Day to Day Politics: Economics is about perception, not what is, but what we perceive it to be.
Tuesday 12 June 2018
The electorate has always believed that the Liberal Party are better managers of the economy. That it is a myth, is unimportant. “Life is about perception, not what is but what we perceive it to be.”
Pensioners will always vote for the Coalition even though the right of politics couldn’t give a stuff about them. The perception is that they offer security in old age.
The Coalition will be hoping that the next election will be fought on the economy, which they have historically seen as their strong suit. Although it is a myth they are right in doing so. “Life is about perception, not what is but what we perceive it to be.”
What is different as we move toward the next election, is that the perception has become more understandable. There are answers to claims of superior economic management.
This has always been so you might argue but I would counter with the fact that the punters are now more aware. Even the pensioners know they are not getting a fair go.
The voice of unfairness has risen and is declaring its share of the country’s wealth.
Why should the rich get richer off the back of the worker? Why isn’t there a more equitable distribution of the country’s wealth?
I believe this voice has been rising for some time. The people now have a clear definition of just what “drip down economics” and “Neoliberalism” is and how it makes the rich richer and the poor, poorer.
In the past, the “born to rule”mentality of conservatives had emboldened them into believing that just being in power resolves the issues. It won’t this time. Again, the punter can see that having a bunch of entitled politicians has not advanced the nation one iota.
In fact, in many areas, we have gone backwards.
The concept of equality of opportunity has, like fairness, entered the intellects of the people. They now consider better services might be obtained from a fairer/ better tax system and that equality of opportunity isn’t just a three-word slogan.
An observation
“Labour is prior to and independent of, Capital. Capital is only the fruit of labour, and could never have existed if labour had not first existed. Labour is the superior of capital, and deserves much the higher consideration.” – Abe Lincoln.
I read yesterday in The Australian (firewalled); “Ross Fitzgerald said he has been following Australian elections for 40 years. Beginning to think the coalition will win. Better the devil you know mindset. Turnbull is disliked. But Shorten is feared.”
I could easily counter that by asking if he were that feared “how come he almost won the last election?”
It is with simple efficiency of words that Labor can counter the Coalitions self-anointed “better managers of the economy” title.
So, let’s pretend we are in the midst of an election campaign and the subject is the economy.
For obvious reasons we can only speak of what we know. What we don’t we will have to leave unknown. Fair enough.
A We will always be better managers of the economy and you will have more surpluses under a Coalition Government.
Since 1945, significant budget surpluses have been achieved only rarely: once by Ben Chifley, three times by Bob Hawke, and eight times by John Howard, who shared another with Rudd, who was elected during the 2007-08 fiscal year. That is, the Menzies, Holt, Gorton, McMahon and Fraser governments managed only a few, small surpluses. So much for the claim about the Coalition’s Fiscal management.
And the surpluses by Howard came from an unprecedented, never to be repeated mining boom and the sale of public assets. So let’s keep it in perspective.
By the way, the current budget is now $532 billion in debt and the interest is about $18 billion pa. Which is a record far worse than Labor’s ever was.
B Company profits are up.
Yes, they are with the help of the workforce. But where is the trickle down effect you speak of? How much time does it need to seep through? We are not looking for a flood.
C Strong economic growth.
Yes, that’s true but again it’s the worker who is making it possible and China of course. Without their buying of our commodities, we would be stuffed. Out in the real world, the worker is doing it tough because of your policies that hold wages down. What are you doing about it?
It’s only 12 months ago that you were saying. We have a spending problem, not a revenue problem. An inflow of revenue prior to the budget was welcomed with open arms. What do you mean exactly?
D Labor is to blame for everything.
The Liberals have been in power 16 of the last 22 years. If people think the country is stuffed, they should know whom to blame.
E Employment is strong. We are producing record jobs numbers.
Yes, that’s commendable but we are just marching up and down on the one spot. Last I looked, for every job available 19 people wanted it. Fewer full-time jobs are being created and those with jobs want more work. Really we are only creating jobs for those who immigrate. Yes, that’s a good thing but what about the others.
F We are giving Tax cuts in the form of 500 dollars cash in your hand before the next election. Will that apply every election as under John Howard.
But Labor is offering twice that. Why don’t you match it?
G And in order to build a better economy we are offering large tax cuts to the Multi-Nationals including the banks. And I might add to those who pay no tax at all.
