Mal’s Coalition cascades into chaos

When we posted How are the ‘adults’ managing our economy? on The Political Sword in April it seemed as if Turnbull’s administration of his Coalition couldn’t get any worse. We were wide of the mark! Now he sits apprehensively and indecisively on his house of cards, on tenterhooks lest he lose his balance, praying it doesn't collapse.

That piece was written as the 2017 Budget was being prepared. Scott Morrison was warning us about what we might be in for. Knowing that debt would increase, he tried to butter us up with talk of ‘good debt’ (spending on infrastructure) and ‘bad debt’ (recurrent spending on, for example, welfare). With his credibility in the doldrums, it is doubtful if anyone listened, let alone believed him.

The April piece on TPS began:
Who will ever forget the insults, the slurs, and the slander that the Coalition heaped upon Kevin Rudd, Julia Gillard and Wayne Swan as they managed the economy through the Global Financial Crisis and beyond? They were depicted as children playing games in their political sandpit with no idea of what they were doing, making one catastrophic mistake after another.

Remember how the Coalition boasted that the children should get out of the way and let the adults take over, insisting as they did that they were the experts at economic management. So convincing was the rhetoric that the electorate believed them and has consistently rated them as superior to Labor in economic management in opinion polls.

Recall the ‘debt and deficit disaster’, a mantra with which they assailed Labor for years. Remember the ‘intergenerational debt’ they accused Labor of accumulating.

Since their election in 2013 they have had their chance to show their much-vaunted expertise under the skilled management of Tony Abbott and Joe Hockey, and then Malcolm Turnbull and Scott Morrison, with Mathias Cormann a consistent shadowy presence. How have they done?
We know how they have done – appallingly. The Coalition’s incompetence and mal-administration is now legend.

Here are some contemporary facts:

Wages growth is the weakest on record, dating back to the late 1990s. Underemployment remains high with an increasing trend towards part-time work, creating the “gig” economy.

Reserve Bank governor Philip Lowe warns that record high household debt and record low wage rises are constraining consumer spending and hurting the economy.

The economy is under performing and will continue to do so through 2017 and beyond.

Stephen Koukoulas summarized the situation in The Guardian as follows: 
Based on the performance of the economy since the last fiscal update in December 2016, the budget is likely to confirm that this is a big-spending, big-taxing government with a strategy for continuing budget deficits and rising debt as it funds some of its pet projects.

It is all but certain that government debt will remain above 25% of GDP in 2017-18 and the forward estimates, meaning the government will be the first in the last 50 years to have spending at more than a quarter of GDP for eight straight years.

At the same time as spending is entrenched at high levels, the tax to GDP ratio is set to exceed 23% of GDP for only the eleventh time in 50 years. Tax revenue is growing solidly, in part in line with the expansion in the economy.

It is also close to certain that the level of net government debt will be projected to reach 20% of GDP, up from 10% when the Coalition won the 2013 election and the highest since the 1940s when the war effort boosted borrowing to record highs.
At as 30 June 2016, gross Australian government debt was $420 billion. In June 2017 the Turnbull government breached the $500 billion mark, (expressed alarmingly by some economists as half a trillion dollars) thereby doubling the deficit it inherited from Labor. Gross debt is projected to exceed $550 billion this year. Morrison is hoping to recoup some of this in this year’s budget with his $6 billion tax on the banks, but still intends to give a $65 billion of tax cuts to business!

We all know that housing affordability is worsening, locking out of the market young folk who do not have wealthy parents. The Coalition refuses to do anything about this as it sticks to negative gearing and the generous tax concessions around capital gains, thereby perpetuating the advantage moneyed investors enjoy over the young.

And as for the NBN, it continues to be a hybrid, copper-dependent mess that is not delivering what business needs, is rolling out far too slowly, and eventually will cost more than Labor’s superior FTTP design. It has been an Abbott/Turnbull debacle from the moment Abbott instructed Turnbull, then communications spokesman, to ‘Demolish the NBN’. Will it ever recover from that?

Need I give you any more evidence that our nation is steadily going backwards under the mal-administration of our economy by the Turnbull government?

On top of all this financial ineptitude, we have witnessed chaos writ large as Turnbull and the fractious conservative right squabble about how to handle the issue of same-sex marriage.

The chaos intensified when a postal ballot that will cost $122 million, was chosen. Astonishingly, the ballot won’t be carried by the Electoral Commission, but by the Bureau of Statistics, which has shown that it can’t carry out even a routine census proficiently. The High Court will decide if such an arrangement is constitutional. How the ABS will conduct the ballot is a mystery, as it’s a statistics-gathering organization. Long delays are likely before we will know the outcome of yet another Turnbull government stuff-up.

Then, as if that shemozzle wasn’t enough, Turnbull and his ministers have become entangled in the dual citizenship fiasco. They have been quite unsure how to handle it, and woefully inconsistent in their approach. Turnbull was only too ready in his characteristically sarcastic style to lampoon the Greens after Scott Ludlum and Clarissa Waters discovered their dual citizenship and resigned. “It shows incredible sloppiness on their part” bellowed our PM in parliament. Now, with several of his own ministers, no less the Deputy PM, the Deputy Leader of the Nationals, and his Minister for Industry, Innovation and Science all caught up in the saga, Turnbull’s barefaced inconsistency has been exposed. Canavan has been excluded from ministerial duties, while Joyce and Nash are permitted to continue as if nothing had happened!

All the time Turnbull is fighting a guerrilla war with the hard-right agitators in his party room, who threaten him with retribution unless he follows their dictates. He is so shackled, hog tied, clapped in irons – use whatever metaphor you like – that he is rendered impotent strategically, administratively, politically, and as a leader.

The voters continue to be unimpressed. We have now had the eighteenth Newspoll in a row where the Coalition trails Labor, this time by eight points: 54/46. If this trend continues, by February of next year Turnbull will have passed Abbott’s infamous record of thirty bad polls in a row, Turnbull’s raison d'etre for upending him.

Essential poll shows the same result. Turnbull’s satisfaction score continues on its poor trajectory, now minus 20. The Guardian features images from the Essential Report that illustrate Turnbull’s dilemma graphically.

Now that the Coalition sees defeat coming at election time, worried that Shorten’s “inequality” meme is biting, Mathias Cormann was sent out to launch a panicky attack on him in a speech at the Sydney Institute.

