At the same time that I got my hands on Confessions of a Faceless Man, I also got a copy of the latest soul-searching Labor “where are we heading” book, called “All That’s Left: What Labor Should Stand For” edited by Tim Soutphommasane and Nick Dyrenfurth.

This book deserves somewhat more than the quick and dirty review I gave Paul Howes election diary. It comprises of ten chapters written by some prominent (and not so prominent) social democratic figures, including Lindsay Tanner, Geoff Gallop, Denis Glover and Larissa Behrendt (who is the only woman contributor to this book). The chapters range in topic from re-starting the culture wars, standing up for the States and cooperative Federalism, the role of trust in politics, the future of unionism and progressive economics.

Overall I found the book to be well worth reading, and a few chapters aside, the authors contributed well-reasoned and well-written additions to the large corpus of Labor-themed hand-wringing. What I found interesting was the central focus of exploring modern “social democracy” that tied the chapters together. I particularly agree that the prescription for Labor’s woes, that we move “beyond left and right” is a capitulation rather than evolution in progressive, left-wing discourse:

It seems indulgent, therefore, to suggest we must move ‘beyond’ Left and Right out of respect for passing intellectual fashion. And it seems too pessimistic to believe, as with many social democrats around the world, that the Left must exist only to preserve past gains. Now is not the time for timidity or despair. Social democrats may not have the opportunity to remake society, but they can still build a better one. (p.14)

Nevertheless, I felt that none of the chapters ended with a solid conclusion that answered the question posed by the book’s title: “what should Labor stand for”. Perhaps only the politicians’ chapters even tried to answer this question. The book’s conclusion (or postscript) tried to answer it, but instead simply summarised the challenges without posing a conclusion.

I feel as though if you were going to edit a book about What Labor Should Stand For, there should at least be an attempt to provide a conclusive answer, and despite the interesting discussion in some of the chapters, Dyrenfurth and Soutphommasane leave us hanging. A constant refrain in the book is that social democracy seeks to “civilise capitalism” – but there is no discussion of what this means or entails – which is a shame. Perhaps I should read Latham’s effort.

Certainly, Wayne Swan in his launch speech for this book tries his hand at answering the question, embedding modern Labor in a narrative of opportunity and social mobility, centred around a strong economy and jobs growth.

Joining Labor doesn’t mean signing up to unworldly idealism leading to inevitable disillusion. Membership of the Labor Party is a summons to public service. It’s an expression of love for our country and for its working people.

While I find Swan’s prescription rather tasteless – in fact in my view a focus on “social mobility” and “prosperity” is hardly different to the sloganeering of the conservative parties – I admire his attempt to place idealism front and centre of Labor. The unspoken line of thought here is Whitlam’s maxim that only the impotent are pure, and that Labor’s mission is achievement over idealism. The reason why Labor is obsessed with winning elections is that real progressive change can only come through exercising the levers of Government (this is a point made by Lindsay Tanner).

A key issue that is not addressed by this book or its authors or editors is “who is this book for”? There is a sense that the constant anti-Labor bashing by the Murdoch Press has wormed its way into the minds of the authors – who have come to accept the echo chamber of “Labor has no vision” or “Labor stands for nothing”. This formula was used against UK Labour for many years by the Murdoch Press, and while it was aimed at the electorate, its real impact was on the activists, intellectuals and policy wonks who support Labor and Labour. Something similar is happening in the US targeting the Democrats and Obama.

The damage to Labor’s morale is far more corrosive and toxic than to the electorate at large – afterall, few people read The Australian. What we have seen is Labor’s intellectual and activist support wane in the face of this conservative barrage – resulting in leakage to the Greens Party. We, Labor supporters, begin to question what Labor stands for – and the many speeches and articles by Labor’s leaders in answer to this are rarely (or never) reported. (See this insightful article over at The Political Sword for more on this phenomenon.)

Books like this are useful, but only useful when the go beyond the few hundred people that will buy and read this book. The ideas and agenda of the social democrats who have contributed to and edited this book need to do more to engage more broadly. This is the role of a modern Labor Party, the modern union movement, and think-tanks like Catalyst, Per Capita and Centre for Policy Development.

It is this lack of practical solutions that is probably the biggest letdown of “All That’s Left” – it is too theoretical in places, too general, too short.

What follows is some thoughts of the main chapters of the book (although not all of them), and at the end some of my own thoughts about answering the question of “What Labor Should Stand For”.

It’s the culture, stupid, Nick Dyrenfurth

Dyrenfurth, a post-doctoral research fellow at the University of Sydney, opens “All That’s Left” with an engaging discussion of the importance of “an all-out culture war on Labor’s behalf… to prosecute a reformist legislative agenda.”

Following its victory of sorts in the 2010 election, where now for Labor? Reclalibrated ‘Kevin 07′ slogans or celebrity politics will not suffice in office, nor will simplistic denunciations of capitalistic avarice or fantastic visions of the coming triumph of the organised working class appeal to the citizens of a society far more complex in structure and outlook than that which confronted Laborites of earlier generations. Labor’s task, however, remains much the same: to enlarge, once more, the outlook and ambition of this country. In this chapter I argue that social democratic public policy requires the cultivation of a distinctive political culture. (p. 18)

With this clarion call, Dyrenfurth takes us on a journey through Labor’s history, from the Tree of Wisdom to the first Labor Prime Minister Andrew Fisher, then Chifley, Whitlam, Hawke and Keating and finally Rudd. He makes the point that Labor has always been more “cultural” than “ideological”. He cites the various Labor myths – the Tree of Wisdom in Queensland, the great speeches of Labor tradition, from the Light on the Hill, to Men and Women of Australia, and the True Believers; he also suggests that where Labor has great heroes, it has terrible villains, like Billy Hughes and more recently Mal Colston.

