It’s Not Just the Economy, Stupid

Another ex-GG columnist who is struggling to get the election result is Dennis Shanahan:

A non-threatening Opposition leader was able to effect a benign dismissal of a competent government during a period of unprecedented economic growth…

Using a prosperous economy, a China-led mining boom that will persist for years, fresh and talented personnel, a thumping mandate and essentially a clean policy slate, Rudd doesn’t have to rebuild an economy as Malcolm Fraser, Bob Hawke and John Howard had to after coming from Opposition.

He can truly set a new course for the nation.

Le Roi Soleil est morte! Vive le Roi Soleil!

I’m not sure where Dennis gets the idea that the Howard Government was competent, but given those remarks on the economy, I guess competent means something like “avoided stuffing up the economy so completely that I had to sell the family McMansion and move into a Hungry Jack’s Maisonette”. That’s a pretty narrow understanding of competence in government.

I’ll leave the question of the Howard Government’s economic competence to another day, and other writers, for the most part. It’s enough for now to note that frequent Costello warning that “Australia’s trillion-dollar economy” could be jeopardised under Labor – as incompetent a statement about the econoy as I’ve ever heard. That “trillion dollars” was a total asset valuation for all the economic assets in the country – the notional price of buying up the country at present market prices: totally meaningless as a measure of economic performance. What Costello and Howard were actually good at wasn’t economic management – it was big-noting themselves.

Even if later events show that the Howard Government hasn’t left us some serious economic problems – such as too many Australian home-loans financed out of the US sub-prime lending sector – there are several areas where they proved signally incompetent. Kevin Rudd may not have an economy to rebuild, but there is a body politic to be mended, thanks to the wilful incompetence of the Howard Government in fostering division for its own political advantage.

Let’s recall too, the wilful incompetence of the Howard approach to Ministerial and Prime-Ministerial responsibility – the code of selective ignorance first used to shore up the myth of John Howard’s honesty in the wake of the Tampa Affair. John Howard did not mislead the Australian people, he did not, because he made damn sure that the truth of the matter never reached his ears. That little ploy proved so successful that it was trotted out whenever a Minister was caught onthe hop over events in his portfolio. Before Howard, a government Minister who didn’t know what was going on in his department would have been deemed incompetent; it will be interesting to see if Kevin Rudd abandons the new Howard standard of “competent until proven knowledgeable”.

This could get to be a very long post if I set out to catalogue all the Howard government’s manifest incompetencies. I think it might be more interesting to throw the task over to youse LP commenters.

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Posted in federal election '07
34 comments on “It’s Not Just the Economy, Stupid
  1. I’m seriously thinking we should start a public-access database for these kinds of issues. There are plenty of web-based database tools with freebie accounts to make it viable.

  2. harry says:

    It’s interesting that comments on Shanahan’s piece have now been switched off and disappeared! Most of the dozen I saw there this morning were along the lines of “You still here, Dennis?” if not harsher.

    I wonder how much of that massive government advertising budget went Rupert’s way? The GG editorial is also good for a laugh today: Howard was a great steward through the boom and Rudd should hold on that course blah blah The more Howard-like Rudd can be, the bettuh… “History will look kindly on John Howard’s political career…”

    As for the accountability thing, it’s funny how none of the ministers who failed to advise the PM were ever held accountable, isn’t it? Jeremy today has a thread suggesting Howard has potentially done irreparable harm to the office of PM, unless Rudd rejects such “clever” politics. But surely Rudd won’t be that stupid – everybody saw through Howard’s “cleverness” a long time ago.

    Meanwhile, the fallout continues, with Vaile quitting. Now when do the Murdoch Monkeys start following them out the door?

  3. Bingo Bango Boingo says:

    “That “trillion dollars” was a total asset valuation for all the economic assets in the country – the notional price of buying up the country at present market prices: totally meaningless as a measure of economic performance.”

    Gummo, please. That ‘trillion dollars’ is a reference to Australia’s nominal GDP. In other words, the widely accepted measure of annual economic output.

    BBB

  4. Craig Mc says:

    “I’m not sure where Dennis gets the idea that the Howard Government was competent,”

    Reality Gummo. Reality.

  5. Andyc says:

    Craig Mc: “Reality”

    OK. So let’s suppose that the Howard Government was competent at something in reality. But What WAS it, exactly, that they were competent at?

  6. Ambigulous says:

    tigtog

    the ‘blidget’ works fine on my version of IE,

    thanks!

  7. Ambigulous says:

    Dennis S,

    what exactly is a “benign dismissal of a …. government”? Is that a dismissal not involving the Governor General/closing Parliament/installing Opposition Leader as Caretaker PM/ immediate election ??

