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Dead Right
How neoliberalism redefined growth in the ugliest of ways – a Quarterly Essay extract

Growth is a beautiful word, but neoliberalism has defined it in the ugliest of ways. The historian Manning Clark described modern Australia as born of a battle between the “enlargers”, who sought to make the most of their freedom from Mother England on what they saw as their empty continent full of opportunities, and the “punishers and straighteners”, who were reluctant to give away the power of the prison guards and governors who defined so much of the early culture of the great big penal colony they had set up.

The optimistic and laconic larrikin spirit that is so prevalent in accounts of Australian culture sits hard against the worldview of the punishers. Whether it’s the glorification of Ned Kelly rising up against the police he saw as unjust, or the Anzacs’ willingness to mock and disobey their British generals, the idea that we should take our country seriously, but not ourselves, has a long history in Australian literature and culture.

Neoliberalism changed that. By endlessly urging economic growth, the punishers draped themselves in the cloak of the enlargers. Neoliberalism has for decades told an optimistic story of the good days to come, but its genius is to convince us that in order to be enlargers we must be punishers first. If we want to end unemployment, we must punish the unemployed for their sloth. If we want to protect what we have, we must first punish refugees for their greed.

Of course we want our children, our gardens and our country to grow and be strong, but we are told that to make our economy grow we must be ever-vigilant against those in need. Yet after 30 years of blaming the unemployed for their unemployment, and single mothers for their absent partners, the prosperity we were promised has yet to arrive for large sections of the population. Indeed, many of the communities and regions that were asked to make the biggest sacrifices in the name of National Competition Policy have seen the smallest gains. While the national income has risen steadily for 27 years, the incomes of many in our nation have not. Those stuck on unemployment benefits and the minimum wage in regional centres continue to fall further behind those with full-time jobs in our cities. Those stuck in casual jobs or the gig economy have no access to the sick leave, maternity leave and paid holidays that adult Australians once took for granted.

One could be forgiven for thinking that those speaking the language of neoliberalism were never trying to enlarge our society – they were trying to control it. As the hundreds of guards who once oversaw a penal colony of thousands knew all too well, it is easier to control a community when it is fearful and divided than when it is confident and united.

What might the enlargers say in response to this?

The opposite of the narrow economic agenda of neoliberalism isn’t a progressive economic reform agenda; it is the re-establishment of a broad debate about the national interest. After 30 years of hearing that politicians, government and taxes are the things that ruin the economy, it is time for the public to hear and see that politicians, government and taxes are the foundations on which prosperous democratic nations are built.

You can’t have a democracy without politicians. You can’t do the things the public wants without a government bureaucracy. And you can’t fund those policies without tax revenue. The neoliberal war on government and tax is, in reality, a war on democracy. And everything from the opinion polls to the number of people ignoring the law on compulsory voting suggests that the fabric of our democracy is not just frayed, but tearing.

There could be no more pressing, nor more conservative, objective than to revitalise faith in democracy. But for 30 years Australian political debate has revolved around “what the economy needs”. The simple truth is that economies don’t need anything. People do.

The Australian economy is nothing more than the collective actions of the 24 million people who live within our borders. Asking whether the Australian economy “needs tax cuts” is like asking if a dog needs a diamanté collar. The economy doesn’t “need” anything, but different people living in an economy, like different dog owners, will have differing views about what they think is needed. Resolving such disagreements is what democracy is for. Economists no more know what a nation needs than an architect knows what kind of house you need. We can ask experts for suggestions, but the choices are always ours.

It should come as no surprise that neoliberalism has done so much harm to our political discourse as, when viewed from a safe distance, it is clear that from the outset neoliberalism was a political project rather than an economic one. In essence, it allowed powerful groups in society to dress up their personal preferences as national goals.

Among the communities and workers that faced the full force of the privatisation of public assets and the contracting-out of essential services, scepticism vied with belief that the bitter medicine would one day produce good community health. But it never did. Although GDP per person, when adjusted for inflation, increased by 63 per cent between 1987 and 2017, few Australians feel that kids today will be able to buy a home and be able to raise kids in it on a single salary. One of the great ironies of neoliberalism is that even though it was supported by many conservative Christians, it has done more to destroy traditional family life than hippies, the pill or renewable energy ever did. Neoliberalism made many people rich, but it rendered many Christians unable to live by traditional Christian values.

After decades of distributional warfare, the gap between the winners and losers has grown too wide to explain away. No one believes that the wealth will soon trickle down. No one believes regional Australia is about to catch up with the capital cities. And no one believes a word that the business leaders, politicians and senior public servants who spent decades selling neoliberalism have to say. After decades in which regional communities lost their train lines and post offices, low-income workers lost their penalty rates, and many of those in aged-care homes lost their dignity, the public can see clearly that those same politicians who said we were too broke to help the poor are still determined to find a way to give enormous tax cuts to the biggest businesses.

People are no longer simply sceptical about the benefits of neoliberalism; they are scathing of the institutions that lied to their faces about shared sacrifice in the name of efficiency and productivity – whether it be the Productivity Commission, the economic modellers or the Business Council of Australia. Tax cuts for big businesses have not led to higher wages. Privatisation and outsourcing have not led to better-quality com­munity services in regional Australia. There have been decades of dodgy economic modelling and promises that weren’t met.

Consider the vocational education and training market, or VET to the neoliberal policy reformers. Once upon a time TAFEs and technical colleges spent years training hundreds of thousands of apprentice mechanics, hairdressers and welders. But it was so slow. And because it was publicly owned, it wasn’t even profitable. So the neoliberals decided to privatise and deregulate what they now call the VET market and the result is thousands of unemployed people borrowing thousands of dollars to do short online courses to become nail artists and physical trainers. Employers can’t get the trained young people they need, young people ran up debts they can’t repay and the private providers made a fortune … all in the name of efficiency.

And then along came Tony Abbott. As Opposition leader, Abbott set a match to the stockpile of scepticism in regional Australia and used it to burn down not just the Rudd government’s emissions trading scheme, but the trust of many in our scientific researchers as well. Climate scientists were not hardworking individuals to be respected, but people with vested interests determined to win grants.

But if someone can become prime minister of Australia by arguing that common sense trumps science and that climate scientists cannot be trusted, how could that man expect the public to have faith in the business leaders who said we must deregulate further to make the economy strong? If climate scientists are on the take, then what words can be used to describe the consultants who are paid to do the economic modelling requested by governments?

The political success of neoliberalism owed much to the power of experts in Australia. But Abbott undermined his own ability to govern with the tactics he relied on to gain office. By fanning the public’s hostility towards experts in order to destroy the carbon price, Abbott let scepticism out of the bottle. And as Malcolm Turnbull is now discovering, the public is in no mood to hear experts, be they climate scientists or economists, tell them what they have to do.

The political right is hoist with its own petard. They were willing to destroy much of the public’s faith in experts and institutions to protect their friends in the fossil-fuel industry from what were, in theory, neoliberal policy tools such as the carbon tax and the mining tax. Having succeeded in that, they are now entirely incapable of using those same experts and institutions to persuade the public to take another large dose of fiscal pain in the hope it will deliver long-term gain.

This leaves Australia at a fascinating crossroads. Without institutions that can be trusted, how do we govern? How do we turn policy ideas into parliamentary action? While there are no simple answers, creating and rebuilding our institutions will obviously play a major role.

 

This is an edited extract from Richard Denniss’ Quarterly Essay 70, Dead Right: How Neoliberalism Ate Itself and What Comes Next, available now ($22.99).

Richard Denniss
Richard Denniss is the chief economist at the Australia Institute.

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