The crux of this Labor culture was that it was about more than electing Parliamentarians – it was about movement building.

The wider labour movement waged a relentless campaign to shift the nation’s political culture to the Left, transforming the electoral contest beyond that of its hitherto natural arrangement: liberal versus conservative. To achieve progressive reforms, Laborites understood the need to cultivate collectively-minded values, so that citizens saw Labor’s program as not only justifiable but the consensus viewpoint. (p. 23)

Dyrenfurth’s critiques of Labor, his summary of its woes are more or less on the money, all the more poignant when enunciated by a sympathetic voice. He concludes that Labor’s fundamental challenge is to place an “ideological impulse behind its public policy.” More than the standard trope trotted out by many Labor spokespeople and MPs that “Labor needs a narrative” or “Labor has a good story to tell”, Labor must embed within everything it does and says the values of solidarity and egalitarianism – and what’s more, social democrats must take the fight to unfamiliar territory: mateship, patriotism and other shibboleths.

This chapter stands amongst the best of those in “All That’s Left” – and although it does not suggest some practical, specific programs that Labor and its allies could undertake, it is a cogent call to arms for the social democratic left.

Social justice and the good society, Tim Soutphommasane

In possibly the most disappointing chapter, Soutphommasane treats us to a dissertation into the definition of “social justice”. As a theoretical exercise it is rather pedestrian and as a formula for What Labor Should Stand For it is content free.

Soutphommasane starts by trying to define social justic – trying to counter the view that it is a nebulous, hard to define concept. This is where the essay starts – literature review of the prevailing views of social justice, morality, emotions, etc. Political philosopher Martha Nussbaum is invoked, as is John Rawls’ “A Theory of Justice”. From this base, Soutphommasane artices that “the basic idea of ‘justice as fairness’ highlights an article of faith among those who would regard themselves as left-liberals or social democrats: a value of fairness exists prior to our basic social structure.”

Taken together, these ideas point to how social justice concerns an idea of individual freedom and self-realisation within a community of citizens. Social justice means ensuring that all citizens of a community have the means and the ability, however variously defined, to be able to pursue a good life without being burdened by disadvantages that weren’t of their own making. (p. 43)

The clumsy, overly-theoretical passages of Soutphommasane unfortunately do not add much to “All That’s Left”. Following this pedestrian definition of social justice, the essay continues – this time putting the counter Rawlsian arguments in the form of large quotes from Amartya Sen, who emphasises “committed citizens” over “just institutions”.

For a movement that prides itself on practicalities, this chapter never rises beyond an undergraduate level of theoretical exploration and summation that is expected from a book written by social democrats. Soutphommasane does an admirable job of summing up the views of the major intellectuals in the area of social justice theory, but his writing is without character or purpose. While he does examine the term “social justice”, the other part of the article – “the good society” is largely overlooked.

His voice is drowned in the essay-style the chapter is written in – and it further suffers from overly technical and philosophical jargon: “hybrid vigour” “pluralistic approach” “solidaristic communities” “deliberative democracy”.

There is of course a place for this kind of higher level writing, but unfortunately Soutphommasane does not make it beyond the wading pool. Which is a shame, but perhaps social democrats should not try to nail down a definition of “social justice” that would inevitably exclude rather than include.

Progressive economics, David Hetherington

Hetherington makes the case, in the post-GFC environment, for a reregulation of the market for social good.

The challenge for social democrats is to harness the power of market forces to stimulate innovation and broad-based wealth creation, while being ever vigilant against the market failures that hurt the most vulnerable in our community. This requires an acceptance that well-regulated market economies remain the best system of resource allocation yet developed, aligned with a willingness to use the power of the state to intervene wherever market failures generate social costs. (p. 107)

Perhaps Hetherington comes the closest to defining social democrats’ mission to “civilise global capital”: could it be “market design by governments; and… the integration of social costs and benefits into economic decision making”? Certainly, Hetherington rejects to efficient financial markets theory that is the cornerstone of Chicago-school style “free-market economics”.

Labor, Hetherington argues, should take the approach of integrating social costs and benefits into markets – emphasising “progressive values of prosperity, fairness, community and sustainability”. With the failure of the “free market experiment”, Labor now commands the mantle of most-trusted party to manage the economy – a position it should exploit, alongside its traditional domination of health and education.

Hetherington sets out some areas where this can be done: Regulating some markets, using pricing mechanisms, providing no frills public options for some financial products, introducing a cost to emit carbon pollution, and putting a priority on finding jobs for the unemployed. He also suggests the creation of a long-term investment fund paid out of the minerals resource rent tax to fund “economic and social infrastructure outside the resources sector.”

A Red–Green coalition, Dennis Glover

The most annoying thing about Dennis Glover’s chapter is his fabricated distinction in trends of the “Left” between “Red” (industrial) and “Green” (environmental and middle class). This distinction alone makes the chapter nearly worthless – as his argument boils down to “Red and Green should get along and work together”. Glover’s prime example of the falling out of Red and Green is the failure of the CPRS to get pass through the Senate.

The first is for Red and Green Left to recognise that their shared goals give them a political interest in sticking together – and that this will sometimes involve compromise and sacrifice from both. In the twenty-first century, neither union members nor environmentalists will ever form a majority of the electorate, but together they might.

… The second is for the Red Left to recognise the extent of its success in solving the problems of material deprivation and explore a vision of society that places less emphasis on excessive consumerism and more on increasing other avenues of human fulfillment.

