The problem with conservative warriors

[The bookcases that were too big to move]
A lot of employers place significant levels of trust in their employees. Retailers trust their employees to charge the customers the correct amount for the products they sell and put the money into the register; airlines trust that their employees are fit and mentally capable of servicing or flying the plane they are assigned to fly; bus and truck operators trust that their drivers will drive the vehicle along the assigned route; while health care workers are trusted to look after those in their care.

At times, employees have to make decisions that may have an inimical impact on their employer’s business. The retailer’s staff usually have a mandate to deduct a percentage of the price of an item if there is some imperfection. External factors may delay the arrival time of the plane in Sydney or the 456 bus to the City. Obviously a number of 737s can’t land on one runway at the same time and if the 456 bus is caught in a traffic jam, the bus can’t push other vehicles out of the way. This in turn affects the operation of the other services as transport operators tend not to have a spare 737 or commuter bus sitting around at every terminal ‘just in case’ something doesn’t turn up on time. This is the greater good in operation, it is better for a plane or bus to be late than for the system to fail completely because of the actions of one person who was following their employer’s requirements regardless of the outcomes.

At times there are those who try to beat the system and there are probably a set of checks to ensure that the trust is respected and the cash register takings balance the amount of stock that has left the store; the pilot for the 8.30 plane to Sydney isn’t enjoying the free drinks in the Business Class Lounge with the passengers before the flight; the heavy vehicle driver hasn’t found a nice shady spot beside a creek and decided to wet a line and so on. The number of trucks and buses in the streets of our major towns and planes that arrive and depart about the right time would demonstrate that most employees demonstrate that the trust their employers show is not misplaced.

Just about everyone who works in a shop, flies a plane or drives a heavy vehicle is paid significantly less than Justin Gleeson, Australia’s Solicitor-General and second ranking ‘law officer’ in the land. Gleeson is a ‘Senior Counsel’ — the latter-day version of a ‘Queens Counsel’. Gleeson is having a very public argument with his supervisor, Attorney-General (and Senator) George Brandis who is the nation’s ‘first law officer’. Brandis is a ‘Queens Counsel’ — better known as a QC. Apparently, the issue at the heart of the argument is Brandis decreeing that Gleeson’s office will not offer advice or counsel to anyone in the federal government (political or public servant) unless the request comes through Brandis’ office.

The ABC’s website has given us a four-act play (probably generous, it seems more like a soap opera) that describes the situation to date. At a meeting between Brandis and Gleeson, Brandis apparently said:
… there had been a lazy practice within the Government and the public service to approach the solicitor-general requesting legal advice directly, and that his office should act as something of a gatekeeper.
Apart from the implication that a senior public servant and lawyer can’t manage his workload, why would Brandis want to know what other politicians or senior public servants need legal advice about?

It’s not the first time Brandis has attempted to influence the work of public servants in his employ. Human Rights Commissioner, Professor Gillian Triggs, conducted an enquiry with less than flattering findings for the government into the children Australia holds in detention camps in PNG and Nauru. Brandis, through a government official, asked Triggs to resign (thus reducing the ‘severity’ of the findings) at a meeting on February 3, 2015. Triggs, when recounting the matter in a Senate Estimates Committee hearing, advised that she had rejected the overture:
"My answer was that I have a five-year statutory position, which is designed for the president of the Human Rights Commission specifically to avoid political interference in the exercise of my tasks under the Human Rights Commission Act," she said.

Professor Triggs also testified that the secretary, Chris Moraitis, told her she would be offered another job if she did.

She described the offer as "entirely inappropriate".
Brandis claimed that he had lost confidence in Triggs as in his view:
… she had made a decision to hold the inquiry after the 2013 election and had spoken during the caretaker period, quite inappropriately, with two Labor ministers, a fact concealed from the then-opposition — I felt that the political impartiality of the commission had been fatally compromised.

"The Human Rights Commission has to be like Caesar's wife, it has to be beyond blemish."
So Brandis is suggesting because Triggs discussed a relevant issue with two politicians from the other political party during an election campaign, she should be sacked. Those of a somewhat cynical bent might suggest that conversations between senior public servants and politicians occur all the time during election campaigns despite the ‘caretaker conventions’ that are put into place: the real issue here was something else — potentially the contents of a report that rightly gained some publicity at the time for its criticism of the government’s policy. To be fair to Triggs, her office isn’t the only human rights organisation critical of Australian government refugee policy. Rationally, if the ALP government had been returned in the 2013 election, the Human Rights Commission enquiry into detained children would have reflected just as badly on the ALP as it did on the Coalition government.

In the 2014 Federal budget, Brandis oversaw significant cuts to the community legal sector. When asked if he had consulted with the sector, he claimed he did. Others in the sector claimed he didn’t. Shadow Attorney-General, Mark Dreyfus effectively invited Brandis to ‘put up or shut up’ by releasing his diary for the period where the consultation was supposed to have occurred. Brandis chose not to, so Dreyfus made a Freedom of Information request. As the ABC reported:
The FOI was originally blocked by the Attorney-General's chief of staff, who claimed it would take hundreds of hours to process because Senator Brandis would have to personally vet each and every entry before they could be released.
Dreyfus appealed the decision to the Administrative Appeals Tribunal and won. Brandis appealed the appeal decision to the Full Court; which eventually found in Dreyfus’ favour. While Dreyfus (who is also a QC) represented himself, apparently at no cost to the taxpayer, Brandis’ legal fees came in at over $50,000 according to Dreyfus, as reported by the ABC. Even after that, the Freedom of Information request has to be reconsidered rather than released immediately.

Brandis was also the one that couldn’t move his $7,000 bookcase to hold his $13,000 worth of taxpayer-funded books and magazines from the office he was in prior to the 2013 election into the ministerial office. So a $15,000 bookcase was custom made for his new office.

As well as being Attorney-General, Brandis has been the Minister for the Arts; maybe he likes attending the first-night performances. The Australia Council (for the Arts) was formed under the Holt Government in 1967 and has been traditionally the vehicle whereby the Australian government funds artistic and cultural endeavours across Australia. In the 2015 federal budget, Brandis, as Arts Minister, oversaw a $110 million cut in the budget of the Australia Council to create a new arts funding body called the National Program for Excellence in the Arts. While some who have had funding applications rejected by the Australia Council in the past may argue that that body wouldn’t know ‘arts’ if they fell over it, there is a probability that in some cases the claim is fuelled more by hurt and anger than any valid criticism of the Australia Council. Like all funding bodies, there is also potentially some internal politics to overcome that could conceivably increase the chances of a successful application ‘should the game be played correctly’.

The ABC reported at the time:
Senator Brandis said there is a widespread perception that the Australia Council is 'a closed shop'.

'We would be blind to pretend that there aren't complaints from those who miss out, who have a perception that the Australia Council is an iron wall; that you are either inside or outside,' he said.

'I've heard that from so many people. That is particularly a perception held outside Melbourne and Sydney.'
Having said that, Brandis was proposing his new arts funding body was to be run by his ministry office, rather than by arts funding professionals. The logic that supports taking arts funding away from professionals in their field and handing it to a potentially highly politicised minister’s office is dubious at best.

What is it with Brandis? We have a person who isn’t afraid to spend taxpayer money on Quixotic endeavours such as custom made book shelves and legal appeals costing the best part of $75,000 while cutting the funding to those that assist those on little or no income through the legal system. When the funding was provided, it allowed the community legal providers to run on the proverbial ‘smell of an oily rag’. The government rightly employs experts in their field such as Gleeson and Triggs to manage difficult and sensitive responsibilities within the government. The government also has an established bureaucracy that has significant knowledge and experience in ‘the arts’.

Yet Brandis believes that he needs to manage the Solicitor-General’s workflow, publically suggests that the reason the Human Rights Commission brings down a report challenging the government’s behaviour was to discredit the government of the day and believes his ministerial office knows more about ‘the arts’ than those with considerable demonstrated experience.

While it is a legitimate action for a government minister to make the final call when it comes to determining policy within their department, there is a difference between policy and implementation. It’s probably fair to suggest that a number of politicians on both sides of parliaments (at all three levels of government) are factional warriors; at some stage they have pledged complete loyalty to what they see to be the objectives of the political party. Rather than seeing the world through ‘rose coloured’ glasses, the world has a deep blue, red or green hue.

The problem with these people is that criticism of their chosen position is a problem. Brandis shows this by his treatment of Triggs and Gleeson – both of whom have criticised Coalition government policies or practices, Triggs with the report on children in detention camps and Gleeson has obviously given advice contrary to the wishes of Brandis. Conservatives seem to have no problem with demonstrating double standards in cutting services to others while improving their lot in life at others’ expense.

Brandis frequently chooses in media interviews to assume the ‘conservative warrior’ persona, and while his personality is not the problem of his political leader, his actions as a minister of the crown are. Setting himself up to muzzle independent experts within his department primarily because the advice doesn’t fit the Coalition’s view of the world is a dangerous precedent — and you would think that Australia’s first law officer would have a better idea of the importance of precedents. If he doesn’t, Turnbull, who is also a lawyer, should be in a position to see the problem. This article started by looking at how sometimes various employees have to make decisions that adversely affect their employer and determined that at times these decisions were made for the greater good. It’s a pity that political warriors seem to have little understanding of the greater good.

What do you think?
Let us know in comments below.

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Statistics are people too
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On 20 October, the ABS released its labour force survey data for September 2016. The media duly reported the drop in unemployment from an upwardly revised 5.7% for the previous month to 5.6% but most also picked up that this was largely a result of a drop in the participation rate, from 64.7% to 64.5%.
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Statistics are people too


On 20 October, the ABS released its labour force survey data for September 2016. The media duly reported the drop in unemployment from an upwardly revised 5.7% for the previous month to 5.6% but most also picked up that this was largely a result of a drop in the participation rate, from 64.7% to 64.5%.

Firstly, a few explanations. The participation rate was traditionally a measure of all those aged between 15 and 64 (the ‘working age population’) who were ‘in the workforce’ and, of course, owing to students and stay at home parents, and other factors, this would never be 100% — around 70% was usually very good. However, the ABS now uses the total population aged 15 and above which I think can be a little misleading because it encompasses many elder retirees — including over 450,000 people aged 85 and over, who I doubt would be considering work.

‘In the workforce’ includes those who are actually employed, whether full-time or part-time, and those who are unemployed but are looking for and are available for work. So a fall in the participation rate usually means that people have dropped out of the workforce and given up looking for work — at least for now. It should also be noted that to be counted as ‘employed’ a person only needs to have worked one hour in the week of the survey — not what most of us would call ‘employed’ but it is the international definition and the ABS uses it, arguing that even an hour’s work is contributing to the economy. What that does mean is students and retirees who may be working no more than a couple of hours a week are included in the employment count.

The ABS also provides raw figures, ‘seasonally adjusted’ figures and ‘trend’ figures. I will mostly use the seasonally adjusted figures which attempt to smooth out known large variations, such as the number of school leavers entering the workforce at the end of each year and seasonal workers who come and go from employment at particular times. The trend figures can be interesting for what they show statistically in terms of where the figures are heading. Except where otherwise referenced all the data I have used comes from the ABS website, including downloading some of their Excel spreadsheets for more detailed data, so I do not separately reference each of these individual sources.

Having said all that, and leaving aside debate about the quality of the ABS labour force data (which has been questioned), I want to pay attention to what these percentages actually mean in terms of people.

The 0.1% drop in unemployment meant that there were 12,500 fewer people unemployed. That may sound like a reasonable improvement but even at 5.6% the number unemployed is 705,100 and that is a lot of people whichever way you look at it — without including their families. But somehow, the government, the bureaucrats advising them, economists and even most of the media seem to overlook the scale of that number by focusing simplistically on the percentage. That is over 705,000 people whose spending power is limited which not only makes life hard for them but, through reduced consumption, also impacts the economy.

The situation is exacerbated when we consider the long-term unemployed — those unemployed for 12 months or longer. As at August 2016 there were 169,000 long term unemployed (based on ABS data) or about 24% of the unemployed. But in September the Department of Social Security released data showing it had 290,161 long-term job seekers on Newstart Allowance in August. No matter which figure you use, that is a large number of people ‘doing it tough’ for a long time and many of them will have little chance of ever finding suitable work after such lengthy periods of unemployment.

Considering the participation rate is a little more difficult given the way the ABS now calculates it. On their calculation, it would seem that almost 40,000 people have dropped out of the workforce but, as that now includes all people 15 and over, a number of those could be retirees. Focusing just on the working age population, at least 25,000 people (probably more) have stopped looking for work. Not large numbers in the overall scheme of things but significant in terms of the number of people involved.

Employment dropped by 9,800 but that partly hides the fact that 53,000 full-time jobs were lost (part-time employment increased by 43,200). That is on top of the continuing loss of full-time jobs over many months now. While the seasonally adjusted monthly figures vary, including both rises and falls, the trend estimates for full-time employment have been consistently lower for each month since December 2015, suggesting full-time employment is on a downward slide.

The September figure for full-time employment is the lowest since June 2015 and since a peak of 8.217 million in full-time employment in December 2015, 102,000 people have lost full-time work (or 54,000 in trend terms and 271,000 on the raw numbers). In that same time, part-time employment increased by 162,800 but, as this includes all those working one hour or more, much of it may not involve significant hours of work.

Even that is only part of the story. Since July 2014 the ABS has been providing data on ‘underemployment’ in the workforce: this includes those engaged full-time but actually working part-time ‘for economic reasons’ and those employed part-time who would prefer more hours. In the first category, there were 75,900 people, predominantly male (60,800), an increase of 3,700 over the August figure. There were 979,900 part-time workers who would prefer more hours, including about 600,000 females (that was a decrease of about 30,000 on the August figure). That is almost 9% of those employed.

If we add the unemployed, for total ‘underutilisation’ of the labour force, we get 1,760,900 people not able to contribute fully to the economy even though they wish to do so — that is about 14% of the workforce. How can our economy be going well if 1.8 million people are not contributing to production and consumption as much as they could? In economic terms they have less scope for discretionary spending: it is normal that as income falls a greater portion of it has to be spent on essentials, such as food and utilities.

To make things worse, we can also consider the data the ABS provides on those ‘not in the labour force’ (NILF) as it reveals more information about ‘hidden’ unemployment. The most recent data I could find was for 2014 (released in February 2015). A further explanation is required here. In the labour force surveys people are asked if they looked for work in the week of the survey and if they could start within four weeks: if they do not meet those criteria they are classified as not in the labour force. The 2014 NILF figures show 21,700 people who were actively looking for work but could not start within four weeks and another 53,200 who were ready to start work. In addition, there were 851,000 people who wanted work, could have started within four weeks, but were not actively looking, including 102,100 ‘discouraged jobseekers’ a majority of whom were over 55. There are many reasons why people are not looking for work, including family issues and illness, but they remain interested in returning to the workforce. While the figures may have changed since 2014, it is clear that we are talking about hundreds of thousands of people who would like to be in work but for a variety of reasons, including just giving up, are not. So now, including these ‘hidden’ unemployed, and those ‘underutilised’ in the labour force, we are talking about something like 2.5 million people. Imagine what could be done if we created sufficient jobs and hours of work to meet that demand!

Total hours worked in September increased by 4 million hours to 1.66 billion hours. This is more interesting in trend terms: an increase of 2.2 million hours and the fourth consecutive increase after declines in the previous five months but still 2.4 million hours below the December 2015 peak. Overall, total hours worked has been trending upwards since 2000 but that is largely driven by population and workforce growth. Callam Pickering from CP Economics pointed out that work hours have actually been trending downwards over that same time when calculated per person. That is a sign of the increase in part-time work.

Ad Astra recently wrote about Turnbull’s planning black hole and it is no more evident than in the lack of response to these figures. What is the government doing to provide work for the 705,000 unemployed, or to provide more work for the one million who are underemployed? What is it doing to encourage people to remain in the workforce, rather than dropping out through the sheer frustration of being unable to find suitable work? I would suggest that many of those dropping out of the workforce have found the ‘cost’ (in economic terms, which includes effort and time as well as money) of finding work too high. I have little doubt that the onerous Centrelink job search requirements would be contributing to that ‘cost’. Increasing the time before which a person is entitled to receive Centrelink payments will not help. And what will the government do to address the ‘hidden’ unemployed, those not in the labour force but who would like to be?

The government’s approach seems to be that it should all be left to ‘the market’, to businesses, both large and small, to provide employment — eventually! That does nothing to support people in the present nor even to offer hope of employment or better hours in the short term. And even in the medium term it may be no more than a mirage. As I pointed out in ‘Are governments ready for the coming economic and social changes’, we are witnessing the rise of the ‘gig economy’. While that may provide some entrepreneurial opportunities, many businesses will move to a labour-force model of part-time or short-term employment. Perhaps the rise in part-time work already evident in the ABS data may be its beginnings. Australia now has the third highest part-time workforce in the OECD, representing 32% of those in employment.

Simply relying on business to create employment, without government support, may also be fraught. The recent NAB quarterly business survey showed ‘weaker profits and softer trading conditions have led to a moderation in business conditions’. Businesses did think that conditions would be reasonable over the next three to twelve months and capital expenditure plans remained strong.

ABS data, however, suggested that business investment fell 5.4% in the June quarter, and more than 17% over the year but much of this was said to be driven by the winding down of the resources boom. Despite that qualification, the NAB survey found that ‘a broader non-mining recovery appeared to stall in the September quarter’. There was also a deterioration in the retail and wholesale sector — to me, not surprising if we have 2.5 million people with lesser income than would be provided by any work, full-time work or more hours of part-time work.

Other business indicators showed sales from manufacturing rose 0.2% (but ‒0.6% and also down 2.9% over the year in trend terms). Companies’ gross operating profits rose 6.9% but were flat over the year (or flat in the June quarter and falling 4.3% over the year in trend terms). While profits may have jumped in the June quarter, wages rose only 0.8%. So where is that money going? — not into new jobs!

All in all, the government is ignoring that labour force data is about people, not just a series of percentages. It is ignoring the unemployed, the ‘hidden’ unemployed, and ignoring the problems created by underemployment and the loss of full-time jobs. Turnbull seems to believe that businesses will come good and provide the jobs or that people will create their own jobs, all part of his new innovative and agile economy. But how do the long term unemployed fit into that scenario? How do 705,000 unemployed survive until the economy comes good with little or no government intervention? How do one million people find the work hours they are seeking? How much production and consumption are we losing by having 2.5 million people not fully engaged in the economy? How are those 2.5 million people faring? — has anybody in government bothered to ask that?

As Ad Astra asked, where is Turnbull’s plan to make job growth happen? After all, this is people we are talking about.

What do you think?
Why do the ‘experts’ talk in terms of percentages rather than the number of people affected?

Why is the government ignoring the scale of this problem and claiming success when there are marginal shifts in the percentages?

Let us know in comments below.


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Trump is just part of the problem



There are two outcomes of the US presidential election that should horrify us all: Trump wins or Trump loses.

The horror of his winning leaves little to the imagination. We can see from his words and actions that on the personal front he is an ugly misogynist and a womanizer, yet is disrespectful of so many of the women who have entered his ambit, women whom he regards as his property, to do with as he wishes. He labels as liars the continuing procession of women who have accused him of sexual predation, insisting that all these claims have been ‘proven false’, and that he will sue them after the election.

We know too that he is a bully, and has a nasty streak that shows when he calls his opponent ‘Crooked Hillary’. He labels her a ‘criminal’ because of her email difficulties, although no charges have ever been laid by any authority. He calls her a liar, accuses her of ‘having tremendous hate in her heart’, attacks her over her husband’s alleged womanizing, and suggests she should be drug tested before their debates, as ‘he doesn’t know what’s going on with her’. He insists that it would be a total disaster should she be elected since, among other calamities, ISIS and Muslims would take over the country, international relations would become even worse, and the economy, already 'busted', would sink still further.

At the second debate he informed her that if he won he would appoint a special prosecutor to investigate her e-mail habits as secretary of state, and when she expressed relief that someone with a temperament like his was not in charge of the law, his rejoinder was, ‘Because you’d be in jail.’ Subsequently, at his rallies his supporters have chanted: ‘Lock her up, lock her up’!

In the third debate we saw more of the same. At first more disciplined, he could not sustain that demeanour; halfway through he broke out into his usual ugly Trumpisms. Just 24 hours later they continued throughout the Al Smith Charity Dinner in Manhattan, a traditionally light-hearted event attended by both candidates, one usually devoid of nasty barbs. But Trump could not contain his nastiness, as the videos show in this article in The New Daily.

We know too that his policy platform includes banning Muslims from entry, with what he likes to term ‘extreme vetting’, building a wall across the border with Mexico at Mexico’s expense to keep out Mexican ‘criminals, drug dealers and rapists’, scrapping trade deals that ‘rob Americans of their jobs’, and smashing ISIS by ‘bombing the shit out of them’, all in the cause of ‘Making America Great Again’. He shows his admiration for tough man Vladimir Putin and exhibits his willingness to cozy-up to him, contrary to contemporary US policy.

Apart from these outrageous policy positions, his campaign is largely policy-free on such matters as health, education, and foreign relations. He has threatened to ‘cancel billions in payments to the UN climate change program’ agreed to in Paris, as he considers global warming to be a hoax.

His latest assault on American democracy is his accusation of voter fraud, his assertion that the presidential election is rigged, and that the media is culpable, dishonestly representing his and his opponents case for election. Even close colleagues will have none of that accusation, which many see as Trump’s attempt to give himself an excuse for losing, which many of his colleagues and numerous social commentators believe will be the case.

Barack Obama’s response was apt: he reminded Trump that it’s ‘unprecedented’ for any candidate to try to discredit an election before it began, and advised Trump to ‘stop whining’ and get on with making a case for winning more votes. But as Women’s Agenda reminds us: “Trump has previously embraced the label of “whiner”, telling a CNN interviewer last year that “I do whine because I want to win and I’m not happy about not winning and I am a whiner and I keep whining and whining until I win.”

Trump’s threat to not honour the election result no matter the outcome, covert in his earlier utterances, became the defining moment in the third debate when in response to a direct question on this matter he replied: “I will look at it at the time”, hardly reassuring for those who expect the traditional smooth transition to the next president. If his thinly veiled threat becomes reality, we can expect a level of discord and disruption never before seen post-election in the US. The following morning he reiterated that he would accept the result, but ‘only if he won’! Now he’s insisting that the opinion polls that put him well behind are 'phoney', and that he’s really winning!

Many Americans share the horror of a Trump victory, particularly a large majority of women (although sadly not the majority of American men), and are fearful of what a Trump presidency would bring about. There is a strong consensus among leaders of many other nations, and commentators worldwide, that a Trump presidency would be disastrous. Many of his Republican colleagues share this view. Some have disowned him and his views and have distanced themselves from him lest he spoil their chances of re-election; some have contradicted his bizarre statements.

While many express fear about what a Trump presidency would do for the global economy, world stability, and international relations, how many have seriously contemplated what might come about should Trump win, a highly unlikely but not impossible outcome, and how world leaders would cope?

But while a Trump loss could hardly be worse than a victory, it would be foolish to believe that it would be without trauma at many levels. This piece attempts to tease out the possibilities.

Trump’s blanket condemnation of the mainstream media suggests a plausible post election defeat scenario: Trump will establish his own extreme right wing media outlet, one that would rival the existing one – Fox News. Trump is a billionaire businessman who has had experience in reality TV. It would come naturally to him to establish a TV network to compete with Fox News with even more extreme conservative, Republican and anti-Democrat views, and he has a readymade audience of supporters keen to lap up its every utterance. Not only would such an outlet be able to push neoliberal ideology, but it would also be a bridgehead from which it could assault a Clinton presidency, and make governing near to impossible with rancorous publicity and continuous condemnation. Fox News is bad enough; ‘Trump News’ would be even more vicious, vindictive, vitriolic, vengeful, venal and vile, should Trump seek to take out his revenge on the one who defeated him and all those who supported her.

This is not an idle thought, an improbable outcome, a fanciful scenario; it is one that Americans should contemplate, fear, and prepare to counter. Several commentators now acknowledge that possibility. One clue to Trump’s TV intentions is that he invited Roger Ailes, former CEO of Murdoch’s Fox News, who resigned from Fox last month over sexual harassment claims, to be his adviser. The latest though is that after just a few weeks they have parted company as Ailes realized that Trump “couldn’t focus, and that advising him was a waste of time.”  

Media commentators are seeing Fox News as an ailing, ageing network that needs rehabilitation and refreshing – the removal of 76 year-old Ailes is part of that process. No doubt Trump sees the audience Fox once enjoyed a ripe takeover prospect. He sees himself as the alternative right of the American national establishment, which he criticizes so vehemently, insisting it is introspective, corrupt and unresponsive to the needs of the people.

So don’t be surprised to see Trump TV News emerge early next year, with lots of beautiful presenters and experienced commentators, poached from Fox News and other networks, which will make billionaire Trump even more money.

In my view the greatest danger when Trump loses though is how his large base of supporters will react.




His supporters follow him because he gives them hope, albeit false hope, that he will fix their problems, improve their situation and make them, like America, great again.

These folk feel left behind in the wake of globalization, technological changes, and free trade, all of which have robbed them of their jobs and left them less well off, often dependent on welfare, and feeling hopeless. They are angry. They see no future for themselves or their children. It is not surprising then that when a ‘saviour’ appears and promises to make their unhappy lives better, they respond as Trump’s supporters have.

