News + Views, November 2016
Was Marx correct, 5 November
Australia's five PMs in a few years is a sign that there are intractable problems that fail to be understood by political elites. Brexit is one bit of evidence. The election of Mr Trump in the USA stunningly underpins the theory.
Another feature of the modern capitalist world is the significant part played by the unhappiness of the masses due to increasing inequality of rewards. This was of course warned about by the arch-Communist Karl Marx.
In 2013, Michael Schuman concluded that Marx was finally being recycled. He wrote: 'With the global economy in a protracted crisis, and workers around the world burdened by joblessness, debt and stagnant incomes, Marx’s biting critique of capitalism — that the system is inherently unjust and self-destructive — cannot be so easily dismissed. Marx theorized that the capitalist system would inevitably impoverish the masses as the world’s wealth became concentrated in the hands of a greedy few, causing economic crises and heightened conflict between the rich and working classes.
'Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole.
'A growing dossier of evidence suggests that he may have been right'.
The latest issue of Quadrant, for November 2016, contains the views of four authors on The Future of Civilisation, November 8.
Articles with authors and links are as follows.
THE FUTURE OF CIVILISATION
Politics, Civilisation and the Survival of the West
Societies of Endless Destruction
Dogs, Cats, Skunks, and the Trustworthiness of Nations
Central Europe and the Future of the West
Subscriber access is remarkably inexpensive and you will be prompted either to log in if you are a current subscriber or to subscribe.
Storm warning for elites, 13 November
President-elect Trump's stunning win over Hillary Clinton is a storm warning for conventional politicians everywhere. The political class in democracies assume they are born to rule, often into a third generation. Many despise voters, called 'the punters' in political circles. Like Brexit, Donald Trump's win is a middle finger raised to the political class.
Australia's fiscal policy, 17 November
In a recent article in the Herald Sun, headed “Donald trumps the International Monetary Fund”, Terry McCrann is strongly critical of the IMF report’s apparent failure to understand why negative gearing investments are increasing (Chinese investments here in particular) and the difficulty of handling the increasing debt. He also savagely attacks the report’s almost unbelievable conclusion that the government is trying to cut the budget deficit too quickly!
McCrann asks whether one would trust incoming president Trump or “the very model of a ‘beltway insider’, IMF boss Christine Lagarde” (the beltway reference is of course to the insiders in Washington DC). He rightly concludes that this is about “more of the same policies and thinking which got us into the GFC and have seen us bogged in economic treacle since”.
McCrann’s criticism is also reflected in Judith Sloan’s comment in The Australian suggesting that Treasurer Scott Morrison should “bin that wacky drivel” and that Christine Lagarde, who “can’t get enough of suggestions of how to spend other people’s money”, is not an appropriate economic analyst. Sloan refers to what has become almost a slogan for solving the current slowness of economic growth viz increase government spending on “infrastructure”, and which is one of the recommendations of the IMF report. The difficulty of course is to find projects which have an economic return and Sloan rightly draws attention to the cost problems faced because of the power exercised by unions, and the CFMEU in particular, under our existing workplace relations arrangements. As I have argued, Turnbull needs to get across to the electorate that the restoration of the ABCC is only a “first step” in the reform required.
While the new Governor of the Reserve Bank, Philip Lowe, made public comments on the IMF report, the head of Treasury, John Fraser, did not do so. Lowe said the right thing, more or less, by urging the government to press ahead with its budget repair Also of interest is a report that former Treasury Head, Bernie Fraser, told his interviewer (just before the IMF report was released) that ‘arguments in favour of fiscal tightening hold no truck’ with him and that ‘the oft-used line that today’s spending will punish future generations is just silly. As ridiculous as the aim to limit total government expenditure to 25 per cent of gross domestic product’. “That’s not a policy for government spending, that’s a slogan. There is no evidence this works and I’m disappointed it had been backed by Treasury”
Des Moore (Lightly edited.)
President-elect Trump's policies, 28 November
'Markets are betting that Donald Trump will keep abandoning his campaign promises', says the Economist, a magazine.
'SINCE the financial crisis, many left-leaning American commentators have yearned for more deficit spending to reflate the economy. Few would have predicted that a Republican administration would be the one to heed their calls. Yet financial markets seem to be betting that President-elect Donald Trump, backed by Republican majorities in the House and Senate, will go on a budgetary binge that ignites economic growth. Since the election the S&P 500 index of shares has jumped 3%, led by stocks like banks and retailers that soar and sink with the economic cycle.
'Such expectations are not baseless. During the campaign Mr Trump called for tax cuts which, according to the Tax Policy Centre, a think-tank, would cost an eye-watering $7trn over a decade, raising the debt-to-GDP ratio by 26 percentage points (or, based on current projections, to 111% of GDP) by 2026. He promised new infrastructure spending worth $1trn, more money for defence and no cuts in spending on pensions and health care for the elderly (which is forecast to soar over the next decade). All else equal, such largesse should indeed give the economy some temporary vim. But there are three main reasons to doubt that a big boom will materialise'. ...
And in conclusion: 'Congress and the Fed are immediate obstacles to a debt-fuelled economic boom. Over a longer period, Mr Trump could be his own worst enemy. Markets are betting that he will abandon the issues that defined his candidacy and disappoint the voters who won him the election. They may turn out to be right. But if they are not then, like Clinton supporters, they are in for a painful realisation.'