… The third is for the Green Left to recognise the importance of maintaining the hard-won social gains of social democracy. (p. 168-69)

It is a picture that is grossly simplistic, and more to the point, wrong. Glover simply constructs crude straw men against which to tilt. Firstly, if Glover is using “Red Left” to equate to Labor, then it is clear that “union members” can form a majority – it did so in 2007 and has done for more than a decade in various States. Secondly, I am not aware of any union or “Red Left” MP advocating for “excessive consumption” – in fact the goal of social justice (explored in other chapters) to me suggests that social democrats have for a long time turned their attention to “other avenues of human fulfillment”. Finally, I’m no fan of the Greens – but the Greens Party does not “scoff at the aspirations of working class people”.

All of this is mere political caricature – and poor caricature at that.

The rest of the chapter is a summary of how a modern Engles would find tackling climate change very important, and the great socialistic endeavour of Marxism was in part a rebellion “against the pollution of Manchester” and its cotton mills.

If Left and Right are political definitions that have been drained of meaning and poignancy, “Red” and “Green” as political shorthand are so barren as to be entirely lifeless.

Twenty-first century unionism, Paul Howes

Howes produces a readable but ultimately unnourishing chapter about the role of unions. There are three strains in this chapter: 1) Modern unions engage with business and the government; 2) modern unions are professional organisations that recruit from outside the nest; and 3) modern unions take organising and recruitment seriously by adopting the organising model.

His chapter is very much a product of its time – when it was written the debate and negotiation around the Resources Super Profits Tax was still underway. Howes is nothing if not a pundit and commentator, and his chapter delves into the current affairs of Labor and unions, reducing its utility as a broader comment on “twenty-first century unionism”. Nevertheless, Howes uses the opportunity to push a growing trend amongst union leadership, and that is the strategic use of workers’ capital embedded in superannuation.

Currently there is over $1.3 trillion invested in Australian superannuation funds, much of which is held in industry funds of which unions are trustees. Unions could look at innovative ways of directing superannuation investments into regional Australia while ensuring that fund members receive solid returns. (p. 188)

This regional focus also makes an appearance – much of Howes membership lives in regional Australia – and he argues that unions have a key role to play in stimulating regional areas, especially promoting skills and jobs.

Unfortunately, this interesting line of thought is only mentioned in the conclusion and not explored. The rest of the chapter serves as a summary of recent union history, the success of the Rights at Work campaign and a declaration that unions are still alive and well.

Trust in politics, Lindsay Tanner

Tanner’s chapter – really an edited speech he gave as a John Button lecture in December 2009 – is one of the more interesting, more practical chapters. His speech rephrases the question “What Should Labor Stand For” to “If we are to have believers, what are our beliefs?” His answer is that “trust” should be the “central theme around which modern Labor can build its program.” In this regard, like Banquo’s ghost, Tanner evokes the spirit of Latham, who argued that social capital was based on trust.

The role of “trust” in our society cannot be mandated, but can be fostered – and that is Labor’s task – although recently, Tanner argues, that objective has been implicit rather than explicit. He cites efforts such as regulating excessive executive salaries, strengthening unfair contract laws, increasing anti-terrorism protection, enforcing anti-discrimination laws, reducing carbon emissions, extending mutual obligation in welfare, protecting the rights of vulnerable workers and reforming electoral laws as initiatives aimed at increasing trust. “Securing trust means reducing fear, unfairness and insecurity” and this is not the role of government alone, but other social institutions “such as sporting clubs, schools, unions, churches and volunteer community organisations”.

Tanner’s most incisive comment unfortunately is not a reflection on Labor, but instead on the Greens Party:

As Stuart Macintyre said in an address to an ALP national conference, true believers need beliefs. The Greens have appropriated elements of the belief system of Whitlam Labor and, free of the constraints of seeking to govern, intensified them to a point where they have no prospect of attracting majority support. Labor can only compete with Green grandstanding at the price of an indefinite period in opposition. (p. 197-98)

This view reminds me of an article I read recently about the German Greens Party:

The Greens’ attraction isn’t explained by their policies. In fact they have surprisingly little to say on a range of important economic issues and many of their social policy proposals are unaffordable. What makes them irresistible to many people is the impression they give of always being on the right side. This is a feel-good party. It gives people a reassuring sense that they will somehow be morally elevated if they vote for it. Green voters hardly ever feel they have to justify their choice — that is a major advantage in the competition for votes.

The SPD remains tainted by the deep welfare cuts it imposed in 2003 and 2004, and people still think the party isn’t really serious about social justice. The CDU, for its part, is still widely regarded as a little dusty and old-fashioned, despite the best efforts by the party’s leadership to shake off that reputation. Meanwhile, support for the FDP has slumped amid accusations that it is just pursuing policies that suit the interests of its wealthy clientele.

People who vote for the Greens, by contrast, don’t need to explain their choice. Who isn’t opposed to climate change? Who isn’t in favor of protecting seals? Who doesn’t have doubts about the safety of nuclear power? And who doesn’t think that men and women should have equal rights?

The more I turn my mind to the Greens Party, the more I am convinced that they are transforming into modern-day ruling class tendency of the kind of the Liberal Democrats in the UK, or the Whigs and Free-trade Parties of the 19th and early 20th century – effectively bourgeois liberalists.

Overall views of “All That’s Left”

All That’s Left is a worthwhile, but ultimately unsuccessful contribution to the library of books about Labor, its values and its future. It is let down by some less than stellar chapters (notably Soutphommasane’s chapter), and for a book that asks the question “What Labor Should Stand For”, it stumbles in actually answering it.

I found the book overall an interesting paddle through the various streams of social democratic thought. More than anything, it highlights at once why “What Labor Should Stand For” is such a hard question to answer, and perhaps why it should not be nailed down.