Trump cannot help them anymore than could preachers in a bygone age that promised eternal life in heaven among the angels to those oppressed by poverty or illness during their earthly existence. Yet his followers believe him fervently. Moreover, they also believe his anti-Clinton rhetoric and at Trump rallies rail against ‘Crooked Hillary’, heatedly shaking their fists at her. Having convinced them that the ‘corrupt media’ and Clinton’s allies have rigged the election, and that there will be widespread voter fraud, you can imagine their anger when Trump loses. He will tell his supporters they were ‘robbed’ by a corrupt system. We should be very fearful if Trump decides to stir up fury and resentment post election.

It’s too easy to dismiss Trump’s supporters as a rabble of discontents, as Hillary Clinton did when she labeled them “a basket of deplorables…racist, sexist, homophobic, xenophobic, Islamophobic — you name it.”

But their feelings are the direct result of inequality in the American economy. Many have lost their jobs, notably in the rust belt. They are poor and struggling. The American dream has passed them by. Many are homeless, on welfare, lacking healthcare, deprived of education – the flotsam and jetsam of American society. And they are understandably angry, just as were those involved in the ‘Occupy America’ movement.

They have swallowed Trump’s trickle down economic plan of giving massive tax cuts to business. They believe his promise that these cuts will stimulate business, create jobs and increase wages, classic neoliberal trickle down thinking that we know so well. But Trump also intends to get rid of ‘Obama-care’, which had given health insurance to so many who previously could not afford it, and he will also cut welfare, which one would have thought would upset his followers, but seemingly his other promises outweigh these drawbacks. History shows that people often vote against their best interests.

On the other hand, Clinton offers a classic progressive strategy of increasing wages, taxing the rich, and stimulating the economy through government spending, such as on infrastructure, just as Democrat governor Mark Dayton did so successfully in Minnesota where the economy is booming. In contrast, in neighbouring Wisconsin where Republican governor Scott Walker implemented a classic neoliberal strategy of cutting taxes and welfare, job growth has been among the worst in the region, income growth is one of the worst in the country, it has a higher unemployment rate than Minnesota, and the budget is in bad shape.

We cannot condemn Trump’s supporters for lapping up his promises, for not seeing through the fallacy of his economic strategy. They are the manifestation of inequality, which we know leads to discord and social disruption. They feel disenfranchised, distressed, despondent and despairing. Who could blame them for embracing Trump and his offer of hope, no matter how phoney?

What is fearsome is not their understandable faith in Trump’s false promises, but the spectre of Trump stirring them to unbridled rage when he loses, as he seems likely to do, unprepared as he says he is to accept the will of the people, ‘unless he wins’. Add to that the likelihood that he will stir up even greater hatred for the winner – ‘Crooked Hillary’, ‘the criminal who should be locked up’. Can you imagine how much civil unrest Trump could inflame, and how easily he could do so? That is frightening. That would be evil. That is what should terrify all who value the democratic process.

To return to the title of this piece: ‘Trump is just part of the problem’, it is his followers, those who adore him, those who hang on his every word, those who turn up to his rallies and shout insults at his opponent, those who really believe he can lift them from their dispossessed state to a glorious sunlit land of hope and prosperity, who are a powder keg waiting for Trump to light the fuse and blow democracy to smithereens.

Trump is just part of the problem!


What do you think?
What do you think and feel about Donald Trump?

Do you believe he will become president of the United States of America?

What do you think would be the consequences if he did?

Let us know in comments below.


Recent Posts
All hail the almighty banks
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All hail the mighty banks


Banks have been in the news recently and there is a clear difference in the approaches of the government and the opposition. While some may suggest that Bill Shorten is being populist in his call for a Royal Commission into the activities of the banks, particularly the ‘big four’, it is clear that Turnbull’s approach of calling them before the parliament’s Economics Committee once a year has been a sham.

Ian Narev, CEO of the Commonwealth Bank, was the first to appear before the committee and set the tone for the CEOs of the other ‘big four’ to follow — they sang from the same hymn sheet or, dare I say, had colluded beforehand to ensure the substance of their answers was so similar as to be almost the same.

There were apologies and promises to do better. There were mea culpa but of limited culpability when examined carefully.

Shayne Elliot from ANZ admitted (from The Guardian’s live blog of the inquiry):
I think as an industry we have lost touch with our customers. It’s taken us down a path that’s created bad behaviour, some poor culture and really not treated customers with the respect they deserve.
And Brian Hartzer from Westpac said:
It is clear that a trust gap has opened up, and we as an industry and as individual banks need to work to close that gap.
Generally, each bank claimed commercial confidentiality not to reveal the profit they made from housing loans or credit cards although ANZ did suggest that its profit from credit cards was only ‘a couple of hundred million dollars’ out of its total profit of $7.5 billion.

While a number of financial planners who had given customers bad advice had been dismissed, it became clear that not one manager or executive had been fired or resigned as a result of some of the banking scandals. Whatever happened to executive responsibility, ‘the buck stops here’? — now blame is shifted down the ladder, not only in the banks but also in government (but that really requires another article).

The same argument about executive responsibility was raised in the US when Wells Fargo CEO John Stumpf appeared before a US Senate Committee after Wells Fargo staff, in an effort to meet sales and revenue targets, had been found to have opened millions of fake credit, savings and other accounts for customers without their consent. US Democratic Senator Elizabeth Warren, a former Harvard University law professor, said to Stumpf:
So, you haven’t resigned. You haven’t returned a single nickel of your personal earnings. You haven’t fired a single senior executive.

Instead, evidently, your definition of accountable is to push the blame to your low-level employees who don’t have the money for a fancy public relations firm to defend themselves. It’s gutless leadership.
It’s a pity our parliamentarians didn’t follow such a line. (Stumpf has since stood down.)

The banking scandals have been spread over a wide area of the banks’ activities.

ComInsure, the CBA’s insurance arm, has refused to make payouts on the basis of dubious medical definitions and has even rejected a coroner’s ‘cause of death’.

ANZ has allegedly been involved in rigging the ‘bank bill swap reference rate’ (BBSW) which is used to set interest rates on business loans, also influences credit card and other loan rates, and is the rate at which banks lend to each other. This is similar to the LIBOR (London inter-bank offered rate) which has world-wide implications and four London traders have recently been gaoled for their role in rigging the LIBOR.

And banks have conceded their wrong doing by paying compensation to some of those who were affected by faulty financial planning advice.

Earlier this year at a Senate inquiry into white-collar crime, two economists presented an argument that banks were regularly fudging the numbers relating to clients’ income when making mortgage loans so as to make their loan portfolio appear ‘safer’.
The banks have trashed their lending standards over a prolonged period of time with significant evidence of banks massaging people’s incomes in their loan application forms to make them look more creditworthy than what they really are, which is essentially fraud.

The banks would do this for various reasons. One is the highly competitive environment between the banks. Second of all is profitability.

The safer your mortgage book looks, the lower it costs you to do business — simple as that. If you show that your borrowers are very creditworthy then you are going to get cheaper funding costs, and that’s a win-win for the bank …
Some of this results from the pressure on staff to meet sales and revenue targets. The Finance Sector Union surveyed its bank members on this and one member responded:
Managers have told us to tell clients certain things in order to get results that will generate bonuses for everyone.
The FSU’s Geoff Derrick said:
[staff] … are being pushed to deliver on sales targets to the point where some feel that they have no choice but to do anything they can to keep managers off their backs, including selling bank products to consumers who don’t need them.
Despite all that, the government’s decision to call the banks before the Economics Committee was based not on those scandals but the banks' decision not to pass on in full the RBA’s last decrease in its cash rate. The ABC provided a calculator to show how much additional interest people were paying on mortgages owing to decisions taken by the banks on interest rates. An example of a CBA mortgage of $300,000 over 30 years taken out in 2011 shows that in the last five years the person would have paid $5,214 in additional interest, made up of:
  • $1,745 because of additional rate rises outside the cycle of RBA rate increases
  • $228 from delays in the bank passing on RBA rate cuts
  • $3,241 from the bank not passing on the full RBA rate cut
The result of the banks’ decisions on interest rates is that they have increased their margin above the RBA cash rate. In 2011 the mortgage rate was on average about 3.25% above the RBA cash rate but in 2016 that had risen to 3.75%. Half-a-percent may not sound like much but when we are talking in billions of dollars it soon adds up to significant amounts (0.5% of 1 billion dollars is $5 million, so on a profit of $7 billion at least $35 million of that could be from this increase and that is just profit — the resulting increase in income would be many times higher).

Before the Economics Committee, the banks consistently listed many reasons for this embracing the actual cost to them of raising funds, including overseas funds, the requirement to hold more cash reserves, and pricing risk into their products. Since the GFC, however, the ‘big four’ have operated with a government ‘guarantee’ which, it has been estimated, saves them 0.2% on their borrowings compared to smaller banks — again a tiny percentage but amounting to millions when we are dealing with billions of dollars.

The banks also consistently rejected further regulation with arguments such as the cost of regulation would need to be passed on to customers or that there could be unforeseen consequences. They suggested that strong banks (read profitable) are necessary for a strong economy.

The government still thinks a Royal Commission is not necessary and instead announced a banking tribunal which customers would be able to approach with complaints without the need for lawyers. One consumer group suggested, however, that decisions of such a tribunal would likely be subject to appeal in the courts (as are decisions by the Administrative Appeals Tribunal) which would then mean the banks, with all their money, could tie up issues for years in the court system.

But why should we be surprised by this? It has been going on for centuries. Lehman Brothers (before its collapse) had identified that there were 11 banking and financial crises in the eighteenth century, 18 in the nineteenth century, and 33 in the twentieth century.

In Australia early in the 1890s there was a banking crisis, including a ‘run’ on banks (people withdrawing their deposits) and a number of bank closures. It was at its worst in Victoria and had been fuelled by a boom during the 1880s with increasing speculation and investment in the property market. At the time the financial sector was essentially unregulated and factors contributing to the problem included:
  • property market speculation
  • credit growth
  • unrestricted capital inflows from overseas
  • the degree of risk management within the financial system (with risk assessment being lowered to cash in on the boom)
  • competitive pressures in the financial system (which also contributed to lesser risk assessment as banks and building societies fought for their share of the boom)
Overseas factors led to a reduction in the inflow of capital, property prices crashed and the system came crashing down.

If that sounds familiar, it should. Mortgages have grown in importance in recent decades as a source of bank business and now represent 57% of the loan portfolios of Australian banks (up from about 30% a couple of decades ago). That core of property underpins the banks’ capacity to borrow overseas. Low interest rates have encouraged borrowers and allowed them to borrow larger amounts (also contributing to rising house prices). Using negative gearing and capital gains tax concessions, people have also invested in property, further fuelling the market. Competition between the banks, and the low interest rates, have encouraged the banks to lower their risk assessment of potential borrowers and, as suggested earlier, even led to ‘massaged’ income figures.

As in the 1890s, it will not take much to cause this system to crash. An increase in interest rates (becoming more likely) may well impact borrowers who have borrowed to their maximum capacity — encouraged by the banks — leading to loan defaults and pressure on the banks.

The risk is increasing and only a few days ago APRA (Australian Prudential Regulation Authority) issued an information paper on Risk Culture and indicated it would be taking a more intensive approach in its reviews of risk culture within financial institutions, including the influence of bonus payments.

In the latter half of the 1940s Ben Chifley moved to nationalise the banks by bringing them all under the then government controlled Commonwealth Bank. Although that move was not successful, some of Chifley’s comments in support of his action remain relevant:
Whatever regard they may claim to pay to the wider concerns of the nation, their policies are dictated in the last resort by the desire to make a profit and to secure the value of their own assets.

Experience of the past has been that private banks increased their lending in good times and contracted it in bad times …
He said that in 1931, as the Depression bit, the ‘trading banks refused to cooperate in proposals by the Commonwealth and States for the relief of unemployment and the revival of business activity’. Rather than helping provide a stimulus the banks had restricted new lending and called in loans, exacerbating the situation. ‘This should not be allowed to happen again,’ he said.

Chifley correctly saw that the flow of money was a major factor:
No single factor can do more to influence the welfare and progress of a community than the management of the volume and flow of money. Mismanagement of money, on the other hand, has contributed to the greatest economic disasters of modern times — booms and slumps, mass unemployment, waste of resources, industrial unrest and social misery.
The current neoliberal emphasis on the ‘free market’ means governments still do not have control of the flow of money and we are still subject to the booms and busts often caused, respectively, by capital inflows and lack of such inflows.

The banks in Australia did not cause the GFC but the collapse of the financial system in the US led to the drying up of capital on international money markets, restricting the ability of our banks to borrow necessary funds. That led to our government’s decision to provide a ‘bank guarantee’ — and then also to spend money to stimulate the economy.

In a paper by J Bradford De Long of the University of California comparing the financial crises of the 1890s and 1990s, one of his concluding remarks was:
A look back at history shows no easy way of controlling the macro-economic instability that large-scale capital inflows create. History does leave clues that a strong, credible, and credited commitment to unalterable exchange rate parities would do some good but we do not know how to create such a commitment in the age of mass politics by any means short of dollarization.
(‘Dollarisation’ refers to linking all currencies to the US dollar as was done in the Breton Woods agreement following WW2, or in some cases even adopting the US dollar as a national currency.)

So our banks are causing us problems — nothing new there. Our banks are contributing to a property investment boom that may not be sustainable — nothing new there. Any reduction in our banks’ ability to borrow overseas may lead to a credit crisis here in Australia — nothing new there. Our banks insist they will pass the cost of regulation on to us, their customers. The neoliberal economic approach adopted by our current government means it will not increase regulation so the banks will be free to continue as they are. The banks themselves claim, strong, profitable banks are necessary for a strong economy, and our government will not disagree even if the banks’ current profits are among the biggest corporate profits in Australia — in other words, the banks may be ‘strong’ but the rest of the economy isn’t.

While many things have changed in the past one hundred and thirty years, it appears banks have changed little.

What do you think?
Is the current devotion to the ‘free market’ simply allowing banks to do as they wish irespective of what is in the best interests of the country?

Has competition gone too far when banks bend, or even break, the rules to ensure profitability for their shareholders?

Let us know in comments below.


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Ad Astra, 19 October 2016
Let’s stand back from the daily tumult of federal politics momentarily, hard though it is to ignore, and look into the distance. What do we see? Given that politicians believe their role is to make this nation a better one for us all, where is the evidence of them planning to make it so? Where is the Turnbull
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Planning - Turnbull’s black hole



Let’s stand back from the daily tumult of federal politics momentarily, hard though it is to ignore, and look into the distance. What do we see? Given that politicians believe their role is to make this nation a better one for us all, where is the evidence of them planning to make it so? Where is the Turnbull Team's much touted 'Plan for a Strong New Economy' that the logo promised?

Let us start with a recent calamity – the electricity blackout in South Australia. The complexities of how this came about will be explained by Chief Scientist Alan Finkel’s enquiry. This is not the place to predict its outcome, but already there is evidence of a lack of planning that has contributed to this disaster.

Although the States and energy generators and providers have responsibility for energy supply, the federal government has overriding responsibility for energy security – indeed Environment and Energy Minister Josh Frydenberg declared the day after the calamity that "Energy security is the federal government’s number one priority." Did anyone hear him uttering these weighty words anytime before it occurred. No. This was a newfound mantra, now so important that it supplanted the Coalition’s top priority – national security. Turnbull concurred.

Which raises the question of exactly how much planning the feds had made to ensure energy security. Had they contemplated the effect that intermittent (or asynchronous) energy generation from renewables might have on the electricity grid and the constancy of supply?

They have known for years that renewable energy generation has been rising steadily. At the end of 2015 there were 77 wind projects, with 2064 turbines generating 4187 MW of power, with a further 365 MW under construction. Almost a year later there are many more. As at March 2015, in addition to household solar panels, there were over one hundred solar projects generating 4,100 MW of photovoltaic solar power.

This is not restricted information – it is freely available on the Internet. Yet there seems no evidence that the federal government and its Energy Minister have undertaken any planning to integrate intermittent power generated by wind or sun into a network that hitherto has been powered by regular base-load power generated from burning fossil fuels. There are complex arrangements already in place to modulate the level of power in the grid, which allow changes to the levels of power occasioned by intermittent power inputs. These arrangements are said to have failed during the fierce SA storm with its gusts of up to 140km an hour and over 80,000 lightening strikes, which took down 22 power transmission pylons and three transmission lines.

The consequent sudden drop in energy frequency in the network triggered an automatic cut at the interconnector with Victoria to protect the national network. SA Premier Jay Wetherill said: "The system behaved as it's meant to behave to protect the national energy market", but the federal Energy Minister and the PM seemed not to understand this reality, nor were they prepared to take any responsibility for this vulnerability despite trumpeting that ‘energy security was their top priority’. What they did do immediately though was to make political capital by castigating State Labor governments for their ‘unrealistic and ideologically-driven targets for wind power’; thereby insinuating that reliance on wind power was a prime cause of the disaster.

Frydenberg then called an urgent meeting with State energy ministers to discuss how the national electricity grid might be better protected in future. Why was this the first such meeting?

If ever there was an example of a gross planning deficit at a federal level, this is it. A Turnbull planning black hole!

Marriage equality
The marriage equality issue is another example of poor planning. Propelled by the promise to his right wing to continue Abbott’s policy, Turnbull has persisted with the plebiscite idea, which will be stone dead once the Senate rejects it.

Turnbull, despite his personal support for marriage equality and his proclaimed confidence that both the people and the parliament would support it strongly, has no Plan B. For him, Plan A, the plebiscite, is all there is. Other leaders have been able to change their mind in the face of an alternative view in the electorate (Mike Baird springs to mind), but so controlled is Turnbull by his conservative rump, which refuses to even consider a Plan B, that he will not to listen to the increasing public clamour for marriage equality and the rising desire for a parliamentary vote rather than an expensive and divisive plebiscite. A sound planner would have anticipated that the long and loudly voiced resistance to a plebiscite by Labor, the Greens and several crossbenchers in the Senate would eventually kill the plebiscite plans, leaving him with nothing.

Bernard Keane of Crikey has this cryptic view: “…there is a Plan B, even if the Prime Minister won’t discuss it. It’s to hope the issue that has hovered over federal politics for more than a year goes away, put off until at least the next election!” 2353NM analyses this issue at length in Turnbull – Abbott from a better postcode.

Turnbull’s lack of an alternative plan for introducing marriage equality is another planning black hole, one that is distressing to the LGBTI community. He ought to have anticipated the outcome now upon him and have planned an alternative approach.

Budget planning
This constitutes another black hole.

How long have we had to endure the ideologically driven budget planning that started with Joe Hockey and was continued by Scott Morrison and Mathias Cormann? We know that it is based on supply-side (trickle down) economics, which benefits the top end of town but penalises those lower down the pecking order. We know that the touted benefits of increased investment, more jobs and better pay for the workers are illusory, unsupported as they are by historical evidence accumulated over many decades. Yet they persist, driven by their ideological disdain for the ‘leaners’ whom they insist depend on the ‘lifters’ who work hard and pay their taxes.

You might be interested to view this You Tube video by economist Robert Reich, former labor secretary to US president Bill Clinton, which addresses this issue:



It goes on still. Only last week the Coalition, backed by Labor, passed a bill that embraces trickle-down economics – the Income Tax Relief Bill – which will drop the marginal tax rate for the $80,000-$87,000 bracket from 37 to 32.5 per cent. This was reported upon comprehensively in The New Daily, an abbreviated version of which follows:

Treasurer Scott Morrison sold it as an income tax cut for “middle income” workers, but The Australia Institute insists it’s not a cut for middle earners because average income earners don’t earn anything like $80,000 a year. Anyone on $80,000 a year is in the top 25 per cent of income earners, and this figure doesn’t include age pensioners, the unemployed, and the disabled. If they were added in, it would push those on $80,000-plus close to the top 10 per cent. While it’s true the average full-time worker earns just over $80,000, that figure is misleading; the Institute’s economist pointed out that when part-time workers are factored in, the average wage drops to $1575 a week, which works out to roughly $60,000 a year.

It’s even worse for women. The average female worker earns only $925 a week, which is about $48,000. Female workers constitute only 39 per cent of those who earn $80,000-plus.

Not only will the tax cut not benefit ‘middle’ Australia, but it will cost the Budget $3.9 billion over the next four financial years.

Giving an extra $315 a year to low-income earners would ensure it was spent immediately, resulting in much-needed economic stimulus, whereas higher earners are likely to bank more of their tax cut – trickle down will not occur.

There are other approaches. Take Mark Dayton, Democrat governor of Minnesota, who won office in 2010. This is what the US blog Mic had to say about his approach: 
“Since 2011, Minnesota has been doing quite well for itself. The state has created more than 170,000 jobs, according to the Huffington Post. Its unemployment rate stands at 3.6% - the fifth lowest in the country, and far below the nationwide rate of 5.7% - and the state government boasts a budget surplus of $1 billion. Forbes considers Minnesota one of the top 10 in the country for business.

“Given that Dayton is a well-connected millionaire whose family controls the Target fortune, one could be forgiven for thinking this was the result of embracing the corporate world. But in fact, over the past four years, the state has undergone a series of policy reforms that most of the corporate world decries: It has imposed higher taxes on the wealthy and raised the minimum wage. (My emphasis)

“When each of these progressive policies was initially proposed, Minnesota Republicans made dire predictions about their effects on the economy, and argued that bleeding-heart concerns about economic fairness would stifle growth. Despite all the warnings, Minnesota's economy hasn't tanked. Instead, it's sailing with greater force than it has in years.”
The Mic article contrasts this with the situation in the adjoining state Wisconsin.
“As Minnesota has enjoyed economic success, observers have often compared the state's situation to that of its neighbor Wisconsin. Republican Scott Walker also won the governor's mansion in Wisconsin in 2010, but pursued a deeply conservative agenda for managing the economy. He made huge spending cuts to vital services ranging from education to health care. He reduced taxes on the wealthy, and got rid of tax credits for low-wage earners. (My emphasis)

By a number of measures, Wisconsin hasn't fared as well as Minnesota. As the Milwaukee Sentinel Journal documents, Wisconsin's job growth has been among the worst in the region, and income growth is one of the worst in the country. It has a higher unemployment rate than Minnesota. And the budget is in bad shape.
This is just one example; there are others. But it illustrates two vastly different approaches to economics: one that increases taxes on the wealthy and increases the minimum wage, and the opposite: one that reduces taxes for the rich and cuts services, and shows that the former is superior.

Why can’t Turnbull, Morrison et al consider approaches other than the traditional conservative one of cutting services and giving tax breaks to the well off? Why haven’t they got a Plan B? The truth is that this is another Turnbull ideologically driven planning black hole. So driven are they by their supply side ideology that believes economies are stimulated by giving tax cuts to the top end of town, that they are unable to consider an alternative approach. The have a Plan A, but no Plan B. This planning black hole leaves them shackled to a discredited economic policy.

In their economic planning, have they ever considered the merits of Modern Monetary Theory as described by Ken Wolff in Modern Monetary Theory and will it help? The answer is: 'almost certainly no'.

What Government planning is evident as we approach an economy where many jobs will be automated, both manual and cognitive, and unemployment and underemployment will rise? Have they thought about and planned for the ‘gig economy’ described by Ken Wolff in Are governments ready for the coming economic and social changes? The short answer is: ‘not that any of us can see!’

Economic planning is among the government’s poorest efforts, leaving us all vulnerable, and many of us worse off.

Inequality
There is now abundant evidence that inequality is a social burden for millions of people in our country and in many others. A large part of the phenomenon we witness day after day as America prepares for its presidential election is the direct result of vast swathes of the nation feeling left behind, while the political establishment does little to elevate them from their impoverished state. Thus people like Bernie Sanders, who press for more equality, excites many followers, and even the arch-capitalist Donald Trump attracts supporters by promising to fix the ‘corrupt’ political establishment that he claims cares little for them.

We know too from the work of Professor Michael Marmot that health inequality runs parallel to economic inequality. Those with the least, those with the poorer jobs, have the worst health.

In The neoliberal execution of democracy, Ken Wolff describes in detail how neoliberal politics promote inequality. He quotes Noam Chomsky: “Neoliberal democracy, instead of citizens, produces consumers…The net result is an atomized society of disengaged individuals who feel demoralized and socially powerless”

Where are the Turnbull government’s plans for decreasing inequality? The Coalition is doing nothing to ameliorate the growing inequality that exists; indeed their neoliberal actions are making it worse.

Climate change
Here is where planning by the Turnbull government is so appalling. We know that its Direct Action Plan, Plan A, is a fraud. At this historic time when the world has crossed the threshold for the Paris agreement to take effect, the United Nations is challenging Australia’s policy. A report in The Age only last week read:
“Australia is facing renewed international pressure to explain what it is doing to tackle climate change, with a United Nations review finding its emissions continue to soar. Several countries are calling for clarity about what it will do after 2020. Countries including China and the US have put more than 30 questions to the Turnbull government, asking for detail about how Australia will meet its 2030 emissions target and raising concerns about a lack of transparency over how the government calculates and reports emissions.