Writing in The Age in an article titled: 'Socialist revisionism': Mathias Cormann's doomsday warning of 'success exodus' under Bill Shorten, James Massola says: ‘Finance Minister Mathias Cormann has painted a doomsday scenario of Australia under a Shorten government, claiming a "cocky" Labor leader is relying on the politics of envy to propel him to the Lodge as people forget the failures of socialism. In an extraordinary speech …Cormann charged Shorten with making a "deliberate and cynical political judgement that enough Australians have forgotten the historical failure of socialism" and exploiting the politics of envy’, even describing Labor’s policies as akin to communist East Germany.  

Need I go on further to convince you of the widespread paralysis that is afflicting Mal's Coalition? You may care to remind yourself of what we published in April, just four months ago, in How are the ‘adults’ managing our economy? To do so click here.

The piece concluded:

The unavoidable conclusion is that this ‘adult’ government is economically incompetent, driven by its conservative rump, quite unable to see its way through the nation’s economic difficulties, incapable of analyzing the economic situation, inept at deriving solutions, bereft of planning ability, and hog-tied by ideological constraints. Moreover, it is so unutterably arrogant that it cannot see its ineptitude. And even if it could, would it be capable of doing anything about it?

As a substitute for informed opinions, all we get is self aggrandizement and platitudes from Turnbull, and a torrent of meaningless drivel from the Coalition's two motor-mouthed financial Daleks: Morrison and Cormann.

How has it come to this with the adults in charge?
Has the situation improved? You be the judge. Click here.

What is your opinion?
How do you assess the Coalition's performance?

Can it regain traction before the next election?

Let us know in comments below.

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Computer says ‘no’


Once upon a time, someone came up with an economic theory that robbery was good for the economy. The theory was along the lines that the robbers get some extra cash and most of it will reappear in the economy at some point soon after the robbery; the bank or shop is insured for the loss so it gets its money back; and as the number of robberies per annum doesn’t exceed the insurance premiums that banks and shops pay, the insurance companies are not out of pocket either. Of course, the theory is rubbish as stealing money (regardless of the rationale) is just wrong: staff and innocent bystanders who are the real victims of robberies are likely to need considerable physical and mental health support for a long time and so on.

Some apparently have a similar attitude to Centrelink benefits. In reality Centrelink pays out billions a year to those who qualify, according to some criteria or other, for financial assistance from the government. In any general population, there will be some who determine (for their own reasons) that their need is more important than others and, as this obviously not going to be met by compliance with ‘the system’, they will rort the system to get what they believe is their genuine entitlement. Centrelink’s billions are a good target as they have plenty more money to give away and a little extra won’t hurt.

In December 2016, Australia trundled off again to the silly season. It could be so named because of the number of public holidays, that people are nicer to each other than usual or there are a number of religious commemorations jammed into the month-long period. The ‘silly season’ is also a period when institutions (lets pick on governments and political parties here for examples) bring out unpopular announcements that they hope will be hidden by the decrease in attention generally shown by those who are searching for the latest toy at 2am in the morning, concerned about the results of the ‘summer of sport’ in their particular field of interest, or dreading the forced interaction with cousin Eric at the in-laws yet again. So what does the government try to hide in plain sight in December 2016? The obvious answer is that Centrelink unveiled their new ‘wizz-bang’ fraud detection system.

No one here is suggesting for a second that those who do commit fraud should get away with it. The concept is as silly as bank robbery being good for the economy. However, to be effective, a fraud detection system needs to have some rigour behind it to ensure that those who are doing the right thing are not unfairly targeted. Centrelink’s doesn’t.

When you apply for a benefit from Centrelink you are required to provide certain information regarding your financial affairs (as well as personal information so they can identify you). Some Centrelink benefits are targeted at those who ‘need a hand for a little while’ — such as those who have run out of sick and holiday leave while suffering a serious illness or the temporarily unemployed. It is highly probable that for a large proportion of the financial year in question, those that ‘need a hand’ would not qualify for a benefit as they earn too much (not that you have to earn much to disqualify yourself from most benefits). As you would expect, Centrelink looks at your income at the time a benefit is needed rather than the whole year’s income to determine if a short-term benefit is payable and the decision is made on that information.

All well and good you might suggest, and you’d be right, except that when Centrelink’s computer is given information from the Tax Office’s computer, which is only interested in your income for the year, there is a problem. The Tax Office may report that a person earned well in excess of the benefit cut off in a particular financial year (currently they are looking back six years). Centrelink’s automatic fraud prevention system then questions why you received a benefit for a part of the year. Rather than referring it to a person within Centrelink who can see that for three months of the year, the person was residing in the ICU at the local hospital, between jobs or in some other circumstance that determined that they ‘needed a hand’, the automated letter is sent out and a debt collector engaged.

And there’s the problem. Rather than quickly realise that a mistake has been made, correct the error and actively chase those who do defraud the system, Centrelink senior management and government ministers seem to be comfortable with something like 20,000 letters a week being dispatched with demands for payment being made prior to any discussion of the accuracy of the claim being considered and most of the letters being blatantly wrong. It could be considered to be a fraudulent business scheme; a swindle which is coincidentally the definition of a scam. Ironic really, when another section of the federal government runs the Scamwatch website. In fact, Deputy PM Joyce and acting ‘responsible’ minister Christian Porter are singing the praises of the system.

There are many others who have written about this issue and the seeming double standard surrounding parliamentary members’ travel claims — that frequently are in the tens of thousands. The co-incidence of now ex-Health Minister Sussan Ley being on the Gold Coast ‘for work’ when a unit she was interested in purchasing was up for auction has been done to death, as have the claims of a number of other ministers. The Shovel has an interesting take on the events as well, which given the history of this government, has that slight ‘ring of truth’ to it.

The interesting thing about Sussan Ley’s ‘impulse’ purchase of the unit on the Gold Cost is that it wasn’t a recent purchase. It was made in 2015 and while the reputed $800,000 unit on the Gold Coast may sound excessive to you, me and clearly most Australians, really the unit isn’t that expensive for where it is.

The real question is who mentioned the purchase to the media in the middle of public outrage over the government’s debt collection practices — regardless of whether the practices are legally or morally correct?

Of course, since the unfortunate relegation of Sussan Ley, others were jockeying (to a greater or lesser level of success) for the position of health minister. The ‘prime minister in waiting’ Tony Abbott did his chances no favour when he chose to speak out on the renewable energy target for 2020 (that his government implemented). Pauline Hanson certainly wants Abbott back in the Ministry, which may also be more of a hindrance than a help in the short and long term.

