Editorial Issue No 84

Posted by on October 11, 2016 in Editorial, Home page feature

Editorial Issue No 84

The election outcome

 

Prosperity, equality and democracy are objectives of progressive politics. The issue is how to get there.  Yet, the portents are so uncomfortable that it might be wise to rely on an old Irish adage, "I would not start from where we are now".

 

Economies are stagnant with high unemployment and under-employment. The IMF blames the Brexit vote for a reduction of a fifth in its forecast of global economic growth. Global debt is higher than before the 2008 global financial crisis with much of the increase in debt going to bail out financiers.

 

Climate change becomes ever more evident. Data for 2016 to date records global surface temperatures are at record high and the extent of Arctic sea ice at a record low. The World Bank argues that climate change and poverty are so inextricably linked that, without rapid action, 100 million more people will be living in poverty by 2030.

 

The ILO forecasts that 199.4 million people will be unemployed globally by the end of 2016. Unemployment is getting worse, and getting worse fastest, in the developing economics. The BRICS economies (Brazil, Russia, India, China and South Africa) are the worst hit. The ILO puts it down to volatile capital flows, dysfunctional financial markets and the shortage of global demand.

 

The International Trade Union Confederation (ITUC) told the September G20 meeting that 65 to 70 per cent of households in advanced economies, up to 580 million people, have experienced falling or flat real income growth. The ITUC said 'The current policy stance of loose but ineffective monetary policy combined with contractionary fiscal policy and a structural weakening of collective bargaining institutions is not working'.

 

Oil, gas, mineral and commodity prices have crashed. Low iron ore prices have given the State of Western Australia a big budget deficit. Low prices are bludgeoning the benefits that Timor L'Este and Papua New Guinea expected from oil and gas.

 

Across the world, governments are avoiding responsibility. Little that governments are doing is working. The only acceptable policy levers seem those held by the reserve/central banks. Printing money (quantitative easing) has made things less worse in the United States - at least compared to the Euro-zone. The spending measures of the Rudd Government plus the then high commodity prices made things less worse in Australia. Even so, in Australia as elsewhere, the neo-liberal orthodoxy is so bereft that the only action left is negative interest rates - charging investors to put money in banks. Yet even this is counter-productive since the absence of inflation means that property prices and mortgage debts do not fall in real terms. This makes home ownership even harder - which is compounded by the switch to investment in property because of low interest rates on bonds and term deposits.

 

The economic orthodoxy has produced and intensified inequality. Almost everywhere, the wage share of the economy is falling and the profit share increasing. The wage share has fallen faster and further in the European countries most affected by the global and euro crises - Greece, Spain, Ireland and Portugal. Profits are made from financial transactions not the production of goods and the provision of services.

 

So far, though, there has been little mass action calling for  political redress to inequality. Governments with unfair agendas are being elected and re-elected; those that profess to want improvements fail to deliver and too frequently become converts to the orthodoxy. Established politics and parties are being rejected in favour of right-wing nationalism and populism. The myriad examples include Donald Trump, Marine Le Pen, Brexit, the Austria Freedom Party, True Finns, Jobbik (Hungary) and the Danish People's Party. In the bastion of social democracy, the right-nationalist Swedish Democrats won almost 14 per cent of the vote in 2014 and became the third largest party in the Parliament. Petter Larsson writing in Jacobin describes their approach.

For Sweden Democrats voters, politics is no longer primarily about the economy. With no party to fight for their material interests, they choose the one that pursues their cultural priorities — that promises to stop “Islamization,” crack down on perceived freeloaders and criminals, keep gays marginalized, bash “politically correct” elites in Stockholm and Brussels, and, in short, “give Sweden back to us,” as the Sweden Democrats’ slogan puts it.

It could be the One Nation Party.

 

The policy inconsistencies are vivid. Scapegoating immigrants will not produce jobs and work security. Blaming environmentalists as 'green-mailers' will not recreate the mining boom. Banning the sale of NSW electricity utilities to Chinese interests will not counter the effects of the free trade agreement with China or the TPP.

 

Politicians of the centre -right and centre-left have intensified their rhetoric in inverse proportion to their lack of ideas. Economic orthodoxies are failing; but so are the standard social ones. For example, Goran Therborn has documented that life expectancies are widening between classes; this should raise questions about centrally funded and administrated health systems.

 

Education is another sacred bovine that needs questioning. The Third Way of Clinton and Blair argued that education was the mechanism to counter social inequality - including that resulting from their pro-market policies. The ALP, especially under Gillard, strongly subscribed to these ideas. But it may be suspect - as insecure unemployment grows, more education qualifications (in themselves a market commodity) may not be the automatic key to well remunerated careers. Likewise, it is no longer clear that the welfare arrangements - as diminished as they are- provide social inclusion or social security. Indeed, they might well be on the way to becoming more of a surveillance regime over the poor and unfortunate.

 

Democracy requires economic as well as political equality. It needs economic, social and cultural institutions that protect people against market vagaries and take labour 'out of competition'. The old is not working, the reactionaries are nasty and divisive and portraying 'the others' as the problem. Progressive politics needs to offer the new. It must start with decency and argue for collective rather than individualist solutions.

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