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The economics of debating

By 2353NM

Economists will tell you that they practise a science in a similar way to chemists, biologists and physicists. If certain inputs are made to solve an economic problem, there will be a certain result. Other scientists also use the same process, a chemist will tell you if you add certain quantities of two chemicals together, it might change colour, smoke or (everyone’s favourite) create an explosion. Others who are less enamoured with economics will suggest that if you put 100 economists in a room and give them a problem, they will come up with a solution. When the solution doesn’t work (because it usually won’t), the same economists will give you 150 reasons why it didn’t.

Really, economists get a bad rap. There will be those of us who remember the time years ago when weather forecasters plied their trade only to receive general hilarity from the rest of the country. The science has improved and, while weather forecasters don’t get it right 100% of the time in your particular bit of Australia, on a regional level they are usually pretty close to the mark. Economists believe that the market will always react rationally. The problem is that people are by nature irrational; their personal beliefs or circumstances will normally overrule ‘rational’ decision-making.

For example, most people who find $500 on the ground at a shopping centre would hand it in to the centre management or police, rationalising that $500 is a substantial sum of money to have lost. Only a minority would pick it up and keep on walking, rationalising that their need was more important (without obviously knowing the needs of the person who lost the money). Most would at least consider the circumstances around pocketing the money before acting rationally. The temptation of the minority to take the money would overrule the ‘rational’ decision-making process.

A similar behaviour pattern can be shown in the current election campaign. Let’s assume for a minute that there are 24 million people living in Australia. If you didn’t watch the ‘Leaders Debate’ last Sunday night, you’re in good company. Something like 23.5 million of us didn’t. Maybe it demonstrates the economists’ argument that people generally make rational decisions.

Surely a large majority of voters would like to hear the plans and aspirations of each leader for the future of Australia? The ‘Debate’ would be a perfect opportunity for some statements and (well) debate about our collective future. To put it into the basest of terms — why does Turnbull or Shorten think his side better than the other side? The ‘Debate’ didn’t include the Greens and Nick Xenophon. It would be fair to say they have a reasonable probability of influencing the way the ALP or Coalition govern from July 3 until hopefully sometime in 2019, so surely their views should be considered as well.

If those who watched the ‘Debate’ thought there was going to be a common interest in explaining policies and principles across the political parties in Australia they would have been sorely disappointed last Sunday night. Most of the media called the ‘Debate’ a draw. The Conversation’s Michelle Grattan called the ‘Debate’ a disappointment where ‘both men did a disservice by resorting to scares and simplistic attacks during their encounter’ while Fairfax’s Mark Kenny wrote ‘Sunday night’s election debate did little to animate a fresh image for Australia nor even to lift a surprisingly formulaic election campaign from its desultory torpor’. Other media outlets were similarly damning in their assessment.

Those who chose to watch a vision actually being fleshed out were probably viewing Channel 7’s House Rules. Other choices included a show where people are supposed to recite their lines — The Voice on Channel 9. Probably the most ironic show on television last Sunday night at the time of the Debate was Seconds from Disaster which was on ABC2. Despite Seconds from Disaster being on a ‘digital’ channel with a smaller audience than the ‘Debate’, it was probably the better choice — at least they were investigating why a disaster happened, rather than watching one happen in front of their eyes on ABC’s main channel.

It is a sad reflection on Australian political parties that they are so gun shy of a bad headline that they won’t let their potential leaders debate who is the better option to run the country. The Guardian’s Lenore Taylor discussed the format, which was agreed prior to the debate occurring:

The format — no interruptions by the questioners or the other prime ministerial candidate — meant that despite the best efforts of the panel, even those voters not lured back to the more dramatic Sunday night offerings on the commercial television stations would have finished the hour-long debate not much the wiser.

Neither leader really won the encounter, because it wasn’t really a contest, but rather an opportunity to deliver speaking notes in stereo.

It seems that the personality of people like former PM Hawke is a foreign concept to today’s politicians. Prime Minister Hawke and his Treasurer, Paul Keating, over a period of a decade, completely restructured the Australian economy. It was their work that allowed Howard and his Treasurer Costello to be able to introduce a significant amount of middle class welfare while ‘banking’ surpluses. Certainly the mining boom helped prime the economy, but Hawke and Keating gave them the tools to collect and manage the income they received.

