The Nobel Prize winner argues that an economy dominated by large corporations has failed the many and enriched the few.
Energy giant failed to declare donations it made to NSW major parties at a time when it was seeking development approvals for projects on state’s mid-north coast
Britain just got its first concrete sign that the British exit from the European Union, or Brexit, will crush the nation’s economy after a grim set of PMI data released by Markit on Friday morning showed a “dramatic deterioration” in the economy since the UK voted to leave the EU. Markit’s flash PMI readings for the UK’s economy showed that composite output fell to its lowest level since March 2009, during the tail end of the global financial crisis. Here is the scoreboard:
Was the previous Labor government responsible for a record deficit as Mathias Cormann suggests? ABC Fact Check runs the numbers.
They cost us a lot but have received little attention this election campaign.
ABS data show private sector business investment and company profits boomed under Labor but have collapsed under the Coalition
India recently launched a “mini space shuttle” for just $14 million. Many people commented, expressing their unhappiness at India investing in space travel while so many of their people live in poverty. The space industry is worth more than a hundred billion dollars worldwide. Most of this is dominated by just a few countries. If India can break into this industry at a lower cost, it could provide a massive stimulus to their economy.
And let’s take a look at a few of the things that were more expensive than their latest launch, shall we?
John Menadue concludes his unmasking of the claim by Malcolm Turnbull, the media and others, that conservatives are better economic managers.
Journalists sifting through thousands of documents from the leaked Panama Papers have uncovered a list of dumb idiots still paying income tax.
The list – which includes Australians – is said to be several pages long. It could be the most explosive find yet in what is believed to be the biggest data leak in history.
“We’ve learnt some pretty amazing stuff this past week, but even we were taken aback by the idea that some dumbasses were filling in tax returns and paying tax at the proper rate,” Investigative journalists Jenny McGuire said.
The tax – which is funnelled directly to central tax offices in countries across the globe – is believed to be used to fund hospitals, schools and roads.
“Some chumps are paying literally thousands of dollars in tax, every single year. That’s money that could be used to fund extra houses and yachts,” McGuire said.
More to come.
While the Chinese government’s response to Australia’s defence white paper was forcefully delivered, state media coverage was low-key.
Scott Morrison is a formidable politician, a leading contender to replace Tony Abbott, and perhaps the anointed successor to Malcolm Turnbull. But Treasury is hardly an easy stepping-stone to the Lodge. Of the 38 treasurers before Morrison, only six went on to be prime minister.
vdnP_Tw[/embed]Source: Robert Reich: VIDEO: Why We Must End Upward Pre-Distributions to the Rich – Truthdig
Any unwanted economic indicators trying to reach Australian shores will be locked up on a small island and never spoken about again, the new Treasurer has revealed.
Making clear he would not comment on operational matters, new Treasurer Scott Morrison said, “If there’s a problem with our economy you certainly won’t be hearing about it from me”.
When asked where the debt levels were currently at, Mr Morrison said, “on a boat to Manus Island”.
Mr Morrison was then asked what the unemployment rate was, to which he replied “it’s the number of people over 15 who are actively looking for work, as a percentage of the total workforce”.
ABC $7.30 presenter Leigh Halfprice interviews Australian Prime Minister Tony Idiott on the subject of the Australian economy.
The latest figures on the health of the Australian economy as shown in the June 2015 quarter National Accounts continues to paint a gloomy picture. Meanwhile, the spin that Treasurer Joe Hockey and Finance Minister Mathias Cormann offer, is priceless. It seems the thrust of their argument is that it doesn’t matter how bad the…
If most Americans have always been poor in the sense that counts, how shall we describe the condition of working people in the age of “secular stagnation”? Repressed for sure: persistent and hopeless austerity will generate social dislocation on a disturbing scale – rising crime and suicide rates, domestic violence and psychological depression. I think of these as expressions of unorganized resistance. Oppressive conditions are naturally resisted in one form or another. The form taken depends on the existence and scope of savvy agents of political resistance. In any case, the State is preparing for what it fears will be significant outbursts of mass recalcitrance. The infrastructure of a police state is in place. State repression apparently must be practiced, rehearsed in preparation for full fledged assault. The experimental “subjects” have thus far been largely black people. But that’s just the dress rehearsal. Only an organized, active Left with a mass base can avert what’s in the wings. So far, it doesn’t look good. So far.