Turnbull has replaced Ley with Greg Hunt (former environment minister for both Abbott and Turnbull) who seems, in current LNP terms, a safe pair of hands. Environmentalists may decry his actions while environment minister, but he did generally keep environmental issues off the front page which is something other portfolios in the Turnbull government can’t seem to achieve:
Having been environment minister in the Abbott government, Hunt is used to difficult portfolios. In that role he oversaw the abolition of the carbon tax and the creation of the government-funded Direct Action scheme that pays polluters to reduce their emissions.

In 2016 he was named "best minister in the world" by the World Government Summit — an honour recognising his work to protect the Great Barrier Reef and his contribution to the Paris climate talks.
Ley has taken a bullet for the team and the world rolls on. Other ministers, including Bishop and Cormann, are also being questioned on travel expenses incurred on official business at what seem to be exclusive social events. Clearly there is more at play here than the ill-advised purchase of a unit on the Gold Coast.

Not being an insider, how does that work? Is there somebody somewhere who trawls through the workings of government looking for potentially embarrassing material that can be released at the opportune time to make a political point; is it sheer incompetence; or, worse still, is it a belief in one’s own importance so great that somehow thousands of public moneys used ‘on official business’ when you happen to go along to a property auction in your private capacity ‘while you’re there’ is acceptable practice?

In all probability, it is one of the latter two possibilities. Just before the 2015 ‘silly season’, you might remember that Treasurer Morrison announced that he was to delay the release of a taxation discussion until 2016. He would not rule anything in or out of the discussion paper which led to every interest group in the country urging the priority of their special interest as being more important than others’ special interests. The inevitable debate went on so long and hurt the government’s standing rolling into 2016 to the extent that they nearly lost the double dissolution election.

The Abbott/Turnbull government has been plagued with stuffups. From the NBN fail where the second rate hybrid system promoted by Turnbull (while communications minister) as cheaper and quicker while delivering slower and no cheaper service to Australians; through to the inhumane treatment of humans at detention centres owned and managed by the Australian government — where even the government Audit Office has reported that political expediency has overruled good governance in the supervision of the contractors engaged to do the work:
Out of $2.3 billion paid over 40 months, $1.1 billion was approved by officers without the appropriate authorisation and another $1.1 billion was paid with "no departmental record" of who had authorised the payments.

The ANAO also concluded the contracts themselves lacked effective guidelines and management mechanisms, owing partly to the "great haste" with which the detention centres were established in 2012‒13. Many faults persisted in later contracts, the ANAO said.
And to prove that this government will commit the same errors again and again, it appears that the current Centrelink debt collection system will be expanded to include those on disability, age and family related payments.

The Abbott/Turnbull government is out of touch with the reality of Australian life. The continual scandals, the exorbitant waste of money on things like detention centres and travel expenses while sending out debt letters to those who have needed to use their entitlements under the welfare system, while embroiled in continual argument over which faction of the Liberal Party should be running the country is unedifying at best. No wonder the Hansons, Xenophons and so on are getting some political traction.

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

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Watch this space in 2017


As with most political issues, the following few questions are inter-related: Turnbull’s future may well depend on the economy, on whether or not a new conservative party forms and whether there is a Trump-inspired trade or currency war between China and the US; our economy may well depend on what Trump does in relation to China, let alone whether Morrison displays any understanding of economics; and so on.

Will the Australian economy improve or continue to stagnate?

In December we had the news that the Australian economy had contracted by 0.5% in the September quarter. Most of the pundits do not expect that to be repeated in the December quarter, which means we would avoid a recession (which requires two consecutive quarters of contraction).

On the other hand, commodity prices are still weak, although better than they were, and if a US/China trade war erupts may weaken again. Every reduction in commodity prices flows through a large segment of our economy, affecting the supporting businesses and often, through reductions in the workforce, local businesses, and the impact then multiplies ultimately affecting government revenue. The Christmas season may help us avoid a ‘technical recession’ (that magical six months) but will we see another quarter or two of contraction during 2017?

This year will also see the end of car manufacturing in Australia. That has implications across a number of industries and, as some commentators have noted, it has been car manufacturing that has driven much of the technological innovation in the manufacturing sector. Turnbull’s ‘innovative and agile’ economy may become a little more wobbly as a result.

The end of car manufacturing will lead to increased unemployment, not only in the car industry but in the companies that previously relied on providing parts to that industry. Couple that with the lack of wages growth (the lowest since records have been kept) and the government will be losing more in income tax revenue and paying more in unemployment benefit, making it that much more difficult to achieve its stated aim of bringing the budget back to surplus.

The economy did not go well in 2016 and the prospect for 2017 isn’t all that good. Even in his MYEFO in December, Morrison lowered the estimated rate of economic growth for both financial year 2016‒17 and 2017‒18. The new forecast rate of growth isn’t even enough to absorb new entrants into the workforce (usually accepted as about 3%) and that is without considering that the economic growth forecasts for the past few years have proven optimistic. Certainly don’t expect a boom year but how bad it may be we will have to wait and see.

Will Scott Morrison ever understand the budget?

Ever since the Abbott/Turnbull government was elected, and returned last year, the government’s budget deficit has continued to grow. Low commodity prices, over which the government has no control, and slow wages growth, which government policies have actually promoted, have not helped.

Morrison, however, continues to focus on government spending rather than revenue raising. Although he has backed away somewhat from his earlier statement that the government had a spending problem not a revenue problem, his actions have remained focused on reducing spending. (I won’t get into the MMT argument here.)

The government has ignored the opportunity to borrow money at historically low interest rates to fund infrastructure. Although it is now talking more about infrastructure, it appears it may be at a time when interest rates could be on the rise again — US interest rates are certainly likely to rise during 2017 which may force some other countries to raise theirs in order to maintain their currency.

Our Reserve Bank still has capacity to reduce interest rates (although such reductions have done nothing to stimulate the economy so far). If it does reduce interest rates, and the US increases rates, the Australian dollar is likely to drop in value. The government will claim that helps exporters but it will increase the price of imports which may not help our ‘terms of trade’ and will also potentially lower our living standards by making imported consumer goods more expensive at a time when wages are barely growing — not something that would enhance the government’s electoral appeal.

Turnbull’s ‘innovative and agile’ economy and the promise of company tax cuts — which he continues to espouse despite it being unlikely to pass the Senate — are not issues that inspire the average voter. If any benefits are to flow to the economy from such ‘policies’, they will be well beyond the next election, so Turnbull and Morrison can’t look there for short term budget improvements but they seem to have no other plans to help the economy and by implication the average voter.

