Conservative ideology: the cuckoo in the economic nest
By Ad astra
Have you ever wondered why our major political parties have such different views about how our economy works, indeed how the global economy works? Have you asked why progressives think so differently from conservatives? Have you pondered why their approaches to our economy are so radically dissimilar? Have you wondered why we never seem to be able to have a rational bipartisan discussion about economics?
This piece argues that in the nation’s economic nest there is a cuckoo – entrenched conservative ideology – too often based on outmoded economics, that continually tries to throw out the progressive fledglings and their ideology, leaving us with the economic dissonance that so bedevils our thinking, distorts our discourse, and inflames our passions. I’ll use a couple of examples to illustrate my argument.
By way of background, let me relate some of what Kate Raworth says in the introduction to her book Doughnut Economics. She describes the reactions of a student, who having taken an economics course at Oxford University and later at the prestigious London School of Economics, found herself bitterly disappointed at the out-of-date content of the courses, content that did not prepare her for becoming a professional economist capable of understanding the complexities of the global economy; her courses were encumbered by a plethora of abstract theories and complex equations from a bygone era.
When the global financial crisis threw the world of economics into chaos, her teachers seemed to have no answers. They reverted to shop-soiled concepts, tired justifications, and out-of-date theories. The twin problems of human deprivation: hunger, illiteracy and inequality on the one hand, and environmental degradation and biodiversity loss caused by climate change on the other, both of which now feature so prominently in contemporary political thought, did not enter into their thinking.
Indeed it was these issues that led Raworth to develop a model of economics that she labelled: Doughnut Economics. She captured this diagrammatically via a doughnut-shaped figure with ‘critical human deprivation’ at its centre and ‘critical planetary degradation’ around the periphery.
To come back to our economics student, the upshot of the disparity between what students were being offered and what they believed they needed to function as economists in a contemporary world, lead to worldwide student dissent in 2014. In an open letter they declared:
The teaching of economics is in crisis, and this crisis has consequences far beyond the university walls. What is taught shapes the minds of the next generation of policymakers and therefore shapes the societies in which we live… We are dissatisfied with the dramatic narrowing of the curriculum that has taken place over the last couple of decades…it limits our ability to contend with the multidimensional challenges of the 21st century from financial stability, to food security and climate change.
The students targetted highbrow conferences with their protest. At the American Economic Association’s conference in 2015 they placed accusatory posters; they hijacked question time; they declared that the revolution in economics had begun; and they pledged to begin reprogramming what they called ‘the doomsday machine’ of economics. They warned that on campus after campus they would: “chase you old goats out of power”.
No other academic discipline has so provoked its students. Their rebellion brought the realization that not only must old ideas be debunked, but new ones brought forward to replace them. As inventor Buckminster Fuller insisted: “You never change things by fighting the existing reality. To change something build a new model that makes the existing model obsolete.” Does that remind of Lakoff’s adage: don’t try to change entrenched beliefs; reframe the problem in a more appealing and refreshing way?
Recalling the history of the economics students’ rebellion, Raworth wrote:
Humanity faces some formidable challenges, and it is no small part due to the blind spots and mistaken metaphors of outdated economic thinking that we have ended up here. But for those who are ready to rebel, look sideways, to question and think again, then these are exciting times. ‘Students must learn how to discard old ideas, how and when to replace them… how to learn, unlearn and relearn’, as wrote futurist Alvin Toffler. This could not be more true for those seeking economic literacy: now is a great moment for unlearning and relearning the fundamentals of economics.
How profoundly true this is, how crucial it is that not only economists, but businessmen, industrialists, and perhaps most of all our leaders, our decision makers, our politicians, unlearn outdated economics and learn the fundamentals of economics that apply to our contemporary world, our global economy, our world of human deprivation, inequity and environmental peril.
Let’s now study the conservative cuckoo’s entrenched beliefs, how they distort rational thinking about economics, and how they result in faulty decisions and flawed policy. To discover their beliefs, one has only to listen to what they say and do. On the economic front, they believe in:
- unrestricted free enterprise
- the importance of private property
- the wisdom and power of free markets
- small government
- light regulation even though sound regulation protects the public from rampant entrepreneurship, profit gouging, environmental degradation, and lax occupational health and safety provisions
- the desirability of unrestrained growth
- the value of low taxes
- the value of reducing company tax for the top end of town, which they insist will result in greater investment, faster growth, more jobs, and the greatest charade of all – increased wages. The fact that they can muster no evidence to support the latter does not deter them – it’s an entrenched belief, an unchangeable conviction.
