May 7th 2016

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Articles from this issue:

COVER STORY Safe Schools: Sorry, chef, but the entire sex-ed menu's off!

CANBERRA OBSERVED Mild unpopularity of Libs preferable to ALP slogans

EDITORIAL Turnbull's stuttering election gambit

ENERGY Media shows no interest in Shorten's renewables plan

LEGISLATION Viability bill at least a baby step for the babies

INTERNATIONAL AFFAIRS Intifada of the Knife: Israel's unknown war

FAMILY AND DOMESTIC VIOLENCE Gender symmetry: women can be as abusive as men

ECONOMICS AND POLITICS Overhauling Australia will require more than a tinker

FAMILY AND SOCIETY Media gush over study only to find same-sex parents more irritable

RESEARCH The scientific objectivity of gender difference (Part One of two parts)

CINEMA Mowgli takes on the lore: The Jungle Book

BOOK REVIEW A sliver of hope

BOOK REVIEW A primer on Western civilisation

BOOK REVIEW Of ships and shots

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Overhauling Australia will require more than a tinker

by Colin Teese

News Weekly, May 7, 2016

I have just finished reading the most recent issue of Quarterly Essay. The piece by George Megalogenis entitled “Balancing act: Australia between recession and renewal”, takes 25,000 words to tell us what is wrong with our country – most notably in the area of what some might call our political economy.

Restarting Australia’s economic

engine is but one aspect of

what is a worldwide crisis.

Megalogenis says: “The debate we have to have is on the role of government in our economy. It is being forced on us by the market failures of the 21st century.”

In other words, he is saying that, whatever may earlier have been the merits of the “open model of the economy”, it no longer works; today’s world is too complicated. (Essentially the open model provides for markets to determine almost all economic outcomes, leaving only a minimum corrective role for government.)

Governments cannot function in this way. They don’t have the skills, the resources or, for that matter, the inclination to carry it out. To meet their responsibilities, contemporary governments must be prepared to wrestle with the contradictions of accommodating conflicting community interests that, these days, cross national boundaries and cultures. It is the pressures for change arising from these interactions that sometimes gives rise to the sense of international chaos we all feel.

Readers of News Weekly will already know that I normally prefer to contain my observations within narrower boundaries of economics. However, Megalogenis makes it clear that the open model is no longer an appropriate tool for policy making. Importantly, the changes he proposes draw closer the nexus between economics and politics.

Notwithstanding, the broadening of my horizons is not entirely due to Megalogenis; neither is it primarily attributable to the coming election. More accurately, my departure can be said to have been inspired by His Holiness Pope Francis.

As a Christian (of Anglican persuasion) it is impossible not to have been struck by his deep commitment to the wider concerns facing the modern world, including Australia. In particular, he prefers to remind us of what most of us have long forgotten: that our fruitless pursuit of material ends to the exclusion of all else is folly.

No less important, the Bishop of Rome, with great humility, reminds us that the human condition forever condemns us to the task of reconciling contradictions. A task always fraught with difficulties.

Pope Francis has set himself, and those around him, the thankless task of re-examining important aspects of Church life and ways of thinking. Not, perhaps, in his case, so much reconciling contradictions, but asking whether, without fundamental change, some important issues cannot be better handled to serve Christian ends.

Doubtless he has accepted the challenges he now confronts, well aware that the task will be difficult, thankless and, in some circles, perhaps misunderstood. No doubt, he fully understands – at this troubled moment in history – the inspirational value of his example. For that we should be grateful, given the difficulties we face.

What the Pope understands better than any modern politician – and the same applies in even greater measure to economists – is that in the modern world, so-called “progress”, or so-called “reform”, can never be justified as an end in itself. Change can have value only in the service of wider social objectives. Material benefits, whether widely or narrowly distributed, cannot justify “progress” or “reform” at the expense of social values and collective necessities.

In this context, dissatisfaction among ordinary people with the way economic life is being guided in most Western democracies is now widespread. The Pope has added his voice to those of the dissatisfied.

None of this should come as any surprise. Yet most political voices in leadership positions seem incapable or unwilling to take notice. Australia’s influential elites – political and otherwise – are no exception.