Will Morrison and Turnbull finally concede that they also need to raise revenue in the next budget? That will be one to watch although I expect that, if so, they will do their best to obscure the fact.

Will there be a new conservative party?

Cory Bernardi is creating a nation-wide conservative movement but not yet formally a new conservative party. It will be interesting to watch where that goes in 2017 and whether it turns into a fully-fledged political party.

The Liberal party will no doubt do its best to stop it happening as it would further split the conservative vote, although that may not be an issue until the next federal election. If such a party comes into being during 2017, it could have serious implications for the government because it has only a one seat majority in the House of Representatives. Even if only one or two Liberal or National members in the House were attracted to the new party that would create a situation where not only does the government have to negotiate with crossbenchers in the Senate but also in the House to have legislation passed. Although the conservatives already seem to wield considerable influence in the Liberal party room, if they held the balance of power in the House, that could actually increase their influence. That may even be a consideration in the formation of such a party: if they wish to create Australia in their conservative image, having a couple of members in the current House could help them achieve that, or force Turnbull to another election earlier than he would wish.

The electoral implications are that the conservative vote could be split between the Liberals, One Nation, the Nationals and the new party, leaving open the possibility that Labor would lead on first preference votes in more House of Representative seats and have an improved chance of winning them. And it is likely that a proportion of the preferences for a new conservative party would flow to One Nation (and vice versa) before they flowed to the Liberals, so it would be very interesting.

The timing of the creation of such a party could be determined by the election timetable. The earliest a federal election can be called, other than another double dissolution, is August 2018 but such a party may like to test its electoral appeal at a state election. WA has an election in March which now seems too soon to establish the party and create an organisation geared for an election. SA goes in March 2018 and the earliest Queensland and Tasmania can go to an election is April 2018 and May 2018 respectively: so to be ready to contest one of those the new party would have to be created no later than the latter half of this year.

Will Turnbull remain prime minister?

Personally I think he will in 2017 but 2018 may be a different story — unless he voluntarily decides to toss in the towel, deciding it is just too difficult to govern his fractious coalition and cope with the constant negotiation with the Senate crossbenchers (and potentially House cross benchers) to have legislation passed.

As indicated above the earliest an election can be called is August 2018. I doubt he would dare have another double dissolution before then as that would not go down well with the electorate (but if he loses members in the House to a new conservative party he may be forced to). But if the economy continues to stagnate, or underperform as a result of a US/China trade war, that will reflect on the government, as economic performance always does even if the government has little real control over many aspects of the economy, and he may well foresee that he cannot win the next election — although he could leave an election as late as possible (May 2019) in hope that things will improve. Much will depend on his own vanity and desire to be prime minister or whether he sees a short stint as having achieved his ambition.

Another key factor will be the possible creation of a new conservative party. For Turnbull that could be both a blessing and a curse. A ‘curse’ for the reasons described above but a ‘blessing’ if it freed him to express more of his liberal philosophy rather than the conservative agenda. A Malcolm Turnbull who again expressed liberal views would probably reignite his support in the electorate but then both he and the Liberal party would need to decide what to do about it. While a more liberal Turnbull may attract votes, it may be just as difficult to form government if a new conservative party also attracts votes: in fact, a more liberal Turnbull may draw some votes from Labor and the Greens while some of the Liberal base goes to the new conservative party — that would really redefine the political landscape in Australia. It could also lead to a minority government and I doubt Turnbull would want to be in that situation.

Turnbull will have much to ponder particularly in the latter half of the year unless there is an unlikely improvement in the economy and unless the Liberal party is able to forestall the formation of a new conservative party or even the growth of conservatism in its own ranks. Will Turnbull want to continue to lead unless those things come to pass? Will the conservatives in the party room decide to move against him for a genuinely committed conservative leader rather than one who panders to them only to keep the job? After all, the result of the 2016 election means Turnbull does not lead from a position of strength.

Abbott has spoken against the rise of a new party and will some in the Liberal party see Tony Abbott as the one who can provide a bulwark against defections to a new conservative party or even its creation? Although perhaps not intended, the pressure created by threats of a new conservative party may well enhance the chance of an Abbott return to counter it.

Will Trump really threaten the world as we know it?

While Trump may cause problems for the US with his apparently contradictory promises to halve the company tax rate, spend billions on infrastructure and improve the US budget bottom line, their impact on Australia will play out indirectly through the international financial system. Of more direct consequence to Australia could be his trade and foreign policies, particularly relating to China.

Trump may wish to be more friendly with Putin and Russia but he will have to remember that China and Russia are still close, if not as close as once they were. He also sees North Korea as a threat but will have little scope to do anything about it without Chinese support although he thinks that using trade as a lever may also force China to act. He may think he is a good negotiator but he and his appointees will run up against expert negotiators and some, like the Chinese, are certainly willing to play the ‘long game’, something which Trump and his ilk seem unable to do.

Australia may continue sitting on the fence and use ‘diplomatic speak’ to suggest that differences should be resolved diplomatically but that may become more difficult under a Trump presidency. Will Australia be forced to side with either the US or China on some key issue? That will be a difficult position for Australia given that they are two of our biggest trading partners.

On trade, Trump is keen to scrap US involvement in the TPP which will effectively be its demise. Turnbull has consistently insisted that the TPP is essential to Australia’s future, so what will its demise mean for that future? It will be another piece of Turnbull’s economic plan that fails to materialise — which in the case of the TPP may not be a bad thing.

The main concern is a potential trade war between China and the US. If the US becomes more protectionist and imposes tariffs on Chinese imports, that may reduce Chinese production which in turn will reduce demand for Australian resources, with all the economic consequences that implies. It could also mean that China sends more cheap goods to Australia that formerly went to the US and that could further undermine what manufacturing we have left unless we also declare that they are ‘dumping’ goods in Australia and impose punitive tariffs which will essentially be biting the hand that feeds us. If this scenario unfolds, Australia will be in a difficult place economically and in how to respond to the challenges it throws up.

In turn, it may also mean that China pays more attention than it already does to developing nations in Africa and the Pacific and that will have foreign policy implications for Australia. We have been cutting our foreign aid budget but if China redirects its effort, we may be forced to do more in that area or accept further growth of Chinese influence in the region — which way will we go?

Conclusion

The above are just a few of the questions that could arise during 2017.