More generally, conservatives believe in:
- freedom of speech
- personal liberty
- family values
- law and order, and the rule of law
- a hierarchy of authority – employer, worker; superior, subordinate; wealthy, deprived; privileged, underprivileged; property owner, tenant; powerful, weak; master, slave; regulator, regulated; powerful, powerless; leader, follower.
Against the background of the tumult that now afflicts the field of economics that I’ve described above, it’s easier to understand the conflict between conservative and progressive thinking. We can more easily recognize how the conservative cuckoo disrupts the economic nest.
Let’s begin with an everyday example – the Coalition’s push for a large reduction in company tax, not just for small businesses, which has bipartisan support, but also for the big banks and large multinationals.
Every day, PM Turnbull and Treasurer Morrison, and every minister asked about the tax cuts, sing from the same song sheet. They insist that it’s just common sense that reducing corporate tax will make companies more competitive on the world stage, and this will result in greater investment in Australia, more jobs and higher wages. They single out businesses that demonstrate this ‘incontrovertible fact’, don their fluoro vests and hard hats, and parade their targetted victims before the cameras to ‘prove’ that what they say is right.
They quote the latest job figures that show a substantial increase in jobs, especially full time jobs, somehow expecting us to associate this welcome news with the proposed tax cuts, which still have not passed in the Senate, almost as if jobs have increased in anticipation of the cuts! If that were so, why bother with them? When asked for historic proof that wages do indeed increase when company tax is cut, they have none. The best I’ve heard from their tame businessmen is that worker bonuses could increase or that profit sharing might boost wages. None talk of increasing wages, which have been static for many years.
The progressives try to counter the conservative line by questioning the value of giving $65 billion of tax cuts to big business, thereby inflating the deficit and postponing for years the prospect of a balanced budget, when that money could more valuably be spent on education, health, welfare, and public infrastructure.
That doesn’t stop the Coalition; they repeat their story, based as it is on the disproven theory of trickle-down economics. They do it every day, knowing that it is out-of-date, but aware that repetition eventually entrenches beliefs, no matter how flawed. And once entrenched, nothing will shift them. The cuckoo flaps its wings triumphantly.
If you need any more convincing, listen to Ben Oquist, Executive Director of The Australia Institute expose the voodoo economics used to justify the tax cuts.
In a laudable indication of the perspicacity of the electorate though, the March 13 Essential Poll showed that only 42% support corporate cuts despite all the Coalition propaganda they have been fed, and only 11% support this measure strongly. Moreover, 52% believe businesses will benefit most, while only 21% of respondents believe workers will, only 14% feel those on low income will, and 27% doubt if the economy overall will benefit at all. Even in Turnbull’s own electorate 68% oppose the cuts. All the verbiage that emits from government ministers ad nauseam evidently has not convinced the people!
The people are right. Last week The Sydney Morning Herald ran a story that reported on a secret BCA survey of Australia’s leading executives that found that fewer than one in five would use the proposed company tax cut to directly increase wages or employ more staff. Clearly more jobs and wage increases are not on their agenda, but boosting returns to shareholders or investing in the company is.
I could describe many conservative cuckoos that soil the nation’s economic nest with their outmoded concepts, but let me give you just one more illustrative example: the Coalition’s obsession with ‘growth and jobs’ no matter what the environmental costs. The conflict is never ending.
The proposed Adani coal mine is illustrative. It is favoured by the Coalition because of the jobs it is asserted it will create, and the prosperity it is said it will bring to northern Queensland. But advocates exhibit almost no concern for the likely environmental damage it will create in the Galilee Basin and the Great Barrier Reef on top of damage that has already resulted from global warming, insisting that ‘protections’ will be put in place. We’ve heard that before!
