The Austerity Cacophony and the End of Serious Platforms

[pietillidie]

This is a UK-oriented comment, but it applies to the Anglosphere generally.

For some time, I've been cursing Cameron and Osborne not simply for the absurdity of holding a referendum on a topic no one understood, but also for making people feel unsafe through a daily cacophony of austerity talk prior to the referendum.

Take it or 'leave' it, but someone has actually assessed the latter claim, and the problem wasn't simply austerity talk:

[David]

What do you make of Trudeau’s approach in Canada, PTID? I can’t say I follow Canadian politics closely, but he was elected on a promising platform if I recall correctly.

[Mugwump]

^^ interesting post, several things I agree with and several I do not.

I don’t think you can reasonably compare the Hawkeating government and Thatcherism. The latter inherited a near-bankrupt country with a badly degraded capital stock and a crisis of democratic legitimacy. Britain could have gone down the Portugal path by 1979 (major world power reduced to mendicant state). What Hawke-Keating set out to fix wasn’t really broken. The only problem was a BoP crisis which was fixed naturally by the rise of China and its demand for raw materials. Exactly what Keating pledged to change.

Britain has not really undergone a serious period of austerity. It had a public spending overreach caused by a naive belief (on all sides) that financial services was a golden goose. In 2007 we discovered that the eggs were painted, and tax revenues fell off a cliff. While governments are not households, they do have to broadly balance expenditure and revenues across a cycle, unless they print money or keep borrowing from the future. Sooner or later, both of those remedies cause a currency crisis, inflation, investment retraction, unemployment and misery. I think the very limited retrenchment of public spending (we are still running a deficit!) was necessary. A decrease from an unsustainable level s not absolute austerity, though it may feel like it.

Brexit is an act of self-harm, at this point. I think a referendum on the issue was justifiable, and I do not think it is for elites to demy th population a vote on major constitutional questions because “they can’t understand”. If we believed that we would never have general elections or constitutional change. That way madness surely lies.

The problem was holding the referendum amidst a sour mood caused by the above retraction of public spending and a sense of decline. Had the ref been held in 2004 I think remain would have won easily. It’s why I think another referendum should now be held once the deal is clear, so there are two clear options.

I agree that the allocation of public spending by the Tories has been a disgrace. They have protected pensioners - for narrow electoral advantage - at the expense of the productive workforce and infrastructure. Today’s pensioners draw down NHS services and pensions that they did not fund in their working lives. This is nothing like social equity, and it is our biggest problem. Someone needs to have a leader-like conversation about it, but no one seems able to do so in a society that prizes feeling over reason.

I am a conservative, but I am not a Conservative. The Tories would sell their children into slavery for power. So would Labour, of course, who rack up debt for the next generation in order to buy votes today. They pretend this is Keynesianism, which is an abomination on the great man’s memory. He wanted budgets balanced over the cycle. You expand public debt when times are bad, and pay back debt via supluses when times are good.

The large society which seems to have the closest to a sustainable social model is probably Germany, which seems to balance social protection with strong schooling, reasonable social discipline,fiscal discipline, acceptance of wealth achieved through business, and an underlying culture of honesty and compliance. Its economic model is probably not sustainable, being built on the sandcastle called the Euro, and it setting about ruining its social cohesion via mass immigration, but for now, at least, it works.

[stui magpie]

Now this could be an interesting discussion.

First off, I agree with Ptiddy that there doesn't appear to be any leaders of vision out there. Ones with the guts to look longer term rather than just the next election.

I also agree that the Hawke/ Keating government was a good one and made a lot of reforms for the good. Unfortunately I got to see the behind closed doors result of the union reform that didn't make the media which changed my views on them forever.

Howard was the next good leader and interestingly speaking of unions, did as much to strengthen them as Hawke/Keating did. The latter tore down the existing structure and forced them to build far better foundations but they also spoon fed them power they'd never had before. Howard made them get their shit together.

Thatcher IMO was the enema England badly needed. I'm sure it wasn't pleasant but the joint was farked. She tore stuff down and broke a lot of things, built a lot of new things but more importantly by razing a lot of shit to the ground she created the opportunity to build anew not just bring back the past. Single most important English PM since Churchill.

[Mugwump]

I think the Hawke/Keating governments perhaps the most overrated in our history. Just one example - they sold off the Commonwealth Bank, which used to be owned by the people and could have been used to keep the other banks honest. Instead it has turned into one of our premier corporate pirates.

Their express strategy was to wean the economy away from being “a farm and a quarry” and turn it into a high-end manufacturing economy based on “elaborately-transformed manfactures”. In truth, I think they achieved very little of that. Australia’s vaunted twenty years of economic growth has been built on a resources boom, large scale immigration (Increasing the population by ~ 1% a year is headline growth only) and a boom in private debt.