What should Labor stand for?

In answering this question, I am reminded of Antonio Gramsci. Labor without a doubt (and as argued in this book) is a social democratic party, whose role historically and now has been to “civilise” capitalism. There is little passion left for a socialist program (if there ever really was one). Nevertheless, in the war of position socialists are compelled to form a united front to win from the ruling classes the consent of the subaltern classes in Australia. Participation within Labor is part of a program of building civil hegemony for working people – while acknowledging that Labor itself is a bourgeois party, albeit with genuine working class elements and links.

Labor’s task – as the party of a united front – cannot be narrow. It must build consent from a range of classes – the technicians of capital (judges, lawyers, school teachers, academics, bureaucrats) as well as the working classes themselves (who in Australia have historically had an underdeveloped class consciousness). It must aim to govern for the majority, and build a broad consensus against the conservatives and allies of capital.

Change can only come through the hegemonic power of the state. In a bourgeois liberal democratic nation like Australia, parliament is the chief way to organise, educate and mobilise the working class (ironically, this situation is a chief reason for the atomisation of the working class as a cohesive political force).

Because of this mission – this historical task to govern in the interests of working people through the consent of the working classes and the technicians of capital together – Labor will regularly compromise and accommodate the wide variety of interests within it – including bourgeois interests!

What does this mean for Labor?

Civil society is the environment in which social classes compete for social and political leadership or “hegemony” over other classes. Hegemony is in large part gained through controlling the levers of government – as Mao said, political power comes from the barrel of a gun, and the state is the monopolist of violence. It is imperative therefore that Labor continue to work towards building parliamentary majorities. To paraphrase Lindsay Tanner and Whitlam, nothing can be achieved in opposition.

Labor is not a revolutionary party. It does not seek to remake social conditions, but to reform them. In the absence of a socialist program, Labor should aim broadly to build progressive consensus on a range of issues: employment that ensures dignity for working people; action on climate change that integrates a just transition with strong pollution reduction; ending discrimination to the most vulnerable people in Australia, including Indigenous Australians and people with disabilities and mental illness; ensuring quality universal services available to all but especially to those who need them most; quality education that empowers Australians from cradle to grave; and a well-funded, quality and comprehensive health system that operates in the public interest.

In his True Believers speech, Keating summed up what the true believers believed in: “a cooperative, decent, nice place to live where people have regard for one another.” At its heart, this is a pragmatic clarion call – intimately tied to the goal of governing, of wielding the levers of power to promote inclusion, access and equity – and a modern restating of the Light on the Hill. Chifley, in that famous speech defined the movement as one “that has been built up to bring better conditions to the people.”

In 2010, Gillard’s call for Labor is:

To build consensus in the community, and majorities in the Parliament, for the “betterment of the people”… Equity and opportunity for all is at the heart of the Labor faith.

Labor’s values and beliefs must necessarily be broad, its ambitions wide, its programs specific, its goals pragmatic.

The area that I think Labor has failed in most in recent years is the withering of its membership. Labor cannot rely simply on controlling the commanding heights – although that is important – it must also carry the masses of working people. Community outreach and rebuilding of the rank-and-file membership is essential in my view to building Labor’s position as the party of a united front.

Labor must as a matter of urgency start a program of genuine membership recruitment – reengage with the hundreds of community groups who share its board vision for Australia. Labor as a political party must run leadership development programs for its activists, training for its members and town-hall meetings for its supporters. As Dyrenfurth, the culture war must be restarted, and Labor must win through building a “distinctive political culture”. It must build progressive coalitions within the community (and seek compromise where necessary with independents and the Greens Party in Parliament).

Related posts:

1. Labor must assert its economic credentials
2. Labor needs a strong stand on emissions trading
3. The Labor-Greens deal

The rising Australian dollar has had a bigger impact on our economy than an $85 per tonne carbon price.

A new Access Economics report says:

Exchange rate movements and the introduction of a carbon price are similar to the extent that both have comparable economic impacts and firms are able to adapt to the new environment.

This means that the recent increase in the price of the dollar has been twice as big a shock as an aggressive CPRS. Some sectors – like higher education and tourism – have experienced some pain, but it is mostly business as usual.

This puts paid to the scaremongering of the climate doves and denialists like Tony Abbott and the Liberals who have said that a carbon price would damage the Australian economy.

The report demonstrates that the Australian economy is flexible and could easily withstand a substantial price on carbon.

Related posts:

1. Thoughts on carbon price talking points
2. Gas should be included in carbon price
3. The “why” of carbon pricing

Following from the recent election, and all of the Tory hyperventilating about public debt, I thought I’d revisit an old post from another place that debunks some economic fallacies.

The University of Newcastle has the excellent Centre of Full Employment and Equity, where William Vickery has an article called “Fifteen Fatal Fallacies Of Financial Fundamentalism” – which should be required reading for progressives.

Here’s a few excerpts:

Fallacy 1:

Deficits are considered to represent sinful profligate spending at the expense of future generations who will be left with a smaller endowment of invested capital. This fallacy seems to stem from a false analogy to borrowing by individuals.

Current reality is almost the exact opposite. Deficits add to the net disposable income of individuals, to the extent that government disbursements that constitute income to recipients exceed that abstracted from disposable income in taxes, fees, and other charges. This added purchasing power, when spent, provides markets for private production, inducing producers to invest in additional plant capacity, which will form part of the real heritage left to the future. This is in addition to whatever public investment takes place in infrastructure, education, research, and the like. Larger deficits, sufficient to recycle savings out of a growing gross domestic product (GDP) in excess of what can be recycled by profit-seeking private investment, are not an economic sin but an economic necessity. Deficits in excess of a gap growing as a result of the maximum feasible growth in real output might indeed cause problems, but we are nowhere near that level.