“It comes as the federal government has been facing calls at home - sparked by its own criticism of ambitious state renewable energy targets - to reveal what it would do on climate change and clean energy beyond 2020. An expert review commissioned by the UN found, based on data submitted by Australia, its emissions would be 11.5 per cent higher in 2020 than they were in 1990.”
The Turnbull government has no Plan B for mitigating global warming even although Plan A continues to be ineffective.

GST in WA
Malcolm Turnbull made a big pre-election political play when in Western Australia about its unfair share of GST revenue and promised to fix it. Several months later there is no fix, nor is there any plan to do so. In his quest for a fairer share of GST for WA, and in the absence of any action by Turnbull, Brendon Grylls, (who is also attempting to regain his position as Leader of the WA Nationals), is promoting a mining tax, which would increase WA’s GST take. He is highly critical of Turnbull for having no plan to match his words.

Here’s another planning black hole with which the Turnbull government is riddled!

I could go on and on, but let’s finish with a laughable procedural planning shemozzle.

Procedural non-planning
With just a one-seat majority, it would be reasonable to expect careful planning in the area of parliamentary procedure. But already, in just a couple of months, the Turnbull government has suffered three defeats on the floor of the House because some of its members decided to leave on an early flight home, and last week Kelly O’Dwyer managed to embarrass the government through a procedural bungle by accidentally endorsing a bill amended by Labor, which criticized the Government. Of course she, the Manager of Government Business, Christopher Pyne, and the PM tried to play down the incident, but observers see it as a metaphor for the awful planning of the Turnbull government.

Whichever way we turn, wherever we look, we see either no planning in critically important areas, or faulty planning that imperils the Turnbull government, and of course we the citizens who depend on government to do those things that keep us safe, that enhance our prosperity, that give each of us a fair go, that enable us to be part of an integrated multicultural society which cares for all its citizens, rich and poor, able and disabled, healthy and ill.

The Turnbull government is letting us down badly because of its many planning black holes.
And sadly there is no sign that planning will improve in the time ahead.




What do you think?
Let us know in comments below.

Can you think of Turnbull's other black holes?

What evidence do you have?
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“I’ve said some foolish things,” Trump said in a taped apology posted on his Facebook page. “But there’s a big difference between the words and actions of other people. Bill Clinton has actually abused women.”

Turning to his Democratic rival Hillary Clinton, Trump accused her of having “bullied, attacked, shamed and intimidated” her husband’s “victims.”
It’s a classic ‘look over there’ approach, that demonstrates that while there is an apology on record, it’s a pretty safe bet that Trump’s campaign team told him he had to do it, rather than some intrinsic understanding that the original conversation was just wrong. The apology went for 90 seconds and the text is available on the CBS News website here.

While Trump’s supporters are also apparently ‘looking over there’, some Republicans are less convinced. According to CBS, his choice for Vice-President, Indiana Governor Mike Pense,
was “beside himself” and his wife was furious, according to a person familiar with their thinking. That person spoke on the condition of anonymity, because they were not authorized to share the private discussion.
CBS also reports the head of the Republican Party was, if anything, more direct
“No woman should ever be described in these terms or talked about in this manner. Ever,” said Reince Priebus, who had stood by Trump through his past provocative comments.
According to the CBS report, Trump’s justification for his actions in the original interview was “When you’re a star they let you do it,” Trump says. "You can do anything."

So Trump is a misogynist. At the time of preparation of this article, Trump is refusing to stand down as the Republican Party’s nomination for US President. It’s not the first time that Trump has made derogatory comments about women, immigrants foreign countries, welfare recipients or the current President, just to name a few. The actor Robert De Niro was asked to film a spot for a ‘get out to vote’ activist group in the US, which contains a really interesting Trump character assessment:
"I mean, he's so blatantly stupid," the Academy Award winner, 73, said of Trump, 70, in the clip. "He's a punk, he's a dog, he's a pig. He's a con, a bulls--t artist, a mutt. He doesn't know what he's talking about, doesn't do his homework, doesn't care, thinks he's gaming society, doesn't pay his taxes. He's an idiot. Colin Powell said it best: He's a national disaster. He's an embarrassment to this country. It makes me so angry that this country has gotten to this point that this fool, this bozo, has wound up where he has."

De Niro continued, "He talks [about] how he wants to punch people in the face. Well, I'd like to punch him in the face. This is somebody that we want for president? I don't think so. What I care about is the direction of this country, and what I'm very, very worried about is that it might go in the wrong direction with someone like Donald Trump. If you care about your future, vote for it."
In 2012, Prime Minister, Julia Gillard rightly called out then Opposition Leader Tony Abbott on misogyny



The speech reverberated around the world. It’s probably fair to suggest that Gillard’s speech was not just a reaction to Abbott’s claim that Gillard was supporting then Speaker of the House Peter Slipper (who probably wasn’t the most moral character in the house), it was a reflection of the years of continual sniping at Gillard’s gender and her ‘lack of fitness’ to be Prime Minister as a result. Abbott’s wife runs an apparently successful business and he has three daughters. He obviously supports and respects his family’s successes and supports their endeavours. What Abbott didn’t and probably still doesn’t realise is continual sniping of a person based on their gender (as Abbott did to Gillard) is not fair game because the victim has differing opinions, it is as Gillard suggested – misogynisy.

Both Abbott and Trump are extremely conservative political leaders. While Trump could claim that he has reflected on his 2005 comments and knows better and Abbott did suggest that Gillard over reacted, is there a common theme here?

Prime Minister Turnbull committed to retaining Abbott’s plebiscite on marriage equity when he rolled Abbott in 2015. While the contents of the 2016 Coalition agreement are secret, is widely believed that the commitment remains – as Turnbull has brought the legislation to Parliament and if it was passed, the plebiscite would have been held on 11 February 2017.

Those who populate a number of religious organisations around Australia as well as organisations such as the Australian Christian Lobby will tell you any family that doesn’t consist of a husband and wife in a deeply committed loving relationship will lead to problems for the children later in their lives. In some cases, they are probably right; however, there are plenty of people with problems later in life that came from married couples with deeply committed and loving relationships as well.

In a perfect world, it would be wonderful if every person was valued for their potential contribution to the world and treated accordingly. Apart from creating ‘ideal’ families, this ‘perfect’ view of the world would also close the detention centres on Nauru and Manus Island, stop the bombing in Syria and provide food and shelter for those who are incapable of supporting themselves across the world. No Virginia, the world is not perfect, and those who are proclaiming the need for ‘ideal’ families are not similarly vocal about the conditions on Nauru, the various wars and human emergencies around the world.

This is where the moral and ethical problem is. For example, the top of the Australian Christian Lobby’s Home webpage looks like this:

Given that most religious groupings, be they Christian, Buddhist, Muslim or Jedi (it was accepted as a choice in the last Census) probably desire a compassionate, just and moral society through having the tenets of their particular religious text reflected in the political life of the nation, it would be seemingly obvious that ethical and moral issues such as treatment of refugees, treatment of young adults in custody and attempting to assist those around the world would be amongst the issues at the top of their mind, after all most of the religious texts request their believers to ‘do unto others as you would have them do unto you’. None of those issues make the ACL’s ‘hit list’ contained on the 377 pages of ‘latest news’. Unfortunately, the actions of people like the Trump, Abbott and conservative groups such as the ACL do not reflect their claimed values. Unsurprisingly most of the ‘hot topics’ on the ACL’s list relate to marriage equity or sex education in schools.

Trump and Abbott clearly do not actually give women the respect they have claimed they do. The ACL has a very narrow view of Christian faith if it just stands by without calling out the Australian Government’s actions in regard to refugees, detention centres and recurring efforts to further marginalise those who can least afford private health care, private schools or even private rental homes. When others called out Trump and Abbott on misogyny, Trump’s response was to suggest that the husband of the Presidential candidate was worse than he was and Abbott suggested that Gillard ‘over reacted’. The ACL’s CEO, Lyle Shelton will make whatever claim he believes will further his argument such as
“Research clearly shows the quickest pathway to poverty for a child is for their biological mum and dad to break up, that's just a fact.”
to argue for his preferred position of the ‘ideal family’. Shelton’s Lobby group is also potentially one of the beneficiaries of the $7.5 million Turnbull would have given the “NO” case should the plebiscite legislation have passed Parliament. As it seems that his public utterances have no factual basis, as there is certainly no collaborating evidence for the issues they claim others are going to implement made in the “Latest News” section of their website (although to be fair the entire 377 pages of items were not checked), and while Trump, Abbott and the ACL are entitled to believe they have done the right and honourable thing, the reality is somewhat different.

There are numerous reasons why a child may not grow up with their biological mum or dad. One parent may have died, the parents may have separated, a parent may have to work in a different town, be in jail or even stuck in a detention centre operated by the Australian Government. Logically, most of these kids will have mental and physical issues to work through as a part of that process. Shelton’s comments (and a large proportion of the anti-marriage equity advertising that has already gone to air) giving the ‘traditional’ view of marriage will not assist the mental health of those kids who have a different reality – regardless of the reason for that reality.

Trump, Abbott and groups such as the ACL all claim to be good Christians who are upholding the values of society. Yet, Trump admits to abuse of women physically and mentally, Abbott certainly treated Gillard (and other women) as second class citizens and conservative groups such as the ACL seem to feel that there is no need for the facts to ruin a good story. If the values of society are those that suggest that the actions above are acceptable, let alone desirable attributes of ‘traditional’ society, we should be re-imaging society so that all people are equal, regardless of their gender, beliefs or attitudes.

In addition to the cost of a plebiscite that isn’t binding (estimated to be $160 million), Turnbull has decided to gift $7.5 million to both the ‘YES’ and ‘NO’ cases for the plebiscite, allowing further attacks on the mental health of those kids that don’t live in the conservatives’ ‘traditional’ families and their caregivers. According to news.com.au, the ACL has already planned to use some of the funding to widen the argument to include sex education in schools.
Deputy Opposition Leader Tanya Plibersek today said she had concerns about “the idea that we’ll have a $15 million publicly-funded battle, when we’ve already seen the sort of material that’s been put out against marriage equality”.

“And we’ve got organisations engaged in this debate saying anti-discrimination law and rules around advertising should be suspended,” Ms Plibersek told ABC Radio.

She wanted to know what they intended to say during the campaign that currently was illegal.
It is a truism that sunlight is the best disinfectant. Political leaders legitimising abuse of other people, advertising legitimising only certain forms of family life and so on creates victims. While abuse of women, discrimination based on gender, preferences or beliefs may have been acceptable in the ‘good ole days’ of ‘traditional’ families, victims have to know firstly that they are victims, secondly there is help available and thirdly how to access that help. If conservatives try to push these issues back into the closet, they are deterring those who are having problems from putting their hand up and asking for help. World Mental Health Day is 10 October and in Australia, the week including that date is Mental Health Week. It’s a shame and not healthy for our society that Turnbull is again being held hostage by the conservatives on his side of politics and plans to fund advertising around a non-binding plebiscite that effectively seeks to de-legitimise a number of loving and sharing families around Australia.

What do you think?
Let us know in comments below.
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In my inbox each day I get an e-mail from The Washington Post called The Daily 202. This year it has been, as is to be expected, mostly about the American Presidential primaries and forthcoming election but, in reporting Bernie Sanders’ primary win in West Virginia back on 10 May, it stated the win was …
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The Turnbull endgame - again?
Ad astra, 12 October 2016
It was Karl Marx who said History repeats itself, first as tragedy, second as farce. Malcolm Turnbull gives contemporary credence to these words.

Seven years ago, in August 2009, as Malcolm Turnbull’s time as Leader of the Opposition seemed close …
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The Turnbull endgame - again?



It was Karl Marx who said History repeats itself, first as tragedy, second as farce. Malcolm Turnbull gives contemporary credence to these words.

Seven years ago, in August 2009, as Malcolm Turnbull’s time as Leader of the Opposition seemed close to its end, I wrote The Turnbull endgame? Four months later he was gone, replaced by Tony Abbott by just one vote.

The leopard has not changed his spots. What was written about him then, applies now. This piece highlights the striking parallels between now and then.

I shall intersperse in block quotes clips from that earlier piece, with contemporary comment to illustrate my argument.

The Australian today [6 August 2009] abounds with talk of replacing Malcolm Turnbull as Coalition leader. Dennis Shanahan and Matthew Franklin wrote a piece Desperate Liberals look to replace Turnbull with Robb, and Shanahan has a blog It's a loser or the last man standing. The sixty comments that followed are evenly divided between support for making a change and leaving Turnbull there, as Robb would be no better!

Jack the Insider has a blog Turnbull artistry no match for the numbers. He concludes “...the hard heads in the Coalition will soon reach the view, if they have not already done so, that the continued existence of the Liberal Party depends on a change in leadership.”... Most of the 240 respondents, even those with Liberal leanings, agreed that a change was necessary.

The Political Sword has long maintained that while Malcolm Turnbull was an accomplished journalist, barrister, businessman and banker, he was not a politician and would have difficulty in the political milieu.

On 19 September last year [2008] in Will the real Malcolm Turnbull please stand up?, it was argued that after starting so promisingly when he entered parliament, when this independent thinker and decision-maker was being forced uncomfortably into a political mould as a Howard Government minister, his authority faded and he became less convincing. He seemed to not have his heart in what he was saying.

Then in The Turnbull Report Card 10 days in posted on 26 September 2008 soon after he became leader, after acknowledging his pluses, concluded “...where he falls short is when he is not on his favoured turf, when he’s challenged with uncomfortable facts, when he attempts to advocate causes in which he does not have his heart, and when he has to defend untenable positions. As political life abounds with such circumstance, unless he can overcome this flaw, he will have difficulty convincing the people of the merit of his approach and his capacity to manage a nation beset with many contemporary challenges and complexities. Leading a nation is so much more complex and demanding, so different from life at the bar and managing a merchant bank.”
Sounds familiar doesn’t it!

Despite the unhappy memories of the Turnbull of 2009, when he toppled Abbott in September last year the sense of relief among the general public that finally the calamitous Abbott was gone (at least from the top job) was so great that memories of the earlier Turnbull were erased from the public’s mind. Great hope was held out that at last we had a leader that was prime ministerial in appearance, demeanour and speech. At last our embarrassment of having Abbott as our leader was behind us.

His prime ministership started well, but soon doubts began. Had he learned from his previous period as leader? Had the Turnbull nature changed? The public was at first prepared to give him the benefit of the gathering doubts that people had.

Let’s look back again to 2008:
In Malcolm’s at it again posted on 15 October [2008], when he was beginning to qualify his support initially given to the first Rudd Government stimulus package, he began to sound less persuasive, became circumlocutory, and arguably lost his audience. The piece concluded: “Kim Beasley was criticized for his prolixity, and unable to overcome it, eventually people stopped listening. Indeed this was a major factor behind the move to replace him as leader. Leaders who lose their audience – Beasley and Howard are examples - lose elections. Turnbull’s minders would be wise to point out this defect to him, and try to rectify it, always providing Malcolm’s ego will tolerate such a move.

To quibble or not to quibble, posted the next day when Turnbull again quibbled about his support for the stimulus, concluded “As said so many times in this blog, when Turnbull does his own thing and promotes his own views, he looks impressive and sounds authentic; but as soon as he’s forced to toe the party line, he loses his lustre and becomes an ordinary politician...When will the Coalition learn? When will they realize that sometimes it’s better not to quibble?”
Sounds familiar again. Balanced journalists have commented time and again that Turnbull is under the thumb of his right wing members, the very ones who extracted promises from him for their vote when he challenged Abbott for leadership.

Now we hear him arguing strongly in support of the Coalition’s paltry Direct Action Plan although he vowed previously never to lead a government that did not put a price on carbon pollution. Just as before, he now sounds unconvincing, and is marked down for being a turncoat.

Although a strong supporter of marriage equality, he persists with his intention to hold a plebiscite. His rationale is that it was an election promise, but more importantly it was a promise to his right wing. The fact that recent polls show that the public’s desire for a plebiscite is waning and that they want parliament to get on with its job of legislating for equality, has so far not persuaded him to reverse his stand and show the leadership they hoped he would. Although he knows how close he went to losing the recent election, he realizes that his prime ministership depends more on the support of his right wing than on the support of the people. He knows where the power rests.
The emerging Opposition strategy, posted on 13 November [2008], described the strategy being adopted by Turnbull and the Coalition: attacking everything the Government did, criticizing everything Kevin Rudd and Wayne Swan proposed, and attacking them personally, labeling them as incompetent and reckless. At the time Crikey’s Bernard Keane said “The risk with Turnbull’s tactics are that they backfire, and create a public impression of a smart-rse, someone who failed to get behind the Government as it tried to manage a global crisis...The risk at the moment is that he cruels his public image before that can happen. Once the public has an image of you, it’s very hard to shake it off.”

The TPS piece concluded “So it’s hard to see any logic to Turnbull’s strategy and tactics other than his belief that if he throws enough mud, some will stick, and that by repeatedly attempting to discredit Rudd, Swan and the Government generally, he will gain traction, the scales will fall from the voters’ eyes, and he will emerge as the indispensable statesman who can restore Australia to the ‘glory’ of the Howard years. On the other hand, as Keane suggests, his strategy may inflict so much damage on his image that recovery will be difficult, if not impossible. Some are already punting he will not survive as leader to the next election; what he’s now doing may ensure that this becomes a discerning prophesy. Unfortunately for him, his impatience, his ego and his determination to use a ‘do whatever it takes’ strategy no matter how politically opportunistic, may be his undoing.”
The pattern of Turnbull’s behaviour was becoming clearer:
The ‘deficit’ wedge posted on 25 November [2008] was written when the deficit and debt slogan was launched. The piece concluded “What this amounts to is an opportunistic ploy by the Opposition to wrong-foot and embarrass the Government about the much-talked-about deficit, and to paint it as incapable of sound economic management if it finally does go into deficit for the good of the nation. That the Coalition’s wedge campaign flies in the face of sensible economic management in these troubled times is of no importance to them; political advantage and the wistful hope of winning the next election is all that counts...Since his election to leadership Turnbull has posed as a financial guru, but he has gained no traction in two party preferred terms in the opinion polls...The people don’t seem to be buying his rhetoric...Turnbull needs to be careful that his blatant opportunism doesn’t backfire.”

Turnbull’s benchmarks for failure of 30 November [2008] described his three benchmarks for Rudd Government failure: going into a deficit, rising unemployment, and recession. The piece concluded: “Economist after economist, commentator upon commentator agree that under the current economic circumstances a deficit occasioned by a well-targeted fiscal stimulus is necessary to limit the risk of recession. They agree with Rudd and Swan, not with Turnbull. His demand that the Government avoids a deficit, although this would be detrimental to the economy, to jobs, and to the nation, is irresponsible. But will contrary opinion be enough to stop him? Laurie Oakes doesn’t think so. Writing in the 29 November issue of the Daily Telegraph: ‘Turnbull falls into deficit’, he suggests that even if he is wrong, Turnbull is never in doubt about the correctness of his position. So it’s unlikely Turnbull will change tack – no price is too high for him to achieve political traction. If one can judge from the latest opinion polls, Turnbull is spinning his wheels. He desperately needs traction. But his strategy is risky. The people are watching. When they see through his glib talk, he will be the one who fails.”

The ‘stop at nothing’ pattern was emerging.
History repeats itself.

In the wake of the disastrous storms that blacked out South Australia, we have Turnbull in full political mode, lambasting Labor states for having ‘aggressive and extremely unrealistic targets for renewable energy’, insinuating that South Australia’s high use of wind power was a significant factor in the catastrophic failure of electricity supply to that State. He persists with this line despite energy providers and experts in power generation, as well as renewable energy providers and advocates insisting that the blackout was caused by the unprecedented disastrous weather event that hit the State, and not the use of renewables. As he condemned Kevin Rudd and Wayne Swan for their actions during the GFC (now shown to be life-saving for our economy), he now condemns Labor premiers for their support of renewables, and piously (echoed by energy minister Josh Frydenberg) boasts that ‘energy security is the Coalition’s top priority’ (apparently national security has slipped down the list). Again accruing political capital is his object, not the wellbeing of the nation.
The 2 December [2009] piece Why does Malcolm Turnbull make so many mistakes? concluded “History may show that Turnbull’s biggest mistakes are underestimating Kevin Rudd and Wayne Swan, perpetually insisting they ‘simply don’t understand’ financial or economic matters, consistently condemning their every move, changing his tune whenever it suits him, flying in the face of competent economic intelligence, failing to exercise strong leadership, continuing to make political points at a time of unparalleled financial turmoil and steadily losing credibility as he does, indulging in obfuscation and circumlocution while avoiding answering questions asked by interviewers, and most significantly failing to notice that the people are not behind him.”
He is now in similar mode, asserting that Labor does not understand energy security, that it is obsessed with renewables, that its targets are wildly unrealistic, all the time neglecting to set national targets to guide the states, or even to carry out modeling for the very modest emission reduction and renewable targets he agreed to in Paris. He is dragging his feet while castigating the Labor states which have filled the void. Again, he is failing to provide leadership. He seems oblivious to the increasing demands of the people who want action on climate change urgently.

And it’s not just ordinary people who want action. Major business organizations and energy users have urged federal and state governments to work cooperatively to map out a “strategic response to Australia’s energy transition and challenges”… warning that investment is at risk. The Australian Energy Council, the Australian Industry Group, the Business Council of Australia, the Energy Users Association of Australia, Energy Consumers Australia, the Energy Efficiency Council, the Energy Networks Association and the Clean Energy Council are jointly calling for leadership from and between the jurisdictions, and bipartisanship on “the tightly connected issues of energy and climate change”, warning that in the absence of bipartisanship, “uncertainty will cause essential energy investments to be deferred or distorted, to the ultimate cost of us all.” But will Turnbull listen to them?
On 11 April [2009], a piece Why is Malcolm Turnbull so unpopular? began “There’s not much need to emphasize Turnbull’s contemporary unpopularity – it’s all over the air waves and the papers. It takes only a few metrics to quantify it...He leads a Coalition that currently shows has an average TPP of 60/40 in Labor's favour across several polls, which show a steady trend away from the Coalition.
His polling situation is not quite as bad now, but compared with the stellar polls he enjoyed just a little over a year ago, his personal popularity is in a steady downward spiral, and recently the Coalition’s TPP was as bad as it was when Abbott was PM!

This piece is already long enough. Let’s finish with the conclusion of the 2009 piece; The Turnbull endgame?
To draw this long piece to an end, should we be surprised at the position in which Turnbull now finds himself? Looking back over a year or more a pattern of behaviour has become clearly apparent: impetuosity, poor political judgement, ruthlessness and self-confidence not matched by political ability, that goes to his character, his integrity and his political wisdom, all of which are now highly questionable.

Is Turnbull’s endgame upon him? ‘Endgame’ describes the last part of a chess game, when there are very few pieces left. That looks like the right word.

It seems that only lack of a plausible alternative can now save him.
Here we are again! Nothing has changed since 2009 except the dates. Turnbull is still the Turnbull he always was, and always will be. The electorate, initially buoyed with high expectations, has that sinking feeling again as disappointment and disillusionment overwhelms.

And his right wing would have him gone in a flash if they could mount a plausible case, provided they could find an acceptable alternative, as was the case in 2009.


As 2353NM put it in Turnbull – Abbott from a better postcode?: “When Turnbull became prime minister, there was a hope that he would bring the claimed decency and ability to appeal to the middle ground that was so lacking with Abbott. After 13 months, it hasn’t happened. There are two possibilities: Turnbull is just as bad as Abbott (except for better clothing choices and living in a ‘more expensive’ postcode); or, to coin a phrase, Turnbull ’doesn’t have the ticker’ to promote and implement policy and legislation that isn’t approved by his conservative rump thereby ensuring his longevity as prime minister. Either way, the rest of us as Australian citizens will continue to suffer as a result."

Marx said: History repeats itself, first as tragedy, second as farce.

We’ve had the tragedy; now we have the farce.

Is this the Turnbull endgame – again?




What do you think?
Let us know in comments below.

Is Turnbull reaching his endgame again?

What evidence do you have?
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Turnbull – Abbott from a better postcode?


Assuming the Opposition agrees, there will be a plebiscite on the proposition to allow same sex marriage in Australia in February 2017. The independents in the parliament have (mostly) stated their positions on the matter and the Greens are against the plebiscite but in favour of same sex marriage.

The history here is that the Marriage Act was legislated in the 1961 saying (basically) marriage is a union of two people and that union is recognised across Australia. It also recognised marriages legally made under the laws of another country. As Rodney Croome wrote in the ‘Winter 2011’ issue of Overland magazine, the reason the law was made was to eliminate blatant discrimination in Australia whereby Aboriginal people were not allowed to marry who they wanted to in some states and Territories. Until 2004, there was nothing in the legislation to suggest that marriage had to be between a man and a woman, leading some same sex couples to have their marriage legally recognised in jurisdictions such as Ontario, Canada which, they claimed, automatically made their marriage ‘legal’ in Australia. The Howard Government didn’t agree and stripped the marital rights of same sex couples as soon as they landed back in Australia.

According to Croome, in early 2004:
… two such couples sought a ruling from the Federal Court on whether Australia’s relatively liberal laws on foreign marriages extended to the recognition of their Canadian unions.