The last thing the prime minister wanted to talk about on the first day of the new financial year was the economy. Firmly on his agenda is the existential threat to Australia posed by a “death cult”, and boat people. Both politically more fertile ground than the ballooning debt and deficit he promised to fix but now doesn’t talk about much, if at all.
There in the Great Hall of the parliament, Tony Abbott called on a higher being to safeguard the nation. Sounding more like an American president, or even a preacher man, this was his parting salutation to the members of the shiny new Australian Border Force (ABF): “May God bless you. May God bless your work. May God bless the country you are helping to protect and prosper.” Believers may have been impressed. Australians, however, are sceptical of anything that smacks of Bible bashing. Especially if it has a whiff of opportunism about it.
One of the country’s respected economic commentators, Ross Gittins, is not impressed. Security scare intended to hide economic failure Writing in the Fairfax papers, he sees the national security scare campaign as an attempt to hide an inconvenient truth: Abbott and his treasurer are making a hash of the economy. The evidence is compelling. Sure there are people in our midst who would do us harm, who despise who and what we are, but the threat they pose, statistically, is far less than any of us being involved in a road accident.
Asylum seekers must always be seen as threats, queue jumpers and illegals, and never as desperate human beings, men, women and children.
Abbott’s hyperbole reached a low point – or high point, depending on the view – in his response to last weekend’s three terror attacks overseas. Po-faced, he warned, “As far as the Daesh death cult is concerned, it is coming after us.” “Daesh” is the derogatory Arabic acronym given to Islamic State’s various iterations, IS, ISIL, ISIS. Instead of urging us to be alert but not alarmed, he was giving credibility to the outfit’s delusional claim it was winning everywhere. According to the author of the best-selling book, ISIS: Inside the Army of Terror, Michael Weiss, this rhetoric is counterproductive. Counterproductive if you actually want to defeat the extremists – but not if you want to appeal to that rawest of voters’ emotions, prejudice and fear.
The newly appointed border force supremo, Roman Quaedvlieg, stuck to the script. Resplendent in his new uniform, he gave resonance to the prime minister’s spiel: “Our utopia, our country, is under constant threat.” A more hysterical warning would not have been out of place as German bombs rained down on London during the Blitz. Nor would the draconian new powers vested in the ABF. Like our spy agencies, its operations will be shrouded in secrecy. Transparency and accountability are always casualties in war, sometimes justifiably. But this federal government is taking it to extremes, and we’re not even at war.
The Border Force Act is targeting doctors, nurses, teachers and aid workers employed in our detention centres. They face a two-year jail term if they disclose what is happening in these places. That prompted a passionate letter of defiance from more than 40 current and former workers on Manus Island and Nauru. One government adviser explained the need for the information blackout on “context”. The suggestion was that no matter how bad these Pacific gulags are, they are still much better than the conditions suffered by the Rohingyas in people smugglers’ camps.
Such speciousness only gives weight to suspicions that the secrecy is really to hide cruelty lest it swings public opinion. Asylum seekers must always be seen as threats, queue jumpers and illegals, and never as desperate human beings, men, women and children.
The protesting signatories see it very differently:
“We have advocated, and will continue to advocate, for the health of those for whom we have a duty of care, despite the threats of imprisonment, because standing by and watching substandard and harmful care, child abuse and gross violations of human rights is not ethically justifiable.”
Far from being dissuaded by these concerns, the government is looking forward to the Labor Party tearing itself apart over them at its national conference later this month. It keeps the headlines where Abbott wants them, and well away from his abandonment of real and promised economic reform. “It’s politics, stupid,” seems to be the new ruling principle.