Others include:
  • Will the housing bubble burst and the construction boom come to an end?
  • What will be the effect if we lose our AAA credit rating, not just for government but for our banks?
  • How will Australia deal with Brexit and the need to negotiate separate trade deals with the EU and the UK?
  • How will we address problems meeting our climate change commitments under the Paris agreement?
And of course there are the perennials such as how we handle refugees and Australian Muslims which will be influenced by the rise of the conservative forces.

It may prove to be an interesting year both here in Australia and internationally.

What do you think?
What are your answers to the questions?

What other questions will Australia face in 2017?

Let us know in a comment below. We may use some of your suggestions for future articles.


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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.


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Where will we be in 50 years?


In the next few months, most Australians will be considering their financial affairs and the preparation of their annual tax return. It is usually a time for some questioning around how you did manage to spend all that money in the past year and what changes you can make to become thriftier in the upcoming year.

Most of us get so involved in the day to day activities that govern our lives, we have little inclination or time to think about the long term. It is also a truism that those who forget their history are bound to repeat it. Those who look at the long term can see patterns and trends that escape us mere mortals. Those long term thinkers — usually called Futurists — can give a valuable insight into our future based upon reflection and observation of what has occurred in the past. The results can be fascinating and worth thinking about.

Taking the reflection theme to heart, let’s look at where Australia has come from and where we as a society are heading. So go and prepare a beverage of your choice, click on this link for one of the better ‘80s Australian pop songs and read on while we discuss ‘where will we be in 50 years’.

Apart from the convenient segue to a song, there is a good practical reason to choose to look 50 years into the future. There seems to be a 50 year (more or less) cycle in Australian economic and immigration history going back to the days when Australia was comprised of six (sometimes friendly) colonies. It is a cycle of boom and bust — boom when we are using the land to produce riches beyond compare and bust when the rest of the world has moved on from our particular riches, and Australia has not adapted. There is a moral overtone here as well: it appears that we as a society welcome new immigrants during the ‘lean’ years, and throw up barriers to their entry when we are booming.

In the 1880s, the city with the highest per capita income in the world was Melbourne. While the streets were not literally paved with gold, they might as well have been. Next time you are in Melbourne have a look at the expansive and quality buildings built towards the end of the 19th century (which fortunately still exist), as well as the good quality housing stock in the inner suburbs originally from the same era. The impressive thing is that the ‘working class’ could afford to live in an expensive place.

The wealth of Melbourne was based on the mining of gold in the (then) colony of Victoria that commenced in the 1850s. Ballarat and Bendigo were the centres of the gold industry and also have a rich history of 19th century buildings to admire. Gold was the method of exchange in the day and extracting it from the ground increased the wealth of everybody in the colony. In 1852, it was estimated that mining comprised around 35% of the Victorian colony GDP and wages in Victoria rose by 250% between 1850 and 1853. Not that Victoria was alone. Gympie, in Queensland’s south east, boomed after the discovery of gold in the late 1850s and with some justification claims to be the ‘town that saved Queensland’ during the early years of the new colony — as Queensland was technically bankrupt.

By the mid 1860s, the initial boom was over. Immigrants to the gold fields were not only from the same or other colonies, there was a significant immigration from overseas. While the English, Scottish and Americans that immigrated to the gold fields could blend into the cities and towns to find work, the Asians that immigrated (predominantly Chinese) could not and, once the money stopped flowing, their different appearance, customs and language made it easy for those that were suffering unemployment to single out and victimise.

By the early 1890s, the six colonies that were to form the Commonwealth of Australia within a decade were feeling the effects of a long drought that caused a recession and industrial disruption (as well as the formation of the Australian Labour Party at Barcaldine in 1891 during an ongoing shearers’ strike). The South Australian premier at the time said:
I regard as second only to the necessity of protecting our shores against actual invasion, the necessity of protecting Australia against the influx of aliens, Asiatics, criminals, paupers, and other undesirable classes
By the 1890s, the gold rushes were back, due in some part to the availability of capital (from the UK) that could not be used elsewhere due to an ongoing economic conditions in Europe and the Americas. As a result, Charters Towers in northern Queensland was a town of over 20,000 at the turn of the century and had its own stock exchange. It was also considered necessary and economically viable to build a water pipeline from near Perth to Kalgoorlie in the last few years of the 1800s so that the extraction of minerals — again primarily gold — could continue apace. While the Charters Towers Stock Exchange is a shopping arcade today, the water pipeline in WA is still in daily use.

In 1901, the Australian colonies federated and became Australia. In the then population, 98% of Australians were of British heritage (70% born in Australia) and one of the first pieces of legislation through the Australian Parliament was the Immigration Restriction Act — later known as the White Australia Policy.

Even though 98% of Australians had some British ancestry, it didn’t stop the Australian government interning those with ‘enemy’ bloodlines during World War 1. As various trade agreements and imports from Germany and Austria-Hungary were seen as ‘unpatriotic’ and the Australian economy benefitted from product substitution, higher output and the associated profiteering, Australia encouraged immigration (from the ‘winning side’) post World War 1 and like most of the world was caught up in the Great Depression at the end of the 1920s. People again began to feel threatened by immigration and joined local versions of the New Guard (remember Francis de Groot who ‘unofficially’ opened the Sydney Harbour Bridge) and the Communist Party. While both groups were ideological chalk and cheese, they both wanted ‘strong’ government who would keep Australia for Australians.

The economic pattern continues through World War 2, the 1950s and the Snowy Mountains Scheme, the 1960s’ ‘Credit Squeeze’; the largesse of the Whitlam years and subsequent contraction under Fraser and so on to the current day where Australia has not had a recession for over 24 years.

The immigration pattern continued from the propaganda fuelled racism in World War 2, through the ‘new Australians’ that largely supplied the labour for the Snowy Mountains scheme as Australia was rebuilding after the war — until there was a return to restrictions in the 1960s when we were booming after overcoming the ‘credit squeeze’ early in the 1960s. Malcolm Fraser to his eternal credit (with support from politicians in general) assisted a large number of South East Asian asylum seekers to come to Australia in the late 1970s (we had contributed to bombing their country almost to oblivion after all), when we were still suffering the after-effects of the oil crises and stagflation. Over the past 10 years, as our prosperity increased, the rhetoric from politicians to restrict immigration increased again to the ludicrous situation where the government of this country apparently implicated all of us as people smugglers by paying cash to those that profit from the miserable conditions endured by asylum seekers coming to Australia by fishing boat.