Whenever Adani is debated, as progressive fledglings tenaciously express their environmental concerns, they are kicked out of the nest by conservative cuckoos loudly chanting their ‘Jobs and Growth’ mantra, an expression of their entrenched belief in the dogma of unbridled growth, a leftover from a bygone era, dogma that ignores the resultant environmental degradation.
So there you have it – two examples of how the conservative cuckoos will always attempt to kick the progressive fledglings out of the economic nest. Sometimes this is because the conservative cuckoos are wedded to outdated or unproven theories of economics, such as trickle down; sometimes it’s because the cuckoos consistently prioritize growth and profit over the integrity of the environment.
I trust that the analogy I have drawn will be of use to you in understanding what is taking place during the endless, and often puerile debates between conservatives and progressives about the state of this nation’s economy.
Your comments will always be welcome.
This article was originally published on The Political Sword.
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Bill Mitchell’s work on modern monetary theory should get some serious discussion. I had not seen the Doughnut Economics concept before, but it would be great if we could get a government to realise that Australian dollars are not a constraint, only a tool used to manage the economy. Our constraints are the natural resources and human labour. Presently we are doing great damage to the former and poorly utilising the our population as measured by the unemployment and underemployment rates.
Further compounding the problem is the conservative arguments for small government and budget surpluses. I believe these are linked to aid private industry, but with the consequence that to grow the economy, the private sector must take on foreign debt. This is necessary as budget surpluses are contractionary, and left for long enough would cause recessions as money, and hence demand, is taken out of the economy.
We have net population growth, and inflation and economic growth are both still desirable concepts, each bringing a need for a few per cent of economic expansion. So a budget deficit of ~ 7% on average is probably quite reasonable. If we are unhappy with foreign government debt levels then we could create Australian dollars to pay off the debt. For those concerned about inflation, Bill Mitchell has addressed the obvious examples of Zimbabwe and Germany post World War 1, and the key difference is that supply was greatly reduced at the time of money creation.
Ben Oquist is well meaning, but I feel he is stuck in the old gold-standard thinking of economics that the article begins with. If we stick with that paradigm, then I agree with him, but I believe we can do much better. If I was reforming the Australian machinery of government, I would remove the Treasury from the legislature and give it to the Reserve Bank, so that monetary and fiscal policy can be managed together. A key reason for doing this would be that tax could be used to apply subtle controls over various market sectors to avoid boom and bust effects. Politicians would be much more open to influence and seek to punish those who support the other side. Instead, if we can have a gradual process of adjusting company taxes by sectors, we should be able to avoid large retrenchments as companies close suddenly. The Reserve Bank or a similar entity should be encouraged to achieve full employment as part of its charter.
I would leave the Department of Finance where it is, being and entity that is meant to review expenditure measures that the government of the day thinks is most appropriate – private vs public education, health, rail vs road, power systems, Defence expenditure etc. These areas wouldn’t be determined by available money – there is an infinite amount to Australian dollars if we want to buy the human and natural resources – but by the political decisions as to how to make best use of the real finite resources: the natural environment and the Australian population.
Thanks Ad astra. The 65 billion, is that an annual sum ?
Yes Martin, how money and taxes really work for a sovereign govt with it’s own ability to create money. Yet, they prefer to borrow from the banks to fund deficits, gives them the ability to deny us nice things and throw us a few crumbs every now and again. It’s spend then tax, not the other way around. The senior public servants in Australia maintain their silence on this, as a govt that could give everybody what they wanted, well we can’t have that can we?
I am an economist who learned that most of my course material didn’t describe reality. The biggest lie was how money is created and how tax works, but there are other examples including the rational agent and so on, when the reality is that people cheat – the GFC happened because of accounting control fraud and excessive lending….
Thank you Ad, Adani is a great example of the bullshit we are fed. There will be some Australians employed in the construction phase and then an army of visa holders will come in to operate the machines. Mining’s all automated now. The company will magically never make any profit, pay any tax or clean up its mess. There is no upside to this, leave the coal in the ground. Solar, wind and battery are already cheaper
Yes Ad, I have often thought about the disconnect between federal parliament and the economic reality of everyday life.
The only conclusion you can come to is if half a brain cell ever made it past parliamentary security it would find itself on its pat malone.