    Well, ummm, I think we just had a scheduled Federal Election, Dennis. One major party won it, and a coalition of two parties lost it. Fairly elementary. Which part aren’t you comprehending, so far….. ?

  8. Andrew says:

    “I’m not sure where Dennis gets the idea that the Howard Government was competent,”

    The Howard government was competent relative to the administration of George W Bush, and I suppose we have to be thankful for that even though the gap probably narrowed in the last couple of years.

  9. Craig Mc says:

    “OK. So let’s suppose that the Howard Government was competent at something in reality. But What WAS it, exactly, that they were competent at?”

    I’ll leave the other, more contentious issues aside and just say “economic management”. If people are going to argue with that, it will only be because they have ideological blinkers on. Eleven years of growth, 3% inflation and 4% unemployment can’t be argued with.

    I hope the Rudd government is nearly as good. After all, I’ll be soaking in it whether I wanted it or not.

  10. Well, that’s what I get for trusting my sometimes vague memory of Question Times past and not checking the Hansard.

  11. Mark Hill says:

    “Even if later events show that the Howard Government hasn’t left us some serious economic problems – such as too many Australian home-loans financed out of the US sub-prime lending sector – there are several areas where they proved signally incompetent.”

    That doesn’t affect you in any way unless you are a shareholder of RAMS.

    If your creditor goes broke, they sell their debt.

  12. gummotrotsky says:

    That doesn’t affect you in any way unless you are a shareholder of RAMS.

    If your creditor goes broke, they sell their debt.

    Dream on, Mr Hill. The first thing you do, if your business is going down the gurgler, is look to your uncollected debts and see what you can get out of your debtors. In the case of home loans secured with a mortgage, that usually means a mortgagee auction. Either instigated by the current creditor or the one to whom the debt has been sold on at a heavily discounted rate.

  13. Debbie(aussie) says:

    Won’t the end resultt of the sub-prime fiasco be, that the average person will be truly stuffed, while the rich, maybe, will lose a little.

  14. As I understand it, what is most likely to happen is that the debts will be sold to other financial institutions. You’ll go on paying your mortgage as before, but there’ll be a different name on the paper.

    The real costs are that interest rates will go up for everybody, and anybody whose super fund or local council invested in subprime debt will do that fraction of their dough.

  15. Debbie(aussie) says:

    Thanks Robert. Not as bad as it might be?

  16. amused says:

    Ah yes. The ‘competent economic managers spiel’ as CraigMc once agian bravely into thebreach rushes to rescue teh reputation of a second rate Barrister and a bunch of semi literate business economics graduates who ‘write for the newpapers’, as my mother calls the media.

    Well anybody can be competent once the previous administration has squeezed out inflation, floated the dollar and introduced Reserve Bank control over monetary policy that Costello merely ratified with legislation, after the work had been done.

    They then sat back and watched the real estate boom make people feel ‘rich’ and their kids feel that they wil never buy a house, and watched as the mining boom fattened their budget bottom line.

    Their reputation for ‘competence’ rests on two things-the so called ‘paying down Labor’s debt’ which they didn’t, and in any case the real level of the debt itself has been wildy inflated, and secondly, for introducing the GST the tax that keeps on giving-to the government, and taking from the majority of people that spend most of what they earn every week. The idea that business economists should be let loose with the complexities of a real economy which actually requires a society in the way the grape vine needs the fence, is a very bad idea indeed.

  17. I’m no economist, but as I understand it, the real costs to the economy is that individuals and businesses will find it more difficult to obtain credit, and those that do will have to pay more for it.

    This is not entirely a bad thing: over the past decade, arguably, the “risk premium” for risky debt has arguably been too low. However, like all these things, it seems the pendulum will inevitably swing too far. The risk is that even fairly low-risk businesses will find it difficult to get finance. If that happens, a fairly nasty global recession is on the cards. That’s what’s keeping the central bankers in Europe and the USA, particularly, up at night.

  18. Craig Mc says:

    Some call it “squeezing out inflation”, others call it “the recession we had to have”. Others still call it losing their job and home. The phrase “anybody can be competent” alone tells me your opinion is worth ignoring.

    It must be so distressing having anyone compared to the genius of Paul Keating. I thought he did some good things too (as you say, floating the dollar, super guarantee, privatisation, & reserve bank independence). Unfortunately he believed his hubris and ended up driving the country into firstly a fevered boom and then prolonged recession. Something crap economic managers do.