So we as Australians have a choice. Are we going to perpetuate a pattern of history that is, if nothing else, racist and economically irrational or are we going to break the mould? There does seem to be a correlation between economic activity and immigration. At the time of writing, the official cash rate is 2%; the government is allowing immediate tax write offs of $20,000 to kick some life into the economy; and, while the US seems to be coming out of a prolonged economic downturn, there are some real and structural economic problems in the Eurozone.

Australia seems to have an economic choice. As a nation we can continue to believe that our current export markets will again expand which is highly unlikely —

  • China is buying less coal than previously and plans to decrease consumption of fossil fuels by at least 20% between now and 2030.
  • India plans to reduce significantly (or even eliminate) the importation of thermal coal within two to three years.
  • NASDAQ reports falling demand and prices for iron ore exports

  • Or Australia could look at the new economy — such as renewable energy or even computer games:

  • The Queensland Government and US Navy are discussing using biofuel grown and produced in Queensland.
  • Australian computer games producers are asking for government assistance to expand

  • Instead our current prime minister is more intent on appointing a wind farm commissioner because they look ugly. In the words of President Obama:
    But we also inherit the beauty and the joy and goodness of our forebears. And we’re on this planet a pretty short time, so that we cannot remake the world entirely during this little stretch that we have. … But I think our decisions matter. And I think America was very lucky that Abraham Lincoln was President when he was President. If he hadn’t been, the course of history would be very different. But I also think that, despite being the greatest President, in my mind, in our history, it took another hundred and fifty years before African-Americans had anything approaching formal equality, much less real equality. I think that doesn’t diminish Lincoln’s achievements, but it acknowledges that, at the end of the day, we’re part of a long-running story. We just try to get our paragraph right.
    It seems that the first sign of a coming decline in our lifestyle is the imposition of barriers against 'unsuitable' immigrants, be they boat people now or Chinese in the 1860s.

    This government (with support from the ALP) has been attempting to remove the legal rights of people to claim refuge in Australia. The previous ALP government wasn't much better.

    At the same time, it seems that our major exports, minerals and other primary produce are finding greater difficulty in attracting and retaining overseas markets. The government’s tax concessions to small business as well as official interest rates indicate that Australia's economic conditions are flat at best. There is even an iron ore price war occurring in Western Australia between BHP and Rio Tinto to move product. All of this would suggest that economic times will get worse rather than better in the next few years.

    When it comes time for others to judge our paragraph in Australia’s history, wouldn’t it be nice for those in 50 years time to recognise our generation as the one that observed there was a pattern and chose the sustainable alternative of assisting people in fear of their lives, value adding exports of high technology devices and supporting those in our society that need help?

    What do you think?
    2353 suggests that we actually first act to identify and restrict ‘unsuitable’ migrants while times are still good. Is that greed? Do we just not want to share our success? And does that blind us to changes? Do we not see our future economic opportunities because we are so caught up in our success that we inevitably slide down into the ‘lean’ years again? — and realise we need migrants to help rebuild. A cycle that 2353 hopes we can escape — once we recognise it.

    For the next two weeks we will be presenting something a little different — an historical approach rather than opinion. We are taking advantage of the parliamentary winter recess to present a two-part piece by Ken on “How did we get a multi-party Westminster system?” In the first week Ken looks at how parliament developed in England and the historical creation of some written but many unwritten rules about how it operates. In week two, he will look at the Australian Constitution and how that reflects the English system by a mixture of law and the accepted unwritten rules (conventions).


    The ‘trickle-down’ effect


    Next time a conservative politician or acquaintance tells you that tax cuts for the better off will help the state or nation’s economy, you might want to have ‘the discussion’.

    Tax cuts for the better off is part of a theory of economics known as ‘trickle-down’ that seeks to prove that if the tax cuts are given to the better off, they will spend more, increasing the demand for goods and services to the direct benefit of the economy as well as the government’s tax revenue. So we’re all on the same page — here is a ‘trickle-down theory’ definition:

    An economic idea which states that decreasing marginal and capital gains tax rates — especially for corporations, investors and entrepreneurs — can stimulate production in the overall economy. According to trickle-down theory proponents, this stimulus leads to economic growth and wealth creation that benefits everyone, not just those who pay the lower tax rates.

    Probably the best known example of this theory around the world has been the Reagan Presidency in the United States. In the early 1980’s, he cut the top tax rate by 20%! Most conservative governments have also implemented similar cuts in the past although, to be fair, not of the same magnitude. Conservatives will also tell you that government spending should be reduced to an absolute minimum and the government’s budget should balance. Forbes (an American business publication) as recently as 2013 has been arguing that while it finds the term ‘trickle-down theory’ objectionable, it is a valid theory that has worked in the past. According to the article, the term was coined —

    … by Democrats in the 1980s as a way to attack President Reagan’s economic policy combination of tax rate cuts and some relaxation of federal regulations. They needed a catchy, easy-to-remember zinger to fire at Reagan; a line that would keep their voting base angry.

    The article goes through all the usual conservative talking points: small government is less of a drag on the economy; people need work rather than infrastructure such as schools and transportation; the better off are the ones that create wealth; that Obama is to blame and so on. It finishes with this:

    What poor people should want is more freedom and more growth, so they will have better opportunities. The deceptive “trickle-down economics” notion was crafted to take advantage of their ignorance about the way the world works. Perhaps one day the pitiable Americans who now cheer when politicians who masquerade as their friends denounce “trickle-down economics” will realize that the massive federal Leviathan is their enemy.

    While I take the point that the term ‘trickle-down theory’ may have been coined by a member of the Democratic Party in the US and it does have more ‘zing’ than ‘supply-side economics’, the fact is that the theory is all about those who are better off supporting the economy and the government reducing its influence. The conservatives have their own ‘zinger’ name for the theory as well — ‘Reaganomics’. Regardless of the name you want to give it, the theory suggests that benefits of tax cuts to the better off are supposed to flow to those that are less well off. If that isn’t trickling down, what is?

    The other argument is that the reduction in regulation assisted Americans to find jobs — and contribute to the economy. While to an extend it did, the majority of the Reagan era was during a time in the world’s economic history when the economy was chugging along nicely thank you very much. It could also be argued that the seeds for the current social and economic woes in the USA were sown in that era where personal wealth was a far greater concern than the common good.

    Seems it’s all cut and dried then, doesn’t it? US and Australian conservatives still call for a return to ‘supply-side’ or ‘trickle-down’ economics (depending on your point of view), citing amongst other justifications, Reagan’s success in 1981 in reversing the US recession.

