in those countries, although it is increasing. Our politicians like to talk about equality in terms of fairness and to give Piketty any relevance in Australia would be to turn our political language on its head. Abbott and Hockey’s 2014 budget may do more than Piketty to emphasise inequality in Australia but, taking Bill Shorten’s budget reply as an indicator, we are more likely to continue to focus on ‘fairness’. (The unanswered question being whether ‘inequality’ and ‘fairness’ are addressing the same thing.)

In a speech to the Fabian Society on 18 May, Senator Penny Wong said that the debate on inequality ‘needs to become more prominent in Australia’ but she comes to what, in my opinion, are some strange conclusions. She refers to Piketty’s equation (r > g) but says that Labor, rather than reducing ‘r’, as Piketty proposes with his taxes, should focus on increasing ‘g’.

Labor should not only increase growth, we should also increase people’s opportunities to gain the benefits of growth. The traditional social democratic approach to fairness has focussed on redistribution through the tax and benefits system. But social democratic parties also need to focus on what has been called ‘predistribution’ — helping people to earn better incomes from the market economy in the first place, before the tax and benefits system kicks in.

The emphasis is on education, training and re-training, for what was earlier called ‘lifelong learning’, as an economy changes over time. Senator Wong refers to this as redistributing opportunity.

It is important for the reasons stated by Christine Lagarde, head of the IMF, as quoted by Senator Wong:

Let me be frank: in the past, economists have underestimated the importance of inequality. They have focused on the size of the pie rather than its distribution. Today we are more keenly aware of the damage done by inequality. Put simply, a severely skewed income distribution harms the pace and sustainability of growth over the longer term. It leads to an economy of exclusion, and a wasteland of discarded potential.

Senator Wong’s declared approach addresses Largarde’s ‘wasteland of discarded potential’ but I don’t think it fully addresses Piketty’s basic premise. To achieve greater equality following her approach Piketty’s equation needs to be reversed: that is become, g > r. As suggested in Part 1, that did occur around the time of the World Wars and the Great Depression, and up to about 1970, but it was assisted by much higher taxes and other government interventions. Unless Labor is prepared to tackle the issue in that way, through taxing the rich and thereby reducing the rate of return on capital, the path proposed by Senator Wong may only be addressing half the problem. Without a reduction in the rate of return, a small increase in the rate of growth may not fully reverse the equation and only lead to continuing accumulation of wealth in the hands of the elite, who then have the capacity to pass that to their children, creating dynastic wealth and power (could I possibly mention Gina Rinehart or the Murdoch and Packer families in this context?).

Part of the problem is that progressive parties around the world have bought into the free market philosophy because, in a globalised economy, they now face a dilemma. Continuing to support redistributive policies can lead to investors threatening to move capital and investments abroad and ‘that, in turn, would cost jobs in the national market and result in less economic growth, less public revenue, less social investment …’ The rise of the New Left in the 1970s also shifted progressive thinking from labour rights to human rights. As Christos Tsiolkas has pointed out in his personal account, Whatever happened to the working class? — The left has forgotten where it came from, the progressives often fail to address the real concerns of the workers, and this is not just the old working class but parts of the middle class — the more highly paid skilled workers and ‘cashed-up bogans’ as Tsiolkas calls them.

If many of them were now “cashed-up bogans”, just as many were unemployed. Many were on welfare, many on drugs both illegal and prescribed. Even among the “cashed-up bogans”, there was a real fear about how long this period of extended prosperity was going to last. … They were fearful of a rise in interest rates and in rents and of the loss of permanent jobs to casualisation.

The cost of living, the uncertainty of employment, the erosion of public health and public education — that’s what mattered.

With progressive parties worldwide not apparently listening to those concerns, the underlying conservatism of the working class has tended to move it to the right, and to the extreme right as evidenced by results in the recent European Parliament election. Returning to such basic issues will also have an influence on how inequality is approached by progressive parties.

Although progressive parties face their own problems in considering inequality, we will certainly not hear Abbott and Hockey talking about Piketty or inequality. While Piketty accepts some level of inequality, he considers that when it becomes extreme it is useless as an incentive and also becomes a threat to democracy. Abbott and Hockey do not see that. As Victoria Rollison described their view recently (and it is worth repeating):

You only have to know their two favourite words to understand Abbott and his government’s entire ideology, which drives their entire raison d’être. User pays. The likes of Abbott’s [sic] have a subconscious thought process that goes something like this: those who are born poor and haven’t worked hard enough are too lazy to stop being poor and are lazy and dependant on hard working rich people who pay taxes. Rich people who pay taxes shouldn’t be relied on to fund the lives of lazy, immoral poor people who are too lazy to get rich and pay taxes. It’s immoral to let people be dependent on the government and a big government encourages people to be lazy and to depend on the government. Big government should be destroyed in preference for a small, useless, and not able to be dependable government. Users should pay their way, so user pays is the best system for funding everything including health, education, infrastructure, community, everything. If user can’t afford to pay, user doesn’t get and user should stop being so lazy and hungry and in need of shelter and should go and get rich so they’re not reliant on the rich people who have to pay tax to support them.

Despite all the evidence, and Piketty and his colleagues have accumulated bucket loads of data, the right-wing believers like Abbott and Hockey will never accept inequality as a problem. They continue to believe that greater national wealth benefits all, which is true to an extent, but not when the top one per cent take the majority of the increase in national wealth and the bottom ten per cent get the crumbs.

Inequality, even fairness, will not be addressed under an LNP government, not until the laissez-faire economic rationalists lose their grip on economic debate and political thinking. Even progressive parties may not tackle the issue effectively unless they also take a stand against the financial markets (perhaps financial transaction taxes) and reconsider taxing the rich and addressing the basic concerns of workers. Piketty, at least, has opened the way for that debate to happen.

* Since preparing this post, I have seen much more discussion of inequality in the Australian media but, as I suggest in the piece, it seems that the Hockey budget, rather than Piketty, has been the driving force for that discussion.


What do you think?