tijaco

putting fire restrictions on firefighters

One of the Federal Government’s key responses to the coronavirus pandemic and the economic hardship that it has caused has been the JobKeeper program. This program was supposed to provide $130bn to businesses to retain their staff through $1500 fortnightly payments. Labor widely labelled the scheme “a great idea, very poorly implemented”. Instead of directly replacing wages, the flat fee given to employers to pass on to their employees whose salaries vary only showed the Liberal Party’s incompetency. Over 2 million workers who were newly-employed casuals and migrant workers were excluded, showing the unfairness of the scheme. In saying that, the projected $130bn being injected into the economy showed a willingness of the Liberals to take onboard the concept of government stimulus, even if poorly executed. That is until months later, on a lazy Friday afternoon, when the $60bn accounting mistake was announced.

To use an analogy from the Australia Institute’s chief economist Richard Denniss, if an economic recession is a fire that we need to put out, the water needed to put out the fire is governmental stimulus. If it is applied in the right way and on the right scale, we can avoid the vast majority of recessions, including this one. The proof for that is the Global Financial Crisis of 2008. Kevin Rudd and Wayne Swan’s work to stimulate the economy meant that Australia was one of the only developed economies to avoid a recession. In this case, the LNP, having apparently learned that governmental stimulus worked, tried it in their own way. The fact that they spent $60bn less on the stimulus than was once thought means that around half as much water is coming out of the fire hose than we thought. What they did next was decide that we didn’t need that extra water and use marketing spin and household analogies to frame their incompetency as a win for the taxpayer. As Denniss put it on the podcast Follow the Money, “it’s like putting fire restrictions on the fire fighters”.

To explain why the government does this, we need to revisit economic theory and explore how the government benefits from this. The Great Depression of the 1930s was a key point in time for economic theory. Before this time, the general consensus was that market economies go through booms and busts and there is nothing governments can do about it. Then, John Maynard Keynes came along. His theory was that the government should instead go into ‘debt’, spend money in key parts of the economy to facilitate demand and get the economy back on positive momentum again. This was the general consensus for a time, until neoliberal world leaders Ronald Reagan and Margaret Thatcher came onto the scene. A neoliberal (“neo” = new, “liberal” = free market) is just a funny name for someone who thinks that we should go back to the pre-Keynesian world. This ideology is backed by virtually no evidence at all and is highly counter-intuitive when you consider how the economy works. To this day, with the exception of the United States who have neoliberals on both sides of the political aisle, this dichotomy is what characterises the “left” and “right” of economic policy.

Those who believe in “neoliberalism” are most often very flexible with their ideology. Most are willing to give it up when their friends are in danger, and this is usually characterised by bailouts, subsidies and grants for big businesses. Neoliberalism, at its core, is all about promoting big businesses. To reduce government spending is to reduce government programs, meaning the working class has even less power when interacting with the corporations. But when the corporations are in trouble, the government will still be there to help, even if it seems an abandonment of their ideology. Those in the Liberal Party believe this fantasy for a number of reasons. First is the fact that there is a revolving door between government and industry, as best reported by Michael West Media. If the politicians know that there are sweetly paid deals waiting for them on the other side, that is clearly going to influence their decision-making. A second reason is that much of the political donations and lobbying comes from big businesses. Only doing what is in their self-interest, they promote a neoliberal ideology but never forget abandon it when the time comes. Third, there is a wider propaganda machine built around the neoliberal ideology. There are thinktanks like the Institute of Public Affairs (IPA) and Australian Taxpayers Alliance (ATA) funded by multibillionaires with only their own interests in mind, universities and the media all funded and controlled by these monied interests. There is almost an inevitability that a certain amount of the population will genuinely believe this damaging fantasy, especially when it is so firmly in their self-interest to do so.

To explain the $60bn bungle made by the Liberal Government, all we need is the pattern of complete incompetence that plagues this party. To explain the decision to paint the mistake as a positive thing for the Australian economy, we need to go deeper into why the government believes such a nonsensical ideology. It is painted in self-interested corporations, politicians and media moguls. To change the ideology of a nation is a massive task which will incorporate changing the media landscape, the way governments and corporations interact, and the way people take part in democracy. The recession caused by this incompetence will hopefully provide some environment for change.