The court was never allowed to decide. Liberal senator Guy Barnett petitioned the prime minister to ‘protect marriage’ from being ‘demeaned and degraded’. The petition was successful, not least because 2004 was an election year in both Australia and the United States, and the politicisation of ‘gay marriage’ welded wealthy and highly disciplined evangelical churches in marginal electorates to the conservative cause.
In August 2004, the Senate passed the ‘man and woman’ amendment to the Australian Marriage Act. Again Croome suggests:
The government’s marriage amendment — declaring matrimony to be exclusively hetero-sexual, and limiting the powers of the courts to recognise overseas same-sex unions — was raced through parliament, prioritised over government anti-terror legislation. For good measure, the prime minister addressed a rowdy meeting in the Great Hall of Parliament House in defence of ‘traditional marriage’, during which homosexuals were condemned as ‘moral terrorists’.
Not that the ALP was any better:
In her address to that anti-gay audience, shadow attorney-general Nicola Roxon declared Labor’s support for entrenching discrimination against gay relationships. She was given a standing ovation.
So why waste somewhere between $160 and $200 million on a plebiscite to change the legislation back to the way it was in the 45 or so years until 2004? Clearly, the reason is not due to some specific wording in the legislation, as Howard had no problem in changing the law in the first place.

In 2015, Time Magazine listed 21 Countries (apart from the USA) where same sex marriage is legal. The USA legalised same sex marriage in June 2015, New Zealand did in 2013. It is plainly obvious that life as we know it has not ended in either the USA or ‘over the ditch’ in New Zealand.

We’ve done the history — now for the politics. Turnbull, like most prime ministers before him, claim that they govern for the benefit of all Australians, regardless of whether or not you voted for him. While it is true that the ALP governments between 2007 and 2013 could have legalised same sex marriage, to be fair around half of the countries on the Time magazine list have only acted since 2013. It makes sense that while the issue had been building for a while, it was the Abbott Coalition government that felt the effects of the debate from 2013. Abbott ‘bought some time’ by promising a plebiscite in the next term of government (he also didn’t know that he wouldn’t be the prime minister at the 2016 election — and that story has been done to death so let’s move on).

Details of the Coalition Agreement between the Liberal and National Parties are re-negotiated every time the leader changes and subsequent to each election, so when Abbott was ousted in favour of Turnbull in 2015 there was a re-negotiation. Both parties confirmed there was an agreement for a plebiscite on same sex marriage in the next term of parliament (the parliament subsequent to the one elected in 2013). Subsequent to the 2016 election there was another renegotiation, as is customary. The 2016 agreement is secret but believed to include an understanding that a plebiscite on same sex marriage is required before the legislation is considered. (A small but worthwhile digression is to ponder why a secret agreement governing an arrangement between two political parties is perfectly acceptable in the case of the Liberals and Nationals, but any co-operative arrangement between the ALP and the Greens is frowned upon by both the ALP and the Liberals.)

Turnbull, rightly or wrongly, has continued to support a number of Abbott government measures, including a plebiscite on same sex marriage, claiming it should be non-binding but compulsory. The logic here is interesting as Howard rammed through changes to the Marriage Act in double quick time (with ALP support) in 2004 to insert the ‘man and woman’ concept into the Act. So according to Turnbull it is completely logical to change legislation to address the concerns of conservative members of his political party in 2004, but we have to waste $200 million in a vote to change it back to the way it was. To ensure tracing the logic is the equal to the triple pike with twist, the plebiscite is non-binding, so if your conservative member of parliament doesn’t want to change the legislation, they can still vote no in parliament — in spite of the results of the plebiscite (however the individual politicians choose to ‘spin’ the response and their eventual vote).

To make it even worse, the federal government has decided in its wisdom to fund both sides of the argument to the tune of $7.5 million each. Turnbull claims this will allow for a respectable debate which will allow the public to make an informed decision. Before the funding was even allocated, the ‘no’ case was linking the same sex marriage discussion to educational matters as well as using (apparently without permission) the image and words of Nelson Mandela.

Managing Director of the Australian Christian Lobby, Lyle Shelton, claims that:
“The baby who is taken from the breast of her mother doesn’t have a voice in this debate, the child who doesn’t get to know their father doesn’t have a voice,”
And
“Research clearly shows the quickest pathway to poverty for a child is for their biological mum and dad to break up, that's just a fact.”
While Shelton didn’t offer any evidence to support his claim, he is claiming that those who are brought up in a family that doesn’t replicate his idealistic view of the world are somehow fatally flawed, something that both Shorten and Turnbull (who were both raised by single parents) should demonstrably be arguing against. Instead Turnbull proposes to give the ‘no’ case $7.5 million to further denigrate those who don’t live in Shelton’s ‘nuclear’ family. While you could suggest that Shelton has ‘jumped the shark’ (again), Turnbull as the nation’s leader has a responsibility to ensure that all are treated equally. He clearly hasn’t to those children in Australia who for a variety of reasons (including same sex partnerships, death, divorce or numerous other reasons) have only have one parent. Clearly keeping the conservative rump of his political party ‘on side’ is far more important than correcting the false testament of people like Shelton who is belittling Turnbull’s own upbringing.

Another example of Turnbull’s behaviour concerns his ‘new’ approach to climate change. It has been widely reported that the Great Barrier Reef is undergoing significant bleaching of the coral. The government’s own Great Barrier Reef Marine Park Authority (better known by its slightly easier to say GBRMPA acronym) reported in June 2016 that this was caused by a seemingly small rise in sea surface temperature. The overwhelming consensus of scientists with experience in the area of study suggests that sea surface warming is an indicator of human induced climate change. One proven way to reduce human induced climate change is to move away from burning fossil fuel to generate electricity. South Australia has probably moved quicker towards renewable energy power than other states connected to the ‘National Grid’, but recently suffered a statewide power failure. Turnbull is publically implying that ‘extremely unrealistic’ renewable energy targets are the problem.

In reality, the South Australian blackout in late September had nothing to do with renewable energy. Twenty-two high voltage power pylons blew over due to excessive wind during a severe storm. As the article points out:
If the recently closed Port Augusta coal power station was still operating, it would have been cut off by the downed distribution lines too. And that would have likely made the disruption worse, since it would have created an even bigger sudden change to the network.
Lenore Taylor argued recently in The Guardian:
… state targets are exactly what Australia needs to meet the promises the prime minister made in Paris last year about reducing greenhouse gases.

Of course it would be preferable to have a consistent national policy to reach those goals, but it’s not exactly the states’ fault that we haven’t got one.

That vacuum was Tony Abbott’s proud achievement, with the abolition of the carbon price and the winding back of the federal renewable energy target, after a lengthy debate about whether it should be abolished altogether, which of course dried up almost all investment in renewable energy.

And consistent, credible national policy hasn’t been any more evident in the year since Turnbull took over either.

His own officials admitted in a Senate inquiry this week they had undertaken no modelling at all about how to meet the target Turnbull pledged in Paris for reducing Australia’s emissions out to 2030. That’s the target he is about to ratify, the target that will be Australia’s legal obligation.

But plenty of others have done modelling and analysis for him, and they all conclude that he won’t meet it, not with the Coalition’s current policies.
Clearly Turnbull is keeping the conservative rump of his political party ‘on side’ and apparently arguing the false testament of notable ‘thinkers’ and conservatives such as Deputy Prime Minister Barnaby Joyce, Queensland Senator (with 77 direct votes) Malcolm Roberts and Brett Hogan, the Research Director of the Institute of Public Affairs.


(Roberts actually linked to a news item stating the real reason for the power failure and still gets it wrong!).



In an environment where Turnbull publically called for the resignation of ALP Senator Sam Dastyari for accepting around $6,500 from people who have ‘connections’ with the Chinese government, he is doing nothing about the claims of a former minister in his government, Stuart Robert, who apparently sees nothing wrong with attempting to stack the Gold Coast City Council with people sympathetic to development proposals. Robert was sacked from his ministerial position in February after (separate) claims of inappropriate use of political donations. Fairfax’s The Age called for his resignation from parliament in an editorial on September 29. At the time of preparation, however, it appears that Turnbull is again keeping the conservatives in his own party ‘on side’ rather than calling out Robert’s behaviour for what it is.

When Turnbull became prime minister, there was a hope that he would bring the claimed decency and ability to appeal to the middle ground that was so lacking with Abbott. After 13 months, it hasn’t happened. There are two possibilities: Turnbull is just as bad as Abbott (except for better clothing choices and living in a ‘more expensive’ postcode); or, to coin a phrase, Turnbull ’doesn’t have the ticker’ to promote and implement policy and legislation that isn’t approved by his conservative rump thereby ensuring his longevity as prime minister.

Either way, the rest of us as Australian citizens will continue to suffer as a result.

What do you think?
Let us know in comments below.
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The neo-liberal execution of democracy
Ken Wolff, 5 October 2016
In my inbox each day I get an e-mail from The Washington Post called The Daily 202. This year it has been, as is to be expected, mostly about the American Presidential primaries and forthcoming election but, in reporting Bernie Sanders’ primary win in West Virginia back on 10 May, it stated the win was not really about …
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The neo-liberal execution of democracy


In my inbox each day I get an e-mail from The Washington Post called The Daily 202. This year it has been, as is to be expected, mostly about the American Presidential primaries and forthcoming election but, in reporting Bernie Sanders’ primary win in West Virginia back on 10 May, it stated the win was not really about ideology but disaffection:
Americans, collectively, are not as angry as watching cable TV would lead you to believe. But many poorer, less-educated folks who have been left behind in the 21st century — the ones who have seen their wages stagnate, their opportunities for upward mobility disappear and their life expectancies shorten — are looking to disrupt a status quo that has not worked for them.

That’s what Sanders and Trump are both promising to do.

So how did the septuagenarian socialist do it? The bottom line is most people are not voting for Bernie because he is liberal. They are voting for him because they perceive his promised “political revolution” as a challenge to the system that has failed them.

“West Virginia is a working-class state, and like many other states in this country, including Oregon, working people are hurting,” Sanders said last night at a rally in Salem, Oregon. “And what the people of West Virginia said tonight, and I believe the people of Oregon will say next week, is that we need an economy that works for all of us, not just the 1 percent.”
We are seeing the same phenomenon around the world: the election of Jeremy Corbin to the Labour leadership in the UK; the rise of anti-establishment parties in Spain and Greece; and, unfortunately, it has also meant the rise of extreme right (and sometimes neo-fascist) parties that tap into that disaffection with the political system.

How has it come to this?

Basically, as Sanders alluded to, it is the economic approach followed by governments that, since the Thatcher and Reagan years, has been based on a neoliberal economic philosophy which appears to be benefitting the wealthy rather than society as a whole. We know the shortcomings of that approach, based as it is on supply-side or ‘trickle down’ economics, but we have seen little discussion (at least here in Australia) on the broader impact it is having on democracy.

We live in a system where a democratic form of governance is coupled with a capitalist competitive free-market economic system.

In a democratic political system all people are meant to be equal — one person, one vote, and all votes of equal value.

The neoliberals also base their political approach on the individual but tend towards the libertarian view that governments should have no role in an individual’s life choices. Thus, in Australia, we have a libertarian, Leyonhjelm, arguing against anti-smoking regulations and the mandatory wearing of bicycle helmets. While that may support individual freedom, it ignores the wider social benefits of those approaches and the cost to the community, through our taxes, of hospitalisation and associated services for smokers or cyclists suffering head injuries. If the wider community bears the cost of such ‘freedom’, then surely it has a right to say that in the community interest some individual freedoms can and should be curtailed.

The neoliberals, however, would argue that the community concern is overcome by privatising health services: then the individuals who suffer health problems from smoking or cycling accidents have to meet their own costs — but so does everyone else, including the less well-off and those cast out of their jobs by the neoliberal economic approach.

This emphasis on the individual, as applied to economics, creates even more problems. A philosopher in the 1970s, Robert Nozick, basically set out a philosophical underpinning for neoliberalism.

There is no such thing as the ‘common good’ in Nozick’s (and the neoliberals’) approach, only individuals:
While it is true that some individuals might make sacrifices of some of their interests in order to gain benefits for some other of their interests, society can never be justified in sacrificing the interests of some individuals for the sake of others. [emphasis added]
Nozick considered that the state’s single proper duty is the protection of persons and property and that it requires taxation only for that purpose. Taking tax for redistributive purposes is on a par with forced labour, he wrote. So government should play little or no role in regulating the economy: the state then can be seen as an institution that serves to protect private property rights and the economic transactions that follow from them regardless of whether we think some people deserve more or less than they have.

The neoliberal economic approach also emphasises debt. I used this quotation in my previous article but it is also relevant here. Although written about the US, it could readily apply in Australia:
Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers. Workers have become so deeply indebted on their home mortgages, credit card and other bank debt that they fear to strike or even to complain about working conditions.
The sale of public assets to relieve debt and the emphasis on the individual means the areas in which government can exercise control in the interests of the wider society are diminishing.

George Monbiot, writing in The Guardian (UK) in April said:
Perhaps the most dangerous impact of neoliberalism is not the economic crises it has caused, but the political crisis. As the domain of the state is reduced, our ability to change the course of our lives through voting also contracts. Instead, neoliberal theory asserts, people can exercise choice through spending. But some have more to spend than others: in the great consumer or shareholder democracy, votes are not equally distributed. The result is a disempowerment of the poor and middle. As parties of the right and former left adopt similar neoliberal policies, disempowerment turns to disenfranchisement. Large numbers of people have been shed from politics.

Chris Hedges remarks that “fascist movements build their base not from the politically active but the politically inactive, the “losers” who feel, often correctly, they have no voice or role to play in the political establishment.” When political debate no longer speaks to us, people become responsive instead to slogans, symbols and sensation. To the admirers of Donald Trump, for example, facts and arguments appear irrelevant.
The remarks by Chris Hedges explain the rise of the far-right and capture the same disillusion referred to in The Washington Post article. Consider also the initial success of Tony Abbott: ‘slogans, symbols and sensation’ and ‘to [his] admirers, … facts and arguments appear irrelevant’. It certainly fits!

We can also go back to Naom Chomsky in 1999 when he wrote:
… to be effective, democracy requires that people feel a connection to their fellow citizens, and that this connection manifests itself though a variety of nonmarket organizations and institutions. A vibrant political culture needs community groups, libraries, public schools, neighbourhood organizations, cooperatives, public meeting places, voluntary associations, and trade unions to provide ways for citizens to meet, communicate, and interact with their fellow citizens. Neoliberal democracy, with its notion of the market uber alles, takes dead aim at this sector. Instead of citizens, it produces consumers. Instead of communities, it produces shopping malls. The net result is an atomized society of disengaged individuals who feel demoralized and socially powerless.
Basically, democracy is being undermined, leaving people disaffected, unable to foresee how they can influence the political process for their benefit. As Monbiot pointed out, the range of politically influenced decisions is contracting. Privatisation of former public assets mean governments are controlling less and less, their decisions also cover less and less. If all our services are privatised and the individual is placed above society, what role is left for government? And in that circumstance, what is the point or the value of voting?

I wrote about this previously in relation to the situation in Greece and noted this comment from eminent economist Joseph Stiglitz:
Seldom do democratic elections give as clear a message as that in Greece. If Europe says no to Greek voters’ demand for a change of course, it is saying that democracy is of no importance, at least when it comes to economics.
We know that the bankers and financiers did say no to the democratic wish of the Greek people.

People are also further and further removed from influence over the economy, and yet the economy relies on people. The neoliberal economy has seen the rise of inequality in most countries around the world. The neoliberals see no inconsistency in inequality.

To return to Robert Nozick’s philosophy: as each individual owns the products of his or her own endeavours and talents, it is possible for an individual to acquire property rights (as long as they are not gained by theft, force or fraud) over a disproportionate amount of the world; once private property has been appropriated in that way, it is ‘morally’ necessary for a free market to exist so as to allow further exchange of the property. And the individual then has complete control as to how that property is passed on. So it is logically okay for someone to inherit a fortune having contributed nothing to gain that wealth: reward for effort or just desert do not come into it for Nozick — it is only property rights and market mechanisms that count. That, of course, is the neoliberal approach.

Piketty made this clear in his work Capitalism in the twenty-first century in which he explained the rise of rentiers (those who gain their income from rents, dividends and interest) and that the growth of such wealth is outstripping the rise of earned income.

Monbiot also quoted another author who was making a similar point:
“Investment”, as Andrew Sayer notes, means two quite different things. One is the funding of productive and socially useful activities, the other is the purchase of existing assets to milk them for rent, interest, dividends and capital gains. Using the same word for different activities “camouflages the sources of wealth”, leading us to confuse wealth extraction with wealth creation. [emphasis added]
Too much economic activity now seems to be based on ‘wealth extraction’ rather than genuinely productive activity. In Australia, the increase in the number of investment houses is a symptom of this, particularly when it is an existing house and provides no new productive activity (construction) and relies on rent and/or capital gains for a return on investment. The negative gearing tax incentive and capital gains tax concessions have distorted the market and made it more profitable to put money into ‘wealth extraction’ rather than ‘wealth creation’. And our government intends to do nothing about it because it may curtail the rights of some individuals — what it falsely called the ‘mum and dad’ investors.

The rise of the global economy has transferred jobs. Chinese manufacturing has replaced significant portions of manufacturing in the US and the UK, as well as in Australia. Even work in call centres has been ‘off-shored’. There is some evidence that the Brexit vote in the UK was influenced by the loss of traditional employment in particular areas, not just by immigration: some of the strongest ‘leave’ vote occurred in areas where major industrial plants had closed in the preceding decade and jobs had not been replaced. Some predict that ‘jobs’ will be the major political battleground in coming years arising not just from a globalised economy but from the increasing spread of robotics.

When people feel economically threatened they look to their government to relieve the situation but governments will not intervene, or intervene minimally, while they continue to pursue neoliberal economic approaches. As Monbiot pointed out, one’s capacity to participate in this new world is determined by spending power but as more people lose jobs they have little or no capacity to participate.

The next step in the process, which has already begun, is that people also then feel that the political system is failing them and will turn to those offering either radical or more despotic (even fascist) solutions. They will be attracted to solutions harking back to a ‘golden age’ — whether it is myth or reality. But in the neoliberal world the government will have almost no capacity to respond: it will be in debt; it will not have control over major economic areas that have been privatised (sold off to meet ‘debt’); it will believe it should not intervene in ‘the market’; it will continue to believe that people improve their situation only by their own individual effort; it will have no answer to those offering alternative solutions that may be attractive to the masses.

If governments across the Western world continue to follow neoliberalism in both their social and economic policies we will also see the continuing slow death of democracy, including in Australia, with more people disaffected and disillusioned with the economic and political systems and that may well lead to a willingness to embrace non-democratic solutions.

So governments beware! Your support of neoliberalism is planting the seeds for your own downfall.

What do you think?
Is One Nation and the rise of right-wing parties around the world simply a reaction against neoliberalism?

How long can democracy survive if governments continue pursuing neoliberalism?

Let us know in comments below.


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Do politicians make you sick?



I expect most of you would answer with a resounding YES. They make us sick when they lie, break promises, assail us with mendacious rhetoric, engage in adversarial behaviour, fail to recognise this nation's problems, seek to blame their opponents for any ills we have, and exhibit incompetence in doing what they are well paid to do.

They make us sick, though, in other ways - through their legislative actions. This piece will describe how policies can and do result in illness in individuals and groups in our society. It draws on the work of celebrated epidemiologist Professor Sir Michael Marmot, president of the World Medical Association, who is currently visiting this country. His book: The Health Gap: The Challenge of an Unequal World is rich with information garnered over many years of studying inequities in health and their causes. He is a medical doctor who moved from clinical medicine to public health because he saw that it was necessary to look for the 'causes of the causes' of ill health, the causes behind the traditional medical causes. He saw that social factors were central in the genesis of ill health. He has made a life-long study of the 'social determinants of health' and headed a World Health Organization commission that published Social Determinants of Health, Closing the Gap in a Generation in 2008.

Before looking at social factors in depth, let's examine some basic principles of cause and effect. The tubercle bacillus is a necessary factor in the genesis of tuberculosis, which usually affects the lungs, but sometimes other organs. But it is not the only factor. Some people exposed to the bacillus contract tuberculosis; others do not. A homely analogy is the 'seed and the soil' concept. No matter how potent the seed, it will germinate only in fertile soil, and wither on barren soil. Likewise, the tubercle bacillus needs a 'fertile' human environment to survive and cause disease. In the era of rampant tuberculosis in earlier centuries, there were the underprivileged who lived in cold, damp dwellings, who worked in dusty, demanding and dangerous occupations and who suffered malnutrition, whose bodies were thereby susceptible to the bacillus. The tubercle bacillus was therefore a necessary but insufficient factor in contracting tuberculosis. The susceptible host was the other necessary factor, and that factor derived from poor work and living conditions and poverty - all social factors.

Michael Marmot takes a holistic view of health. While acknowledging the importance of medical science in health and illness, he insists that there is so much more to it. In the introduction to his book he writes:
Knowledge of medicine and public health is not so much wrong, as too limited. Health is too important to be left solely to doctors. Health is related not only to access to technical solutions but to the nature of society. We are being foolish in ignoring a broader array of evidence, which shows that the conditions in which people are born, grow, live, work and age have profound influence on health and inequalities in health in childhood, working age and older age.
He illustrates his assertions with evidence. One of his most important is that the gradient of health parallels the social gradient. He contrasted life expectancy in two suburbs of Glasgow, Calton and Lenzie. He reported:
If a man dies in his prime in Calton, a down-at-heel part of Glasgow, it may be a tragedy, but it’s not a surprise. Actually, the question of what constitutes his ‘prime’ in Calton is moot. Life expectancy for men, when I first looked at figures from 1998–2002, was fifty-four. In Lenzie, a much more upmarket place a few kilometres away, ‘in his prime’ has an altogether different meaning: life expectancy for men was eighty-two. That converts to a twenty-eight-year gap in life expectancy in one Scottish city.
He carried out similar studies in several countries, with the same conclusion.
The social gradient in life expectancy runs all the way from top to bottom. It doesn’t just feel better at the top. It is better. At the top, not only do you live longer but the quality of life is better – you spend more years free from disability... The social gradient in disability-free life expectancy is even steeper than it is for life expectancy. ‘Disability’ here is quite broadly defined: any limiting long-standing illness. Talk about adding insult to injury: the more deprived people spend more of their shorter lives with ‘disability’. On average people at the top live twelve years of their lives with disability, people at the bottom twenty years.
I could go on quoting his many other studies, but will satisfy myself with his famous 'Whitehall' study of British public servants. The details are fascinating. Here's an abbreviated account of how Marmot described that experience:
The British Civil Service changed my life. Not very romantic, a bit like being inspired by a chartered accountant. The measured pace and careful rhythms of Her Majesty’s loyal servants had a profound effect on everything I did subsequently. Well, not quite the conservatism of the actual practices of the civil service, but the drama of the patterns of health that we found there. Inequality is central. The civil service seems the very antithesis of dramatic.

Please bear with me. You have been, let’s say, invited to a meeting with a top-grade civil servant. It is a trial by hierarchy. You arrive at the building and someone is watching the door – he is part of the office support grades, as is the person who checks your bag and lets you through the security gate. A clerical assistant checks your name and calls up to the office on the fifth floor. A higher-grade clerical person comes to escort you upstairs, where a low-grade executive officer greets you. Two technical people, a doctor and a statistician, who will be joining the meeting, are already waiting. Then the great man’s, or woman’s, high-flying junior administrator says that Richard, or Fiona, will be ready shortly. Finally you are ushered in to the real deal where studied informality is now the rule. In the last ten minutes you have completed a journey up the civil service ranking ladder – takes some people a lifetime: office support grades, through clerical assistants, clerical officers, executive grades, professionals, junior administrators to, at the pinnacle, senior administrators. So far so boring: little different from a private insurance company.

The striking thing about this procession up the bureaucratic ladder is that health maps on to it, remarkably closely. Those at the bottom, the men at the door, have the worst health, on average. And so it goes. Each person we meet has worse health, and shorter life expectancy, than the next one a little higher up the ladder, but better health than the one lower down. Health is correlated with seniority. In our first study, 1978–1984, of mortality of civil servants (the Whitehall Study), who were all men unfortunately, men at the bottom had a mortality rate four times higher than the men at the top – they were four times more likely to die in a specific period of time. In between top and bottom, health improved steadily with rank. This linking of social position with health – higher rank, better health – I call the social gradient in health. Investigating the causes of the gradient, teasing out the policy implications of such health inequalities, and advocating for change, have been at the centre of my activities since.
The difference between top and bottom was attributed to work stress. While initially it was postulated that those at the top had higher demand and more stress and therefore should have poorer health, that was shown to be wrong. There was another factor. Marmot puts it this way:
It was not high demand that was stressful, but a combination of high demand and low control. To describe it as a Eureka moment goes too far, but it did provide a potential explanation of the Whitehall findings. Whoever spread the rumour that it is more stressful at the top? People up there have more psychological demands, but they also have more control.
Having control over one's life, one's destiny, is a necessary factor for having a more healthy life.

Let's now look at how some policy decisions and legislative moves that the federal government has made, are likely to influence health. There are many; I shall select just a representative few.