Even the analogy itself is faulty. If General Motors, AT&T, and individual households had been required to balance their budgets in the manner being applied to the Federal government, there would be no corporate bonds, no mortgages, no bank loans, and many fewer automobiles, telephones, and houses.

The Chaser in “Yes We Canberra” highlighted this in a personal sense with Tony Abbott’s “sinful and profligate debt” in purchasing a house valued at more than he earns in a year.

Another widely spread fallacy – one that is used by the US tea party movement and by Barnaby Joyce (et al) is that public debt is “generational theft”.

Fallacy 14:

Government debt is thought of as a burden handed on from one generation to its children and grandchildren.

Reality: Quite the contrary, in generational terms, (as distinct from time slices) the debt is the means whereby the present working cohorts are enabled to earn more by fuller employment and invest in the increased supply of assets, of which the debt is a part, so as to provide for their own old age. In this way the children and grandchildren are relieved of the burden of providing for the retirement of the preceding generations, whether on a personal basis or through government programs.

This fallacy is another example of zero-sum thinking that ignores the possibility of increased employment and expanded output. While it is still true that the goods consumed by retirees will have to be produced by the contemporary working population, the increased government debt will enable more of these goods to be exchanged for assets rather than transferred through the tax-benefit mechanism.

…

This fallacy is another example of zero-sum thinking that ignores the possibility of increased employment and expanded output. While it is still true that the goods consumed by retirees will have to be produced by the contemporary working population, the increased government debt will enable more of these goods to be exchanged for assets rather than transferred through the tax-benefit mechanism.

Just like the conventional wisdom amongst media political commentators – most of which is just recycled conservative talking points – much economic commentary in Australia mindlessly accepts many fallacies.

For those of us who want to promote progressive views, this CofFEE article is a good tool for us to challenge these fallacies.

Further suggested reading: We Are All Dead - occasional blogging by an ACTU policy wonk.

Related posts:

1. Labor must assert its economic credentials
2. Great news for Tony Abbott: Liberals’ economic credibility trashed
3. Bad decision in equal pay for women Budget backdown

The Newspoll before the election has great news for Tony Abbott: the Liberals’ lead in polling on the economy has been trashed by Abbott’s economic innumeracy.

For the last three weeks, Tony Abbott has refused to accept a debate with Julia Gillard on the economy (or any other issue). Labor has responded by running ads highlighting Tony Abbott’s economic record – a personal history of former bosses and Liberal Ministers expressing complete lack of confidence in Abbott’s financial nous.

Newspoll shows that the Liberal Party’s 12 point lead on “handling the economy” has been reduced to just 1 point.

The Opposition Leader responded to criticism of his economic credentials by declaring “under the Coalition, debt will always be lower and deficits smaller”.

It is voodoo economic statements like this that has contributed to Tony Abbott turning Liberal gold into Liberal mud. When ever he is asked about the size of deficits or interest rates, Abbott comes out with ludicrous statements that most Australians can clearly see is farcical.

The polling also shows that Labor is breaking through with its message that its stimulus package helped safeguard Australian jobs during the Global Financial Crisis.

Related posts:

1. Great News for Tony Abbott: Tony Abbott is not a tech head, doesn’t understand economics either
2. “Carefully scripted remarks” scandal is great news for Tony Abbott
3. Joe Hockey doesn’t understand productivity: Great news for Tony Abbott

There was a lot of reporting about Tony Abbott’s interview on 7:30 Report last night about the Liberal’s risible broadband policy.

Tony Abbott repeatedly said “I don’t claim to be any kind of tech head in all of this”, basically admitting he didn’t have the faintest clue about his own policy. After all, no one expects him to have a technical knowledge of broad band policy, but he should be able to speak knowledgeably about it when interviewed on the teevee.

However, the problem with Tony Abbott is not that he “doesn’t claim to be any kind of tech head”. The problem is that he doesn’t have a basic understanding of economics.

There’s been a lot written about his lack of interest on economics – both John Hewson and Peter Costello have spoken about it – and all of his public statements (such as his budget reply calling on Australia to follow New Zealand’s lead – into recession) underscore that this is a man who would be a danger to Australia’s economy.

Tony isn’t helped by the fact that neither Joe Hockey or Andrew Robb are credible on the economy either.

Related posts:

1. Joe Hockey doesn’t understand productivity: Great news for Tony Abbott
2. This triathlon is great news for Tony Abbott
3. “Carefully scripted remarks” scandal is great news for Tony Abbott

Joe Hockey’s budget reply speech yesterday to the National Press Club, universally described as a “shemozzle”, has revealed that the Shadow Treasurer doesn’t understand what productivity is. This is, of course, good news for Tony Abbott.

Joe Hockey doesn't know what productivity is. Photo: AAP: Alan Porritt.

Productivity is considered amongst neo-liberal economists as the key driver of economic growth and health. It is the key issue determining the rise and fall of Australia’s economic fortunes. The higher an economy’s productivity, the higher that country’s standard of living (measured in GDP).

Simply put, productivity is ratio of outputs (measured in the national accounts) to inputs (labour, materials, etc). It is a supply-side measure “capturing technical production relationships between inputs and outputs. But, implicitly, it is also about the production of goods and services that are desired, valued and in demand.” Productivity is important to the discussion around workplace relations because “productivity data are used to investigate the impact of product and labour market regulations on economic performance”.