  19. amused says:

    Well you are wrong about the crash CraigMc. The Reserve Bank after the event, admitted it went too far at the time, and Paul Keating should have reigned them in before they went completly troppo. Of course he made mistakes, and that was one of them, but they pale into insignificance compared to the last lot. Business economists at the time of the ’80s feeding frenzy just loved all that lovely moola they got their hands on, after wage restraint tipped hundreds of millions onto those company balance sheets, all available for the kind of activities that business spivs just love, left to their own devices, and egged on by the mantra of ‘deregulation of anything and everything rocks’ crowd.

    As for the prolonged ‘recession’, by the time the just sacked government got their hands on it, the economy had a straight five years worth of growth going for it. As Howard said, he inheriterd an economy in more than passing good shape. Unlike his successors, who will be left with the problem of an enormous private debt overhang, an industrial relations system that is a complete disgrace, insult and expensive mess, emerging inflation, and a growing problem of access to affordable housing for the people who actually make the economy and the society ‘work’.

    Unlike the spivs and drones who write business columns and draft legislation specifically to shaft their social enemies, the people who actually make the economy ‘run’ as opposed to ‘running the economy’, have had enough.

    If you think the self serving drivel of business economists passes muster these days as serious economic policy, in an environment that is far more threatening than anything we have seen for the last thirty years, you are even less smart than you appear to be.

  20. Bingo Bango Boingo says:

    amused, you’re right that Howard’s successors will have to deal with inflation, unlike Howard himself. But then Keating’s ‘recession we had to have’ and its massive output gap kind of made that a near certainty, didn’t it? It’s not that hard to slay the inflation dragon if you’re willing to impose economic and social misery on a massive scale.

    And what’s with the scare quotes around the word recession? I’m not sure where you were, but down here in Victoria it didn’t tickle.

    BBB

  21. Mercurius says:

    Why are we still talking about the Howard government?

  22. jinmaro says:

    My thought precisely, Mercurius.

    A meaning variation on “machine politics”, perchance?

  23. Veltyen says:

    Not completely on topic, but related.

    The thought occurred to me today that one of the reasons that the liberal party didn’t gain much traction with “the economy” during the election was workchoices.

    During the previous elections the thought of a good economy (and perhaps gaining a little more of the expanding pie) kept people thinking that this was a good thing.

    After workchoices, the rhetoric of “The pie keeps getting bigger” doesn’t sound so good when the full statement is “The pie keeps getting bigger, isn’t it great that most citizens will get a smaller slice, leaving the really big portions to the friends of the liberal party”.

    Hammering on about a “wonderful economy for the already wealthy” fails to win elections it appears. It cuts out that aspirational vote certainly.

    Even if it harms the economy, most people will settle for a larger piece (for themselves) rather then a larger pie.

  24. amused says:

    What I am saying is that it was the Reserve that got it wrong, and so gave us the ‘recession we had to have’. Presumably it has learnt soemthing in the meantime at least about that set of problems, as people tend to do unless they are completely stupid, mad or both.

    I am aware of the effects of the recession we actually had, and no, it wans’t pretty, but its worst effects could have been avoided, had Keating been less deferential to the nobs running the Reserve Bank and the herd writing the opinion columns in the business press at the time. Remember? They all thought it was completely ‘worth it’ in order to ‘slay the inflation dragon’. I even remember the slogans they all copied from each other.

    Unfortunately, next time around, there will be no stopping it (the Reserve) even if you wanted to, and the mistakes of Central Banks, as there will be as the next set of unexpected ‘events’ unfold, will be unable to be corrected easily.

    Well, business has the exactly the economy they keep telling us, will deliver forever and ever, no probs, no worries, ‘end of the business cycle’ and all that old guff. We’ll see.

  25. Mercurius: get typing, then…I’ll be posting on Rudd’s first major set piece – attending the Bali climate change summit.

  26. Peterc says:

    Denis S, Howard lost. Get over it. Your bleatings now serve no purpose, so they can stop. Your partisan attempts to portray Howard as something he is (and was) not did not work, but it wasn’t for lack of trying on your part. Best to find a job where you actually get paid for what you do best – peddle unfounded opinions masquerading as “news”. Maybe try the IPA?

  27. The Rockstar Philosopher says:

    “I’ll leave the other, more contentious issues aside and just say “economic management”. If people are going to argue with that, it will only be because they have ideological blinkers on. Eleven years of growth, 3% inflation and 4% unemployment can’t be argued with.”

    Not good enough. You can’t leave the other issues aside. As the article here states, there’s more to life than an economy. I hate to Godwin, but Hitler had a pretty good economic record, so by your rationale` he should be considered a great leader… I’m not comparing JH to Hitler by any measure, but it does highlight that a nation should be concerned with what their leaders are doing beyond “teh economies”.