Contemplate how those on welfare must have felt when Joe Hockey declared 'the end of the age of entitlement', when he tagged welfare recipients as 'leaners', supported by the good guys, the 'lifters', who worked and paid taxes to support them in their indolence, and when he brought in his punitive 2014 Budget designed to punish them. His behaviour increased their stress, reinforced any feelings of inadequacy they may have been harbouring, and deprived them of control over their destiny. They were in his careless hands. Hockey's policies and actions, supported by his leader and his party, created conditions conductive to anxiety, depression, feelings of inferiority and inadequacy, all manifestations of ill health. And the longer his rhetoric lasted, the more vulnerable they became.

This ideologically-driven politician made them sick.

Reflect on Eric Abetz' declaration that those on welfare must complete forty job applications a month - twice the number previously - for the very limited number of jobs in his home state of Tasmania. How did they feel about this demanding yet pointless imposition? Did that affect their mental health?

Liberals just can't give up on 'welfare dependency'. Minister Christian Porter was at it again last week. Although he clothed his policy recommendations in words of support for those in that predicament, the prime purpose was clear - to reduce the burden of welfare on the federal Budget. He exaggerated his case by using 'lifetime' projections of cost that soared into the trillions, neglecting though to point out that this figure was but a tiny proportion of the multi-trillion revenue budget over the same 'lifetime' period. Ideology dominated his thinking. But the effect on the targeted was as always - demeaning, demanding, destructive to their wellbeing and mental health. Porter's move would make them sick despite his stated intention to make their life better, sincere though it purported to be.

Remember the attempts to increase the required waiting period to receive the dole from one week to six months, a measure designed to save the Budget $1.8 billion over five years. Imagine how potential recipients felt about being without income for a long six months! The threat of this Coalition move must have made them sick with worry and apprehension. This is what Peter Martin had to say on this subject.

Attacks on welfare create anxiety, increase uncertainty, demean the recipients, and make them sick.

Reflect on the plebiscite on marriage equality, which PM Turnbull insists he is bound to implement. Already we are hearing of the distress the LGBTI community is feeling at the prospect of a bitter, biased, and likely bigoted public debate about whether they should be afforded the right to declare and publicly confirm their love and commitment as do heterosexual couples. Their right to do so is to be subject to the whims of the ACL and other opposing bodies. Will the LGBTI community feel they have been placed like insects under the public microscope? Will their mental health, already fragile from past experiences in 'coming out', deteriorate? Will suicide, that some contemplated when 'coming out', become more inviting? It seems hard to avoid the conclusion that some will take this course.

The policy of subjecting this matter to a plebiscite will make some of our community sick. Politicians do make us sick!

I could go on, but these examples, taken against the profusion of evidence that Michael Marmot has documented in his book, ought to caution us not to inflict any more distress and misery on those amongst us who are vulnerable. We have no right; politicians have no right to make us sick through making decisions, by legislating policies that can have no other health outcome among our most distressed, underprivileged and marginalised than to make them sick, even sicker than they are already.

If you wish to learn more about Michael Marmot's work on health inequality, watch Jane Hutcheon interviewing him on One Plus One on ABC TV.

For even more information, listen to Professor Marmot's Boyer Lectures.

Politicians do make us sick. They need not; they ought not; but they do.

What do you think?
Do politicians make you sick?

Please give us some examples.

Let us have your views in comments below.


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When you reflect on the dilapidated state of federal politics; when you question how on earth we have become encumbered with so many appalling policies, do you ever ask: 'Why is it so?'

I do often. And when I do, one culprit emerges over and again. Who is it?

Who in this motley …
More...

Are governments ready for the coming economic and social changes?


In 1930 John Maynard Keynes predicted widespread technological unemployment ‘due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour’.

In the decades since there has been rapidly increasing technological change but employment has generally been increasing, matching population growth, although not without winners and losers. The creation of new jobs often lags behind the pace of loss of jobs (as Keynes predicted) and those who have lost jobs are not always the ones who take the new jobs — they are often taken by the new generation.

Since the GFC, governments around the world have felt constrained in responding to the changes in the workforce because they lack money — they are in debt — and are being told by mainstream economists that they must return to budget surpluses. People losing their jobs are not being provided the full range of assistance they need to re-enter the workforce nor, in some cases, even the support to sustain themselves and their families whilst unemployed.

That is a direct result of the dominant neoliberal economic approach adopted by so many Western governments. The neoliberal emphasis on debt also has political implications and the following, although written about the US, could readily apply in Australia:
Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers. Workers have become so deeply indebted on their home mortgages, credit card and other bank debt that they fear to strike or even to complain about working conditions.
While the neoliberal approach remains in place, governments will not be well-placed to respond to current and coming changes in the economy and workforce — selling public assets to reduce ‘debt’ will not help people. Modern Monetary Theory (MMT), on the other hand, offers an approach in which sovereign currency-issuing governments are not so constrained. It is possible for a government to both retain public assets and have the money to provide more programs and assistance to people in these times of economic change. Unless governments embrace a new economic approach like MMT, then the technological unemployment predicted by Keynes is likely to be a real outcome.

The spread of robotics and computerisation throughout the workforce is already happening without us being fully prepared. While there is talk of the need for improved education in things like STEM, computer coding and even innovative approaches, and of the need for a flexible, agile and innovative workforce, these are essentially economic issues and we seem to be ignoring some wider social implications.

A basic question in the rise of robotics is that of ethics. One writer raised an interesting ethical question in the scenario of driverless vehicles: if a driverless vehicle ‘perceives’ that it is about to be involved in an accident and the only pathway to avoid the collision may involve hitting a woman with a pram, which decision will it make? A human would likely make a moral judgment to face the accident and minimise the impact by braking, swerving slightly or whatever action is appropriate but will an automated vehicle see saving itself as the primary response? Whether driverless vehicles can ‘learn’ to place humans first in such situations is debatable. While theoretically driverless trucks seem to be one of the next major targets of computerisation, I think there are still issues to be resolved but I doubt they will be prior to their introduction as the economic imperative will over-rule the ethical.

Computerisation generally will displace many people from their current work, as discussed in more detail in ‘An economy without people’. New forms of work will emerge but how long will that take? Much of the new work will require higher level skills: will we have the capacity to retrain people for the new jobs or do they simply move to the ‘scrap heap’ to be replaced by the next, better educated, generation? As unemployment increases, how will governments respond? If our government is already complaining about welfare costs, it will find it difficult to provide for the new unemployed as computerisation pushes further into the workforce. With an ageing population, there should be a need to keep more people in the workforce but that may no longer be possible.

Some unemployed may voluntarily enter ‘the gig economy’ to help tide them over. But the gig economy may also be on the rise as companies decide it is more ‘efficient’ (cheaper) to hire workers only as they are needed for specific tasks or projects rather than maintain a larger full-time workforce, meaning many more people will be forced into the gig economy. While for people it is ‘the gig economy’, for economists and businesses it is the ‘on-demand’ economy: that difference in terminology also shows how people can be removed from consideration in the coming changes. Whatever it is called, it will have many implications.

Nick Wales at the UNSW Business School has raised one basic concern:
“It polarises people”, says Wales. “Is this creating communities of entrepreneurs who have been marginalised from the traditional economy, such as housewives, students, retirees and immigrants, offering them the flexibility of part-time working? Or is it an underhand way for businesses to get around labour laws and pay these contractors low wages?”
If more and more people are working in the gig economy and on short-term contracts, what rights will workers have? They will not have paid sick days or holidays, or protection from unfair dismissal. Even many occupational health and safety rules may not apply. They will also need to provide for their own superannuation but the extent to which they can may well depend on how much they are able to earn. And will unions find new ways to cover them or is this the final death of unions? (If the role of unions diminishes even further what impact will that have on the future structure of the ALP?) Will these gig workers be treated as, or choose to become, small businesses? We have already seen the problems created by the use of ‘contract workers’ and in the new economy that looks set to expand exponentially.

How do banks respond to people who do not have full-time work/regular income if they are working gigs? At the moment, loans to such people would either be out of the question or, at best, be classified at high risk of default. If, however, this form of work becomes normal for a large proportion of the workforce, banks simply cannot ignore such a significant customer base. There will need to be innovative products that cater to the needs of such customers.

Banks may become more important in another way. There is a possibility that people will become more reliant on debt (loans and credit cards) to carry them through between gigs. It may be in the interest of banks to move into areas of lending currently dominated by the so-called ‘payday lenders’ as there is likely to be a growing market for such short-term products. Banks will have much thinking to do about their role in the new economy.

The gig economy has implications for how government views employment and unemployment as the 37-hour week may no longer be the norm. The OECD is already working on new indicators for employment and unemployment. It is likely, however, that any new definition of ‘employment’ will reduce access to unemployment benefits as it is likely to involve shorter periods of work. Even paying unemployment and other welfare benefits in their current form may no longer be appropriate as they are tied to levels of income. The ‘paperwork’ (data entry) involved in making constant adjustments as people move in and out of short-term jobs (some very short-term) will become onerous as the number of gig workers increases. New forms of payment may be required.

Then there are issues of government regulation and taxation. Already the ATO has ruled that Uber drivers must register for and pay GST as they are providing a ‘taxi travel service’. Current taxi drivers believe Uber is not competing on a level playing field because it does not need to meet the same licence and safety regulations. Victorian cab drivers are protesting a Victorian government announcement that it intends to deregulate the industry. While that may create the level playing field the drivers are seeking, they are not happy that the Victorian government is offering to buy back current taxi licences at a price below what many paid.

On the other hand, if more ‘workers’ are operating as contractors and small businesses, what impact will that have on government revenue, particularly if the push continues to lower company tax rates? Governments may need to reconsider that approach as ‘company tax’ could conceivably become the biggest source of revenue as more people in the gig economy register as small businesses to reduce their taxation.

Deregulation and ‘contract work’ or operating as a small business do not provide the full answer — although it will be attractive to the neoliberal economists and, as such, support for those approaches may be the advice that governments receive. It would mean a large workforce not protected by any provisions for safety, holidays, superannuation nor even hours of work. As Wales suggested, it would allow companies to under-cut existing wage structures and make full-time employment even less attractive for other competing businesses, creating a feed-back mechanism encouraging further use of gig workers.

The Aspen Institute in the US, however, does not believe that governments should regulate but allow companies, workers and consumers to experiment with new models:
… that can begin to give shape to a social contract for a changing economy and new century. We need a better system that ensures workers have the stability and security they need, without stifling innovation or undermining the flexibility the on-demand economy offers.
While suggesting that ‘stability and security’ are required for workers it is basically leaving that to ‘the market’ to determine. Given the history of market solutions, I would have no faith in it reaching a suitable arrangement — because, as explained in the first article in this series, ‘the market’ after all is people manipulating trading for their own advantage and it is to their advantage to have an insecure workforce that is less likely to make demands regarding wages and conditions. Government, even if intending to allow such an approach, must hover at the edges and be prepared to regulate minimum conditions.

While a new economic approach like MMT will help governments understand that they do have the money to deal with problems, it is not the answer to all the issues I have raised (it is, after all, a macroeconomic theory). I am concerned whether its Job Guarantee can be used in the new economy or whether it, too, is based on a model of full-time employment.

At Davros earlier this year, a report to World Economic Forum stated:
During previous industrial revolutions, it often took decades to build the training systems and labour market institutions needed to develop major new skill sets on a large scale. Given the upcoming pace and scale of disruption brought about by the Fourth Industrial Revolution, however, this is simply not an option. Without targeted action today to manage the near-term transition and build a workforce with future proof skills, governments will have to cope with ever growing unemployment and inequality, and businesses with a shrinking consumer base.
So the final issue is that it is not just workers who will suffer. Robotics, computerisation and an increasing number of gig workers will each contribute to ‘a shrinking consumer base’ and that has implications for business survival — in essence, their rush to reduce costs could be creating the conditions for their own demise. That in turn will impact government revenue in lower company and individual tax revenue — but only if they continue to cling to the neoliberal economic approach. If there is a silver lining to this ‘cloud’, it may be that the neoliberal economic approach will be shown to provide an inadequate response to the new situation.

With the possibility of declining consumption and problems redefining employment and unemployment, the concept of a ‘universal basic income’ may gain more traction. Although a proposal to introduce such a payment was recently voted down in Switzerland, it is being considered in Finland and the Labour Party in the UK has begun discussing the concept. In simple terms it is an income payment made to every man, woman and child. It has the potential to replace virtually all welfare payments including pensions, unemployment benefits and family support payments for children: in the case of unemployment, it would remove the need to redefine ‘employment’ to meet the circumstances of the new economy. As it would be paid to everyone, it means those who are working would also receive the payment and it becomes necessary to apply tax to the payment so that those who are in work return a much greater proportion of it in the form of tax. Even the MMT approach would require taxation of such a payment to ensure that it did not create demand beyond the productive capacity of the economy. For businesses it would help maintain the consumer base and so be of benefit to them. With fewer workers, the productivity benefits of robotics and computerisation will not be spread throughout society but further concentrated in the hands of the company owners and shareholders, unless something like a universal basic income is adopted. As robotics and computerisation spread and replace major portions of the workforce, such an approach may become the only viable option.

It appears we have a rocky road ahead. Governments will not be able to respond effectively if they cling to neoliberal economic approaches. Avoiding regulation and spending, and leaving resolution to ‘the market’ will be a recipe for disaster and even businesses will suffer. Without new approaches we will continue to have an economy in which people are placed last and well-being is barely a consideration.

It is time this conversation began because if we leave it until the impact is being felt, it may be too late to avoid a major economic downturn, ironically created by the very process businesses thought would boost their profits.

What do you think?
Are businesses blindly pursuing robotics and computerisation without fully understanding the wider implications?

Can ‘the market’ be trusted to reach new solutions or must governments first find new approaches (including MMT) to protect the people?

Let us know in comments below.


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Who is the culprit?
Ad astra, 25 September 2016
When you reflect on the dilapidated state of federal politics; when you question how on earth we have become encumbered with so many appalling policies, do you ever ask: 'Why is it so?'

I do often. And when I do, one culprit emerges over and again. Who is it?

Who in this motley …
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Who is the culprit?

When you reflect on the dilapidated state of federal politics; when you question how on earth we have become encumbered with so many appalling policies, do you ever ask: 'Why is it so?'

I do often. And when I do, one culprit emerges over and again. Who is it?



Who in this motley collection is the culprit? Who is responsible for these policy calamities?

You be the judge. It's not a big challenge for the politically astute, but it might be revealing for the casual political observer.

Let's look at just a handful of policy catastrophes that afflict us still.

Consider global warming
Leaving aside the uninformed utterances of our new One Nation senator Malcolm Roberts and all the other climate deniers, there is strong consensus among thousands of climate scientists that the planet is warming inexorably towards levels dangerous to life on earth, which if not curtailed will become irreversible. A majority of ordinary people believe this to be true, and want something purposeful and effective to be done about it. So what is being done?

All our government is doing is implementing its so-called 'Direct Action Plan'. No environmental scientist or economist worth their salt can demonstrate that it is working, or even can work. It's a dud. Since Labor's 'carbon tax' was repealed and the DAP began, carbon emissions, which had begun to fall, are now rising again. Forget all Greg Hunt's talk about Australia 'meeting and beating' its emission targets, and Josh Frydenberg's reiteration of it. Emissions are increasing. We are not pulling our weight as global citizens. We are frauds in the climate change world.

Why is it so?

Who was it who thwarted the move towards an Emissions Trading Scheme that PM Kevin Rudd and Opposition Leader Malcolm Turnbull had agreed upon? Who used this nascent agreement to upend Turnbull and take his position? You know. Who used the repeal of the 'toxic carbon tax' as a powerful weapon in gaining power. You know.

Have you reflected upon how destructive a move this was, one that left this nation far behind comparable countries, one that made us a pariah? We have never recovered from that, and never will while we have no ETS.

Turnbull lost his leadership over this, and even today clings to it by a thread, obliged as he is by his deal with the conservative clique in his party to make no change to climate change policy. But he was not the culprit. He did not dream up the DAP; he supports it now only to save his skin. It was he who boldly said he would not lead a government that did not take effective action to combat global warming. His support for the DAP is insincere. It puts the lie to his previous pro-ETS utterances. It belittles him. You know who the culprit is in this sorry tale of missed opportunities and ineffective action.

Of all the misdemeanours of our prime culprit, this is the most egregious. It is quite the most dangerous. It is shameful. You know who the culprit is.

Consider the National Broadband Network

It is a strange coincidence that our prime culprit and our current PM were also the players in this sorry saga. Labor proposed a fibre-to-the-premises NBN that experts around the world acknowledge is the ideal model, one that would give the best results and provide this nation with an enduring position in the communications world, and a competitive advantage over those nations with inferior models.

You will have no difficulty recalling who instructed the then Communications Minister, Malcolm Turnbull, to 'demolish the NBN'. Demolition was his modus operandi. Anything Labor did must be demolished irrespective of whether it was in our national interest to keep it. Turnbull must have been horrified. His reaction was to create a hybrid, multi-technology model with a substandard compromise of fibre-to-the-node on the street corner with ageing copper wire to the premises. Turnbull knew this was an inferior model, but at least it was better than demolition. So we are now stuck with a model that will leave this nation well behind in the world of communications and uncompetitive, just when our PM tells us that we must be innovative so that we can be globally competitive.

It is shameful that this has occurred for no other reason than our prime culprit regarded anything Labor created was anathema, and therefore must be destroyed. It is shameful too that tech-head Turnbull now vigorously but unconvincingly defends the Coalition's NBN. He knows it will be inferior, probably will cost the same as Labor's, and might be no faster in rollout. Turnbull has sold us another pup with his FTTN NBN. But there is no gainsaying who is the prime culprit in this lamentable saga. But for him we could have had the best, but now we are stuck with second-best or worse. All the talk about the excessive costs and slow rollout of Labor's model has turned out to be bunk. Now Turnbull is trying to convince us that users don't want the fast speeds Labor's FTTP guaranteed. Has he checked whether businessmen want and need very fast speeds to be competitive?

Our prime culprit has inflicted on our nation yet another destructive decision born of adversarial hatred of anything his opponents proposed to do. You know who he is.

Consider marriage equality

We all know our prime culprit does not support same sex marriage, no matter what he says. So, knowing there was clamour from the community to introduce marriage equality to reverse the Howard government's 2004 insertion of 'between a man and a woman' into the Marriage Act, done so subtly by a simple parliamentary vote, our prime culprit sought to thwart attempts to change the Act by insisting it be put to a plebiscite after the recent election.

He knew a plebiscite would delay a decision; he knew that he could obscure the matter by allowing lots of time for debate and argument 'from both sides'. He is ideologically opposed; same sex marriage is contrary to his religious beliefs. He does not want it, although the community does. He hopes that by fostering debate religious groups can cast doubts in the minds of voters. He knows that doubt is a potent element in any public vote, be it referendum or plebiscite.

He knows that if his allies in opposing marriage equality, prominent among whom is the so-called but unrepresentative Australian Christian Lobby with its persuasive spokesman Lyle Shelton, are given a chance to spread misinformation, fear and doubt, even bigoted views, it might engender a 'No' vote in the plebiscite. He is devious, cunning and ruthless. His conservative supporters have locked PM Turnbull into supporting the plebiscite, although Turnbull himself supports marriage equality.

If the plebiscite fails to reach a majority in favour of marriage equality, just one prime culprit will be responsible.

Now think about income and wealth inequality

You don't hear Liberals talking about inequality - they accept it as the normal state of affairs. There have always been the Lords and the Ladies and the Serfs to bow before them. Driven by their entrenched neoliberal belief in the power and wisdom of markets, they cling tenaciously to the long-discredited theory of supply-side economics, colloquially known as 'trickle down' economics, which posits that tax cuts given to the top end of town trickle down as benefits to the workers in the form of more jobs and better pay. It's bunk, but advocates recite this belief like a catechism mindlessly repeated during worship.

All the evidence is that inequality is increasing in this country. It has been for years. It shows no sign of lessening. The construction of the 2014 Budget made inequality even worse. Neo-liberals don't acknowledge this; neither do they care about it.

Who is the culprit?

Some may identify Joe Hockey, or his successor, Scott Morrison, but think about who put them up to their budgetary strategy. The 2014 Budget was not Hockey's; the punitive attack on the less well off was authorised and endorsed by our prime culprit. He was the one who was prepared to punish the poor. Even his supporters acknowledged that the Budget was unfair, the most unfair in many years, and that those who had the least were targeted for the most punishment. Why is our prime culprit so mean?

To add insult to injury, the Coalition now proposes to give generous tax cuts to businesses. This includes the banks and wealthy international companies, many of whom pay little or no tax anyway.

The budgetary assault on the less well off and the attack on Hockey's 'leaners' are shameful, and equally the handouts to the well off are obscene.

So who is the culprit?

We know that there are a few good politicians, many mediocre ones, several poor ones, and an occasional lamentable one. This piece argues that there is one person, just one, who has inflicted on the Australian public a succession of appalling policies, just four of which I have outlined. His egregious actions have diminished us as a nation.

He has made us a pariah in the world of climate change action. He has thrust upon us an inferior broadband network that will curtail our competitiveness. He has manipulated the debate about marriage equality to diminish its chances of becoming law despite the public's wish that it be so. He has accepted inequality as the norm in our society and has sought to make it worse.

Can you think of a single politician who has inflicted so much destruction, so much damage on our society? Can you identify a meaner person whose adversarial nature has caused so much harm?

Yet he still hovers in the background like a ghost of things past, quietly, subtly eroding confidence in his successor, hoping for another opportunity to wreak havoc once more upon our lucky country.

You know who the culprit is.

If you are still scratching your head, click here!

What do you think?
Let us know in comments below.

Did you identity the prime culprit?

Do you agree with my assessment of who fits this description?

What is your assessment of this person?
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What is Modern Monetary Theory and will it help?


Modern Monetary Theory (MMT) is a macroeconomic theory for the current age in which governments have abandoned the gold standard and also floated their currencies. It is ‘macroeconomic’ and ‘monetary’ because many of its conclusions relate to the money supply in an economy. Does it offer scope for a new economic approach recognising people? Can it better assist responses to robotics and computerisation than current economic approaches?

Historically, gold was important because coins were minted from it (and silver). Even when coins were no longer minted in gold, the currency issued by governments was convertible to gold and governments needed to hold sufficient gold reserves to satisfy a potential demand from all holders of their currency — that was the gold standard. In that situation governments could not spend without first taking money from the economy (taxation) because the money supply was limited to match the quantity of gold. Following WW2, fixed exchange rates also meant that governments, through their central banks, had to defend the rate they had fixed by buying or selling their own currency in international money markets: that also affected the money supply in their home economy and also placed limitations on government spending. Floating currencies now allow central banks and governments to target domestic economic policy goals knowing that the floating exchange rate will resolve the currency imbalances arising from trade deficits or surpluses.

MMT points out that much economic thinking since the 1980s operates as though the gold standard is still in place — namely, that governments can only fund their spending by taxation and therefore deficits are bad — but some MMT proponents and supporters argue that this has ideological (neoliberal) rather than genuine economic underpinnings.

Since the abandonment of the gold standard, most countries, including Australia, now have a fiat currency — that is, it is created by government fiat (decree) — and it has no intrinsic value. My $50 note is not matched by $50 worth of gold any longer, nor is my plastic note worth $50 itself (in 2012 Australia’s polymer notes cost 34c each on average to produce irrespective of their face value). My note has value only because the government decrees it has and the government is the monopoly provider of currency: therefore it is the currency I need to participate in the economy and to pay taxes.

MMT places this new reality at the centre of its approach. A sovereign government issuing its own currency can never run out of money, never go bankrupt or default on its ‘debt’. That in a sense was Greece’s problem: as part of the Eurozone it was no longer an issuer of its own currency. In that circumstance, as for the states within a sovereign nation, the oft-used analogy of a household budget still applies but it does not apply to the sovereign issuer of a currency.

The ‘sovereign issuer of currency’ argument leads to probably the most well-known and sometimes controversial aspect of MMT, that a government can always ‘create’ money. The critics argue such printing of money — although these days it actually requires only a few keystrokes on a computer to create deposits in the private banking system — will lead to hyperinflation as in Zimbabwe or the Weimar Republic in post-WW1 Germany. MMT accepts that inflation is one factor that imposes a limit on government spending but that limit is not reached until all the ‘real’ resources of the economy are fully utilised — all human resources (full employment) using all available physical resources. If a government continues to spend after that, then dangerous inflation may result but, prior to that point, MMT argues that government spending to assist utilisation of available resources will not lead to uncontrolled inflation. For MMT, the issue is not just money but the real human and physical resources that are available to the economy and not currently being used:
If there are slack resources available to purchase then a fiscal stimulus has the capacity to ensure they are fully employed.
As a means to help control inflation, current mainstream economic thinking accepts the Non-Accelerating Inflation Rate of Unemployment (more commonly known by its acronym, NAIRU). The Australian Treasury uses NAIRU in its modelling as the basic foundation of longer-term stable inflation — currently the NAIRU in Australia is 5% unemployment. Before NAIRU, full employment was taken to mean there would be about 2% unemployment, allowing for people moving between jobs or unemployed short term for various reasons. In practice, NAIRU provides a ‘buffer stock’ of unemployed which basically means that having those extra unemployed, above the previously accepted 2%, provides downward pressure on wages growth because the unemployed are more willing to accept lower wages simply to have a job. The argument goes that if unemployment falls below the NAIRU level the competition for workers will mean employers accept demands for higher wages thus leading to higher inflation. (Despite the whole capitalist free market system being based on competition, whenever workers appear to have a competitive advantage it is decried as a threat to the economy!)