Nowhere was this more obvious than the revelation that the Expenditure Review Committee (ERC) of cabinet, chaired by the prime minister, actively considered changes to superannuation tax arrangements before this year’s budget. Labor’s Chris Bowen, a former treasurer, says the department would not have sent four briefings to the ERC unless this was the case. At the time, Joe Hockey was signalling a disposition for changes. He was being urged to it by his own Commission of Audit, his own Financial System Inquiry, and the superannuation industry itself.
Abbott killed it stone dead after Labor announced it would concessionally tax interest earnings above $75,000. Hardly a sock-the-rich move, it would begin to address the huge cost to the budget of these concessions. Never mind the advice, for Abbott it was politics. The prime minister has now gone one step further. His promise not to look for equitable savings in this area is a “never ever”. Repeating the precedent of his election eve undertakings not to do something, he told reporters, “We have made a very clear decision that we aren’t ever going to increase the taxes on super.”
A government serious about repairing the budget would be looking for more than bracket creep to do the job – that is, inflation pushing wage and salary earners into higher tax brackets. In the meantime the budget deficit has doubled, unemployment is rising, productivity is falling and investment is patchy. Gittins has called out Abbott’s bluster in opposition, his claim the Liberals had good management in their DNA. “I thought he had a point,” Gittins writes, “but what we didn’t discover until too late was that he and his chosen treasurer just didn’t have that gene in their bodies.”
Abbott’s reform shyness is born of political weakness, a legacy of last year’s budget disaster and February’s leadership scare. He has been clawing his way back but his government is still languishing in the polls. Wrapping himself in a flag or 10, depending on the occasion, is only working to a point. This week’s consolidation of the past quarter’s Newspolls dramatically shows it would lose government in an election held now. A lot of the media focus is on Bill Shorten’s looming challenges in the unions royal commission and the ALP national conference. But the warrior prime minister is facing two big moments of truth in coming months.
The United States Supreme Court’s recognition of same-sex marriage as a human right has given new impetus to the push for recognition here. A Liberal backbench bill, seconded by Labor and supported by independents, will go into the parliament in August. That will trigger a debate in the Liberal and Nationals party rooms on a conscience vote. Abbott hasn’t changed his views, he says, although this week he refused three times to restate them. He is under pressure from his conservative allies not to allow a free vote, a position that is looking increasingly out of step with the broader community and as such could be politically damaging.
Not making our climate-change sceptic PM’s life any easier is a new alliance calling itself the Australian Climate Roundtable. What must have surprised, if not shocked, the naysayers in the Coalition was the membership of the group. Besides the usual environmentalist suspects, business is throwing its weight behind the need for real action to achieve the stated goal of avoiding a two-degrees Celsius rise in the earth’s atmosphere. The aluminium industry, one of the biggest users of electricity, says it’s time to set climate policy on a path that will efficiently reduce emissions while also enhancing economic prosperity and maintaining industry competitiveness.
The roundtable includes as a policy tool trade in emissions entitlements and the removal of carbon from the atmosphere – something Abbott has categorically ruled out. Anything that smacks of a carbon tax is anathema to him. It would show his “scrap the tax” as a pyrrhic victory. But when you have the Business Council of Australia, electricity generators, manufacturers and unions all signing up to policies that look beyond the next khaki election, it’s serious.
Adding to the pressure is the announcement from China, one of the world’s biggest emitters, that it is intent on cleaning up its act. Beijing has announced ambitious initial emission reduction targets for after 2020. Apart from praising coal as “good for humanity”, Abbott has had precious little to say on the subject. He’s been too busy scaring the nation with an overblown terror threat to spend any time addressing one the world’s scientists warn is real and increasingly urgent. Urgent, in the sense that a transition to a less carbon-intensive economy takes decades and has to begin now. In case Abbott hadn’t noticed, our future depends on it.
Mining magnate Gina Rinehart says she is heartbroken, but holds out hope of one day mending the broken relationship with her trust fund.
“She knows it will take time; there’s no quick fix,” a friend of Ms Rinehart said. “But the relationship between a mining magnate and her trust fund is special, it’s sacred. So I’m confident that with time, patience and lots and lots of litigation the two can be brought back together”.
