The Other School of Economics

You know something. Labor is *really* not doing us a favor [updated w/ refugee Malaysian deal]

On election night 25 Nov 2007 Australian Labor leader Kevin Rudd put an end to 11 ½ years of conservative government standing on a stage by the words “new leadership, fresh ideas”. A year later in November 2008 Barack Obama also ended a decade of neo-conservatism in the US. He too had an emphatic message for his supporters: at this “defining moment, change had come to America”.

rudd-NL-620
Kevin 07 – You know something. Change was in the air.

From euphoria to disappointment

Australian Labor and US Democrats were swept into office on a tide of euphoria, a spirit of engagement with politics and a renewed interest in the big picture.

Both parties have failed to deliver the performance required to match their electors’ madly exaggerated expectations. In Australia Rudd quickly implemented symbolic measures such as the ratification of Kyoto or the Apology to the stolen generation, but then stalled on decisive environment policies. Similarly in the US, Obama did manage to pass the Health Care bill but completely failed to reform the financial industry when the opportunity was there.

So not only are those ‘Left’ governments under pressure from conservative oppositions, but they are also losing support from their own base for wasting the window of opportunity that History gave them to write a new cycle of Labor reforms before the next Tory phase. And we are all losing with them.

The (utilitarian) reason why missing this political window of opportunity is bad

Indeed, History shows there is a utilitarian reason why political parties take turns in government in representative democracies. Labor phases of social progress and wealth redistribution alternate with conservative Tory times traditionally focused on pushing pro-business agendas. There are obviously nuances to this broad depiction but experience shows that this is roughly the nature of the alternative.

Whether you agree with them or not, you would have to admit that until the 80s the ‘progressive’ Left had convictions supported by a coherent progressive ideology. Its raison d’être was to build “a new Jerusalem“, as Clement Attlee put it in 1945. The Left aspired to employ the power of the State to transform society by eliminating disproportionate inequalities. It believed that the rule of the law and the will of the people could achieve that objective through legislation, regulation and public administration. The dispossessed would be assisted by the diversion of tax revenues and public services to reach the potential of their abilities.

It is this coherent ideological belief that drove Labor governments to implement progressive social measures such as the Maternity Allowance Act of 1912 in Australia, the 2-week annual paid leaves in France in 1936, the elimination of military conscription and criminal execution, universal health care and fee-free tertiary schooling in Australia in the 1970s under Whitlam.

itsTime
Gough Whitlam, 1972 – It was time

The seeds of the current crisis

History also shows that the causes of the current crisis of the Left have been a long time in the making, well before Obama and Rudd got elected into their predicament.

Labor parties abandoned their social ideology in the 80s and 90s and converted to neo-liberal economics during years of prolonged prosperity. Indeed Paul Keating and Bill Clinton were the true architects of the triumph of neo-liberal economics in their respective countries. It was Keating who rejected economic nationalism and the role for the state in running public utilities. It was Bill Clinton – not Ronald Reagan or George HW Bush – who most fervently argued for the benefits of globalisation and signed major free-trade agreements. In less than two decades the ’progressive’ Left had accepted that markets were more relevant than the state to deliver the common good, and individual citizens were better placed to spend their own income. Competition for cutting taxes replaced the competition to build a better nation.

At the end of the 90s this shift almost looked like the winning strategy: Clinton, Blair and French socialist prime minister Lionel Jospin (under whom Dominique Strauss-Kahn served as Minister of Finance) scored electoral victories by convincing voters that Left governments would give them the best of both worlds: a balance of free-market and social policies that the Tories would not deliver.

This came at a price: the social conscience has gone AWOL

However this shift also carried the seeds of today’s problems because the Labor movement simply forgot its role as a social conscience for the system. During this phase of economic expansion, like the ant from the Fable preparing for harsh winter days, the Left should have anticipated the next historical cycle. It should have spotted the growing side effects of globalisation and designed a robust ideological platform to address environmental issues and global economic imbalances. It did not. Instead, it behaved like the Grasshopper. It kept singing a tune that was not its core value.

As Australian blogger Amy Mullis analysed, “this econo-centric rhetoric left the Labor Party in a real bind”. When discussing a policy, Labor doesn’t actually ask if it is good or bad anymore, but whether it is efficient and productive. Ironically, to use a vocabulary fashionable in business circles, they have lost their ‘strategic vision’ and have become ‘tactical’ in their approach to politics.

So when the great crisis of capitalism stuck in 2007-08, instead of saying “I told you so” and being ready with relevant alternatives to neo-liberal polices, Labor and Democratic parties did not have anything to stand on beyond the campaign rhetoric of “change” and “fresh ideas”, which made them unable to reform.

What is happening to the current Australian Labor government typifies how the Left has lost its ideological compass to the point of now flirting with conservative policies.

On the domestic front the recent speech from Australian Labor PM Julia Gillard at the Sydney Institute announcing a crackdown on welfare recipients perfectly illustrates the trend. In words that could have been delivered by her conservative opponents, she announced it was time for the State to scale back. Gillard is now asking “every Australian to pull his or her own weight” because “it’s not fair for taxpayers to pay for someone who can support themselves”.

This sparked reprobation amongst welfare advocates and sarcasm from liberal commentators such as Joe Hildebrand who observed that “a Labor Prime Minister who once claimed to be a socialist, now, sits to the right of John Howard”. He too picked on this terrible betrayal of the political cycle and the fact that “Gillard and the cronies who advise her have robbed the party and the nation of what would have been a decade of reformist Government, because – whether they agreed with it or not – the voting public knew what he stood for.

Foreign policies are also impacted as demonstrated by the draconian statements posted on the twitter social network over the week-end about asylum seekers trying to reach Australia:

“A message for people smugglers & those they try to exploit – if you get on a boat you risk ending up in Malaysia at the end of the queue. JG”

This means that people seeking asylum in Australia will be sent to Malaysia, which is not a signatory to the UN Convention on Refugees. This new-found toughness on humanitarian issues really finishes to close the gap between Labor and the Tories. The tacit deal struck in the 90s about the acceptance of economic rationalism mellowed by a general humanitarian philosophy is now obsolete. The Bleeding-Heart social conscience which the Left was once wearing as a badge of honour has been officially revoked, and with it the final point of differentiation with the Right.

We need this social conscience back

Indeed, our system needs a social and reformist conscience. A Labor government playing the ‘me-too’ game with the conservatives is not useful. History shows that the Left is at its best when it is at the rendez-vous of social changes. This is definitively needed today. Now is the time for Labor to rediscover that progressive ideology is not a dirty word and rebuild the political philosophy that made it a driving force of the 20th century. Or it will lose relevance, and we will all be worse off for it.

{ leLaissezFaire – Sydney, 19 April 2011
Updated on 8 May 2011 further to the PM’s statements on asylum seekers }

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