Are you serious? You mean you are giving tax cuts to companies who are making record profits, to banks who treat their customers with gross unfairness, and to those who don’t pay any tax. You must be kidding, right. Fair dinkum. Giving tax cuts to people who should be in jail. You cannot be serious. How unfair can you be? What about the ordinary worker. What’s in it for them? If it’s all so honky dory why the tax cuts in the first place?
Of course, this isn’t the complete picture and each party will have more to add during an election. My assumption is that yes, the economy is on the improve, but it’s not because of anything the government has done, legislated or promoted. Therefore, arguing against every perceived positive statement is relatively simple.
My thought for the day
“The left of politics is concerned with people who cannot help themselves. The right is concerned with those who can.”
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Return to home pageJohn another good article from you, please keep up the good work.
“Labour is prior to and independent of, Capital. Capital is only the fruit of labour, and could never have existed if labour had not first existed. Labour is the superior of capital, and deserves much the higher consideration.” – Abe Lincoln.
I would like to add this to good ol’ Abe’s statement. Labour would not exist without the environment / resources. The environment is superior to labour and capital and deserves much higher consideration.
I’m sure Abe would be pleased Johnno.
A lot of hope, jl, but little substance of use to a non 7/9 party? Who has replace hanson??? very interesting???.
I cannot understand why every news has someone playing footsie with their dacks down. It perpetuates the mystery and forces us to rely on others,
The lnp talks in slogans the alp talks in, what seems to be, riddles and is easily brushed aside.
Bill was good last night but PM don’t think so. Check you ‘true’ comments with your lnp friends to see their point of view.
Good thought been rolling around for some time periodically popping why not put it into a slogan??
my fb has:
We pay taxes to help the poor, like the long haired bludgers next door what do we do that for?
ps no trump???
wam, those long-haired bludgers next door did not get much of an education, they were bullied at school, by teachers and students alike, there was no TAFE around and they had no chance to go uni… Both parents worked to keep roof above their heads and some tucker on the table, from early on the kids had to fend for them selves…
Let’s start with a good education system, make every teacher and school excellent, have cheap public housing etc. etc, plenty of work for both Bill and Mal…
What about an efficient transport system to get people out of those far-away suburbs to places where the work is..
We don’t need to help the people who already have enough, only the have-nots…
Good piece thanks John
While it’s true that the majority of retirees tend to vote conservative it’s simply not true to claim that pensioners will always vote for the Coalition .. The majority is not the all. Although the longer I am retired the more sympathy I have for that conservative position.
Just watched Shorten in Q&A where he was at pains to point out that when it came to negative gearing he was not in the business of applying his new rules retrospectively. Existing arrangements would be grandfathered. No need to worry because those who went down the negative gearing track would be protected. He made it sound like a principle yet when it comes to dividend imputation there has been many twists and turns.
When first announced, the end of dividend imputation applied to all who paid no income tax. The people were assured that Shorten et al (read Bowen, Chalmers and Leigh) had thought it all through and all would be caught. It again sounded like a principle. But no – the well thought through policy was rapidly rethought.
Even worse.
Policy on the run? Methinks that’s the case.
People in retirement are vulnerable and particularly sensitive to policy changes when they can do little to change their circumstances. Pensioners who almost saw their dividend imputation wiped will take little convincing that Shorten has them in their sights. After all, that’s what his well thought through policy was designed to do.
Many retirees don’t expect that things will get better but they live in fear that things will get worse. Shorten arouses those fears. Thus Fitzgerald resonates:
(Much more could be said.) PS People are often criticised because they vote against their own interests. The end of dividend imputation for retirees will change the ‘interest’ equation for some.
https://www.sbs.com.au/news/labor-moves-to-exempt-pensioners-from-tax-crackdown
This is one pensioner who won’t be voting LNP, so the generalisation is a bit broad. Budget surpluses don’t equal good economic management, just a willingness to cut (predominantly) social welfare programs and those controls which are supposed to keep grubby capitalism in check.
This is one self-funded retiree (who is also entitled to a modest dividend imputation credit) who has managed to maintain the rage since the Whitlam era, but even I find that getting an unearned tax handout unreasonable.
I always vote below-the-line for the simple satisfaction of putting the conservatives last, although lately with so many a***holes to choose from it’s been a bit of a struggle to see who wins that special position.
The myth that the coalition are the better economic managers is real mainly because the coalition and Murdoch reinforce it daily, but it is a myth and can easily shown by objective analysis.