While Hawke was prime minister, his exploits were well known and in comparison to today’s ‘perfect’ role models. Hawke had an ‘interesting life of beer, women and song. A considerable section of the population really didn’t approve of Hawke’s ‘private’ life prior to politics but most admitted that he had some personality. Turnbull and Shorten may be seen on the nightly news with a beer sitting in front of them but it is infrequent to see them actually drink any of it and that’s about as risqué as it gets. Personality is limited to the standard stump speech with daily variations to demonstrate that the prime ministerial contender is actually where the television footage seems to place him at the time rather than standing in front of a ‘green screen’ at a studio in one of our large cities.

So we have a number of planes (and buses) running all over the country doling out a few dollars here and there to demonstrate to people that those allegedly running the joint haven’t forgotten about them. For example, on the day this article was written, Turnbull (if re-elected) was going to allocate $20million to some Sydney researchers to enable them to identify earlier cancer in children. Worthwhile? — certainly: however, it could be suggested that this would have happened anyway regardless who was in government at the time.

At the same time Shorten was ‘slumming it’ in Cairns announcing (if he is elected) funding for protection of the Great Barrier Reef. Again, highly worthwhile but almost certain to happen anyway.

In both cases, as they both ‘believe’ in the effects of climate change you’d have to ask how much carbon was released and dollars were expended in getting everyone to a pretty backdrop (either a research lab or out on the reef) to make the announcement. Why are we force fed these thematic announcements that somehow are supposed to demonstrate that Turnbull cares about research to a greater level than Shorten — and conversely Shorten cares more about the reef.

The ongoing theme of this election so far has been the size of the ‘black holes’ that various funding announcements have created in the country’s budget. In reality, the ‘black holes’ don’t matter. We started off talking about economists and how their predictions usually are incorrect because circumstances change. Without disparaging the work of the ‘beancounters’ in the Treasury and Finance Departments, the real surplus or deficit for the financial year is announced some months after the event. What it’s going to look like next year is anyone’s guess, let alone ten years’ time.

To paraphrase a former onion eating Prime Minister, stuff happens. Financially the ‘stuff’ has an effect on the economic plan (or Budget) announced usually in May to the fascination of some and the snores of others. To expect a political party (even with help from Treasury and Finance) to understand all the variables in a policy or program that hasn’t been implemented is fantasy. Furthermore, to expect considerable accuracy around what is going to occur in ten years’ time is lunacy. To bring this back to your household economy: you have calculated that in two years you’ll be able to take the kids to Disneyland and figure you need $10,000 to do it. So things are plodding along nicely until the fridge blows up three months into your plan and then a further six months on the transmission in your car fails. The funds you are saving now pay for a new fridge and car and Disneyland is now three or more years away. Yes, the numbers are bigger in the Australian economy, but so are the inputs.

If the polling is correct, the election will be a close run thing. The reality of the 2016 election is that neither of the presumptive prime ministers is likely to obtain a large majority in both houses of parliament, accordingly they will have to convince another political group to work with them to pass legislation and provide certainty in matters of supply and confidence. Various minority governments around Australia have demonstrated they are much more efficient and consultative than Abbott/Turnbull’s parliament has been to date. A minority government (or one with a third group having the balance of power in the Senate) really isn’t a bad outcome and hopefully stops the excesses of absolute political power such as ‘Workchoices’ or sections of the 2014 budget becoming law.

Having said that, both Turnbull and Shorten have to convince others they can win and win both houses of parliament. It seems that the way they are doing this is by playing ‘me too’, by making large announcements over miniscule funding issues (Australia’s GDP is around $1.5 trillion so announcements that commit millions really aren’t that ‘big’) and flying around the country to be seen in areas their party machine think are liable to be gained or lost.

There is a lot of cost (hiring a 100 seat jet for each party isn’t cheap), lots of happy snaps but no actual benefit. You can’t help but wonder if one of the leaders stopped the set piece daily round of flying into some poor unsuspecting location with their entourage, making the announcement, doing the pre-planned ‘doorstop’, possibly walking around the local business area and repeating ad nausem, they might actually contribute something to the discussion. Then there might be some interest and substance instead of what is fast becoming Malcolm and Bill’s respective road trips.

Another common saying is that if you’re not making mistakes, you’re not trying hard enough. On that basis, there is clear evidence that neither leader is really trying. As a result, most electors are acting rationally and going along with their lives, to the detriment of this country in the future.

This article was originally published on The Political Sword

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  1. John Kelly

    The current trends in most of the major economic indicators are appalling, yet there is barely a whisper from the media who appear, once more, all too happy not to make waves, too lazy to question, to apathetic to bother calling them to account. Does anyone smell a conspiracy?

