Recently whilst browsing through a local bookshop I came across a title that caught my attention, probably because it had a cartoon of Peter Costello dressed in a tight fitting super-hero costume. Its title was also very catchy Ozonomics: Inside the Myth of Australia’s Economic Superheroes.
The Author Andrew Charlton is an economist and his thesis seems to describe an ongoing debate here at Blogocrats. Last year in an opinion piece published by SMH Charlton asserts:‘
In Australia the battle for the title of “better economic manager” has become one of competing narratives. Howard and Peter Costello, backlit by the conspicuous boom, have an obvious advantage over the Labor story which is unflatteringly silhouetted against the recession they presided over.
Labor says its macro framework in the 1980s and micro reform in the 1990s created the bedrock for later success and that the recession was the price to be paid for progress.
In contrast, the conservatives say the Howard Government’s decisions to pay down the national debt and deliver budget surpluses have directly produced the long boom. Howard has taken credit for the prosperity and used it to position himself as an economic superhero deserving of complete trust from the electorate.
The Liberal and Labor claims deserve thorough scrutiny because what we believe about the foundation of our wealth makes a great deal of difference to how we should pursue our future.
If, as our economic superheroes would have us believe, Australia’s prosperity has been due to the superior performance of our leaders, then our job as citizens is merely to continue to passively re-elect those leaders.
But if our success is a complex combination of long-term policies and global circumstances, then our challenge is to ensure we continue constant public debate with a view to finding the right policies to sustain our position in a changing world.
Given that Australia is the beneficiary of a strong global economy and a resources boom, you would expect the economy to be creating jobs, whether the recent industrial relations reforms have helped or hindered is difficult to say.
It’s obvious in hindsight that Charlton’s comments came just before major cracks finally appeared in global financial markets and economies as well as our own misplaced belief that a strong resources boom would help us avoid any calamities that would befall other major economies.
The comment I find most interesting is “the conservatives say the Howard Government’s decisions to pay down the national debt and deliver budget surpluses have directly produced the long boom. Howard has taken credit for the prosperity and used it to position himself as an economic superhero deserving of complete trust from the electorate.” These claims, as many would have to agree, really get up the nose of anyone with even a modicum of commonsense and a basic understanding of economic reality.
The central point Charlton makes is valid, in my opinion: “The economy is much like a little boat on Sydney Harbour on Boxing Day. Whether the trip is calm or rocky depends much more on the weather and the wash from the bigger boats than anything that might be done internally. If the weather is bad, you cannot blame the skipper for the bumpy ride. In fact, unless you know a lot about sailing, it is hard to know whether the skipper is doing a good job in bad circumstances, or whether he’s making it worse.
The same is true of skippering the economy. If you ask Australians about the economy in the decade or so of John Howard’s prime ministership they will remember the low unemployment rates, the low inflation, low interest rates and the general mood of affluence which suffused the nation. Howard turned this prosperity into stunning electoral success.”
Tell us something we don’t know.
Author of the Land of Plenty Mark Davis counters Howard and Costello’s economic management credentials when he wrote:
“Australia’s ‘age of prosperity’, as Peter Costello calls it in his memoirs, has been underwritten by the mining boom (even as manufactured exports stagnated during his tenure) and massive increases in household debt (now more than $1 trillion – about the same as the annual national output), even as the government has wound down its own debt. The national debt has in effect been privatised while, at the same time, risk has been shifted away from government and business onto the shoulders of ordinary people, in the shape of long working hours, casualisation, and the sort of uncertainty that is written in the fact that Australians take the least holidays of any western nation.”
It just doesn’t get anymore succinct and to the point than that. In fact, we now know that our economy is just as vulnerable to a major economic downturn than the struggling US, leaving us facing the spectre of soaring unemployment, falling house prices and a long-drawn out economic slump.
And that, I suppose, will be all Kevin’s fault?
Charlton is right on one very important central fact that shouldn’t be lost to politicians and their egotistical whims: our success is a complex combination of long-term policies and global circumstances, and our challenge is to ensure we continue constant public debate with a view to finding the right policies to sustain our position in a changing world.”
Over to you