Ms Rinehart held back tears as she tried to come to terms with where it all went wrong. “I remember when it was so small – just a billion dollars or so.
“It’s grown so much; so much. And somehow I let it drift away. I only hope we can get back to that intimate, beautiful time we had when it would cuddle up next to me at night and do whatever I said”.
Why did Prime Minister Benjamin Netanyahu of Israel feel the need to wag the dog in Washington? For that was, of course, what he was doing in his anti-Iran speech to Congress. If you’re seriously trying to affect American foreign policy, you don’t insult the president and so obviously align yourself with his political opposition. No, the real purpose of that speech was to distract the Israeli electorate with saber-rattling bombast, to shift its attention away from the economic discontent that, polls suggest, may well boot Mr. Netanyahu from office in Tuesday’s election.
But wait: Why are Israelis discontented? After all, Israel’s economy has performed well by the usual measures. It weathered the financial crisis with minimal damage. Over the longer term, it has grown more rapidly than most other advanced economies, and has developed into a high-technology powerhouse. What is there to complain about?
The answer, which I don’t think is widely appreciated here, is that while Israel’s economy has grown, this growth has been accompanied by a disturbing transformation in the country’s income distribution and society. Once upon a time, Israel was a country of egalitarian ideals — the kibbutz population was always a small minority, but it had a large impact on the nation’s self-perception. And it was a fairly equal society in reality, too, right up to the early 1990s.
Since then, however, Israel has experienced a dramatic widening of income disparities. Key measures of inequality have soared; Israel is now right up there with America as one of the most unequal societies in the advanced world. And Israel’s experience shows that this matters, that extreme inequality has a corrosive effect on social and political life.
Consider what has happened at either end of the spectrum — the growth in poverty, on one side, and extreme wealth, on the other.
According to Luxembourg Income Study data, the share of Israel’s population living on less than half the country’s median income — a widely accepted definition of relative poverty — more than doubled, to 20.5 percent from 10.2 percent, between 1992 and 2010. The share of children in poverty almost quadrupled, to 27.4 percent from 7.8 percent. Both numbers are the worst in the advanced world, by a large margin.
And when it comes to children, in particular, relative poverty is the right concept. Families that live on much lower incomes than those of their fellow citizens will, in important ways, be alienated from the society around them, unable to participate fully in the life of the nation. Children growing up in such families will surely be placed at a permanent disadvantage.
At the other end, while the available data — puzzlingly — don’t show an especially large share of income going to the top 1 percent, there is an extreme concentration of wealth and power among a tiny group of people at the top. And I mean tiny. According to the Bank of Israel, roughly 20 families control companies that account for half the total value of Israel’s stock market. The nature of that control is convoluted and obscure, working through “pyramids” in which a family controls a firm that in turn controls other firms and so on. Although the Bank of Israel is circumspect in its language, it is clearly worried about the potential this concentration of control creates for self-dealing.
Still, why is Israeli inequality a political issue? Because it didn’t have to be this extreme.
You might think that Israeli inequality is a natural outcome of a high-tech economy that generates strong demand for skilled labor — or, perhaps, reflects the importance of minority populations with low incomes, namely Arabs and ultrareligious Jews. It turns out, however, that those high poverty rates largely reflect policy choices: Israel does less to lift people out of poverty than any other advanced country — yes, even less than the United States.
Meanwhile, Israel’s oligarchs owe their position not to innovation and entrepreneurship but to their families’ success in gaining control of businesses that the government privatized in the 1980s — and they arguably retain that position partly by having undue influence over government policy, combined with control of major banks.
In short, the political economy of the promised land is now characterized by harshness at the bottom and at least soft corruption at the top. And many Israelis see Mr. Netanyahu as part of the problem. He’s an advocate of free-market policies; he has a Chris Christie-like penchant for living large at taxpayers’ expense, while clumsily pretending otherwise.
So Mr. Netanyahu tried to change the subject from internal inequality to external threats, a tactic those who remember the Bush years should find completely familiar. We’ll find out on Tuesday whether he succeeded.
This post originally ran on Robert Reich’s website.