A few years ago French economist Thomas Piketty wrote a book called Capital. His primary purpose was to put the view that economic inequality around the Western world was now at the same level as at the end of the 19th century – having briefly improved in the 25 years or so after World
War II – and that we should be concerned. There will be debates for and against Piketty’s position on inequality, but some of the points he makes in passing are as incontestable as they are troubling. His comment on economic growth is one.

He points out that world economic growth has averaged about 1.6 per cent a year since the beginning of the industrial revolution, around 1800. This has proceeded alongside a population growth from about 600 million to around 7 billion. Interestingly, some 0.8 per cent of growth is due to output; the other 0.8 per cent is due to population growth.

So, in the most remarkably rapid period of world economic growth in 2000 years, the best we have been able to average in output growth has been 0.8 per cent a year.

Piketty makes the point that continuing population growth at the rate of the immediately past is impossible. To achieve it would mean a world population of 72 billion by 2300.

 We cannot assume even 0.8 per cent annual growth over the next 200 to 300 years. Some internationally renowned economists have already recognised some of the implications of this. Meanwhile, the world’s elites are wringing their hands about how to restart economic growth and keep it above 2 per cent each year.

The unreality of these aspirations seems to be taking hold worldwide – except in Australia. We know overall world economic growth is stalled – but some economies (think China) are still growing. Such growth as there is, is actually being redistributed, away from the rich, developed world. The richer countries are losing out on economic growth.

The economic consequences of these changes are impacting adversely on the less well off in rich economies. They don’t like it. For quite some time their likes and dislikes did not seem to be having much influence. But all that seems to be changing. We are seeing these signs more strongly in the Western nations of Europe and North America.

Australia, until recent months, seemed to be less affected than the rest of the developed world, but it was happening here too. The beginning of this year seemed to make this clear.

Australian political life has passed through several tumultuous years. Wasted really, so far as policy was concerned. Erratic leadership laced with ideological fervour. Both sides of politics have dislodged serving prime ministers; apparently with eyes only on the capacity to win elections.

Precisely what was expected when Malcolm Turnbull dislodged Tony Abbott from the leadership of the Liberal Party and became Prime Minister? The opinion polls about voting intentions swung decisively in his favour. Yet, Mr Turnbull has struggled to put his stamp on the leadership. As a result, new opportunities have opened up for what seemed to have been a crippled opposition leader.

With his lead in the polls gone, Mr Turnbull has brought on a double-dissolution of Parliament, apparently in the belief that the subject of union unpopularity will win back the doubters and deliver his Coalition a fresh term in office. He may be right, though that is by no means certain.

As Australia goes into election mode, guess what Mr Turnbull’s catch cry is? Growth! Australia, he assures us, is in good shape, and under his policies healthy growth rates can be maintained into the future to keep Australia prosperous. By comparison, the policies of his political opponents are certain to undermine future growth and prosperity.

The leaders of the two parties are engaged in a war of words about who is better suited to lead the country, largely based on manufactured differences between them on the matter of economic management. In fact there are no such differences, as both are aware. I suspect the electorate is coming to understand that.

The electorate may also realise that Labor and the Coalition fight each other with slogans while the real problems facing Australia remain unsolved.

George Megalogenis has done well to remind us that our problems can be traced back to the failings of the open model. It should be recognised, though, that as a Labor supporter, Megalogenis’ message is directed at his party’s leadership – inside and outside Parliament. Discard the economic model enacted so successfully by Bob Hawke and Paul Keating some 30 years ago, or go under, seems to be his message.

The open model was for then, not now. Labor needs to revisit the policies Bob Menzies inherited from Ben Chifley after World War II and reshaped.

I would disagree that the policies of Hawke and Keating were ever right for Australia. I got a different and more important message from Megalogenis. He claims Labor has been behind all the big reforms in Australia. That’s not the point. Wherever generated, all the big reforms dealing successfully with real crises have been possible only with bipartisan political support.

Adversarial politics is a luxury only good times can support.

For the coming election neither side is advancing the policies needed to solve our problems. Nor are they talking to each other. Fixing our real problems will require new kinds of thinking. Our two leaders could serve Australia by getting together and reaching a common position on what the problems are and how, together, they might go about fixing them.

Anyone taking a step in that direction would do well first to take notice of what Pope Francis has said and is doing.

All you need to know about
the wider impact of transgenderism on society.
TRANSGENDER: one shade of grey, 353pp, $39.99

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