MMT rejects the NAIRU and instead proposes a Job Guarantee for the ‘unemployed’, sometimes referred to as ‘transitional employment’ which probably describes it better. As opposed to the NAIRU ‘buffer stock of unemployed’, MMT offers a ‘buffer stock of employed’ but this is done at a ‘fixed price’ — in Australia this would be the minimum wage, inclusive of standard employment conditions. It means the government supports employment until such time as a person obtains higher paying mainstream work and it will be in productive work using under-utilised resources:
What matters … is whether there are enough real resources available to produce goods and services that are equal in value to the government’s job-guarantee spending. If these resources are available — if they are not already being used to produce something else — then the increased demand that results from the payment of job-guarantee wages will not be inflationary, regardless of what they go to produce.
On broader monetary issues, MMT says that there can only be saving in the private sector, inclusive of banks, businesses and households, if the government spends more than it collects in taxes: that is, only when the government adds money into the economy can there be private sector saving as well as investment.

A good, simplified explanation of this was provided by John Carney at CNBC in 2012:
The MMT people aren’t actually referring to you and I saving. They aren’t even talking about the entire household sector saving financial assets. They are talking about the entire private sector spending less money than it earns.

You can easily see why this would be impossible without the government spending more than it collects. Every dollar someone is paid is a dollar someone else has spent. If we all — every single person and company — spend less than we are paid, very quickly we will find we have to be paid less. The aggregate effect of savings is to reduce the total amount people are being paid for things.

So this is what MMT people are talking about when they refer to a “private sector desire to net save.” They mean that if you add up all the earning, spending and savings of every person and company in the economy outside of the government, sometimes you find that the private sector is trying — nearly impossibly — to earn more than it spends.

The only thing that can make private-sector net savings possible is government spending. If the government spends more than it takes in taxes, the private sector can earn more than it spends. Remember, if everyone pays less than they earn, some outsider must be paying more than he earns.
The MMT equation for this is:

(G – T) = (S – I)

Or in words, government spending (G) minus taxes (T) equals private saving (S) minus gross private investment (I). This is so because in macroeconomic terms the two represent the entire amount of money in the economy. And the other key of this equation is that it shows that money does not come into being in the private sector unless the government has first spent it (over many years now).

MMT points out that when governments run surpluses it leads to an increase in private sector debt because, in that circumstance, if the private sector wishes to save and invest, it has to borrow from the existing pool of money (and the government surpluses are actually reducing the money supply). This is explained by the concept that transactions between banks, businesses and households are ‘horizontal’ transactions and cannot change the amount of money in the economy (liquidity). Only a ‘vertical’ transaction between the government and the private sector can change liquidity (MMT includes both the treasury and central bank when it talks of ‘government’).

In the USA, on all occasions when the government has run surpluses, and reduced debt for a few years, it has been followed by recessions or depressions. Arising from the indebtedness forced on the private sector by the government surpluses, there comes a point when the private sector reduces spending because it cannot afford to take on more debt, thus creating an economic slow-down. In such circumstances, only government spending can relieve the situation. (It is also of interest that since 1776 the US government has been in debt in every year except for the years 1835 to 1837.)

In a globalised world, however, national economies do not operate in isolation so one more aspect needs to be added to the equation: exports (X) and imports (M).

(G – T) = (S – I) ‒ (X – M) or

(G – T) + (X – M) = (S – I)

If a country has a trade surplus that adds to private savings. Many countries, however, as Australia, operate a trade deficit which means that private sector saving is reduced and more reliant on government spending. And at a global level the nett outcome of all countries’ trade must sum to zero, so it is impossible for every country to run a trade surplus — a surplus in one country necessarily requires a deficit in other countries. So a trade deficit or surplus is not bad in itself but does affect private sector saving and creates more need for government to adjust its spending appropriately.

Although even MMT still talks about deficits and surpluses, my reading is that those words are less relevant in MMT. If a government can create money it can never really be in deficit (except perhaps in a point-in-time accounting sense). Even claiming that the deficit represents spending more than collected as taxes is not relevant. MMT says that the government does not need taxes in order to spend — it can always create whatever money it needs. The real purpose of taxes is to take money from the economy or, in economic terms, to reduce liquidity, meaning there is less money to spend and thereby total demand across the economy is also reduced. What taxes can achieve is to create ‘space’ for government spending. If an economy is already running at capacity and the government continues to spend, that is increases liquidity and demand without first making space for that spending, then high levels of inflation may result because there is more money in the economy to buy the same amount of goods and services, meaning people competing for those goods and services are willing and able to pay higher prices to obtain them. So taxes can be important in allowing government spending without dangerous inflation but are not necessary in themselves for that spending.

Similarly MMT argues that the sale of government bonds is not necessary to fund government ‘debt’. So-called ‘debt’ can actually be met at any time because the government can ‘create’ the money to do so. But as always the limiting factor is controlling demand in relation to the capacity of the economy so as not to allow dangerous levels of inflation.

MMT’s explanation is that the sale of government bonds is primarily a means of controlling interest rates: this relates to the overnight commercial bank reserves placed with the central bank but I won’t attempt to explain how that works. (This interview with Bill Mitchell for the Harvard International Review provides an explanation and also a good summary of MMT.) A secondary reason is that banks, financial markets and the private sector generally, desire government bonds as a safe haven to park money. Here in Australia, that became obvious during the Howard/Costello years when the government paid down its debt and saw little need to make new bond issues but the private sector complained and the government had to issue more ‘debt’ even though it had no debt: that fact alone gives credence to the MMT argument.

Although the approach is called Modern Monetary Theory, it places more emphasis on fiscal policy. Bill Mitchell writing on the current economic problems said, ‘until we stop relying on monetary policy and restore fiscal policy to the top of the macroeconomic policy hierarchy, nothing much is going to change’. Mitchell argues that governments have been using the wrong approach to overcome the current economic stagnation affecting many countries:
It is not that they have run out of ammunition. They have been using the wrong ‘ammunition’. For example, trying to drive growth with low or negative interest rates failed to work because the lack of bank lending had nothing to do with the ‘cost’ of loans.

It had all to do with the dearth of borrowers. Households, carrying record levels of debt and facing the daily prospect of losing their jobs, were not going to [start] suddenly bingeing on credit again.

Business firms, facing slack sales and a very uncertain future, could satisfy all the current (low) levels of aggregate spending in their economies with the existing capital stock they had in place and therefore had no reason to risk adding to that capital stock.
In the MMT model, the remedy to many economic problems is fiscal stimulus not austerity which only exacerbates the problems. And as a sovereign issuer of currency the government always has the capacity to provide such a stimulus when there are under-utilised resources in the economy.

Using fiscal policy, and the knowledge that governments can spend as much as they wish, limited only by available real economic resources and inflationary impacts, MMT suggests that the real issues are social policy issues. The debate should not be about ‘debt and deficit’ but what we as a society wish to achieve, wish to become, and, within the limits mentioned, governments do have the capacity to meet those goals. For me that is an important outcome from MMT, not just that it offers a new economic approach but that it offers scope for a new policy and political approach. To that extent, it does allow space for people by creating an economic approach that recognises social policy goals are of critical importance and the ability to achieve them is not so limited or proscribed as it is by existing neoliberal economic theory. For that reason alone MMT deserves more attention.

Next week, in the last of this four-part series, I will consider whether governments are ready for the coming economic and social changes.

What do you think?
Can MMT really change government thinking and overcome current neo-liberal approaches, not just in government but in Treasury?

Will it take a new generation of economists before MMT is accepted? Will that be too late to help the people?

Let us know in comments below.


Recent Posts
Our Government is morally bankrupt
2353NM, 11 September 2016
Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again. …
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An economy without people
Ken Wolff, 14 September 2016
Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs …
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It’s all about me
2353NM, 18 September 2016
At the risk of earning a Godwin Award in the first sentence, according to those who staffed his office, Hitler was a kind and paternal man. Apparently Goebbels was kind to his family as are no doubt most of the world’s leaders today.

However, the same people who make sure they …
More...

It’s all about me


At the risk of earning a Godwin Award in the first sentence, according to those who staffed his office, Hitler was a kind and paternal man. Apparently Goebbels was kind to his family as are no doubt most of the world’s leaders today.

However, the same people who make sure they are kind to their staff, helpful for their friends and make sure they have a positive influence in their children’s lives can make the lives of people more distant from their immediate family absolutely horrific. It is history that Hitler and Goebbels were two of the leaders of a regime that murdered millions of people based on racial stereotypes, plunged the world into the second World War and left their country far worse off than when they came to power. It could be argued that there are leaders of a number of countries who are committing similar atrocities today. It is always good, however, to remember that one person’s ‘freedom fighter’ is another person’s ‘terrorist’.

A few months ago, SBS screened a documentary from the UK titled Troll Hunters. The narrator of the documentary is a young woman (Em Ford) who owns an internet beauty blog, giving other young women tips on how to dress according to the current trends and apply makeup. Like a lot of young people, Ford at times suffers from acne and part of the make-up tips she shares on the internet are methods to hide acne. Em Ford’s blog is located here. Unfortunately, and probably unsurprisingly, some of the comments Ford receives on her blog, YouTube videos and so on are less than complementary on her appearance, personality and taste in clothes and fashion. Some of those who comment are persistent, insulting and use copious amounts of foul language. So she sets out in this documentary to find her ‘nemesis’ and call that person to account.

So the search begins. Trolling is basically illegal, as it is using a ‘carriage service’ to harass and cause harm. As you would expect, most ‘professional’ trolls don’t leave much information behind to identify them, however there are people who can sometimes discover the identity of the ‘troller’.

Here’s the spoiler alert as the end of the documentary is the relevant section for the purposes of this article.

While Ford doesn’t find ‘her troll’, with help she locates a troll who was uploading pornography to the social media feeds of a woman who was a former British Conservative Party MP. Ford and the former MP confront the man outside his house and as you would expect the former MP has some interesting observations on the man’s behaviour and can express those views with an interesting variety of language. By arrangement, Ford interviews the ‘troller’ who is not sorry for what he’s done and, despite meeting his victim, doesn’t believe she is real. It appears there is a disconnect with the reality that every ‘cyber person’ with a social media account is somehow related to a real person with a right to be treated with courtesy and respect. He admits he uploads pornography to people’s social media accounts for the fun of it! He also gets a (perverse) victory out of being blocked from someone’s social media accounts.

Let’s put that into perspective. The ‘troller’ enjoys that he can apply increasing pressure to selected victims by use of words, pictures and so on which invokes potentially a police complaint (for which there is little or any evidence available for a conviction) and certainly blocking from the victim’s social media feeds. When this happens, the ‘troller’ believes they are victorious against a ‘cyber-person’ who has no basis in real life and probably moves on to harass someone else.

So how does this relate to Australian politics? Despite what you think of their policies, it is evident that Malcolm Turnbull loves his family (including the often mentioned and photographed grandson, Jack), as Tony Abbott loves his wife and daughters and Bill Shorten loves his ‘blended’ family. It’s probably fair to suggest that Scott Morrison, Peter Dutton, Sam Dastyari and George Brandis love their families as well. In each case, it would be pretty certain that each politician would do whatever it takes to look after their family and have a pretty good stab at teaching children not to steal or cheat, as well as giving them the skills to ‘play nicely with others’.

So why would the same people act so differently when it comes to running the country? Dutton, in response to leaked reports of over 2,000 cases of abuse and humiliation of refugees (supposedly) in our care on Nauru, claimed there was nothing new to see here when it was first reported; and subsequently claimed he was the victim because he was being verballed by the media. This is despite evidence showing that Dutton had been given extensive briefings about the actions of the contractors he employs on our behalf. Dutton was attempting to shift the blame to everyone but himself and the government for the problem caused by his government’s unbending harshness as discussed by The Guardian here a few weeks ago. Maybe it is a coping mechanism. Assuming Dutton’s claim of a ‘fit up’ are true, Dutton claims there are a number of exaggerated and made up claims (by inference not all the leaked claims are incorrect), and there are obviously some incidents that bring discredit to Australia and Australians. According to his website, Dutton has a family. Even one case where a person is treated less than well is one too many and diametrically different to the care and love Dutton probably shows to his family.

The Sam Dastyari donation issue is equally as instructive here. Fairfax media reported:
It is worth noting Dastyari had broken no law, no regulation, nor even a norm in Australian politics. Technically he had not even taken a donation, but a gift. He had even properly declared the gift. He was determined to ride out the scandal.

Last Friday though, the Prime Minister, Malcolm Turnbull, piled on, pointing to quotes in Chinese media suggesting that Dastyari had advocated China's position on the South China Sea dispute, a position contrary not only to Australia's stance, but that of our key ally, the United States.

‘Cash for comment’, said the PM.
The claimed difference between this ‘gift’ and other ‘gifts’ and donations is that Dastyari is supposed to have publicly contradicted the ALP’s policy on the current South China Sea issue where China is apparently attempting to exert more influence than it currently does.

Dastyari fell on his sword early in September and resigned from the position of Manager of Opposition Business in the Senate. Turnbull’s ‘cash for comment’ claim is full of faux outrage. If Turnbull is claiming that Dastyari’s opinion was changed by around $6,500 (in two individual ‘gifts’), it is worth asking why Turnbull and his Liberal Party colleagues’ opinions are not influenced by the 89.56% (or $9,315,505) of ‘non-individual’ donations above the reportable ‘cap’ received during 2014/5 by the Liberal Party. The Nationals seemingly are more resilient to being influenced by ‘non-individual’ donations — 100% of their donations (above the reportable ‘cap’) were not from individuals; the ALP comes in at 90.22% and the Greens rate the least affected, if you can call 89.19% of their donations coming from ‘non-individuals’ as significantly better than 100%, 90.22% or 89.56%! Fairfax reported:
There is still a large portion of donations in the system falling below the $12,800 threshold required for disclosure, many of which would be small contributions from individuals. Labor's figures include all donations above $1000 as they have put in practice their proposal to legislate a lower threshold.

For the purpose of this analysis, Fairfax Media also counted only the AEC "donation" category and not financial benefits reported as "other receipt".
So it is debatable if the million or so dollars in Liberal Party income from Parakeelia, the provider of the customer relationship software mandated for use by Liberal Party politicians, wholly owned by the Liberal Party and funded by parliamentary services electoral office budgets (aka your and my taxes) is included in these figures — it could have been listed as a dividend.

Dastyari has done some good by focussing the national headlines onto the donation issue for close to a week and weathering the storm of faux outrage generated by Turnbull and a few of his ministers. Should donation reform be on the agenda? Almost certainly, yes it should. But the major political parties are so reliant on the donations received from ‘non-individuals’ there is probably no real appetite by the politicians to really do anything as they rely on the funding to the political parties to gain and retain their seats.

It’s not the first time that political donations have undone a political career. Former Premier of New South Wales Barrie O’Farrell’s career fell apart over a bottle of (supposedly quite nice and definitely expensive) wine. O’Farrell did try to limit donations to individuals in New South Wales, but the law was overruled by the High Court.

The interest in political donations here is similar to the interest in refugees on Nauru as well as ‘trollers’ on the internet. There is a disconnect between our reality and theirs.

Em Ford’s interview with the ‘troller’ shocked her — not for what you would assume but for the reason that firstly the male ‘troller’ was an articulate person who seemed to be a normal member of society who just couldn’t understand that behind each website blog (such as this one), YouTube channel or social media account was a person who has probably tried their best, with feelings and an expectation that people should treat each other with respect, recognising that at times people have a right to express different experiences and values politely. The ‘troller’ just didn’t ‘get it’.

If you meet Peter Dutton (or Scott Morrison, the previous Immigration Minister responsible for the indefinite and proven — in PNG at least — illegal detention of refugees who asked Australia for protection and a safe home), you would probably find a person who treats you with respect. They both also have families and you would have to imagine they would do anything to protect their family from hurt and keep them safe. It seems they just don’t ‘get it’. Refugees are people who by circumstance have been forced to leave their homes and livelihood. They are families as well and deserve to be treated as well as the families of Dutton or Morrison.

Turnbull attacks Dastyari over donations of around $6,500, claiming that the cash influenced his opinion, while saying nothing about the almost $10million the Liberal and National Parties received from ‘non-individuals’ in 2014/15 (later figures are not available). It stands to reason that Turnbull just doesn’t ‘get it’. Somewhere around $10million would purchase a lot more influence than $6,500 or thereabouts. Is Turnbull upholding a principle or ‘playing the man’ for political gain?

The real problem here is that there is a disconnect. At what point do people just become numbers, or customers, political enemies or voters? It stands to reason that everyone has people they care about more than the person sitting in the car beside them in the traffic jam, however those who make the decisions in Australia seem to forget that they and their loved ones are a very small proportion of the 24 million plus people who live in Australia or the 7 billion plus people who inhabit the earth. While their job is not to ‘tuck each individual into bed each night’, those who are placed in positions of power need to remember that they are dealing with people’s lives, and act accordingly. Clearly, the Coalition government isn’t. Are they any better than the anonymous ‘troller’ who posts pornography to people’s social media accounts for the fun of it, or those past and present world leaders who carry out genocide for some warped idea of racial purity, without a care in the world about how the victims feel?

What do you think?
Let us know in comments below.
Recent Posts
Modern economics has lost sight of people
Ken Wolff, 7 September 2016
This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. …
More...
Our Government is morally bankrupt
2353NM, 11 September 2016
Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again. …
More...
An economy without people
Ken Wolff, 14 September 2016
Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs …
More...

An economy without people


Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs but for the broader economy.

The loss of jobs is not new. In Australia since the 1970s there has been an ongoing loss of un-skilled jobs, particularly for males. In 2006 Sue Richardson, with the National Institute of Labour Studies at Flinders University, wrote in Unemployment in Australia:
By 2001, at every age, at least 20 per cent of men with no post-school qualification were not in the labour force. These men have not withdrawn from the workforce because they have handsome alternatives that mean they do not have to work … Overwhelmingly, the reason they are not in the labour force is because they cannot find work and have given up looking.
And in 2004 Bob Gregory wrote in Between a Rock and a Hard Place: Economic Policy and the Employment Outlook for Indigenous Australians:
An exceptional feature of the Australian labour market over the last three and a half decades has been the loss of unskilled male full-time jobs. This loss has been so substantial that as a proportion of males 15‒64 years of age one full-time job in four has disappeared. Most of this job loss has fallen upon the unskilled …
At the same time there were skills shortages. In September 2004 the Australian Industry Group reported a shortfall of between 18,000 and 21,000 in the manufacturing sector for skilled tradespersons.

And a shift in the make-up of the workforce was already occurring. In 2006, the then Department of Employment and Workplace Relations (DEWR) reported that between 2001 and 2006, 78% of new jobs were created in the four most highly skilled occupational groups: Professionals (17.4% growth), Associate Professionals (18.3% growth), Managers and Administrators (28%) and Tradespersons (10%) but job growth for Labourers had been only 0.6% in that five-year period.

Skills shortages continue. In February this year the Department of Employment published its list of occupations in which there were shortages during 2015. Twenty-five occupations were experiencing national shortages, including higher level occupations like surveyors, optometrists and audiologists. The list included trades such as motor mechanics and automotive electricians, bricklayers, glaziers, roof tilers as well as wall and floor tilers, air conditioning and refrigeration mechanics, chefs, hairdressers and cabinet makers.

The department also released its jobs outlook, Australian Jobs 2016. Overall employment was projected to grow by 8.3% over the next five years which appears to be little more than matching population growth. Six industries were expected to grow by more than ten per cent: Accommodation and Food Services (12.0%); Arts and Recreation Services (10.8%); Education and Training (13.0%); Health Care and Social Assistance (16.4% and it is also the largest industry by employment numbers); Professional, Scientific and Technical Services (14.8%); and Rental, Hiring and Real Estate Services (11.9%). Employment in Mining will decline (‒14.1%) as will Manufacturing (‒5.3%) and Agriculture, Forestry and Fishing (‒3.1%).

When it comes down to occupations ‘Professionals’ provided 41% of new jobs from 2010 to 2015 and employment is expected to grow by 14.5% to the end of 2020. Seventy-four percent of professionals hold a university degree. Professionals are also more likely than other workers to work full-time.

In that period of five years up to 2015 ‘community and personal service workers’ provided the second highest proportion of new jobs, 22% (they also make up about 10% of all employment). Their employment has grown by 16.3% since 2010 and is expected to grow by another 19% in the next five years. Nineteen percent hold a university qualification and 42% a VET Certificate III or higher but 55% are employed part-time. It includes child, aged and disability carers, waiters and bar attendants and baristas.

Technicians and trades work provided 11% of new jobs up to 2015 and employment grew by 5.2% in that time and is projected to grow 5.5% in the next five years. Most of these workers are employed full-time and 62% have a VET Certificate III or higher.

Among the lower-skilled occupations there were, late in 2015, 1.7 million clerical and administrative workers, 1.1 million sales workers, 1.1 million labourers and 740,000 machinery operators and drivers which is still about 40% of the Australian workforce. Their projected growth to the end of 2020 is 1.6%, 9.3%, ‒1.3% and 1.0% respectively. The groups include receptionists and office managers, checkout operators, real estate agents, truck drivers, forklift drivers, delivery drivers, cleaners, kitchenhands and packers, as well as labourers.

The more rapid projected expansion of highly qualified occupations appears consistent with the experience in America identified in 2013. But in America there had also been a loss of middle-ranking jobs, largely due to the automation of routine tasks, not only for manual labour (classified as routine manual work) but by the computerisation of office, sales and administrative work (classified as routine cognitive work). There had been an increase in the number of jobs for non-routine work, both cognitive and manual. The former (non-routine cognitive) requires higher levels of education and generally commands higher wages, but the latter (non-routine manual) involves work such as cleaning, food services, security services, home help, and so on. This is leading to a polarisation of the workforce in America, with more high-paid jobs, more low-paid jobs, and fewer in the middle.

The basic problem with those projections is that they are based on what has already occurred and do not take full account of the increasing pace of technological change nor the areas into which it might move in the coming decades (and the Australian projections are short-term, only for five years).

In January this year CSIRO (and Data 61) released Tomorrow’s Digitally Enabled Workforce in which it found that up to 44% of current Australian jobs were under threat of being replaced by robotics and other computerisation. It found that, as yet, there was no evidence of the ‘hollowing out of the middle’ in Australia but it did find:
… Australian men, particularly single men with less education, are becoming increasingly likely to drop out of the labour force. … Despite strong jobs growth in the service sector, it appears that for a growing number of men the labour market has little to offer unless they re-train.
That reflects the earlier findings of Sue Richardson and Bob Gregory. But it also found that in the future there will be a greater need for individuals to create their own jobs and even a need for higher skill sets to access entry-level positions. So a new flexible education will be required. Similarly, workplaces will need to be more flexible (which can also lead to greater casualisation and use of contract workers). Some changes, however, may lead to greater disparity in regional areas, particularly for older workers: past experience suggests that displaced older workers in regional areas do not relocate to find work but, if forced to, will relocate to cheaper housing in the same location. So new approaches to unemployment and transition to work will be required.

The difficulty with the emphasis on education and higher skills is that has already been happening in America but simply creating an oversupply. It was found that highly educated workers were being pushed down the employment ladder into lesser-skilled positions, pushing the low-skilled further down or out of the workforce altogether.

The CSIRO report did not go into the detail of individual jobs but its estimate of jobs at risk was based on a model used by Oxford University researchers who did a study of the US labour market: The Future of Employment: How susceptible are jobs to computerisation? That report found that 47% of US jobs are at high risk of computerisation. Given the work currently being undertaken on driverless cars, it is foreseen that in the next decade or two driverless trucks will become the standard form for movement of goods and many truck drivers will become redundant. Some have suggested that on major inter-state routes driverless trucks should actually have their own lane. So governments will also need to respond to those changes.

In Australia, Rio Tinto is already automating its Pilbara iron ore mines with driverless trucks and automated charge drilling and setting machines, and is also hoping to have driverless trains to deliver the ore to port (tests have been conducted but recent software glitches have delayed implementation). That is an example of even some skilled work being automated but the huge driverless trucks do require the worksite being ‘landscaped’ to suit.

As more data becomes available and can be stored, office and administrative support positions will be affected and further encroachment into manufacturing will take place. Even aspects of the construction industry could be affected as robotic prefabrication of parts takes place in factories, requiring fewer workers for the actual construction and even circumstances where robots can piece the prefabricated parts together on-site (as has already occurred in Japan).

The availability of ‘big data’ is important in expanding the reach of computerisation. For example, an American oncology centre is using computers to provide chronic care and cancer treatment diagnostics. This could be done because data from 600,000 medical evidence reports, 1.5 million patient records and clinical trials, and 2 million pages from medical journals were able to be stored and used for ‘benchmarking and pattern recognition purposes’. Examining such a vast amount of data would be impossible for a human but not a computer (if it is programmed correctly). As more ‘big data’ becomes available computers will expand their reach.

