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Bad Economics || Russel Marks for Politicoz

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This article was first published Politicoz on 7 October 2014 and was written by Russel Marks. 

There will be predictable reactions to Treasurer Joe Hockey’s announcementthat the government needs to scale back its budget surplus predictions because of global factors outside of his control. The Right will agree, and will continue to blame Labor for creating the “debt crisis” and for not agreeing to the Coalition’s desired spending cuts. Progressives will point out that the government has abandoned revenue measures (like the carbon price and mining super-profits tax), and will want to hold Hockey to account for using the same arguments for a continued deficit that he rejected when Labor used them.

Behind this political play is a deep disagreement about budgets, social security, taxation and the role of government itself. It’s a disagreement that’s often papered over by political parties in constant election-mode “me-tooism”, and neither party seems willing – or competent – to engage voters on the fundamentals of their political and economic philosophies. The problem is more acute for Labor. As the Chifley Research Centre’s Michael Cooney points out, its lionising of the Hawke-Keating government and its “microeconomic reform” precludes it from responding to today’s challenges.

The most immediate of those challenges is an extraordinary right-wing shift in the social contract that the Coalition is trying – and mostly failing – to engineer, against, it seems, the values of the bulk of Australians. Labor has struggled to articulate an effective response beyond “No”, perhaps because the Coalition’s policies look from some angles like extensions of the Hawke-Keating microeconomic reform. But the Coalition’s economic policy is built on the theoretical assumptions which economist Steve Keen argues have kept Europe in deep and sustained crisis.

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