Productivity is measured by aggregating labour productivity and capital productivity. Labour productivity defined as output per united of labour input (typically measured in hours of work), while capital productivity is efficiencies gained through capital stock (such as machines). Multifactor productivity is not widely used but is technically a better measure of productivity performance than labour productivity, and simply put is productivity improvements gained from better training, education, management practices and operational processes, rather than better machines or longer working hours.

Joe Hockey’s definition of productivity is:

Productivity growth, that is growth in GDP per capita…

He then goes into what the the Government should do to increase productivity.

This is, of course, unbelievably hypocritical (and also amazing that he gets productivity so wrong), because one of the main stated aims of WorkChoices was to increase productivity. The central objective, according to the then-Government was to “encourage the further spread of workplace agreements in order to increase productivity and hence the living standards of working Australians.” (Kevin Andrews, Hansard, 2 Nov 2005)

Hockey identifies the MUA/Webb Dock dispute as a good example of increasing workforce productivity. Working harder and longer is the most simplistic way to increase workforce productivity – and it just shows Hockey’s (and the Liberals’) lazy policy making that they consider this to be a good example.

Of course, during the WorkChoices period (2005-2007), productivity growth dropped, and there was negative growth in multifactor productivity in that period.

The Liberal Party, Joe Hockey and Tony Abbott want to bring WorkChoices back. Abbott is on the record as saying:

Let me begin my contribution to this debate by reminding members that workplace reform was one of the greatest achievements of the Howard government

Joe Hockey defended WorkChoices and the (false) claims that WorkChoices increases productivity.

Despite WorkChoices being a key plank in the Liberal Party’s economic plan to boost productivity (which it didn’t do), Joe Hockey has demonstrated that he doesn’t actually know what productivity is.

Good sources on productivity (that Joe Hockey should read):

Productivity Commission, Productivity Primer

Andrew Charlton, Ozonomics: Inside the myth of Australia’s economic superheroes, Random House Publishing, South Australia, 2007

OECD, OECD Compendium of Productivity Indicators, 2008

Related posts:

1. Great News for Tony Abbott: Tony Abbott is not a tech head, doesn’t understand economics either
2. Great news for Tony Abbott: Liberals’ economic credibility trashed
3. This triathlon is great news for Tony Abbott

UK Labour media master Alastair Campbell has an excellent post on his blog today about how the Tories consistently fail on strategy, even if they excel on tactics. He basically makes the point that even though the media is on their side, and they are able to get their line in the paper each day, their argument that Labour is to blame for the recession (rather than responsible for the recovery out of the global financial crisis).

Because Alastair’s blog is rather eccentric and doesn’t have a permalink to his articles (and it’s not currently in the Archive), I’ve reproduced the article below.

For the nth time, I will point out the difference between strategy and tactics and suggest that David Cameron and George Osborne are rather better at the latter than the former.

Watching Gordon Brown, Alistair Darling and Peter Mandelson take apart the Tories’ National Insurance deception – glad to see they were calling a spade a spade – was a reminder of that esssential Tory weakness.

They assume that if they get a good media hit out of something, they have won the day. And they think if they win enough days in the media war, they will win with the public.

Yet even with the media heavily loaded in their favour, and even with the hit they enjoyed with their NICs rabbit the other day, and the roll-out of business support, it does not appear to have had the desired efffect. And it is interesting that is they who want to move the debate away from this particular issue, and Labour and the Lib Dems who want to keep a focus upon it.

I had all but forgotten about the James Report until GB mentioned it this morning. It brought back awful memories of the last campaign in 2005 when this heavy tome was unleashed upon us, identifying all sorts of areas where government could save money and so fund the promises being made by the Tories.

It took a while, but bit by bit we pulled it apart until its credibility was gone. The same is now happening to the four page memo on which DC and GO appear to be basing their entire economic ‘strategy.’

By happy coincidence, this morning’s press conference took place against the backdrop of an OECD report suggesting the UK was better placed than other countries to emerge from the recession strongly.

That sense of recovery, and the government’s role in it, is without doubt one of the reasons why the Tories are failing to pull away in the way they had hoped to by this stage of the campaign. But the inexperience and judgement of DC and GO are also factors, as is the sense many people have of their elitism and their lack of connection with most people’s lives.

One of the most efffective parts of this morning’s event was when Alistair Darling reminded people of the serial misjudgements Osborne and Cameron made at the time the global economic crisis struck. This latest misjudgement – a promise of a tax cut without real explanation as to its funding days after saying the deficit was priority number 1 – stands in a long line.

As GB mentioned a few times in PMQs exchanges in the last year or so, the Tories were wrong on the recession and wrong on the recovery. Tactics will only take you so far if your strategic response to the single most important event of the last Parliament, and the single most important issue for the next one, is wrong.

Now, without over-emphasising the similarity, in my view the Liberals have made exactly the same mistake. They are focusing on debt and interest rates, and slamming the Stimulus Package that saved Australia from the recession that the UK and the rest of the OECD is experiencing.

This is a strategic error for the same reasons that it’s an error for the Tories to focus on National Insurance. Australia has the best economy in the developed world with amazingly low levels of unemployment, and most Australians recognise this fact.

Abbott (and Turnbull and Nelson) has picked the wrong side of this economic argument.

Related posts:

1. David Cameron on the campaign trail
2. Britain’s first internet election?
3. How the Tories lost the unlosable election

The No Clean Feed campaign has exploded on Twitter, received extensive coverage on the tech blogs, several independent campaign sites, and has spawned its own “Glenn Beck” style domain registry controversy.

Unfortunately, much of the commentary, especially from “Pirate Party” officials, is shrill and near-hysterical in its pitch. Simply put, the majority of Australians, even if they don’t support the filter, aren’t going to buy into the idea that Australia is becoming a fascist-state or going down the Iran/China/North Korea totalitarian route.