The U.S. economy is picking up steam but most Americans aren’t feeling it. By contrast, most European economies are still in bad shape, but most Europeans are doing relatively well.
What’s behind this? Two big facts.
First, American corporations exert far more political influence in the United States than their counterparts exert in their own countries
In fact, most Americans have no influence at all. That’s the conclusion of Professors Martin Gilens of Princeton and Benjamin Page of Northwestern University, who analyzed 1,799 policy issues — and found that “the preferences of the average American appear to have only a miniscule, near-zero, statistically non-significant impact upon public policy.”
Instead, American lawmakers respond to the demands of wealthy individuals (typically corporate executives and Wall Street moguls) and of big corporations – those with the most lobbying prowess and deepest pockets to bankroll campaigns.
The second fact is most big American corporations have no particular allegiance to America. They don’t want Americans to have better wages. Their only allegiance and responsibility to their shareholders — which often requires lower wages to fuel larger profits and higher share prices.
When GM went public again in 2010, it boasted of making 43 percent of its cars in place where labor is less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.
American corporations shift their profits around the world wherever they pay the lowest taxes. Some are even morphing into foreign corporations.
As an Apple executive told The New York Times, “We don’t have an obligation to solve America’s problems.”
I’m not blaming American corporations. They’re in business to make profits and maximize their share prices, not to serve America.
But because of these two basic facts – their dominance on American politics, and their interest in share prices instead of the wellbeing of Americans – it’s folly to count on them to create good American jobs or improve American competitiveness, or represent the interests of the United States in global commerce.
By contrast, big corporations headquartered in other rich nations are more responsible for the wellbeing of the people who live in those nations.
That’s because labor unions there are typically stronger than they are here — able to exert pressure both at the company level and nationally.
VW’s labor unions, for example, have a voice in governing the company, as they do in other big German corporations. Not long ago, VW even welcomed the UAW to its auto plant in Chattanooga, Tennessee. (Tennessee’s own politicians nixed it.)
Governments in other rich nations often devise laws through tri-partite bargains involving big corporations and organized labor. This process further binds their corporations to their nations.
Meanwhile, American corporations distribute a smaller share of their earnings to their workers than do European or Canadian-based corporations.
And top U.S. corporate executives make far more money than their counterparts in other wealthy countries.
The typical American worker puts in more hours than Canadians and Europeans, and gets little or no paid vacation or paid family leave. In Europe, the norm is five weeks paid vacation per year and more than three months paid family leave.
And because of the overwhelming clout of American firms on U.S. politics, Americans don’t get nearly as good a deal from their governments as do Canadians and Europeans.
Governments there impose higher taxes on the wealthy and redistribute more of it to middle and lower income households. Most of their citizens receive essentially free health care and more generous unemployment benefits than do Americans.
So it shouldn’t be surprising that even though U.S. economy is doing better, most Americans are not.
The U.S. middle class is no longer the world’s richest. After considering taxes and transfer payments, middle-class incomes in Canada and much of Western Europe are higher than in U.S. The poor in Western Europe earn more than do poor Americans.
Finally, when at global negotiating tables – such as the secretive process devising the “Trans Pacific Partnership” trade deal — American corporations don’t represent the interests of Americans. They represent the interests of their executives and shareholders, who are not only wealthier than most Americans but also reside all over the world.
Which is why the pending Partnership protects the intellectual property of American corporations — but not American workers’ health, safety, or wages, and not the environment.
The Obama administration is casting the Partnership as way to contain Chinese influence in the Pacific region. The agents of America’s interests in the area are assumed to be American corporations.
But that assumption is incorrect. American corporations aren’t set up to represent America’s interests in the Pacific region or anywhere else.
What’s the answer to this basic conundrum? Either we lessen the dominance of big American corporations over American politics. Or we increase their allegiance and responsibility to America.
It has to be one or the other. Americans can’t thrive within a political system run largely by big American corporations — organized to boost their share prices but not boost America.
An email sent by HSBC whistleblower Herve Falciani to British tax authorities, which they denied ever receiving, has been discovered by a French newspaper.