The report into the US workforce also found that automation will move into non-routine manual work in sales and services. A simple example is the increasing availability of robotic vacuum cleaners capable of replacing at least one task of a hired cleaner: how many other tasks will follow? This follows the historical pattern of technological change, namely breaking down apparently ‘skilled’ jobs into smaller unskilled components — the move from the traditional skilled ‘carriage builders’ approach to early car manufacture to Henry Ford’s production line manned mostly by unskilled workers. If this prediction proves correct, the growth in low-skilled service jobs that has been occurring in the US will actually begin to reverse during the next couple of decades.

This does not mean that all jobs in these areas will be lost but a significant proportion will be.

Jobs least affected will be those requiring creativity and social skills:
… generalist occupations requiring knowledge of human heuristics, and specialist occupations involving the development of novel ideas and artefacts, are the least susceptible to computerisation.
Others have since suggested that even some creative work can be done by computers: already there are computers capable of creating musical scores (no doubt based on ‘big data’). If that continues into the future, and AI becomes a reality, there will be almost no job that is not at risk.

This new world is giving rise to what is known as ‘the gig economy’. This means that, like a band of musicians, people will work ‘gigs’ for which they must search.

A study released in January this year by The Aspen Institute in the US found 45 million Americans (22% of adults) were working in the gig economy providing ride sharing, accommodation, food delivery and other platform-based services. For 14 million it was their main source of income and just over half, 23 million, were young, aged 18‒34.
However, most workers (72 percent) believe companies should be doing more to provide benefits, and more than two-thirds worry that as independent contractors and not employees, they don’t have a financial safety net.
Anecdotal evidence from participants suggests that many, but not all, see such ‘work’ as extra income to meet bills and so on, or as income in periods between mainstream permanent work. Or they are working many jobs to achieve a reasonable income and that can create problems — such as lack of sleep. Some examples:
[young woman in Turin]
I keep busy but I have to constantly juggle different gigs every day … What scares me most is that I have no guarantees, no steady pay, no stability. Everything could end overnight, so I can never make long-term plans.


[Uber driver in Los Angeles]
In the short term, this way of working works, but there is a long-term downside. It’s very difficult to build a future, to save for a downpayment on a house, say, or to save for [a] college fund, on a full-time Uber driver salary or even if you combine multiple freelance services.


[Airbnb host, charity worker and interior designer]
I definitely advocate this way of working, but it’s not for the faint-hearted — if you’re working three or four jobs in a day, you need to be very disciplined and have a keen sense of priority. You have to be a bit of a workaholic: finding the balance and boundaries to fit everything in can be a bit of a juggle. And obviously not having paid time off is a downside.
Some professionals can do better in the gig economy as the internet (and specific sites) allow them access to a much wider range of clients in a much wider range of locations. For some, whose work can be done over the internet, the location of the client no longer matters and, therefore, having access to a larger number of potential clients is an advantage. Conversely, the sites involved also permit potential clients to more closely match the skills of their selected professional to the work required.

Companies will rely less on full-time employees and will hire on a task or project basis. This will apply across many job categories, not just professionals. Companies will be able to hire the specific skills required for a single task, so the work could range from a few hours to a few days. People will be able to specialise and offer their skills to many clients. But this will also spread the problems described by people currently working in the gig economy.

Such an approach is already moving down the employment ladder to very mundane tasks, and to ‘micro-tasks’ such as tagging images, extracting keywords, checking address data, which sometimes may be no more than a few minutes work for each ‘job’. These are termed human intelligence tasks (HIT):
At the time of writing [August 2015] there were about 300,000 HITs on offer on AMT [Amazon Mechanical Turk]. An average Turker (as they are referred to by AMT) can expect to earn US$2 to US$5 per hour on a good day but there’s no guarantee in terms of regular work availability.
Not all of these jobs will remain. Uber, for example, is already investing in and preparing for driverless vehicles. And computers can already undertake some of the minor tasks currently available. Whether people can be prepared in time for the new jobs that may emerge, or there will simply be massive unemployment, will be the big question.

All of the above may prove to be wrong as we do not have a very good record predicting the future — some things change less than we foresee while we seem to completely miss other significant changes. In the 1960s some popular magazines were predicting that by the early 2000s we would have flying cars, or at least hover cars. I also recall a television program from that time, specifically looking at future change, that predicted we would be required to work only ten hours per week in the new millennium to maintain our lifestyle.

Cars have changed, being more luxurious and incorporating many more safety features than in the 1960s but they still have wheels and still require roads. And, in Australia prior to the GFC, individual work hours were increasing, not decreasing. Our lifestyle has changed: the average new house is now twice the size it was (as is the cost); more homes incorporate central heating and/or air conditioning; televisions have grown both larger and smaller and few households are now satisfied with only one. But the biggest change that few, if any, predicted was the explosion in digital technology; the rise of computers, the internet and the information age; and now the portable devices that allow us to access that information at any time and almost any place.

So do we have the rise of robotics and ‘the gig economy’ right? We cannot say with certainty. But to the extent that they are already happening we do need to plan for them and consider their ramifications both for people and the economy as a whole because so much work will no longer require people, or require them for only short durations. We may not get it quite right but we cannot ignore it.

Next week I will consider Modern Monetary Theory (MMT) and what it may offer to meet the challenges of the new economy.

What do you think?
How far can robotics and computerisation go in reducing the need for humans? Is there a limit?

Will unions themselves become redundant if more and more people do not have work or enter (or are forced into) ‘the gig economy’?

Let us know in comments below.


Recent Posts
Toxic talk
Ad astra, 4 September 2016
Are you as offended, as disgusted as I am with the language used by our politicians day after day? Have you noted how mean-spirited, antagonistic and adversarial their words so often are?

They use words like poison arrows aimed at the heart of their political opponents …
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Modern economics has lost sight of people
Ken Wolff, 7 September 2016
This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. …
More...
Our Government is morally bankrupt
2353NM, 11 September 2016
Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again. …
More...

Our Government is morally bankrupt


Recently on this website, we discussed the nastiness of the conservatives that currently inhabit the halls of power in Canberra. Ad Astra’s article gave a number of examples that demonstrated the point and you can read the article here rather than have me go over the fertile ground yet again.

To paraphrase a sacked host of an extremely popular BBC television program loosely based on cars when talking about their ‘tame‘ racing-driver; some say they reached a low with treatment of refugees, others might suggest that the blatant disregard of human rights was worse — all we know is that the government allowing these things to happen is morally bankrupt. How about we look at the claim of moral bankruptcy in the cold light of day. There are a host of examples that could be provided.

Example 1: Offshore detention

We’ll start with offshore detention. During August, The Guardian came into possession of over 2,000 claims of mistreatment and abuse perpetrated on refugees held at a Detention Centre on Nauru funded by the Australian government and staffed by contractors to the Australian government. A significant number of the subjects of the reports were children. The holding company currently contracted to provide management services to the offshore detention centres was recently bought out by Spanish interests and —
… has been warned by professors at Stanford Law School that its directors and employees risk prosecution under international law for supplying services to Australia’s camps on Nauru and Manus Island in Papua New Guinea.
“Based on our examination of the facts, it is possible that individual officers at Ferrovial might be exposed to criminal liability for crimes against humanity under the Rome Statute,” said Diala Shamas, a clinical supervising attorney at the International Human Rights and Conflict Resolution Clinic at Stanford Law School.
They will not be extending their contract arrangements.

Dutton seems to have no problem in continuing to justify the obscenity perpetrated on refugees immorally held on Manus Island in our name. Dutton’s response to the (embarrassing to the government) release of the documents was to downplay the seriousness of the accusations, suggesting ‘Most of this has been reported on before.’

While Dutton may be correct in his assertion that ‘asylum seekers are … setting themselves on fire, deliberately self-harming, or making false allegations of sexual assault in order to come to Australia’, it is beyond comprehension to believe that every one of the 2,000 reports originally authored by Save the Children (who had a contract with the government to provide humanitarian services on Nauru) was false or exaggerated. When challenged, Dutton doubled down on the insults telling 7.30's Leigh Sales : ‘I think the situation is that people have paid people smugglers for a migration outcome.’

Dutton is a proxy for all Australians. We pay him to represent our standards, traditions and moral standards when the Coalition government is dealing with immigration matters. So his (as well as the actions of immigration ministers back to the days of the Keating government) actions are the actions of all of us because we elect the government. The current prime minister and most of the country were disgusted with the reports of abuse that occurred to children at the Don Dale Centre in Darwin. Yet the same government sees no problems with similar claims coming from children that this country put on Nauru on indefinite detention. At least those at Don Dale had a date they would be released.

Example 2: Changes to the Racial Discrimination Act

Senator Bernardi is canvassing support for a private members’ bill that will allow for discrimination to others based on race. While it could be argued that someone else’s opinion could be considered to be risible, their religion, gender, race or ancestry is not a determining factor in why their opinion or statement is what it is. Nevertheless, Bernardi claims every Liberal Party Senator bar one has signed a petition supporting the change.

Clearly we should not ‘offend’ or ‘insult’ anyone. Bernardi wants to legalise it, while not allowing intimidation and humiliation. That would be a fine line.

That the law was felt necessary in the first place is a sad indictment of Australian society as it demonstrates that a number of Australians believed they could insult and offend people based on their religion, race or ancestry. It is even a greater stain on our society that politicians are now actively campaigning to allow it to reoccur.

Example 3: The same sex marriage plebiscite

Since the election of the current parliament, there has been a continual debate about the necessity for a $160million plebiscite to ask Australian voters if the government should legislate to allow same gender marriage.

Let’s get something out of the way first up — there is no need for anyone outside parliament to do anything to make ‘same sex marriage’ legal in Australia. The Howard government inserted the ‘man and woman’ clause into the Marriage Act in 2004. According to Howard at the time:
(It should) not over time be subject to redefinition or change by courts, it is something that ought to be expressed through the elected representatives of the country.
So why can’t the elected representatives of the country change the law now?

According to The Monthly’s political editor Sean Kelly:
For a start, Turnbull accepted the plebiscite as a condition of becoming prime minister. We will never know if this was unavoidable or if, given the choice between losing government under Abbott and accepting a free vote under Turnbull rather than a plebiscite, the Nationals and the conservatives would have backed a strong-willed Turnbull anyway. Certainly Turnbull’s negotiating hand within the Coalition has never been stronger than it was then. But the lure of power can be hard to resist, and at the time the compromise would have seemed like a small thing to give away.
At the end of August, Fairfax’s Matthew Knott suggested that the brutal reality is there will be no free vote on marriage equity, although more recently apparently there have been discussions to make the plebiscite ‘self-executing’ (if the plebiscite is successful, it doesn’t need a vote in Parliament to become law).

The morally bankrupt issue here isn’t who sleeps with whom in the marital bedroom, it is the double standard that allows one conservative prime minister to engineer a change to an act of parliament to ensure that Courts do not have the powers to change or redefine the participants in a marriage, and when it comes time to reassess the action some 12 years later, the same process is determined to be insufficient by another Conservative government to make a change should it be deemed necessary. Instead the country will be forced to the polls in an exercise expected to cost over $160million (while we have a federal budget expenses problem) solely to shore up the credentials of the current and immediate past prime minister in the eyes of his own side of politics. To add insult to our injury here, one of the talking points with the ‘self-executing’ option would be:
… that no taxpayer money be given to either side. That would delight the "yes" camp but anger conservatives, given the Australian Christian Lobby has asked for $15 million in public funds.
Given that some of the same people that want no change to the Marriage Act want to change the Racial Discrimination Act Section 18C to allow offence and insults, opposition leader Shorten’s comment that the plebiscite will be ‘a taxpayer-funded platform for homophobia’ is probably closer to the truth than Turnbull’s claim that ‘Australia is capable of having a respectful debate on same-sex marriage’.

Example 4: Political donations

Senator Sam Dastyari resigned from the ALP ‘front bench’ last Wednesday night over the acceptance of an amount of around $1600 from a Chinese company to repay excess travel claims as well as around $5000 from another Chinese company to settle a legal case. While Dastyari was apparently compliant with federal law as both amounts were declared, he may have been in breach of ALP policy. Either way, why a Senator who receives around $200,000 in salary per annum needs assistance to pay his expenses is a matter for concern.

While the Coalition was claiming that he must go immediately, Deputy Prime Minister Joyce was far less damning regarding his own future last Tuesday night on ABC’s 7.30 current affairs program when asked why he received and kept donations from Mining Magnate Gina Reinhart. Is it splitting hairs to be able to justify some donations while decrying others?

The initial claim here is that our government is morally bankrupt. Surely the government’s treatment of refugees, changing legislation to allow offence to be legal, generating the conditions that will ensure homophobic behaviour is considered fair and reasonable as well as the splitting of hairs around political donations demonstrates the point.

Members of parliament are our employees. It is time for us to tell our politicians that we expect morals, ethics and consideration of the rights of others (regardless of their gender, religion, ancestry or sexual preference) to be more important than political point scoring, looking after mates (who probably donate to re-election campaigns) and the smell of ministerial leather in Canberra.

Jobs and growth as well as 100 positive policies are useless to Australia without the moral and ethical background that is necessary to implement these policies equitably.

What do you think?
Let us know in comments below.

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Modern economics has lost sight of people
Ken Wolff, 7 September 2016
This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. …
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Modern economics has lost sight of people


This is the first of four articles looking at particular changes, and potential changes, in our economic environment and approach to economics generally.

For those who have followed my pieces on TPS you may recall that I am qualified as a social anthropologist. I take the anthropological view that economics is about how a society uses and distributes its resources — that is any society, whether hunter-gatherer or a modern technological society. It is a view that raises some questions about our modern approach to economics.

Basically the ‘use’ of resources includes a social responsibility for sustainable use so that resources can be utilised by others when required and also be available for future generations. And ‘distribution’ of resources includes a social responsibility to ensure that everyone in a community gets a reasonable share to enable them to survive comfortably within the context of their society.

Classical Western economics, however, is based on the tenet of the rational self-interested individual: that people make rational choices in the market that best provide ‘utility’. ‘Utility’ is something that provides the user/purchaser with satisfaction and/or meets their desires in some way. Adam Smith also introduced the concept of the benevolent ‘invisible hand’ whereby decisions made in an individual’s self-interest actually prove beneficial for society.

In classical economics there are also the concepts of ‘perfect knowledge’, by which the individual makes rational decisions based on information about all the prices in the market, and ‘perfect competition’ by which a product reaches an equilibrium (supply matching demand), and its price also reaches an equilibrium for all suppliers of that product, meaning there is then no competition nor need for advertising of the product. Of course these do not exist in the real world. Neither are individuals always rational in making their decisions in the market. So what was classical economics actually describing?

Even the concept of the market needs exploring. Markets of course go back millennia but the concept of the market has changed over time. Early in human history people shared goods, then exchanged surplus goods for other desirable goods and, as villages and towns developed, for services. Money eventually became the medium of exchange for any good or service.

Markets were not always based exclusively on the individual. In medieval Europe if a merchant from town A left debts when he departed town B, the merchants from town B didn’t pursue that individual merchant directly but would detain the next merchant who arrived from town A and hold him until he, the original merchant, or anyone from town A paid the debts. In that sense, the role of the individual in the market wasn’t as important as it later became — at that time it was believed that the community from which the merchant came also had a responsibility for his behaviour (and his debts). Subsequently merchant guilds were formed in which debts could be settled and over time that grew towards individual responsibility for the settlement of debts.

The other concept relevant to the modern market is private property. While the idea of private property now dominates our economic and social thinking it was not always so. Even in medieval England when land was held by dukes, barons and the like, there was common land used by the serfs, so both common and private property co-existed. It is estimated that, although serfs had to provide labour to the rich landholders, by using the common and small plots around their own dwellings they were actually able to keep from 50% to 70% of the product of their own labour. An industrial labouring class was created during the industrial revolution with the enclosure of the commons (in modern parlance, the land was privatised) and poor farmers and rural labourers no longer had access to that land to supplement their incomes and so had little choice but to work in the factories.

In the market, the logic is that to exchange something I must own it in the first place and the other party must also own what they are exchanging. The logic of that seems apparent when one considers what a thief may offer for exchange: we undoubtedly consider that not to be a fair exchange because the thief does not actually own the item of exchange — or does he? The thief clearly has ‘possession’, so is there a logical difference between ‘ownership’ and ‘possession’ in the economic system?

The emphasis on private property as central to a market economy goes back at least to the 1700s in England. C B Macpherson, a political scientist also trained in economics, argued that political freedom came before economic freedom and was first obtained by the property-owning elites who then used their new political power in their own self-interest to entrench private property rights. And it also goes back in history in the sense that much modern ‘ownership’ is based on past dispossession of previous owners and yet the economic system is based on the modern possession not the historic ownership.

Now private property, whether physical or intellectual, is central to thinking in a modern market and in modern economics.

These concepts were put together by the philosophers Hobbes and Locke but Macpherson also argued that they were bound by the values of their time and hence developed their philosophies around the market, contractual obligations and property; and the concept that an individual is the sole proprietor of his or her skills and owes nothing to society for them — what Macpherson called ‘possessive individualism’.

In rejecting a social element to ownership, economists refer to the ‘tragedy of the commons’ to justify that individual ownership, that is private property, is superior to common or social ownership. Although the idea has a longer history, the phrase came from a paper by Garrett Hardin in 1968. It was suggested that, when people grazed their herds on a ‘common’, a self-interested individual could improve his situation by adding one animal to his herd. The individual would gain the benefit. But if each individual added an animal the common would quickly degrade. While the individuals retained the benefit of having an extra animal, the ‘cost’ (the degradation) was shared, leaving them with a self-interested benefit — before the failure of the system. Following this argument, and its corollary that Adam Smith’s benevolent ‘invisible hand’ of individual self-interest does not work for the commons, economists argue that private property, and the individual’s responsibility for that property, remedies the situation and that became central to modern economics.

That approach is based, however, on a misunderstanding of how commons worked. They were not ‘open access’ as the theory implies. Throughout the world where people shared resources there were usually social and cultural rules that controlled that sharing. In Iceland, for example, the common resource of the fisheries was traditionally controlled by kinship rules that allocated spaces on the beach, that were necessary for launching fishing boats, to individual families. In some communities in India the allocation of the common resource of water for farming was determined by community meetings. People accepted these approaches as essential for the well-being of their communities or, in other words, social responsibility was more important than individual self-interest.

The modern market idea of private property and individual self-interest has basically destroyed social responsibility and the concept of the common good and allowed polluters to pour their waste into the ‘commons’ of the rivers, oceans and atmosphere.

We now use GDP to measure the ‘success’ of our economy but the use of GDP to measure economic activity only arose after the Great Depression of the 1930s when the American government was concerned that it did not see the depression coming. The government asked economic experts for a model that would allow it to keep track of the economy and so have a chance of foreseeing such events in the future.

The use of GDP, however, was being questioned as early as the late 1950s. Even its creator, Simon Kuznets, said that ‘the welfare of a nation can scarcely be inferred from a measurement of national income’.

A major problem with GDP is that it measures only productive activity and takes no account of the losses or costs associated with the activity:
… it tends to go up after a natural disaster. Reconstruction and remediation spur intense activity that is registered by GDP, while the destruction, lives lost, suffering and disruption to families and communities in the wake of a flood, cyclone or bushfire are ignored.
Or as Robert Kennedy said in 1968:
… the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. [emphasis added]
Yet we still rely on GDP as a measure of a nation’s progress although it has nothing to say about the well-being of the people. Gross GDP per head is sometimes taken as a measure of the economic prosperity of individuals: if that is rising people are said to be better off but it does not tell us whether that prosperity has enhanced ‘happiness’.

There is a long history in which ‘happiness’, or well-being, was removed from economics. A chapter in the World Happiness Report 2013 provided a potted history of the changes in the Western view of happiness: from the Greek philosophers and early Christian church’s view that happiness was achieved by being virtuous, to the economic theory of ‘utility’ in which individualism and consumerism prevailed — the early economic theorists brought material goods into the happiness equation, suggesting that people purchased that which brought them pleasure or happiness (‘utility’). In the twentieth century, however, economics came to be dominated by mathematical formulae and the question of whether market consumption could increase happiness and well-being was no longer a consideration.

Economists claim their field is a science and value free but the economy depends on social values like trust. We cannot even have a ‘market’ unless we trust each other. In a shop, the shopkeeper trusts that I will hand over the money after he hands over the goods or I trust that he will hand me the goods after I give him my money — otherwise we could be there all day arguing over who should make the first move. It could be argued that the behaviour of large multi-national corporations is destroying that trust, as is the use of tax havens to avoid social responsibility. And are we now so distrusting that we require automated payment systems, including even when paying for our goods in supermarkets? — now we have to trust a machine! Human interaction is being removed from the basic market process of exchange.

As Jeffrey D Sachs wrote in the World Happiness Report:
A prosperous market economy depends on moral ballast for several fundamental reasons. There must be enough social cooperation to provide public goods. There must be enough honesty to underpin a stable financial system. There must be enough attention paid to future generations to attend responsibly to the natural resource base. There must be enough regard for the poor to meet basic needs and protect social and political stability.
After all the economy does not exist in its own right. The market and the economy is people, as producers and consumers, as it has always been. It is the approach to it that has changed.

In an article in The Monthly, Richard Denniss argued that we are being led to believe that governments, in making their decisions, have to be conscious of the reactions of ‘the markets’. He wrote that we should remember that ‘markets’ per se do not have feelings, do not have needs or demands. What we refer to as ‘markets’ is actually people buying and selling and attempting to manipulate trading for their own advantage.

So historically we have moved from social co-operation in economic activity to twentieth century economic theories that have reduced people almost to invisibility. We discuss economics in terms of markets, GDP and monetary and fiscal policy as though these are entities in their own right. There is no economy without people, no markets, no goods and services without people as producers and consumers but this now gets less attention. The economy is deemed to have its own ‘scientific’ rules that operate irrespective of people and, as mentioned earlier, can now be analysed simply in terms of mathematical formulae.

Until people are re-introduced into the equation (both metaphorically and literally), the economists will not be describing the real economy nor will those utilising economic theory, such as governments (and their advisers), pay enough attention to the needs of their people. When ‘markets’ and GDP come first, people come last.

We need to measure the well-being of the people rather than only production; we need to pay more attention to the sustainability of our use of resources, not only for future generations but to ensure that current generations have reasonable and continued access; we need to ensure a fair distribution of resources, not only within our own society, but for all people globally; and only then will we have an economic approach that is realistic rather than the narrow view of current economic theory.

Next time, continuing the economic theme, I will discuss ‘an economy without people’ as robotics and other changes reduce the size of the workforce.

What do you think?
Who benefits from economic theory if it does not pay enough attention to people?

Why have we accepted the propaganda that even social progress hinges on the economy?

Let us know in comments below.


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Toxic talk



Are you as offended, as disgusted as I am with the language used by our politicians day after day? Have you noted how mean-spirited, antagonistic and adversarial their words so often are?

They use words like poison arrows aimed at the heart of their political opponents and those in our society whom they despise.

They have no concern for the damage their arrows might inflict, or how injured or offended their targets might feel. Wounding, disabling, hurting, demeaning is their purpose. The more damage they can inflict, the more satisfied they are.

It’s akin to schoolyard bullying, but much worse. Can you recall language as ranting, as poisonous, as hurtful, as damaging, during your school days? I can’t.

Listen to them – try to pick their targets, and watch their reaction.

There is a group that conservatives loathe passionately – those at the bottom of the social scale who rely on welfare support: the unemployed, the job seekers, the homeless, the disabled, and the mentally ill. They are Joe Hockey’s ‘leaners’.

This derogatory language goes back a long while. Do you remember when Tony Abbott, as a minister in the Howard government coined the tag ‘job snobs’ to denote those who were too lazy to look for a job, or too fussy about what work they would do and where, or too demanding about terms and conditions? Those who eventually did get a job might then oversleep, or not turn up because the travel was too arduous or inconvenient or they had no transport, or they would leave work early or slack on the job – thus the tag ‘job snobs’. When job seekers moved onto Newstart, the term morphed into a peculiarly Aussie term: ‘dole bludgers’.

Joe Hockey upped the ante when he pushed his ‘end of entitlement’ message, first at a conference in Britain. Far from trying to conceal his theme, he proudly shouted it from an international pulpit. His point was that there were some, indeed too many, who felt entitled to welfare, entitled to support from the government, and of course the taxpayer, if they had no job. Not long after we heard his now-infamous descriptor – ‘leaners’ – to designate this despicable mob, who depended on Hockey’s ‘lifters’, the good guys who had a job or a business, who pay their taxes and support the idle leaners.

Hockey’s message did not go down well, especially when those castigatory tags were given effect in his punitive 2014 budget, in which he punished the leaners and the less well off. Even his own supporters recognized that his budget was unfair. Rudiments of it still languish in the Senate wistfully awaiting endorsement.

Then along came Scott Morrison, keen to transmit the same message but unwilling to use Hockey’s tags. So he coined some of his own, not as elegant as Joe’s, but replete with the same pejorative meaning. So now we have the ‘taxed’ and the ‘taxed-nots’. As keen as Hockey, and Abbott before him, to divide our nation into ‘them and us’, into ‘the deserving and the undeserving’, Morrison launched his unique tags at the Bloomberg Summit on the economy last week.