Sadly it looks like Oz voters prefer those Conservative Cuckoos to the Progressives… Look what happened to Wetherill in SA, he was too progressive, he lost his job…
Love your work Ad Astra.
Beware the conservative cuckoo – they soil the nests of both the major political parties – many arguments here at AIMN have been held on the merits of the Adani mine and all the “jobs and growth” it will create for Queensland.
Are you sure Jay Weatherell was simply “too progressive” for the South Australian electorate, or do you think it is possible there were other factors at play?
First, may I thank you all for your helpful and informative comments, and your kind remarks – most encouraging.
Thank you for your comprehensive and thoughtful comment. There are many who agree with you that Bill Mitchell’s MMT deserves serious discussion. But I wonder does anyone in government understand MMT sufficiently to even begin to consider it! It would be telling move to ask Scott Morrison and Malcolm Turnbull whether MMT comes into their fiscal thinking. I wonder what sort of answer they would give! I expect a torrent of verbal diarrhoea would emit from Morrison, and a flood of incomprehensible waffle from Turnbull. They both subscribe to the BBB theory.
I note Christopher that you are in accord with Martin.
The $65billion is a total figure over the time the corporate tax cuts are being applied: This article from The Australian: How company tax cut cost grew to $65bn provides a sound explanation: https://www.theaustralian.com.au/national-affairs/treasury/company-tax-cut-scott-morrison-explains-how-cost-grows-to-65bn/news-story/9a209a40d64218268efa7971bf42cfa6
If the link does not work for you, you may have too put the article title into Google to get it.
Apologies for the typo. The last sentence should read: If the link does not work for you, you may have to put the article title into Google to get at it.
Hi Astra5: MMT may be a step too far at present (too easy to damn it as the prevailing paradigm is so firmly entrenched) and as most economists trained in the last 30 years were inculcated in neoliberal economics and have swallowed it all uncritically. First step is to unseat the Coalition! ASAP!
BTW: the link below is to the clearest explanation of MMT principles I have yet seen. US-centric but very much appicable.
If we ever get to setting priorities which match our circumstances instead of ideologies, action on climate change needs to come first. In light of the impact mitigating the worst of our pollution and transitioning to sustainable technologies will have on the global economy. I have no argument against MMT, per se, and I completely agree, with you that timing is crucial.
I agree that task one is to unseat the Coalition. It looks like they are doing a fine job of unseating themselves.
Thanks for the link to MMT, which I have bookmarked for later reading.
I though it was a fine article and pairs nicely with the one on libertarianism.
Great article Ad astra! I must disagree with you Helvitnyi with regard to the so-called “progressive” (?) Weatherman government here in SA! He closed down our coal-fired power station about 5 years to soon! We have had to put up with power outages/blackouts etc for several years now, we have the highest or equal highest energy prices in the world, his stupid bloody “transforming health” crap has left us with the world’s most expensive hospital–which we all have to pay back over a million dollars a day for over 30 years, just to pay for the building!–he has closed hospitals, down graded hospitals, caused many Medical persons to leave the profession, & even this stupid new RAH is too small, especially in the Emergency Department, the car park & the number of beds needed. He has sold off everything that was once Government owned–usually at a loss to this state!–he has “decided” that we NEED (?) trams to go along North Terrace to the old RAH (why? & at a huge cost!), also along King William street towards the Adelaide oval, but stopping short on the city side of the Torrens River bridge (again why?), he has told so many untruths or lies it is not funny, he has been very secretive with disclosing any information to the public that he did not want us to hear, he “had” (?) to construct a bloody expensive tunnel under our Parklands at a huge cost, to “save” travelers on our O-Bhan busway about 3 minutes travel time to the city, he has several “odd” ideas for”saving” (?) our power supply shortfalls, more wind farms, more solar panel farms & even diesel powered (NOT Green!) back up for the solar panels etc The list could go on but after 16 years of labor bullshit etc this state had enough of him & his party & elected the Liberals. I am a long time Labor man, having been heavily involved in the Union movement whilst working, but since this Weatherman & before him the Rannster man, I was sick of their lies, bullshit etc & wanted to give the State Liberals a go I DO NOT like, want or vote for the Federal Liberals under any circumstances, but here in SA, enough was enough!