HM Revenue and Customs (HMRC) denied contact with Falciani, 43, who is at the center of one of the biggest financial leaks in history.
But French newspaper Le Monde has since uncovered the email, which Falciani sent to HMRC in 2008 informing the authority about HSBC’s alleged tax avoidance scheme.
It supports his previous allegations that HMRC did not act on information he provided the agency.
“It proved I’m right,” Falciani told the BBC. “It required seven years of battles to get the point we are just now.”
Liz Nelson of the Tax Justice Network told RT HMRC’s missing email sounded “disingenuous.”
The former IT systems engineer for HSBC’s private banking operation in Switzerland stole the details of 30,000 bank accounts, totaling £78 billion, in 2007.
Swiss authorities issued an arrest warrant for Falciani for breaching their banking secrecy laws. He fled to France in 2008. The Swiss government continues to seek his prosecution.
Falciani then leaked the details to French authorities, who refused to extradite him to Switzerland when they realized the data could help identify thousands of French tax evaders.
The files have since been handed to the International Consortium of Investigative Journalists (ICIJ).
Falciani, who claims his family has received death threats since he made the leak, now lives in France under police protection.
The files reveal how HSBC Private Bank not only helped clients dodge taxes in their home countries, but also aggressively marketed the schemes.
HSBC in Switzerland actively contacted wealthy clients in 2005 to suggest ways of avoiding a new tax levied on the Swiss accounts of EU citizens, The Guardian reports.
The documents also reveal how HSBC Private Bank provided accounts for relatives of heads of state, people implicated in African corruption scandals, arms industry figures and others.
An HSBC bank branch in France laundered drug money collected from the sale of cannabis to immigrants in the Parisian suburbs, depositing the cash in the accounts of respectable clients in the French capital and reimbursing the drug dealers via their Swiss branch.
The leaks have caused a row in the UK over accountability, with Britain’s Public Accounts Committee (PAC) challenging HMRC over its inaction.
In a hearing Wednesday, it emerged that of the 150 files seen by the tax authority only three were sent to the Crown Prosecution Service (CPS). Of those, only one case was taken by the CPS.
Jennie Grainger, HMRC’s director general for enforcement and compliance, said it was extremely difficult to prosecute individuals for offshore tax evasion.
In the case of stolen or leaked data, guilt could only be proven using supplementary evidence, she said.
When probed on whether ministers were informed about HSBC’s practices, she initially said she was unsure, but later conceded concerns were passed on to ministers at the time.
Speaking to RT, Liz Nelson of the Tax Justice Network said: “These so called missing email – sounds disingenuous to those people [and] businesses that work hard and pay their fair share of tax.”
“There seems to be a culture at HMRC of tolerance towards tax avoidance because to be other would be anti-business, and that taxing the very wealthy is somehow anti-business.”
Lord Green, who was CEO and then chairman of HSBC during the period which the leaks cover, was later made a member of the House of Lords and then trade minister by the Conservative-led coalition government.
Green was appointed to a Cabinet committee on post-banking crisis reform by Prime Minister David Cameron, all of which happened after HMRC received data detailing the extent of HSBC’s tax avoidance schemes.
The Conservative party has come under fire after it emerged several of its key donors avoided tax in Swiss bank accounts.
Lord Fink, who donated £3 million to the Tories and was appointed a party treasurer, said he took “vanilla” tax avoidance measures.
Speaking to the Evening Standard, Fink said, “Everyone does tax avoidance on some level.”
Tony Abbott “continues to make the most astounding, cringe-worthy gaffes that stretch all credulity” writes Jennifer Wilson.
This, today from a Prime Minister who spends 4.3 million of taxpayer dollars monitoring social media, and employing spin doctors to “offer strategic communications advice” from the information gleaned:
I’ll leave social media to its own devices [said Abbott today]. Social media is kind of like electronic graffiti and I think that in the media, you make a big mistake to pay too much attention to social media,” Mr Abbott said. You wouldn’t report what’s sprayed up on the walls of buildings…
In spite of that 4.3 million taxpayer dollars’ worth of strategic communication advice, in spite of the iron control reportedly exerted over the PM by Chief of Staff Peta Credlin, Abbott continues to make the most astounding, cringe-worthy gaffes that stretch all credulity, and nobody wants him anywhere near them.