What is not a myth is that the underlying and principles and values that underpin the coalition “individualism” the belief that I’m all right Jack and stuff the rest of you. The sad reality is that a significant proportion of the population hold the same values. They know that the poor, the unemployed, the disabled, asylum seekers, aborigines etc are doing it hard but essentially they don’t care or worse the victim. And of course blaming or demonising the victims is key part of the coalition strategy.
An intersting perspective John. Perhaps it would be more accurate to describe the present NLP misgovernment as failing to provide any policies for the benefit of the electorate and many thought bubbles in favour of leading Australia down the economic road to a 19th century colonial future for the benefit of foreign owned multinational corporations and their overseas shareholders.
The reason we have/had differential taxation scales was to allow successful entrepreneurs to benefit from the secure social Australian society and repay that society for their financial success. However, both “sides” of politics have perverted this principle of mutual support for all, to benefit the undeserving wealthy and corporates at the cost of the aged, infirm and less capable. For example, there is about $150 BILLION PER YEAR paid as government gifts, free, gratis and for nothing, to the wealthy and corporates (many not paying any taxation already) in the form of subsidies, rebates and straight out middle class vote buying.
Federal government surpluses lead to economic contraction unless counteracted by an increase in private sector debt, a drawdown in savings or a current account surplus.
Federal government surpluses are therefore generally a sign of bad economic management and counter productive spending austerity. Our record levels of personal debt, high unemployment and underemployment, poor government services and stagnant incomes arose primarily from inadequate federal government deficits or even worse surpluses.
Current levels of unemployment would be much worse if the federal government did not have the current sizable deficits.
SURPLUSES ARE NOT AN EXAMPLE OF GOOD ECONOMIC MANAGEMENT.
The economic management superiority mantra seems to be making a comeback in recent weeks.
Yes we know it’s a lie, yes it’s being peddled by the main stream media
Yes we know the MSM are co-conspirators – but why are people so willing to accept that particular lie given the current national debt and deficit numbers.
One enormous piece of incontrovertible and wholly contradictory piece of evidence – right there for all to see – and still so many are repeating the mythical lie.
That is truly disturbing…
Who has the time to make a long as comment on this site? You guys have no life.
It is interesting to read the different opinions here. One wonders where they came from. I can understand the concerns of the older person worrying about whether they can survive, especially if money policies are not clear. The older person is more likely to be more conservative, having shaken of the idealistic enthusiasms of youth and then drifted towards the money man who is supposed to be part of the party which is the best economic manager. But reality makes this myth a lie, as many here realise.
But what of wam @9:10am who claims the ALP speaks in riddles and is easily cast aside. Wam writes in such generalities, but rarely actually illustrates what he write with examples. I sometimes wonder if he really pays attention to details.
Then we have Matters Not @9:46am referring to Ross Fitzgerald, a highly qualified academic. But I wonder about his connection with the Sex Party and with Murdoch. Fitzgerald’s claim is that Turnbull is merely not liked, whereas Shorten is feared. The argument is that in bad times voters would turn to the devil they know and not to Shorten. This idea has its problems. Turnbull is a muddler, especially with regard to policy and action. The Coalition has done nothing substantial but claims success in economic growth, employment and managing money. They have built up a false perception aided by myth and propaganda. Remember that Labor, led by Shorten, lost by one seat in that double dissolution.
The Coalition is trying to assassinate Shorten’s character. They use words such as ‘shifty’ and ‘unbelievaBill’. They claim that he has questions to answer, but they cannot think of what they are. They exhausted all possibilities after grilling for 3 days to no avail in a trumped up Royal Commission. It is the Coalition which has questions to answer, especially with regard to such policies as trickle-down economics, climate change policy and indefinite detention for refugees who have committed no crime.
So we find one MSM outlet claiming Shorten struggles to explain his immigration policy. But then so does the Coalition, which hides behind military secrecy, but is clearly in breach of human rights. Shorten made two points about refugees on Qand A, one being the desire to prevent drownings, the other to avoid indefinite detention. At least some of that is a clear distinction from Coalition policy.
But even more clearly, Shorten thinks about people, but for Turnbull it is all about money and his moneyed cronies.
I heard today that not enough school students choose to study economics. While there is more theory than certainty in economics, at least some understanding of economic theory is useful. Like science, it evolves, so what might have been a valid explanation in the past in relation to deficits and surpluses in a fiat economy is now seen in a different light.
I prefer a government to see its role as ensuring that social justice is delivered.