Happy to watch Steven Marshall set back South Australia’s transition to renewables by, say, 10 years – and I am feeling generous, because we know how Liberals feel about coal – any closure of a coal power station is bound to be too soon.
Also, the opportunity for low-income people to benefit from cheap, clean affordable sustainable power – slashed – it was the very first act by Steven Marshall – and you did not consider any of this BEFORE voting?
What were you saying about Weatherell’s “odd ideas” – that you don’t understand them and/or could not be arsed researching what sustainable energy is all about before voting for a regressive government?
paul walter, etnorb, diannaart
Thank you for your kind remarks. I will leave it to those of you who understand South Australian politics to debate the pros and cons of a Weatherill versus a Marshall government.
Bear in mind though that the conservative cuckoo will always kick progressive fledglings out of the nest. Marshall’s plan to ‘kill’ the Tesla battery plan is a case in point.
Good article, even though what conservatives call freedom of speech is more likely freedom of fascist speech considering how hard their friends and detractors form the mainstream media impose their propaganda and censorship, moreover, I doubt that progressives would deny anyone to express their opinions.
It is also a good point to say that the Adani mine would only provide a little average of 1000 jobs to northern QLD in the long term but no need to remind what most of the people here already know, sadly conservatives seem to have forgotten about this number but cary on undermining renewable energies as they apparently would be expensive!
Conservatives just live in a bubble revolving around the past, sure the transition from steam power to electricity or from whale oil to that nasty petrol didn’t happen without pain and loss but you can’t make an omelette without braking the egg right?
As a big man once said, those who make a peaceful revolution impossible will make a violent one inevitable, get my drift?
Ad, thank you for such an informative article, on a topic this ‘pleb’ wouldn’t normally have the opportunity or awareness to understand.
I have to disagree on one point though, that of ideologies. Especially as we’re discussing updating old ideas with new. Yes, there are progressive and conservative ideologies and blends in between, especially amongst voters. However, I no longer believe that this current LNP government is operating according to this simple dichotomy, but have adopted a third (more insidious) ideology with very narrow objectives; Fascism.
It’s important to accept this, otherwise expectations of perceived conservative outcomes will only lead to confusion, disappointment and outrage – and there is no shortage of outrage at the moment.
When conservative ideals fit into their narrow objectives of winning government, and the increasing of personal and associate wealth, only then will they will be adopted. Even upon adoption, it is worthy to note how conditional these ideals become when gauged against the recipient of the benefits.
Yes, they believe in reduced regulation, as demonstrated by a Tasmanian minister who adopted this objective into his portfolio’s title (Tasmania’s Parliamentary Secretary for Small Business and Red Tape Reduction, Roger Jaensch). This reduced regulation will not apply to construction workers however, who have had applied to them onerous requirements via the ABCC, for example.
Unrestrained growth is conditionally favoured when pertaining to profits, not employment or any other social benefit.
Freedom of speech, perhaps the biggest fallacy of all. There are so many measures to silence or drown out dissenters, via legislation (e.g. Medical Staff/offshore detention) or compliant/enabling media that this freedom is an illusion.
I think most readers here will agree that the government is blatantly corrupt, (https://independentaustralia.net/politics/politics-display/turnbulls-tawdry-corruption-tally-tops-the-ton–that-didnt-take-long,11203) flouting and having little regard for the “Rule of Law”‘, going so far as to officiate that position for our entire nation by stating to the UN, that they would “respectfully disagree”‘ in regard to observing their recommendations (specific to international human rights treaties), as they were not considered legally binding.
As for conservatives venerating tradition; the spectacle wrought upon the LGBTI community in particular by one Barnaby Joyce, regarding the sanctity of the Tradition of Marriage, has proved that these values are very malleable and trotted out simply on a ‘needs’ basis only.
And if need be, well progressive policies are not a bridge too far if it means a win. Softening of the 2017 budget, going ahead with Gonski and NDIS, concessions that were a “means to an end”.
So, it is something far worse than a conservative cuckoo soiling the nest. For a government to cling to a project as tenaciously as they have with Adani, indicates a motive more compelling than the possibility of a few jobs to pacify the populace (and score some votes). Some kick-backs maybe after a gifting of a mere $1B?
Yeah I know, I’m a raging cynic.