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QUARTERLY ESSAY 70 Dead Right

 

Correspondence

W. Max Corden

Right at the beginning of this essay we are told that neoliberalism is “the catch-all term for all things small government.” Later, on page 18, we are told convincingly that “Australian politics isn’t about ideology, it is about interests.” I assume from the context that “neoliberalism” is the ideology the author is writing about. Since neoliberalism has numerous definitions and interpretations in the world (notably in Latin America), it is thus best to ignore this confusing, ghastly term and get down to business. What really matters in Australia and other countries are “interests.” Possibly there is no relevant ideology governing our rulers other than self-interest (of individuals, groups and companies).

The author is concerned with the harmful influence and language of our political and business right-wing advocates and commentators. Call them the “elite.” Possibly this language masquerades as ideology and obscures the importance of their “interests.” There are two issues he discusses. I think both are extremely important.

The first concerns the size of government and (in the views of the elite) the need to keep this size as low as possible, for whatever reason. It is a right-wing obsession. This also involves the desirability of shifting many activities from government to privatisation. If one judges episodes of privatisation by the actual effects on costs and quality of services received by consumers, we have important examples in Australia of extreme failure. The author refers to these, and it seems to me that more detailed and comprehensive analysis of such private-sector failures is needed. But the evidence so far is remarkable. Well-known cases in Australia are the privatisation of national electricity supply and the privatisation of vocational training and education. What has gone wrong in these cases and why do measures that foster competition among private providers often fail?

Most recently, right-wing elements of the Liberal Party have apparently proposed that there is no “economic” justification for the Australian Broadcasting Commission (ABC). This seems to imply that it should be privatised (or even abolished). This is likely to be widely discussed, so it just comes under this general category of reducing the size of government. Australia’s right-wingers seem to have an obsession in this area. Are government agencies really so bad? And who would gain from ABC privatisation? In this case, as others, there is a notable use or possibly misuse of the term “economic.”

The second big issue has to do with the national budget. As Denniss writes, “reducing the budget deficit is very, very important.” It is what “neoliberals really seem to believe.” He notes that whenever some social spending (that he approves of) is proposed, the so-called neoliberals (meaning the right-wing elite) oppose it for the sake of avoiding or reducing a budget deficit. But then, he points out (and elaborates), they find many ways of spending for purposes they approve of, while opposing expenditures for social purposes.

There is no doubt that this essay by Denniss conveys an impression of bias on the part of its author, but as a reader of Murdoch’s The Australian I am inured to that from the other side. The author covers many interesting issues: for example, the difficulties of devising adequate rules and regulations to protect consumers in a “free” market, and why some monopolies are inevitable.

An ambitious final chapter, “Government Is Good,” is well worth thinking about, though, admittedly, I am somewhat sceptical. In this chapter, Denniss is full of ideas. He thinks there is too much emphasis on increasing the rate of growth, and especially that there is a tendency to blame the unemployed for their unemployment. He wants to see re-established a broad debate about the national interest. Strikingly and convincingly, he argues that the right-wing war on government and tax is, in reality, a war on democracy. He wants to see a revitalisation of faith in democracy, and he thinks there is a need for an improvement in the popular education of democratic processes. And, in addition to all that, he wants a whole lot of new institutions: a charter of rights, a national interest commission (to guide on what is good for the country), a federal corruption watchdog, a sovereign wealth fund, and – surprise, surprise – an end of talk about the economy all the time. The following sums up his ambitious message: “For thirty years our elected leaders have endlessly debated what is good for business or good for the economy, but it is time that we commenced a broader debate about what is good for the nation.”

He seems to be somewhat uncomfortable with the Productivity Commission, though some of his proposals go close to expanding the Commission’s activities. One of his ambitious suggestions for comprehensive reviews comes close to the Commission’s comprehensive “Shifting the Dial” review.

With some reservations, I would certainly recommend Denniss’s essay, especially the last chapter, to anyone (especially politicians) who wants to sponsor non-economic but radical social and administrative reforms in Australia.

 

W. Max Corden is emeritus professor of international economics at Johns Hopkins University and has been a professorial fellow in the economics department of the University of Melbourne since 2002. He has been on the staff of the International Monetary Fund and a consultant for the World Bank. His most recent book is his autobiography, Lucky Boy in the Lucky Country.

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This correspondence featured in Quarterly Essay 71, Follow the Leader.


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