When it comes to immigration policy, and Adani, Bill has to be very circumspect until he is the one deciding policy. Before an election, one wrong word and the Coalition and the MSM would rip him to shreds!
Re:
That’s one way of looking at it but it’s certainly an optimistic perspective. The incumbent Turnbull Coalition Government experienced a national swing against it of 3.13 per cent, and then had a total of 76 seats in the House of Representatives, down from 90 seats in the previous Parliament.
The ALP increased its number of seats in the House of Representatives from 55 to 69; two Independents (Cathy McGowan and Andrew Wilkie), one Katter’s Australian Party (KAP) member (Bob Katter), and one Australian Greens member (Adam Bandt) were re-elected; and a new minor party MP, Rebekha Sharkie (Nick Xenophon Team (NXT)) was elected to the House.
Seems to me that Turnbull had more than one seat up his sleeve. McGowan, Katter and Sharkie could always be relied on if it came to a matter of confidence and if their voting records are checked it’s pretty obvious on what side of the ideological divide they reside. While Shorten did very well, to suggest (as many do) that he lost the election by only one seat is a bit of a stretch.
Yes I think the election is there for Shorten to lose but taking his political advice (only) from his economic team is fraught. Bowen et al are neo-liberal in outlook. They proceed on the assumption that life (and politics) is, and ought to be, driven only by economics. It’s economics (the means) which becomes the end in itself.
Bowen et al are not for the changing. Their ideological direction is clear
You all need to learn how the economy under a fiat sovereign monetary systems works then we will see change… #learnmmt which is an accurate description of the economy works.
“We are not going to get out of the economic doldrums as long as we continue to be obsessed with the unreasoned ideological goal of reducing the so-called deficit. The “deficit” is not an economic sin but an economic necessity.” ~ William Vickery Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize in Economic Sciences
Public debt — an economic necessity
Former Reserve Bank of Australia Governor Bernie Fraser says Government is Not Like a Household or a Business… and the idea that Governments have to live within their means is folksy “nonsense”…
It should be viewed in conjunction with this written piece by Warwick Smith https://theconversation.com/why-the-federal-budget-is-not-like-a-household-budget-35498
Taxes and government borrowing NEVER finance the spending of a monetary sovereign central government, such as Australia is.
People saying they do, or conventions which are introduced to make it look as though they do, don’t change this simple fact.
People who claim otherwise either don’t understand monetary systems or are being dishonest.
Taxes are there to limit inflation – government debt issuance is there to provide safe financial assets to savers and/or for the purposes of interest rate management.
Professor Mitchell explains…
bilbo.economicoutlook.net/blog/?p=38885
The Turnbull Governments 19th century budget management by Dr Steven Hail
https://independentaustralia.net/politics/politics-display/the-turnbull-governments-19th-century-budget-management,11568
Well said PK but the AIMN commenters have apparently moved on, again most none the wiser about the need for federal deficits under Australia’s current circumstances. The links you provided are well worth a look.
I would have a lot more time for MMT if proponents were honest about our current system and the legislative changes that would be necessary to fund deficit spending by any means other than bond issuance.
As it stands, taxes do not “destroy” money. They are credited to government accounts at the RBA. The government cannot overdraw its Current Operating Accounts with the RBA except in very short term exceptional circumstances.
It doesn’t have to be this way but we would have to change the law to operate differently.
As for bonds being used as a safe investment, stuff that. Investors can open a term deposit if they want safety. And interest rates could be controlled by the RBA offering interest on overnight deposits.
MMT offers possibilities but, in my opinion, its proponents fall short in explaining them because they ignore our current reality.
MMT economist Warren Mosler studied how the US Federal Reserve and the US Government interracted with the US economy and determined that all federal taxtion does indeed extinguish money and all federal spending creates money. Economist Stephanie Kelton investigated this further in great detail and confirmed Mosler’s observation. No one has disproven Mosler and Kelton.
The same applies to all nations with their own sovereign fiat currency, such as Australia.
GOVERNMENT BONDS DO NOT FUND DEFICITS. Issuing bonds is a leftover from the period when currencies were backed by gold and is a waste of effort and money. In any case the interest expense is met by issuing more bonds and all deficits are funded from created money currently without any legislative changes.
MMT concepts regarding national government spending, taxation and any deficits or surpluses apply currently. What is lacking is the optimisation of deficits so that we attain full employment and the full spectrum of adequate government services.