Furthermore, it’s my view that most Australians do not believe that slow Internet equates to censorship. The things on the “Refused Classification” list include movies that feature either real s-x acts, violent s-x acts or depict underage s-x (e.g. Baise Moi or Ken Park). They also include Jihadist literature, fetish p-rn, and books on euthanasia. None of these things are “family friendly”. (I’ve written about my views on the classification system in this post.)

In discussion with some friends, I’ve prepared some key message ideas that are alternatives to the ones getting air play at the moment.

My contention is that the No Clean Feed campaign needs to not just oppose the filter, but propose an alternative.

The Government has clearly laid the ground on which the media debate is being had. Every time they get questioned about the filter, they frame the debate as one about “cyber safety” for families. In that context, it is near impossible to defend open access to fetish material, jihadi literature or movies with violent s-x scenes. I suggest avoiding commenting on the refused classification – most Australians aren’t going to be sympathetic to an argument that wants to allow free access to Jihadist propaganda, fetish images or advice on euthanasia. The civil liberties line sounds a lot like “geeks are complaining about not being able to download freaky p-rn as fast”.

The two areas that I think are strong arguments against the filter are:

Economics and productivity: The filter will destroy the productivity gains sought in the $43 billion National Broadband Network; and

Real cyber safety: The filter won’t stop or catch a single pedophile, whereas the $44 million spent on the filter could hire up to 300 new Federal Police who will actively hunt down and stop child s-x offenders.

To this end, I’ve prepared some key messages based around these two key themes.

• Download the key messages here (pdf).
• Download 1 page fact sheet (pdf).

Related posts:

1. #NoCleanFeed campaign starts to focus messaging
2. The #Nocleanfeed campaign, DoS and political nous
3. Filtering out the muck and the filth

The economics of climate change, like the science of climate change, is becoming clearer.

The scientific evidence is saying that unless we rapidly and significantly reduce our carbon emissions, we face a climate catastrophe.

The economic evidence is also showing that the cost of inaction will far out-weigh the economic costs of action, and more than that: that early action now actually makes good economic sense.

Climate Progress has posted about a report for the Economics for Equity and the Environment Network (E3) found that with investments of 1-3% of global GDP, we could convert the global economy to clean energy, create jobs and stabilise the climate.

The take away message of the report is that we cannot afford to just have a little bit of climate policy.

From the report’s introduction:

Stopping global warming and protecting the earth’s climate is a daunting challenge. To prevent a climate crisis we have to move quickly to transform the ways in which we create and use energy, develop petroleum-free transportation, and much more. These changes will not be free; there is already resistance to paying for the first steps along this road. Some think that reaching for more ambitious mitigation targets, and quicker reductions in emissions, would mean economic disaster. Some economists have become known for advocating only slow and modest responses to climate change, lest the costs of mitigation become too large. This report demonstrates that the ‘go slow’ recommendations are unjustified. A number of economic analyses, informed by recent scientific findings and using reasonable assumptions, suggest that more ambitious targets and quicker action make good economic sense. The warnings about climate change are growing steadily more ominous — but it has not, as a consequence, become impossibly expensive to save the planet. We can still afford a sustainable future.

The bad news about climate change relates mostly to the costs of inaction. As greenhouse gas emissions grow, it is the cost of doing nothing that is becoming unbearable, not the cost of taking action. If there is reason for optimism amidst the dire warnings it is this: the costs of insuring the planet against climate disaster are not prohibitive. The best estimates of the costs of a vigorous, immediate effort to rebuild the world economy around carbon-free technologies are still in the range of one to three percent of world output (GDP) per year, even with the more stringent emissions reduction goals we are supporting. Scientific research continues to yield evidence that climate change is occurring faster, and its consequences could be more severe, than previously expected: the costs of climate inaction, or even of delay in mounting a large-scale response to the climate crisis, are getting worse and worse.

We cannot afford a little climate policy, half-measures that would leave us all vulnerable to the immense risks of an increasingly destructive climate. We need a big initiative, a comprehensive global deal on protecting the earth’s climate by rapidly reducing emissions of greenhouse gases. Because the status quo is not sustainable, the most economical choice is to change, as quickly, cost-effectively, and comprehensively as possible. This study looks at both sides of the equation, beginning with the worsening news about climate risks (i.e., the costs of inaction), then turning to the costs of an adequate response.

This report is primarily looking at the economics of the 350ppm target. However, 350 is now seen as the very least we should be aiming at if we really want to avert dangerous climate change.

Just like no credible scientist is saying that climate change is not real, no credible economist is saying that early action to mitigate and adapt to climate change is worse for the global economy than doing nothing. The risks of doing nothing are simply too great.

What we need now is political leadership, both globally and in Australia.

Related posts:

1. Good news for Tony Abbott: Off the deep end on climate change
2. Weathermen amongst most trusted authorities on climate change; many are skeptics
3. Latest polling on climate change

A critical assessment of the Work Choices laws in addressing its stated aims and objectives

The 2005 legislation, Workplace Relations Amendment (Work Choices) Act represented one of the most fundamental shifts in industrial relations laws and Commonwealth-State relations since Federation. With the principle aim of Work Choices to “unleash a new burst of productivity growth”, John Howard described industrial relations reform as “an article of faith for the Coalition parties”. This “article of faith” statement was also allegedly repeated in a speech to the 2005 Liberal Party Federal Council, although this appeal to ideology was not repeated in later public statements.