    And if it’s all about economic management, why did we throw out a leader who, as treasurer, completely revamped Australia’s economy and workforce to make them the envy of the world, saved us from a recession caused by the economy going too well due to said changes, and then got booted out when inflation was at 2.5%. Sure, you bring the unemployment figures in, but if you take into consideration those who have been moved off the dole and on to parenting and disability allowances, then the amount out of work has remained fairly stagnant (about 2 million). If you change that to consider those who are underemployed, then the figures are less rosey yet.

    History will show Howards “economic management” to be the big steaming pile of shite it really was. It’s like calling someone cruising on a highway with cruise on a race car driver.

  28. Peterc says:

    The real challenge for the Liberals and Nationals is whether they bunker down in denial (e.g. about WorkChoices and climate change) and dig their hole deeper, or whether they throw away their misguided denial and do what Arnold Schwarzenegger and the Tories in the UK have done – adopt real strategies for addressing climate change. Imagine that, the Liberal party castigating Labor for not moving fast enough to transition away from coal fired power! I think only Turnbull can lead them in that direction, and now the Liberals are not schackled by Howard’s denial and inaction. Go for it – our future depends on a bipartisan approach on such an important matter. A war footing in effect. Let’s stop the futile “war against terror” and start a “campaign to address climate change”, and build a new economy and export industry in doing so.

  29. Hal9000 says:

    This talk of competent economic management is pretty amusing, since the only economic management levers left in the hands of government are fiscal policy ones – ie government spending. A competent economic manager of a government would ensure, after the necessary government services are covered (ideally targeted at needs unmet by market mechanisms), that enough is spent on underwriting future economic activity by broad spending on education at all levels, and by spending on economic infrastructure. It would also avoid squandering and waste.

    The Howard regime, by contrast, starved education and infrastructure of funds other than in pork-barrelling exercises at election time, directed services spending to those in least need – middle class families sending their children to private schools for example – and squandered taxpayer dollars on silly and/or corrupt expenditure like $6Bn on obsolete military aircraft, $1Bn on political propaganda and $500M on pork-barrelling grants in National party electorates. Even in the narrow definition of fiscal competence favoured by the Right, this has been the biggest tax-and-spend administration in Australian history. The Howard-huggers (now doesn’t that sound like necrophilia?) running the line that good economic indicators prove fiscal competence make the classic fallacy of post hoc ergo propter hoc – sequence of events does not prove causality. Showing how the fiscal policy of the Howard government gave us a strong economy is like showing how the rooster crowing caused the sun to rise.

  30. Craig Mc says:

    “And if it’s all about economic management, why did we throw out a leader who, as treasurer, completely revamped Australia’s economy and workforce to make them the envy of the world, saved us from a recession caused by the economy going too well due to said changes, and then got booted out when inflation was at 2.5%.”

    Oh boy. Keating “saved” us from a recession. That rockstar lifestyle isn’t doing anything for your long-term memory.

  31. Craig Mc says:

    “And if it’s all about economic management…”

    BTW Rocky, I was making the point that this time it wasn’t about the economy as far as the electorate is concerned. In fact I bet that AES survey shows the economy as a non-issue with ALP voters, and younger voters generally. But it will be. It almost always is. The only exceptions I’ve known in my lifetime are ’72 and now ’07.

  32. Craig Mc says:

    “A competent economic manager of a government would ensure, after the necessary government services are covered (ideally targeted at needs unmet by market mechanisms), that enough is spent on underwriting future economic activity by broad spending on education at all levels, and by spending on economic infrastructure. It would also avoid squandering and waste.”
    On the other hand, a competent economic manager knows that governments are the last people you trust to wisely invest money. They’re much more likely to squander and waste it. What’s better policy, a dam or a desalination plant? You know which one the government will build.

    I agree that Howard did tax and spend, but always with a surplus, and never borrowing to do it. Pandering to pressure groups is a cross-party symptom of long-term governments desperate to be re-elected. In 96 Keating was even worse than Howard. In that respect it’s always good to hit the reset button every now and then just to wipe out these obligations.

    That’s the one bright lining for me from this election.

  33. Dave says:

    As a tax lawyer of many years can I say how SICK I am of hearing about how great Costello was as treasurer.

    He was a lazy idiot who didn’t lift a finger in 11 years to simplify our tax system, now groaning under the weight of its own complexity. All he’d do is get his advisers to prepare a budget once a year dividing out the resources windfall and take all the credit.

    Costello was and always will be full of nothing but himself.

  34. Hal9000 says:

    “On the other hand, a competent economic manager knows that governments are the last people you trust to wisely invest money.”

    Lucky those wise private investors have brought us universal education, roads, ports, hospitals and all the other paraphernalia of civilisation, then, eh? If governments had been left to their own devices, we’d have none of those things. I bow before your superior wisdom, Craig Mc

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