  2. Phil

    This article makes a lot of sense to me. I think all parties participating in this so-called campaign are timid, having perhaps, been railroaded into adopting an approach dictated by their backroom consultants who are paid far too much and who have no idea as to what Australians want or need. The result is a coterie of wooden men wandering the nation, boring the people with mindless platitudes and pork-barrelling.

    Nothing thus far into this tortuous electioneering theatre leads me to feel in the least bit confident that Australia is going to reassert itself as a major player, or even a contributing participant in addressing the most pressing global issues be they economic, social, ecologic. All I have seen from three years of Liberal rule is division, dismantle and theft of our democracy – retreat on every substantive issue – pulling up the drawbridge, closing the ‘borders’, running away, secrecy, capitulation on social progress.

    My voting strategy – neoliberalism goes last below the line – bad government does not deserve reward.

  3. Jaquix

    It seems to me that the Labor Party has been very busy doing their homework this last three years working on unity, issues and policy. So far no major criticism of their policies, unlike the Coalitions which have been shown up for what they are. Malcolm gets behind the mike and thunders Labor/chaos/mess/cant be trusted etc. Thinking people arent impressed, but I suspect many other voters might be. So in effect the lazy message gets the lazy voters. Bill Shorten’s presentation has improved a lot, but still isnt the world’s greatest salesman, despite having the better product. I notice people, including children, genuinely like him. Children know a fake when they see one, are not so taken with Malcolm (unless especially chosen). Next Leaders “Debate” should definitely include di Natale.

  4. totaram

    “It was their work that allowed Howard and his Treasurer Costello to be able to introduce a significant amount of middle class welfare while ‘banking’ surpluses. Certainly the mining boom helped prime the economy, but Hawke and Keating gave them the tools to collect and manage the income they received.”

    It’s a little more complex and different , the way I see it. But I concur completely with the following:

    “In reality, the ‘black holes’ don’t matter. We started off talking about economists and how their predictions usually are incorrect because circumstances change. Without disparaging the work of the ‘beancounters’ in the Treasury and Finance Departments, the real surplus or deficit for the financial year is announced some months after the event. What it’s going to look like next year is anyone’s guess, let alone ten years’ time.”

    What you didn’t say and what any economist should say, is that the real surplus or deficit is “endogenous”. It is not something the treasurer can determine in advance, no matter that Wayne Swan and Joe Hockey promised their “surpluses”, which of course never eventuated. What no one is saying again, is that the govt. having a surplus can only happen if the private sector increases its debt, which is already at 150% of GDP and a big worry. This is no theory but simple accounting.

    Finally, you complain about the leaders criss-crossing the country to push their message. However, I would assert that this is the only way they can get anyone to really take interest in what they are trying to say. Of course the “debates” could be better, but then this is what everything has descended to, and the MSM is to blame. They are the ones who play “gotcha” and focus on trivial matters like the size of Julia Gillard’s bum, and her specs, and then you have a Prime Minister running a RC into what she did 20 years ago as a junior lawyer. Did the MSM take the govt. to task for that? No they didn’t. So the worthies from the MSM you quote, are precisely the ones responsible for this state of affairs. Have you actually read Mark Kenny’s pieces in the Australian? I do not read them directly but get choice bits from “loon pond”, and you would be hard put to make any sense from what he writes unless you are some kind of delusional nut case. Michelle Grattan is not much better. What piece of insightful analysis has she produced?

    So what is the solution? Do we need a brave, unconventional leader who will take the bull by the horns etc? Not a hope when the MSM has brainwashed everyone into thinking the Greens are lunatics, even though they put out policies “fully costed by treasury” well in advance of the elections in 2013 unlike the other parties. And they aren’t even thinking outside the neo-liberal macro-economic mythological paradigm! What hope do we have of a real discussion ? None. It’s just too complex and no one really has the time. They have to go by some kind of gut feeling and there are always the “experts” like Crosby and Textor who know how to manipulate that gut. So we get what we deserve. Let’s hope we manage to muddle through somehow.

  5. Mic the Heretic

    I see not point in wasting media time on these debates. Anyone who has paid attention to both mainstream and independent media is not going to be considering either of the major parties at the coming election. Vote independents and MINOR parties, making it a point to cross off representatives of MAJOR parties.

  6. paolo soprani

    I cannot think of one single reason why anybody would vote for The Coalition! I have racked my brain, but a single rational reason eludes me!

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