Using the corporations power in the Australian Constitution (Section 51(xx)), Work Choices sought to introduce a single national workplace relations system, overriding most state industrial relations systems. This in itself was remarkable, upheld by the High Court; until Work Choices it was widely believed that the Commonwealth’s direct role in industrial relations was limited by Section 51(xxxv), limiting powers to make laws to “conciliation and arbitration for the prevention and settlement of industrial disputes beyond the limit of one state”.

Work Choices elevated individual statutory agreements (Australian Workplace Agreements, AWAs) as the pre-eminent form of workplace agreement, with enterprise level workplace agreements (collective agreements) and state and Federal Awards relegated to lesser status. The arbitration system, encapsulated by the Australian Industrial Relations Commission (AIRC) that had been a feature of the Australian workplace relations system since 1904 had its role greatly reduced, with new Offices and Commissions responsible for overseeing the application of workplace agreements, setting of minimum wages and settling of industrial disputes.

When introduced to Parliament in November 2005, the Minister for Employment and Workplace Relations, Kevin Andrews MP said: “the Workplace Relations Amendment (Work Choices) Bill 2005 moves Australia toward a flexible, simple and fair system of workplace relations.” The central objective, according to the then-Government was to “encourage the further spread of workplace agreements in order to increase productivity and hence the living standards of working Australians.”  For the Howard Government, Work Choices was not merely an economic argument, “it is a moral argument”, with the new laws to create a “good society” and a “brighter future”.

You can download the entire paper here.

A critical assessment of the Work Choices laws in addressing its stated aims and objectives by Alexander White is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Australia License.

Related posts:

1. Significant IR changes possible through regulations, other Acts
2. Joe Hockey doesn’t understand productivity: Great news for Tony Abbott
3. Opposition IR Shadow Minister cut from Reith cloth

The recent spate of reporting of polls demonstrates that Labor must continue to assert its strong nation building narrative and economic credentials.

Labor and Kevin Rudd correctly judged the public’s mood by decrying the excesses of extreme capitalism and neoliberalism, and forging a renewed social-democratic path.

Despite the baying of the press gallery and conservative columnists and opinion writers, Australians are confident that Labor has the right political and economic strategy to see us through the global financial crisis.

Labor must continue to hold firm and ignore the ideologues in New Ltd, and by nervous nellies in its own party, who worry each time Hockey or Pyne criticise Labor over debt and deficit.

Rudd and Labor are on strong ground – the Keynesian strategies are exactly what is needed in these times, and there is an army of economists backing them.

Related posts:

1. Great news for Tony Abbott: Liberals’ economic credibility trashed
2. Gillard and the Labor leadership
3. The Labor-Greens deal

Alex Robson from Concept Economics has not bothered to read the Australia Institute paper into the CPRS emissions floor (pdf link). Amazingly, his uninformed and un-researched tirade against environmentalists was published in The Australian today.

Mr Robson writes:

Clearly, if the number of permits in circulation could never fall, then the Australia Institute view would be correct: if a business or individual were to reduce their emissions then the demand for permits would be lower than it otherwise would be, and commensurate number of permits would be freed up in the system for useelsewhere.

Hence the conclusion follows that there would be nothing that any individual or business could do to reduce aggregate emissions.

The logical flaw here is the assumption that the number of permits in circulation must be fixed and could not fall. This assumption is incorrect.

Under an ETS there is always another option for citizens who are concerned about climate change: the “buy and hoard” method of emissions reductions.

If individuals, families, businesses, or lobby groups such as the Australia Institute want aggregate emissions to fall below the Rudd Government’s target, they can contribute to this goal very easily: go into the market, buy permits, and permanently remove them from circulation by either hoarding them or destroying them.

Remember, cap and trade makes it illegal for a business to emit without a permit. By permanently removing permits from circulation, the buy-and-hoard method reduces the ability of businesses to emit: no ifs, ands or buts. Aggregate emissions would be lowered by the number of permits hoarded or destroyed, full stop.

In other words, as a simple matter of fact and logic, the argument that an ETS puts a lower bound on emissions cannot be sustained.

Robson’s diatribe heats up towards the end of his article:

Instead of going into the political marketplace and spending endless hours lobbying, why don’t green lobby groups form permit superfunds and buy permits from our largest emitters?

…

And therein lies the rub: deep down, climate zealots have always preferred government action and regulation to market-based alternatives and the voluntary exchange of permits for cash.

Many activists cannot accept the proposition that instead of lobbying and using political influence to get what they want, they might actually have to cough up the dough and put themselves at the mercy of market forces to achieve their aims.

They would rather compel the community as a whole to bear all the costs than to reduce their own lobbying output. The last thing they want to do is to go out into the market and try to persuade business to reduce emissions by paying them to do so, even though that is the logical and most straightforward way of reducing emissions under an ETS.

Of course, if he had bothered to read the Australian Institute paper, he would see that the scenario he presents as manifestly logical and foolishly overlooked by TAI, is, infact, presented by the Australia Institute (page 2)

Buy carbon permits directly and then rip them up. Because it is illegal for the top 1000 polluters to emit more greenhouse gases than the permits they have purchased allow, the only way to reduce Australia’s overall greenhouse gas emissions is to remove carbon permits from the system. There will then be fewer permits available to polluters, who will need to pay a higher price for the right to pollute. Carbon emissions will experience a net decline as a result.

Incredible.

Alex Robson is a senior economist for Concept Economics, but clearly the concept of actually reading the article you are criticising is a novel one.

As a side note, Alex Robson does not appear on the Concept Economics website as a senior economist.

UPDATE

Larvatus Prodeo on Alex Robson‘s previous forays into the climate change debate.

Related posts:

1. Costs to reduce pollution cheaper than expected: Grattan Institute
2. Coalition ETS amendments shows denalists have won
3. Assessment of the “Clean Energy Future” policy