So it would seem the spin doctors and Ms Credlin are catastrophically useless at their jobs, because just when you think Abbott can’t get anymore bizarre, he goes and smashes all his previous records of stupid.
If Credlin and the strategic communications advisors were employed by anyone other than the LNP government they’d be sacked. I wonder how any of them will ever find alternative employment, given their unbroken record of spectacular failure with the Prime Minister.
Please do leave social media to its own devices, Mr Abbott, and stop wasting our money on monitoring it to see what it’s saying about you. It’s never anything good, you can be sure of that. How many millions of our dollars do you need to spend to find out what an absolute fool we think you are?
I’ve said it before and I’ll say it again. You can’t make a silk purse out of a pig’s ear. No matter how many dollars and spin doctors you throw at it, you just can’t. A pig’s ear is a pig’s ear and right now, on Australia Day 2015, we have a pig’s ear in charge.
(I suppose I should say sorry to pigs, who are really pretty smart animals.)
(Which Tony Abbott is not. A smart animal, that is.)
This article was first publish on No Place For Sheep.
There’s no denying that many supporters of The Greens were taken offside by Nick Kenny’s article yesterday. One comment was made that Nick should have been more concerned with attacking the ‘real enemy’ – the Liberal Party. Today Nick does just that as he breaks down another myth about Gough Whitlam.
Myth # 2: “Gough stuffed the economy, blew the budget, and made a mess of the joint” (The Liberals).
The Liberals love this one. Only the last part of it is even remotely true. Gough’s major downfall was trying to achieve too much too soon. After 23 years in opposition, having missed the global tide of left-wing reform in the 1960s, Gough and the ALP had a truckload of ideas they were aching to unleash.
Unfortunately, it doesn’t matter how long you’ve waited, no government is capable of focusing on more than a handful of key policies at once. The ALP learned from this mistake – the Hawke-Keating years were a succession of drastic, much needed economic reforms, spread out over the course of thirteen years. Gough tried to squeeze in the lot in three, and the government collapsed under the confusion and turmoil.
But that’s as far as it goes. Gough did not “stuff the economy” – Nixon and OPEC did. The United States president dismantled the Bretton-Woods monetary system in 1971. Those countries that had used it as the replacement for the previous “gold standard”, including Australia, saw inflation skyrocket. Two years later, the entire global economy was plunged into chaos and disorder after the Arab oil crisis of 1973, bringing an end to almost two decades of unbroken, unprecedented growth. The “Golden Years” had passed us, and the ALP missed the boat by sitting on the opposition benches the entire time.
Much like James Scullin, who came to power two days before the infamous Wall Street Crash of 1929, and was turfed from office two years later as the Depression tore us apart, Gough was a victim of rotten timing. There was bugger-all any Australian could, should, or would have done to properly prepare us for the economic earthquake that would shock the world into a new age.
For his part, Gough stayed staunch, and tried to keep us on our steady new course while the economic winds went out of our sails. In the end, the country jumped shipped ship, blaming him for the miserable weather.
The idea that Gough “blew out the budget” is even more laughable. This myth is passed around in Liberal circles as some testament to the superior economic credentials of the Coalition, particularly under the Howard prime ministership. It is an outright lie. The Whitlam Government delivered a budget surplus every year it was in power.
Moreover, the Fraser Government that defeated Whitlam in 1975 went on to deliver seven consecutive budget deficits. With nothing to show for it. And who was Treasurer overseeing this obscene waste of taxpayer dollars? Who held the key to the nation’s piggy bank, signed the cheques, sent interest rates through the roof? None other than the Liberal grand master himself, John Winston Howard.
The Fraser/Howard duo inherited zero government debt from the Whitlam Government. Zero. By 1983, Howard had blown the budget out to $40 billion. And for all this spending, nothing was achieved – in fact, we went a hundred miles an hour in reverse. Howard and Fraser went on a warpath to undo almost everything achieved during the Whitlam years, and left us with nothing more than double-digit inflation, double-digit interest rates, double-digit unemployment, record numbers of strikes, an “inward-looking, moribund, industrial graveyard”, and a $40 billion dollar debt that refused to die until Howard sold Telstra off decades later to recoup the losses.
