Saturday Sanity Break, 10 November 2018 - Politics, Economy, Transcendent Matters
'The insurgents were crazy' the latest former PM said on ABC TV. 'Look at all my achievements - a strongly growing economy, etc, etc.
I forgot to write the list down, but the strong economy is due to excessive fiscal stimulus at the time of the GFC, when the Head of Treasury and the Treasurer panicked, very slow shift to reduce fiscal stimulus since then, very low cash interest rates and the newly stable relatively low wages. Low wages growth in my view is largely due to workers' common sense. Workers know that excessive wage demands pushed hard in an economy showing low productivity growth will find them replaced by a currently unemployed or underemployed worker.
None of these facts were due to the work of Prime minister Turnbull, and his desire to encourage innovation loudly touted in his first speech as PM seems to have been forgotten.
The current PM, Scott 'Scomo' Morrison said yesterday that the basic reason the previous PM was fired was his 'failure to connect with grassroot members.' Not a bad try Scott, but from the outside I have a slightly longer set of reasons.
The basic reason, virtually by definition, was 'loss of confidence by members of the cabinet'. Mr Turnbull came very close to losing is as he named the insurgents - I did not count but was it 10 or eleven he said were the guilty people.
His patrician style hardly endeared him to the worker bees of the cabinet, but in my mind (looking in) there were three precise reasons for his eventual loss of support.
1. Challenging and dismissing a PM, Tony Abbott, who'd had a dramatic win over the rabble that was the Rudd-Gillard-Rudd government. This made the coalition look just as ratty and disloyal as the R-G-R government and provided a clear precedent when Mr Abbott's popularity created a case for firing him.
2. The most disgusting piece of man management I can recall greatly offended many in the cabinet. Looking like an elderly 1950s Presbyterian minister, lips pursed, eyes flashing and barely containing his rage, Mr Turnbull dumped all over Barnaby Joyce, his loyal colleague and popular Deputy Prime Minister.
3. The excuse, already referred to, the 30 poor poll results. Until Mr Turnbull dropped the axe on a sitting PM, elected with a strong mandate by voters, this was unthinkable for a coalition PM. A (minor) saving grace was the act was an innovation, showing however Mr Turnbull's complete lack of political judgment.
Yesterday the RBA released its spring economic review. The AFR's headlines are included in the links below that will allow gentle readers to learn more.
The final link in this section is to the full article and I shall offer comments on the issues that I believe need some different perspective.
These are all thoughtful bits of analysis. The RBA is facing persistent low consumer inflation, the main guide to monetary policy introduced by Treasurer Costello in 1996. Despite my own enthusiasm for this target in a paper published in 1990, I never saw it as the final approach to formulation of monetary policy. Neither is 'return to budget surplus' the full story with fiscal policy.
There is little doubt that there was a case for the RBA to begin normalising cash interest rates two or three years ago, taking the steam out of house prices in the process. Equally, there was a good case for the Abbott-Turnbull-Morrison government to work harder to reach budget surplus at about the same time, meaning by now Australia would be paying off government debt.
Higher cash interest rates would have discouraged the greatly overdone household debt bubble, which now puts Australia a world leader with a dangerously overheated consumerist culture. Other ways to encourage household saving would have helped install a more saving-friendly culture. Yet the only policy with relevance to saving, taxing 'excessive' superannuation balances, was a clear anti-saving policy.
Most importantly, normalising cash interest rates and budgets , and encouraging rather than discouraging household saving, would have put Australia into a far stronger position when the next global downturn occurs.
A strong set of policies to raise national productivity is the only safe way to allow real wages to rise, and I can think of no government since those run by Messrs Hawke and Keating, and to a lesser extent the government of Messrs Howard and Costello, who delivered productivity increasing economic reforms.
R-G-R delivered mainly chaos, and A-T-M (so far) have stumbled from coup to coup, leaving no time or energy for useful reform. Nor have these latter governments devised and hammered an acceptable economic narrative that was a vital part of H-K and H-C.
We are delighted to bring to our readers a wonderful paper by George Pell, a review of a book by another powerful theologian.
Comments will be welcome, and we shall actively seek out and publish articles on what we call 'transcendent matters.
Here is Cardinal Pell's great contribution, posted here with his permission and that of Quadrant magazine.
Fiona Prior visits the exhibition of the modern master ‘William Kentridge – that which we do not remember’ at the Art Gallery of New South Wales. More here.
The Oz one day side recovered from its shameful collapse in game one of the series against Pakistan, thanks mainly to the bowlers. On to the final game, dear readers, accepting that a better sporting performance may inhibit our amazingly strong economic growth.
The Ozzie Rugby team plays Wales starting at 4.30 am tomorrow. I shall try to see the game, which perhaps may signal another sporting resurgence.
Image of the week - above: 'Self portrait with theorums'