    Reagan’s tax cuts are claimed to be the event that ended the recession of the late 1970’s and early 1980’s in the USA. But what is (conveniently) forgotten is that he increased government spending by 2.5% at the same time. Government spending also stimulates the economy. Therefore the most cited example of the benefits of this economic theory doesn’t stack up, as there were other influences at the time. Despite later increasing taxes for the better off, Regan also tripled the US Federal deficit from 1981 to 1989 — hardly the action of a government reducing influence in the economy. George Bush (the elder) also increased taxes despite a ‘no tax increases’ promise.

    Recently the Huffington Post reported on the success on the Governor of the US state of Minnesota (Mark Dayton) and his remarkable turnaround of the state’s economy. The full article is here and the highlights are that when he took office in 2011, he inherited a deficit of US$6.2 billion and 7% unemployment. In 2015, Governor Dayton handed down a budget surplus of $1 billion that he has pledged to spend on transportation and education. Unlike nations, US (and Australian) states do not issue their own currency, so balanced budgets are considerably more important than at the federal level.

    Dayton is an interesting person. He has been in politics for some time but considered to be a terrible ‘retail’ politician. According to Mother Jones:

    An heir to the Target retail fortune, Dayton, 68, has ploughed tens of millions of his own money into his campaigns, but it still hasn't come easy. He swallows his words in a rush, speaking in almost-unintelligible mumbles and frequently losing track of his point as he rambles on unrelated tangents. "He's not a terribly articulate guy," says Larry Jacobs, chair of the University of Minnesota's public policy school. "He's not a smooth talker; he struggles to give a smooth public speech." At public events, Dayton hunches his shoulders, which makes him appear shorter than his 5-foot-10 frame, and often appears to be trying to disappear into the crowd. No one wonders whether he'll seek national office someday. He's not the leader of the free world — he's your dad, struggling to make small talk with you and your friends after you get home from school.

    So how did Dayton do it? Well you could say he threw the ‘supply-side theory’ out the window. Not only did he raise taxes on the highest earners in Minnesota; he increased the basic wage in the state to $9.50 an hour. Mother Jones reports:

    Republicans went berserk, warning that businesses would flee the state and take jobs with them.

    The disaster Dayton's GOP rivals predicted never happened. Two years after the tax hike, Minnesota's economy is booming. The state added 172,000 jobs during Dayton's first four years in office. Its 3.6 percent unemployment rate is among the lowest in the country (Wisconsin's is 5.2 percent), and the Twin Cities have the lowest unemployment rate of any major metropolitan area. Under Dayton, Minnesota has consistently been in the top tier of states for GDP growth. Median incomes are $8,000 higher than the national average. In 2014, Minnesota led the nation in economic confidence, according to Gallup.

    Scott Walker is the Republican Governor of Wisconsin — the neighbouring state to Minnesota — and a potential Republican Presidential Nominee in 2016. For decades, the two states have been comparable in a number of social and economic criteria. In the past few years, it seems that the ‘unlikely politician’ in Minnesota is outperforming his counterpart in Wisconsin according to a number of sources including Minnesota Public Radio and Econbrowser. Walker was also the subject of a ‘recall election’ in 2012, when in excess of 500,000 Wisconsin voters petitioned for Walker’s removal from office. He won the subsequent re-election — only after allegedly receiving considerable financial support from outside the state. CBS News in the US is reporting there are some potential problems with the morals and ethics of how Scott Walker manages his fundraising. Never the less, Walker is seen as a conservative hero by legislating to remove considerable negotiating power from the public service unions in Wisconsin and other US states as detailed in this article from The New York Times . Walker is now claiming that his ‘success’ with unions gives him the experience to deal with Islamic State (when he becomes a Republican President in 2016 you would have to assume). Fighting with unions and reducing public services are not unknown in Australia under the current federal government or its predecessors. Dayton has announced that his current term will be his last — and yes, he did have to wait until the ‘stars aligned’ to actually perform what is considered to be a remarkable recovery.

    Australia’s newly appointed (in January 2015) Treasury Secretary, John Fraser, has gone ‘on the record’ claiming that ‘Reaganomics’ had some positive effects. Gareth Hutchens, writing for Fairfax media (link above) suggests that the view of Fraser is somewhat different to Martin Parkinson and Ken Henry — the previous two Treasury Secretaries. Given that Parkinson and Henry demonstrated their credentials during the Global Financial Crisis and its aftermath, Fraser has some large shoes to fill.

    It is fair to suggest that there will be economists discussing the benefits of ‘trickle-down economics’ for years to come. However, Governor Dayton has clearly demonstrated that trying to make society more equitable by increasing the basic wage and taxing those that can afford to fund the services will not only improve the state’s bottom line, it will improve the quality of life enjoyed by all its citizens, then when the ‘payoff’ comes, services such as education and transportation can be improved using government funding. It seems there is a better way than the frequent calls for ‘tax cuts for the well-off’.

    Minnesota and Wisconsin have seemingly been joined at the hip economically and socially for a considerable period of time. Governor Dayton has improved the living conditions of those in his state, reduced unemployment and is now funding improvements to transportation and education using methods that are certainly not supported by Australia’s Treasury Secretary Fraser or Treasurer Hockey. Governor Walker cannot replicate the success of Dayton (or Reagan for that matter) using ‘traditional’ conservative economic measures in neighbouring Wisconsin; accordingly the citizens of that state are falling behind their ‘long time equals’ who live over the border in Minnesota.

    So next time you hear the call for tax cuts, austerity and ‘small government’; why don’t you think about Minnesota’s Mark Dayton and have ‘the discussion’ about a better way instead?

    What do you think?

    About 2353

    Welcome to ‘the discussion’ we have to have. 2353 provides plenty to discuss in this piece on ‘trickle-down’ economics and the alternative approach — that seems to be more successful. The piece is particularly timely as Hockey released the government’s taxation discussion paper last Monday.

    Next week, on a similar theme, Ken discusses ‘How the economic rationalists tried to steal our hearts and minds’, which looks at how the economic rationalist approach was trying to change not just our economy but our basic Australian values.



    Enjoy a new era at The Political Sword


    On Saturday, 13 September 2008 Ad astra wrote: ‘This is the first posting of The Political Sword blog. Its focus is Australian politics. It is intended to give expression to those who have opinions about contemporary political events. In particular it will provide a forum for exposing deception among politicians, bureaucrats and commentators.