Whitlam spent within his government’s means, and he spent it on priceless investments – free tertiary education and universal health care are just a few. While we now shackle our governments’ spending according to the gospel of “fiscal conservatism”, we would do well to remember an age when spending was seen for what it really is – an investment. No different to a mortgage, private school tuition, share portfolio, health insurance, employee training seminars, university degrees, and so on. Consider all these private, personal sacrifices we make in our lives that pay off in the long run. Now consider them on a national scale. Organised, targeted, and accessible to all, elevating this country to its true potential. Such was the Whitlam dream.
But we should always remember that the wealth created by the private sector is not for the nation; it is for themselves. The nation always comes second. By continually producing surpluses, governments are treating the nation as second class citizens by restricting their own investment in the creation of a nation’s wealth. Surpluses deprive a nation of reaping the rewards it could gain through investment.
Business is always wary of governments who borrow, regardless of the need. The business attitude is to let them do the borrowing and make the profits. Governments should control the money supply so that inflation is kept in check. They should also extend to business lots of grants and subsidies to help sustain employment levels while business makes more and more money.
For business, all this could be seen as economic heaven if it really worked that way. But business is brutal and unforgiving. Things can, and do, go wrong and when they do, generally greed is the culprit. Business’s get greedy, take on more than they should. Then, they forget how they started, they forget the principles of developing a business case, they get sloppy and careless.
When this happens those at the top of the tree make sure they are protected to the exclusion of those who work for them. Those who work for them suddenly find themselves redundant, out of a job, thrown on the scrapheap or pressured into working for less. That is how the gap between the rich and the poor is maintained and widened.
It should come as no surprise that it is conservative governments, generally, that foster this kind of freelance wheeling and dealing. They are more likely to encourage private investment at the expense of building national wealth that should rightly be owned by the people. They are the ones who, generally, sell off government owned assets, even highly profitable ones to improve their household budget mentality.
Reform governments are the ones who then have to come in and restore government services, particularly health and education, areas left in crisis due to funding cuts conservative governments make to create their surpluses. Reform governments clean up the mess and rebuild services essential to a properly functioning society.
So, why is it that most people think it is the other way around? Why do most people believe conservative political parties are the better financial managers? How many times have we heard Tony Abbott score political points when he refers to Labor’s “debt and deficit disaster” when we know that the debt Labor incurred during the post GFC period kept Australia on a growth trajectory while the rest of the developed world went backwards?
I blame the economists whose voices we can’t hear. Not the ones in the private sector; they are complicit. The voices of the rogue economists, the stalwarts who understand what is really happening are the culprits. Their voices aren’t loud enough.
This is the real conspiracy. Remember, it is the borrowers of money that make the money, not the savers. When governments borrow and invest in infrastructure, like the NBN, invest in transport, health and education, the nation profits; the dividend is the future.
When governments sit back and let the private sector run services that governments should run, like Medibank for example, they forego the wealth inherent in those services. When that happens the nation as a whole, is the loser.
Abbott could spend $2bill less to achieve the emissions reduction target of 19% set for 2020. It would boost our chances of achieving the 5% cut in emissions on the levels of 2000. We could buy International credits for 20% of the $2.5bill allocated to Direct Action. The Business Council of Australia & The Australian Industry Group support it. However our Rhodes Scholar PM back in 2011 was known to have said ” money shouldn’t be going off shore into dodgy carbon farms”.
The Climate Change Authority ,which Abbott wants to axe, says meeting the targets with only domestic action is too expensive when there is a flood cheap international permits about. After all “Australia is open for business” and business is a two way street. Why not trade.
Is he really going to override the UN & cut down 74,000 hectares of trees in Tasmania and then replace them and call the result Direct Action ? Wouldn’t it be cheaper to leave them all alone after all he didn’t support the car industry.