Here’s what he said:
“A generation has grown up not ever having known a recession, of seeing unemployment rates at more than 10% … On current settings, more Australians today are likely to go through their entire lives without ever paying tax than for generations. More Australians are also likely today to be net beneficiaries of the government than contributors – never paying more tax than they receive in government payments. There is a new divide – the taxed and the taxed-nots.”
Remember though that in his mind the ‘taxed-not’ cohort are the dole bludgers, the leaners, those who suck the welfare system dry because they don’t, won’t, or can’t work and therefore pay no taxes. Somehow, the almost 600 companies, major ones such as Qantas, Virgin Australia, General Motors, Vodafone, ExxonMobil, Warner Bros Entertainment, Lend Lease and Ten Network Holdings, who paid no tax last financial year, were not mentioned. Nor were international giants Apple, Microsoft and Google, who paid very little tax here on the large profits they earned in this country. Presumably Morrison does not categorize them as ‘taxed-not’. Why?

The reason behind Morrison’s apparent inconsistency is ingrained conservative ideology. Conservatives believe that we get what we deserve. Those who work hard, or are entrepreneurial enough to own a business, deserve the monetary reward they get, and what’s more deserve to keep that reward and not have governments take it away as taxes and give it to others, to those who do not work and earn. Thus we hear endlessly that Liberals want to reduce tax, and have seen them propose to do that, even for the wealthiest. The promised $48 billion tax cut to businesses awaits the verdict of the Senate.

Moreover, conservatives believe that those who have little deserve their impecunious state. They have not worked, or have not worked hard enough, or have not saved enough, and therefore deserve to be poor. These people ought not expect to get handouts from others, or from their government. They deserve their poverty-stricken situation, and should not expect the milk of human kindness to be offered to them. This view is consistent with George Lakoff’s model of politics. Using the metaphor of nation as family and government as parent, he argues that conservative politics corresponds to the strict father model that posits that people should not look to the government for assistance lest they become dependent. Conservatives regard the inequality that is a sequel to such an ideology as part of the natural order. There have always been lords and ladies, and serfs to bow to them and serve them. They see no need for egalitarianism in what they see as an inherently unequal world.

We ought therefore to not be surprised when we hear Scott Morrison or Mathias Cormann or Kelly O’Dwyer perpetuate ’the workers versus the bludgers’ way of thinking. Remember the fury Eric Abetz generated while he was Minister for Employment when he sought to introduce a rule that the unemployed must complete forty job applications a month. As far as he was concerned, they had nothing better to do. The impracticability of this soon mugged him, particularly when it became apparent that it was unlikely that forty jobs would be available in Tasmania close to where the job seeker lived. His object was not really to find a job for these people; it was to punish them with ‘homework’ for being unemployed.

Abetz reasoned:
"We undertook what we believed would be a fair consideration of an application of a job every morning and every afternoon should not be too onerous."

"There doesn't seem to be a community complaint with the cut-off of 20 job applications per month, so one assumes one might be able to increase that without too much extra community concern.”
Eventually, the idea was scrapped out of concern that employers would be ‘swamped with fake job applications’, rather than the imposition on job seekers of forty applications a month was unreasonable and stupid.

So long as conservatives are in power, we can expect this toxic talk to continue, directed as it is at what they see as a lesser grade of citizens, a poorer class of people. It is a reflection of their entrenched ideology, which they will not, indeed cannot change. It is in their DNA.

There is another variety of toxic talk, one that we witness, in fact suffer every day, many times a day. We see it whenever politicians are confronted with uncomfortable facts. Rarely prepared to say: ‘We messed up’, ‘We made a mistake’, or more benignly ‘We could have tried a different approach’, they barrage us with a deluge of disingenuous words to justify their actions, and just as deceitfully, to blame others for the situation.

All politicians are adept at this stratagem. Blame shifting, and aiming their poison arrows at their opponents, comes easy. But few do it as spitefully as our odious Minister for Immigration, the Honourable Peter Dutton.

Confronted recently with the shocking report by Save the Children about the impact prolonged detention was having on children held on Nauru, he quickly dismissed reports of sexual assault and abuse as ‘hype’ and ‘false allegations’. He went on to roundly condemn The Guardian and the ABC for promulgating the report and the ugly accusations it contained.

He accused those seeking to expose the awful occurrences on Nauru as maliciously denigrating the government’s effort. Never was there a concession that things were bad on Nauru, and needed urgent attention. To Dutton, this report was a storm in a teacup, exaggerated out of proportion. He maintained that protective systems were in place and operating effectively. He accused asylum seekers of setting themselves on fire, deliberately self-harming, or making false allegations of sexual assault in order to come to Australia. He airily dismissed the reports of sexual assault, child abuse and self-harm written by detention centre staff, insisting: “Most of that’s been reported on before.”

To Dutton, whistleblowers are simply troublemakers hell bent on embarrassing him and the government.

He was quick to add that the genesis of this situation was Labor’s relaxation of ‘border control’, and the resultant arrival of thousands of boat people, with hundreds drowning on the way (he has always got his figures off pat). His argument is that if only Labor had continued the Howard border protection policies, this situation would not have arisen. Now poor Peter has to cope with Labor’s legacy of neglect and incompetence!

So he delivered the double whammy: nothing much was wrong on Nauru, and what was wrong was Labor’s fault anyway.

Perhaps more than most, it is those ministers who are tasked with managing the nation’s finances who most regularly engage in toxic talk. Never prepared to concede that they haven’t got all the answers, or that they might have achieved a better result with another approach, they continue to blame the previous Labor government for their fiscal woes. We are regularly reminded about Labor’s legacy of profligate spending, ‘debt and deficit’, and Labor’s determination always to raise taxes, and never to cut spending. It matters not that under the Coalition spending has increased, taxes have risen, and the deficit has ballooned; it is still all Labor’s fault. Labor continues to be condemned with this toxic talk, this disingenuous language, extravagantly embellished with straight-out lies.

I could go on for pages recounting this type of toxic talk that so infuriates us all day, every day. I wrote about it extensively on The Political Sword almost eight years ago in The curse of adversarial politics. It is still worth reading. The penultimate paragraph reads:
“Those who despise adversarial politics find it to be contemptible, a damaging affliction on our political system. They resent the stifling impediments it places on governing, on governments carrying out what they promised the electorate they would do. They see it as focused on ‘winning’, on gaining a political advantage, rather than telling or establishing the truth, or contributing usefully to the discourse.

“It sets the teeth of the electorate on edge, which ‘turns off’ in despair. Voters would prefer politicians to be open and upfront, more focussed on the good of the nation, less willing to corrupt the usually-worthy principles that brought them into politics in the first place. Adversarial politics may be an important reason the public has turned away from politics and has become cynical about the motivation and behaviour of politicians. The more adversarial politics becomes, the greater the erosion of voter engagement and threat to the democratic process.”
That was written eight years ago. What’s changed? Nothing!

The public loathes toxic talk as much as ever. Will politicians ever learn?




What do you think?
Let us know in comments below.

How do you feel about the way politicians use pejorative words to describe citizens they despise?

How do you feel about the adversarial language our politicians use against each other?

What do you feel about the way they use toxic talk to attack and berate each other?

How would you prefer them to behave?



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After a year of saying that he could get the Federal Budget back into surplus, seemingly by just cutting support to the less well off in our society, Treasurer Scott Morrison finally realised something any school child who has started business studies classes would be well aware of — a balance sheet comprises debits and credits.

Morrison was speaking to the Bloomberg Economic Summit in Sydney last week. Apart from the usual claims of deliberate obstruction from the Opposition, there was an acknowledgement that ‘Deficits have proven difficult to shift in recent years, despite applying significant expenditure controls’. Taxing more, which is apparently different from ‘protect[ing] the revenue base from structural weakness’, has been ruled out. That still allows measures such as enforcing GST payments on low value imports (such as the shopping you and I do over the internet), attempting (apparently again) to ensure that multi-nationals pay tax before shipping profits overseas and looking at ‘the way generous tax concessions are provided in the superannuation system’.

We even got a new (sort of) three-word slogan to illustrate how serious Morrison is: the ‘taxed and the taxed-nots’. Morrison correctly makes the claim that a lot of Australians have not experienced a recession in their adult lives or unemployment rates of over 10%. The jury is still out on the effectiveness of the ‘taxed and taxed-nots’. Probably the gold standard here is now Ambassador Joe Hockey’s ‘lifters and leaners’: while it was an effective slogan as people remember it, Hockey’s period as treasurer was noted only for an increase in the government’s debt and the infamous 2014 budget which still hasn’t passed parliament in its entirety.

Hockey and Morrison point the finger at the ALP for holding up savings measures in the Parliament. Most of the measures held up in the Parliament are spending measures because as Peter Martin reported:
As he [Morrison] puts it, "you don't encourage growth by taxing it more". Of course, withdrawing spending doesn't help much either, but to him it's a lesser evil.

Of the $40 billion in budget measures yet to be passed, more than 60 per cent constrain spending. Only a third, $15 billion, boost revenue.
The two big claims are that more Australians receive more in government benefits than they pay in tax and Australia (the government) will owe $1trillion to others in the near term should action not be taken immediately. Let’s look at the claims.

It’s probably a fair statement to suggest that about half of the population pay no nett tax. At least it was a couple of years ago. The architect of the current taxation and welfare systems, Howard era treasurer Peter Costello wrote an opinion piece in the Daily Telegraph a year or so ago which to an extent justifies his reasons:
Sometimes tax reforms involved lower income earners paying more — like the introduction of the GST — but we were always clear that the welfare system could be used to compensate for that. The welfare system is the way to redistribute income. That is not the role of the tax system. The tax system is there to raise revenue at the lowest cost in the most efficient way doing the least damage to the economy.

If you try to use both the tax and the welfare system to redistribute income you get punishing rates of income withdrawal as a person’s income rises. This is called the effective marginal tax rate (EMTR). As people lose benefits and pay higher taxes they can lose 60, 70 per cent, sometimes 100 per cent of every extra dollar they earn. This creates a huge disincentive to work. It creates poverty traps. And, it heightens the incentive to “hide” additional income.
And Costello has a point — the tax system is there to raise revenue at the lowest cost and do the least damage to the economy. If there is a need to return funds to a section of the community due to adverse circumstances, it is far easier to do so using targeted welfare, rather than arranging for exemptions and conditions in the taxation system. We could discuss the inequity in Costello’s targeting until next week if we wanted to but the professionals, such as The Australia Institute might have a better understanding.

According to The Australia Institute, Peter Costello’s actions during the ‘once in a lifetime’ mining boom was to:
… cut taxes so far and so fast that they forced the Reserve Bank of Australia to rapidly increase interest rates.

While countries like Norway took the benefits of resource price booms and banked them in their sovereign wealth fund, Peter Costello chose to cut taxes for the wealthy instead. He knew at the time that his populist generosity to the highest income earners would force future treasurers to choose between budget deficits or cutting spending on the sick, the poor and elderly. No prizes for guessing which our former treasurer prefers.

The only thing Peter Costello hates more than budget deficits is collecting the revenue needed to fix them. Just as his government did nothing about the long term challenge of climate change, his government did nothing to set up Australia's long term public finances.
If you want to, you can wade through the IMF’s report of government waste and profligacy released in January 2013 here or you can just take The Saturday Paper’s word for it that generally Australia was judged well except for four periods — the two largest under the stewardship of Howard as prime minister and Costello as treasurer (partial paywall). Howard and Costello were buying votes. It’s an easy sell to suggest that if you support my re-election campaign, I’ll give you money back in additional benefits or reduced taxes. As The Australia Institute suggests:
For the record, here are 5 of Treasurer Peter Costello’s most ‘profligate’ and inequitable decisions, which created the structural deficit inherited by his successors;

1. Income tax cuts, primarily for the rich, during the boom. Worth $37.6 billion or $26.4 billion if you exclude bracket creep in 2011-12

2. Capital gains tax discount. Worth $5.8 billion in 2014-15

3. Got rid of fuel excise indexation. Worth $5.5 billion in 2013-14

4. Superannuation tax cuts. Worth $2.5 billion in 2009-10

5. The decision to convert 'franking credits' into cash refunds for shareholders
They have given an explanation why each of the cuts has been incredibly bad value to the economy — go to the article to see them.

In some ways it is a delightful irony that the Coalition treasurers of the ‘twenty teens’ are having difficulty in politically justifying the spending cuts they believe are necessary to achieve their economic aim. Which leads us on to ‘message two’ as recently promoted by Morrison — Australia’s debt will hit a $1 trillion if nothing is done.

news.com.au breathlessly reported last week that Morrison’s statement to the Bloomberg Economic Summit would blow out to $1 trillion within the next 10 years if the government doesn’t get its budget savings through the parliament. Of course, according to Morrison anyway, this is the ALP’s fault and, while it is admitted that the figure is the ‘worst case scenario’, the implication is that Keating’s ‘Banana Republic’ would have nothing on the resulting recession.

Apparently, a trillion looks like this; 1,000,000,000,000. Australia’s annual GDP (our income before expenses) is currently around $893billion (or $893,000,000,000) according to the Parliament of Australia’s website. While all debt does have to be repaid at some point there is bad debt and good debt — a nuance that seems to be lacking in the current political debate.

Bad debt in the case of the government is where they are borrowing money to pay for recurrent items such as wages, the cost of stationery or similar items. To bring it back to a domestic level, if you were to go to the supermarket and petrol station each week and get your groceries and fuel on the credit card while only repaying the minimum amount due, two things would eventually happen: the first is that you would hit the credit limit of the card and the retailers would not accept any further charges; and two, the cost of the groceries and fuel you had already consumed would rise exorbitantly as the usually high interest on the purchases made on a credit card would continue until the debt was repaid in full (together with the interest).

Good debt is something else again. Governments borrow money for capital works and long term investments. Again bringing it down to a domestic level, if you borrow money to purchase a home to live in, depending where you live in Australia you are entering a contract with a financial institution for them to loan you considerably more than you can possibly earn in a year. Here’s an example using Westpac’s ‘How much can I borrow’ calculator for a couple with two dependent children.

Borrower 1 earns around $60,000 per annum and Borrower 2 earns around $45,000 per annum and they have some expenses. If you assume that they have a 20% deposit they would probably be in the market for a property priced around $800,000 to $900,000. To save time, we’ll leave the discussion on what they can/should buy and where to the property websites and TV shows. The point here is that between our two borrowers, their joint income is around $100,000 per annum. The Westpac borrowing calculation is really saying that to purchase a home, they can borrow about seven times their annual income and in parts of Australia, they will need every cent of it.

If our mythical borrowers were contemplating borrowing up to seven times their annual income no one would blink an eyelid, as buying a home is ‘good debt’ and the ratio of around 7 to 1 hasn’t changed for decades.

What we have yet to establish is if the potential government $1 trillion debt is good debt or bad debt. Last Sunday on our website we observed that of the $37 billion in additional debt Australia had placed in the 2016 budget, $36 billion of it was for capital works. Generally capital works are an improvement to a particular site that generates income in some way — either directly (say the construction of a new factory to house a production process) or indirectly (improving people’s quality of life by putting a roof over their head for the long term). Just like buying a home, capital works is generally good debt for government, provided we can meet the repayments, as it improves the amenity of our society through more efficient transport connections, better communications or increased services to the community.

Morrison’s recent speeches on debt and disaster therefore are duplicitous on two levels: while the ALP certainly didn’t clean up the overly generous welfare system, neither did they create it (if anything the ALP and the Greens are trying to inject some fairness into the changes blocked in the 2014 and subsequent budgets so the better off ‘feel the pain’ as well); and if a bank will lend our hypothetical ‘borrower 1’ and ‘borrower 2’ nearly seven times their annual income to purchase a capital item (a home to live in), why is there so much concern about Australia’s borrowings potentially getting to a value slightly over one year’s income or GDP (prior to deductions) in around 10 years’ time?

The problem with all this is that Morrison is claiming a debt of $1 trillion will send this country into a recession like we have never seen before. Who knows, it may — but the chances are pretty remote. The more probable alternative is that our society shares the output from the borrowing by our government and the resultant economic benefits. The economic benefits of the better road, rail line or telecommunications infrastructure makes money for the businesses and individuals who use it, who then earn more and pay more tax giving the government the resources to repay the original debt.

Morrison is half way on his ‘road to Damascus’ in that it recently seems to have ‘clicked’ that alterations to the revenue side of the Australian budget are just as necessary as his and his immediate predecessor’s fixation with the expense side of the ledger to the detriment to those on lower incomes. Now he just needs to understand that there are different types of debt; and some of them are actually good for our society.

What do you think?
Let us know in comments below.

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Some believe that those who purchase Lotto entries, play pokies or Keno or participate in other forms of gambling are effectively paying an idiot tax. On a purely rational level, they may be right as there is a significant chance that the few dollars you give to the Lotto machine operator or similar is wasted money — albeit a small proportion goes to the government in some form of wagering tax.

There are of course, many that disagree and happily put their money down to have a chance of winning considerably more than they started with. It doesn’t matter if it is pure luck or there is some skill involved in the wagering process; each time the money is gambled there is a small hope that the gamblers world will get much better financially very soon. Gambling companies have to publicise the chances of ‘winning big’ these days, and it’s on their website (albeit right down the bottom of a menu).

Despite the miniscule chances of winning a life changing amount, we all at some point have wondered what it would be like to be able to afford anything we wanted to do. Well, Steve Colquhoun probably couldn’t afford it but he hasn’t had to wonder either. You see Colquhoun up until recently was a writer for Executive Style on the Fairfax Media websites and the list of what he has done to file his stories is awesome. Despite seemingly having it all (with the added bonus of not having to pay for it), he’s giving it up to spend valuable time with his ‘long suffering’ family. Maybe you can’t have it all.

Sadly, most of us will never win a substantial amount of money gambling or have a job reviewing ‘experiences’ for Executive Style. That’s why financial institutions were invented — to lend money.

Provided you meet some criteria, there are any number of financial institutions that will lend you money for all sorts of things. Running a bit short until next payday — there are organisations that will lend to ‘tide you over’. Is your TV too small? — there is a lender for that as well. It’s the same if you want to buy furniture, cars, holidays, houses or pretty well anything else that takes your fancy; ‘come in and talk to our friendly and helpful staff and you can walk out with the item of your dreams’. Lenders are there to sell money. Interest on the money they sell is the cost to the purchaser of buying the money now rather than waiting until the consumer can walk in and ‘write the cheque’ (which these days is usually ‘do a bank transfer’ — which is a completely separate can of worms to talk about another day). The lenders take a risk in lending for periods of up to 30 years (for a house) based on the financial affordability that you can demonstrate today and they price the risk in, making the loan according to the facts they have at their disposal. Financial institutions like to get their money back. If the loan is secured (you pledge that they can get something of equal or higher value if you choose not to pay the lender’s money back), the lender will price the money accordingly.

So, for example if you are looking for a few hundred to tide you over until payday, the facts a lender would consider include why you only need money for such a short term and the chances of you not being able to be found when it’s time to repay the debt; and charge you a high cost (interest rate) for the use of their money. Traditionally, people borrow money for a home, assets that appreciate in value or a tool of trade (a machine of some sort that generates more income than it consumes). Without trying to be flippant, it is the bread and butter business of the financial industry. Assuming you have the income and can demonstrate you fit the criteria for security and repayment capability, there are hundreds of lenders around Australia that will lend you the money now to fund your purchase if you promise to repay the debt over a specified period. Generally, houses increase in value, which means that while you are paying a fee to use someone’s money, the increase in value of the house will over time probably exceed the interest you pay. Tools of trade generate more income than they cost — a plumber would find it difficult to get to their next job with all their tools if they relied on public transport and a machine that can double the output of a product will generate cash for the business that buys it. You could say everyone’s a winner.

Some loans don’t make as much sense. If you borrow money to purchase a personal use car or consumer goods, you are paying a higher interest rate and generally the item you are purchasing doesn’t appreciate in value as a house does. A ten-year-old car is worth far less than a new one, while a house that you have lived in for ten years will probably be worth more than what you paid a decade ago. The car or other consumer item you are purchasing is also transportable, you can drive a car across the country; you can hide an expensive watch in your pocket and so on. Accordingly, the lender will charge you a higher fee for the privilege of using their money.

Borrowing to purchase a home, an asset that should appreciate in value or a tool used to produce income is an accepted part of Australian lifestyle, so much so that when the Commonwealth Bank recently announced a $9.45 billion profit claiming the bank's flagship retail business underpinned the profit growth, the media reports suggested:
Investors were underwhelmed by the result from a bank that trades at a premium to peers, with CBA shares falling 1.3 per cent to $77.40.
In fact, one of the points of difference between the two major political parties at the last federal election was the future treatment of ‘income losses’ produced by taxpayers negatively gearing investment borrowings. Neither party was suggesting that borrowing money to fund the purchase of income producing assets was a bad idea: the ALP claimed they were attempting to reduce the heat in the property market in some of Australia’s large cities (and gain revenue) while the Coalition wanted to keep the status quo.

Yet at the same time as the Coalition is suggesting to you and I that if we can demonstrate to a financial institution that we can afford the repayments we should be able to purchase all the houses we like (and the subsequent increase in prices pushing first home buyers out to areas where services such as shopping, transport and so on are either not provided or far more expensive), we have former Treasurer Peter Costello on ABC’s Four Corners claiming:
PETER COSTELLO: Superannuation changes aren't going to balance the budget; that's obvious. The only way you'll balance this budget is if you get spending below 25 percent of GDP, right? We're at about 25.8 percent now. Um you cannot balance a budget on that. Until such time as you get your expenditures below 25, and preferably well below 25, you won't balance a budget. Super won't do it.
Yes, this is the same Peter Costello who introduced a number of expenditure measures (tax relief to companies and subsidies to average and higher income earners) while Treasurer during the period that Australia was in the fortunate position of higher than traditional revenue due to the mining boom. His ‘profligacy’ has been a problem for all the governments that followed him. As The Saturday Paper observed in December 2014:
Profligate is not our word. It was the word used by the International Monetary Fund in a major report it released early last year, that examined 200 years of government financial records across 55 major economies, identifying periods of government prudence and profligacy in spending.

Overall, Australia was judged very favourably. For most of the country’s history, governments of both persuasions had been prudent economic managers. The IMF identified only four periods of profligacy. The two biggest were during the Howard–Costello years. They were in 2003 and then between 2005 and 2007, and they accompanied the mining boom.

On its face, the IMF assessment might seem harsh. After all, before they were voted out in 2007, Howard and Costello had delivered six budget surpluses in a row.

But they also seriously undermined the structural integrity of the budget by making big spending commitments and giving huge tax cuts, on the basis of a flood of revenue that would inevitably dry up.

“You can sum it up in four words,” says Chris Richardson of Deloitte Access Economics. “Temporary boom, permanent promises.”
Whether Costello or Treasury were responsible for the permanent spending caused by a temporary boom is not the issue. The issue is the consistent bashing over the head we receive with the claim that the budget must balance and government debt is bad. At the same time, the government of the day and Treasury are encouraging the Australian population to assume debt in the form of home loans, through processes such as the ‘First Home Owners Grants’, the ability to claim losses from investment properties as a deduction on tax returns, as well as the capital gain being halved prior to the tax calculation if the appreciating asset is held for a period in excess of one year, they are telling us that all government debt is bad. On a logical basis, it just doesn’t make sense.

While most Australians would prefer not to incur debt on recurrent expenditure, such as fuel for their vehicle or the weekly trip to the supermarket of their choice, it is probably fair to assume that governments would prefer not to pay for wages and subsidies from debt funding as the costs are recurrent in both cases. But, just as it makes sense for Australians to incur debt to purchase appreciating assets or tools of trade it is probably just as valid for the governments around Australia to incur debt for infrastructure that will either appreciate in value or produce income in excess of the costs of the debts (especially when interest costs are so low at the moment). After all, if there is benefit in a concept that benefit should accrue regardless of the corporate status (individual, company or government) of the ���person’ that will benefit. When someone spends money, the whole economy benefits, through people receiving wages and then creating demand in the economy. Governments are the financial industry’s ultimate safe borrower — there is almost no chance that the government will renege on the agreement and they almost invariably repay their debts to the cent at the required time. Ross Gittens recently wrote in Fairfax media:
Treasury wants little old ladies to feel as guilty about borrowing to improve the Pacific Highway as they do about borrowing for "routine government expenses".

So, let's worry about getting the recurrent budget back to surplus (as most state governments did long ago), but not about borrowing for infrastructure. Agreed?

Except that when you read the budget papers carefully enough to find the info Treasury has hidden on page 6-17, you discover that the expected underlying cash deficit for this financial year of $37 billion includes capital spending of $36 billion.

Get it? We're already back to a balanced recurrent budget. So why so much hand-wringing? And why aren't we getting on with planning the infrastructure pipeline we could expedite "in the event that we were to need a big demand stimulus"?
So much for the debt and deficit disaster that Australia will inevitably face. It seems most of the debt that Australia is going to incur this year is for capital expenditure such as upgrading the Pacific Highway. Whatever happened to the country that completed the Snowy Mountains Scheme, the water pipeline from Perth to Kalgoorlie and the building of thousands of kilometres of railway lines, then roads, all paid for at least in part with borrowings?

Australia as a nation can’t wait until we get ‘lucky 7’ on the roulette wheel, the winner in the third at Moonie Valley or win the lotto to justify spending on improvements to our infrastructure that will improve our way of life well into the future.

And to prove you can’t have it all, it seems that winning the lotto is not all it is cracked up to be.

What do you think?
Let us know in comments below.

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