Australia's economy: Swallowing the austerity lie

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Austerity has crept into our public affairs, disguised as good economic management. Mike Dowson thinks we should unmask this imposter.

THIS YEAR'S election has become a pantomime.

But it does reveal one important theme, which currently sets the tone for our political discourse.

That theme is scarcity.

It’s not just the major political parties. The media, too, seems to have embraced it. Opinions clash over what to do about it but nearly everyone seems to agree that in Australia today we simply don’t have enough to go around. The pointing finger of doom is provided by the budget deficit.

This has lent a moralistic flavour to the debates. There is some optimistic rhetoric about the future, but it has barely enough depth for a Wiggles song and only reinforces the atmosphere of dearth in the present.

In this context, the job of voters seems to be to work out who is deserving and who is not. The dialectic is so antiquated, it’s almost Dickensian.

On the one hand, the deceptively avuncular patriarch, preparing to throw our orphaned social services out into the winter’s night of neoliberal austerity, insists that we must “live within our means”.

On the other hand, our stalwart retainer, shielding her wards from his lordship’s spidery grasp, swears to defend them.

In the background, the dark, satanic mills spew forth relentlessly. A grim miasma of hard times and low expectations settles like a Victorian London fog.

Does this strike you as odd at all? What happened to all that golden soil and wealth for toil?

Before we meekly toddle off to the workhouse – or the poorhouse – it might be worth taking stock of our prospects in a bit more detail.

We have a continent of nearly 8 million square kilometres. Vast natural resources. Massive agricultural production. Unparalleled potential for renewable energy. Hungry foreign markets.

Twenty-four million people. High levels of literacy and numeracy. An open, tolerant society. The world’s 12th largest economy. World class institutions. A proud history of scientific discovery and invention.

I’m just not getting the poverty vibe, are you? So what is it we have such a lack of?

Well, if the deficit is any indication, it must be money. We don’t have enough of it, so we’ll have to go without luxuries like health, education and the arts.

Some have suggested that we might find extra money by raising taxes. Ignorant fools, comes the retort. Don’t they realise how that would destroy the economy? Which is funny, really, because the correlation between tax and growth around the world is not at all strong. And overall tax in Australia is low compared to the OECD. There must be more to it.

Foreign investment, perhaps? We might have huge amounts of resources and smart people, but apparently the only way we can get anything done around here is with foreign money.

The obvious question is what about all the local money? It’s tied up in the tax shelters we’ve created for it, mostly in real estate and – indirectly – the banks. Why would those people be so silly as to invest in productive activity for the common good?

Since we don’t feel like investing in our own productivity we’ll have to get foreign investors to do it. Apparently, tax puts them off. After all, there are plenty of downtrodden people elsewhere in the world willing to go without good wages, schools and hospitals.

It’s not easy to see that in the data. In fact, it almost looks as if many investors prefer doing business in an advanced liberal democracy like ours. No accounting for it, is there?

It doesn’t line up with my experience either. I’ve known a few very rich people and some entrepreneurs. I don’t recall them being all that reticent about good business opportunities with fewer risks.

If we are to believe the LNP’s backers, the only thing that will lure these sensitive creatures back to profit-making activity is the sight of an entire nation bending over with its pants down. Without them, it appears we simply don’t have enough money to do all the incredible things we know how to do with our almost unlimited resources.

But hang on. We’re a sovereign nation. We make our own money. It seems that’s not an option either. These days we leave it up to the banks to decide where new money should be allocated.

Without the fund managers, and those rich people in Boston and Dubai and Shanghai, the whole country will collapse. We’ll all sit around with puzzled looks on our faces, wondering what to do with our minerals and farms and science and technology.

Our government is powerless to help us. They’ve run out of money. They can’t raise taxes. They can’t end the tax rorts that have locked up local capital. And they can’t inject money into the economy to get our spare capacity moving. The situation is hopeless.

I don’t want to be churlish. After all, government ministers, mainstream journalists, business lobbyists and even ordinary folk in the fruit and veggie aisle all seem to agree on this. So they must be right. It’s only people with qualifications who disagree.

But I’m a bit puzzled. Aren’t these the things that governments are supposed to do? When I consider what justifies the big salaries and lifetime entitlements we give to politicians, these tend to be the things I think about.

It sounds old fashioned now but I remember something called "the national interest". The idea was that we would elect governments to enact policies that would help the whole nation, rather than just a few influential people.

This idea came about as a result of centuries of brutal oppression at the hands of a selfish rentier class. Our forebears got sick of all the needless suffering and decided they wanted a change.

Since then, a new strategy for curbing democratic impulses has emerged. Some common folk have been granted honorary status among the rentiers. This is the genius of the tax shelters. Many people – even those who don’t benefit from negative gearing or capital gains tax exemptions – now believe their fortunes hinge, not on good government, but on the defence of privileges.

Absolved of the difficult responsibility of promoting the national interest, the Government now seems to be trying to make itself disappear by repeatedly cutting tax and spending. It’s a sort of national voluntary euthanasia.

But the Government is us. We elect politicians. Magnates might hijack their campaigns but we pay their wages. They work for us. They are the agents of our collective will. Why would we allow them to sacrifice our authority to the vagaries of global markets?

The theory of learned helplessness explains why humans and other animals are sometimes unable to extricate themselves from adverse circumstances, even though the means are available to them. It can result from prolonged bullying, or physical or psychological abuse.

The Government can’t bully us personally. But it can bully us economically. And for years, with the ardent assistance of the mainstream media, it’s been doing just that. Budget emergencies, black holes, lifters and leaners – they’re all part of a persistent narrative of imaginary scarcity.

This is how a proud, independent and copiously well-endowed country can be persuaded to hand control of its destiny to others it will never know.

The truly terrible aspect of this cynical strategy is that as inequality continues to rise, social services are cut and the domestic economy contracts as a result, the poor will have to spend more of their diminishing share on essentials. Scarcity will become a self-fulfilling prophecy.

We need a bigger vision than this, one that inspires by acknowledging our true potential, instead of intimidating us with the threat of scarcity. If there’s one on offer, that should get our vote.

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