Lots of dubious privatization, lots of neoliberalism, tertiary education fees, lots of rhetoric. Some tax reform was desirable and well managed, and the Mabo settlement was embraced, which I think undeniably basically fair. I’m struggling to think of much else that justifies its reputation. Howard, by the way, seems to to fly in the jet stream with Hawke and Keating in many ways, but with more tail wind from China. The airline logo changed, but neoliberalism, economic radicalism, debt creation and immigration were the pillars of government, leading up to the more fractured and unequal society we have today.

The Menzian courtesies and social settlement underpinned a broadly contented and successful society for many years. Australia is a nice enough place to live today, but had it evolved and modenised along those lines, I think it likely that it would have been better still.

[pietillidie]

[pietillidie]

[pietillidie]

[Mugwump]

^yes, I think there would be anger, because cuts always cause anger. It is human to resent loss more than to joy in gains. But anger comes and goes, and Britain has been a discontented society many times in the past without fracturing, or badly self-harming like this. It was angry in 1980, and happy-ish in 2005. It is part of leadership to endure the anger of change, and to look beyond the thorny path to the better lands beyond. The LibDems showed much leadership in that regard in 2010-15, little good though it did them.

I try to be measured about the EU. Like you, i accept that it may be a necessary counterweight to China and the US, and there is much to admire in its internal camaraderie and ease. I was in Portugal last week, and reminded again of how much hope it has brought to countries and people where history has been less than kind. However, I also love the local and particular, and I suspect the Eu will absorb and dissolve that in time. I dislike its inherently liberal naïveté. I do not want the UK to become a statelet - a Virginia or Massachusetts - of Europe. And though I admire modern Germany, I fear it will always dominate the EU, and that is not what our history was for. Still, perhaps another generation, further away from the horror and the glory, will see that differently. In any event, while the EU train may be steaming to a destination that I do not want, that destination is far enough away, and the journey sufficiently uncertain, that it seems foolhardy to leap off the train and risk injury now.

I think the UK is fixable, but it will take immense leadership. Britain was once good at finding leaders at truly critical moments, but evidently that’s not true right now.

Our respective remedies, as we know, would be quite different ; but one thing that we might agree upon is the need to shift the limited state investment to better uses. I would means test most of the welfare state, as in Australia. I would require some contributions to medical care from those who can afford it, via private health care. And I would start a conversation about more palliative /minimal care rather than very expensive procedures for the very old. The latter would seem hard, but in truth we deny young mothers adequate cancer screening and response while funding heart bypasses for 88 year-olds. Like children, we prefer the immediate and emotional response to the hard choice.

This money could be invested in STEM education, in seed-funding for start up businesses and employment in major regional cities outside London/Oxford/Cambridge. It could also kick-start a public housing programme for established, reliable citizens, funded by rents just a notch above government borrowing rates. Note that some of this would be a problem under Eu rules, so Brexit does have some upsides.

Is that a comprehensive platform ? Probably not. But the principles that underpin this type of thinking could be developed into one, and aspects of it would apply in Australia just as much as in the Uk.

[stui magpie]

[Mugwump]

Unions arose in a context where the individual labourer had no power relative to capital, and was thus highly vulnerable and often exploited. That was true in the 19th and early 20th century and unions did a great deal of good in that era.

In a world where the returns to capital are not greatly higher than the rate of interest, where knowledge work means the individual worker has quite a lot of differentiated value, and social protection and employment laws give individuals rights against their employer, the purpose is very cloudy. Unions have thus become just another agent pursuing narrow, sectional, rent-seeking interests, or mindless defenders of the work-shy and unprofessional individual.

Today, in Australia and the UK, they are mostly large corporations which produce no consumer benefit, operating in a monopoly context (mostly government, where they cannot kill the host) and/or heavy industries with a very high capital/labour ratio). In such a context, they advance the interests of their office-holders and their "shareholders" at the expense of the public.

Now, it does not have to be this way, and in much of Northern Europe, notably Germany and Netherlands, and in parts of Asia, they are able to serve a wider role looking at the interests of workers in the context of national, industry and enterprise competitiveness. But that requires a very different legislative context, and a very different quality of union leader.

[HAL]

What does have to be this way and in much of Northern Europe Germany and Netherlands they are able to serve a wider role looking at the interests of workers in the context of national industry and enterprise competitiveness ?

[pietillidie]

[Mugwump]

At the enterprise level, “employee engagement” is pretty much the buzz word of the era, and in some areas the type of representation you suggest is taken seriously. Really good leaders manage to genuinely work with it to make change as positive as it can be. A lot, of course, just go through the motions of consultation to get to a pre-determined result.

Still, sincerity matters - and the interests of shareholders and employees, let alone customers, are far from identical. We can work to enlarge the intersection space as possible, but we shouldn’t be too pollyanna-ish about it.

[stui magpie]

While on the subject of unions, this seems to me to be a classic case of the union putting it's own interests first, cutting deals with employers to lower wages in return for increased memberships which means money and political clout.

https://www.theage.com.au/business/workplace/huge-pay-rise-for-coles-workers-after-scrapping-of-cosy-union-deal-20180811-p4zwwo.html