    ‘The people deserve to know the truth about political decisions, how and why they were made, and about those who made them. They are entitled to know if political commentators are truthfully representing the situations they are reporting, and that they make clear what is fact, and what is opinion. They owe it to their readers to validate the facts they report and reveal their source.

    ‘By challenging politicians and commentators to stick to the truth and to justify their words and actions, it is possible that the quality of political discourse in this country might improve. The Internet provides ordinary citizens with the opportunity to influence political behaviour between elections, rather than only at election time.

    ‘Politicians, journalists and academics read political blogs - they are bound to be influenced by them, at least to some extent.

    ‘Al Gore said that political blogs have become a significant new force in political debate and decision making in the US. The same opportunity exists in this country to put politicians and commentators to the verbal political sword
    .’

    Over six years later, the words apply even more than when they were written. Blogs and social media now do impinge on politicians; sometimes the politicians do hear what the ordinary person says and sometimes they do respond. But their honesty and their transparency has not improved; indeed it seems to have deteriorated, most noticeably since the 2013 election.

    When in September 2013, at the same time as Lyn, who provided TPS users with comprehensive links to political material day after day for many years, Ad astra decided to step back from TPS, Janet (jan@j4gypsy), not wanting to see it disappear, moved in and organised a team that has maintained the site ever since. In Ad astra’s words: “Her organisational skill, and the dedication of TPS team members have been outstanding. They have authored, sought other authors, reviewed, edited, and coded countless pieces that have appeared week after week on TPS.”

    Over time the nature of our author contributions has evolved. In recent months, the emphasis of most pieces has been on the philosophical aspects of politics, with a focus on economics. The pieces have been learned treatises on the chosen subject, well researched and referenced with many links, fascinating and valuable reading that has evoked reflection and deep thought about the matters that influence politics profoundly. Because these matters are seldom addressed by politicians in their discourse with the public, and are usually neglected by mainstream media journalists, the electorate has been left to flounder in a sea of inconsequential superficiality, devoid of thoughtful consideration of the central issues that influence, and indeed mould our democracy. So important have these pieces been, that it is planned that such contributions shall continue to be the solid base upon which TPS will continue in 2015. You can look forward to more of such pieces from our talented authors.

    Casablanca took over from Lyn, and since then has supplied a continual stream of links to important material from the media. Her dedication and perspicacity in selecting relevant items is deeply appreciated. You can look forward to her contributions in 2015.

    As we enter a new year and contemplate the 2016 election in about eighteen months, as the substandard performance of the Abbott government continues, and as its leader’s performance declines by the day and his public approval sinks to greater depths, the need has become more and more pressing for incisive commentary on the government, its leader and its ministers, as well as on what the other parties are doing.

    TPS Extra

    To this end, TPS has added another component to its repertoire: TPS Extra. Older readers will remember how curbside paperboys in another era shouted: ‘Extra, Extra, read all about it’ as they spruiked editions of their newspaper that contained startling news. TPS Extra is TPS’s attempt to bring you the startling — in political commentary. We will not be generating news; there are countless news generators, and we don’t have the resources anyway. What we will be doing is dissecting the contemporary news from many sources, analyzing it, looking for meaning in the events, and interpreting what they might imply. We will provide links to the news sources and will often quote from them. The pieces will therefore be opinion pieces. They will reflect the opinion of the author, and they will invite your opinion.

    It is our intention to post such opinion pieces on TPS Extra. There may be several in one week, or none at all, depending on what is happening politically. You will be able to read these by switching from the main site, The Political Sword, to TPS Extra. 'Buttons' have been provided on each site to enable you to switch from one to the other and back again as often as you wish.

    Our Webmaster, who goes by the nickname Web Monkey, has skillfully designed the new site and the transit buttons. We are deeply indebted to him for his stylish design.

    TPS Extra is now live at http://www.tpsextra.com.au. There are several posts there: four prepared last week to trial the new site, and one added this week that comments on Australia Day . You may wish to read them, comment upon them, and rate them. Commenting and rating are done just as on the main TPS site.

    We suggest you make the original TPS site your default, and switch to TPS Extra as the desire takes you.

    We trust you will enjoy the variety now offered by The Political Sword in its two forms.

    While the main TPS site will continue to focus on more in-depth analysis of political and social issues, we are also making some minor changes in our approach for 2015.

    A call to authors

    The Political Sword will be accepting shorter pieces from authors for posting. Last year, our posts were usually around 2000 words (give or take 200‒300 words) but this year we will accept shorter pieces, anything from 400 to 1000 words. So if you have been reading our posts thinking you couldn’t write longer pieces like that, now you don’t have to. When we receive shorter pieces, we will attempt to put pieces addressing the same topic together and post them together: so instead of a single article constituting a post, we may have two, three or four articles.

    To help you, we now also have a list of themes. This doesn’t mean that they are the only things we will post about but we do hope to address a number of them during the year and your pieces, both short and long, will help.

    Our current themes are:

    • education
    • health
    • environment/climate change
    • immigration/asylum seekers
    • economy
    • social equity
    • tax
    • finance
    • work and the labour force in the 21st century
    • welfare
    • Aboriginal and Torres Strait Islander affairs
    • science, research and innovation
    In addressing the themes, we will not only be looking for critiques of the current approach taken by the government but alternative approaches that may actually help improve the situation or approaches that you think Labor could take into the next election. Of course, some of the themes can overlap.

    And, given our authors’ statement of beliefs (see below), there is also scope to ask them to expand on some of those beliefs and explain how they see our society achieving the ideals they have listed.

    About our authors

    We are also introducing a new feature: ‘About our authors’, for both TPS and TPS Extra. We all have our beliefs, our vision of the sort of country in which we want to live, and of course our biases. So that you can see where our authors are coming from as they write, a short bio and a longer statement of beliefs will be provided for you to read about each of them, all at the click of your mouse. To read about our authors, click ‘About our authors’ which you will see in the left panel immediately below ‘AA's Top Political Websites’.

    During the year, each author will be asked to provide a short ‘bio’ and a statement of beliefs. A short ‘bio’ from each author will be necessary, but the statement of beliefs is optional, although we do think it adds to our readers’ understanding of the author’s position and approach.

    As always, your feedback will be welcome as regards both TPS Extra and the approach on TPS.

    The TPS Team

    Be sure to come back on Sunday evening for our first main post of the year: ‘We’re all in this together’ by 2353.