Budget Debate: Pragmatists vs Touchy-Feely.

If you believe economists and other practitioners, socialism is for pinkos and other touchy-feely weirdos; economics is the realm of the pragmatist/technocrat:

"I like things that work. I'm a macro economist first and foremost. And I don't like things that hide dysfunctionality under metaphysical cloaks. My politics? I'm a bleeding heart, naturally. But I consider them pretty secondary. What works is usually non-ideological, I find."

That was true for all practitioners, whether well-established or just aspiring, orthodox or heterodox (the author of the passage above, for instance, is a young and highly heterodox, PoMo/PoKe, wannabe), but particularly so for those of a more mainstream, free-market persuasion.

And to pragmatism you had to add realism, as evidenced by your use of hard data.

How things have changed.

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Kenneth Davidson (Fairfax Media) writes on the Abbott/Hockey make-believe debt crisis, to complain most will be unfairly hurt and he is old-fashioned enough to use data:

"The truth is the Commonwealth doesn't have a debt problem. Estimated net debt in 2013-14 is $197.8 billion, or 12% of gross domestic product - one of the lowest of the mature industrial countries…
"According to these criteria, the budget deficit [sic] in 2014-15 is one of the most deflationary on record. It will withdraw $20 billion from the income expenditure stream, compared with an injection of $31 billion into the income expenditure stream in 2013-14.
"This is a massive deflationary turnaround of $51 billion in the impact of the budget on the economy (equal to a reduction of 3.2 per cent of GDP)" (here)

Mind you, he is not the only one. Sean Carmody, from Stubborn Mule, commenting on the chart below:

(source)

"Despite Hockey's concerns about a budget emergency, Australia [i.e. the "+" in the chart] is a wealthy country with a relatively low rate of government spending. Among these 30 countries, only Switzerland and South Korea spend less." (here)

So, is not just that public debt is currently low (as Davidson correctly says), it's that spending is already constrained, so debt doesn't have to "explode".

Another who makes ample use of data is Bill Mitchell, from Billiblog. Although Mitchell cites many reasons why spending cuts are counterproductive, I'll mention two, only:

GDP growth is well below trend and public spending is needed:

(source)

And labour underutilization is high and rising:

(source)

This is how Mitchell concludes:

"Overall, a very predictable fiscal statement from a nasty government that is keen to do the bidding of the elites and big business and use the rest of the citizens, particularly the weakest among as, as pawns in their wealth-generating activities.
"It will reduce growth and increase joblessness.
"It will increase hardship on those least able to cope with it.
"And why? For no substantive economic reason. This is not an economic statement. The annual fiscal statement has become an annual statement of dogma from a deeply flawed economic paradigm." (here)

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How do the supporters of the Abbott/Hockey debt crisis thesis argue their case?

Phil Bowen, whom the free-marketeer Australian Financial Review identifies as "Parliament's independent budget adviser" (why do they need one?), adds no details, just says he does not agree the federal budget cuts were built on a manufactured crisis, waves his hands, and reiterates Hockey's message:

" 'If you just continued on the trajectory of payments and revenues prior to the budget, net debt is forecast to grow rapidly, I think, at the highest rate in the OECD,' Mr Bowen said.
" 'I don't think that's a fiction at all, but neither am I saying that we have an immediate emergency.'
"Mr Bowen said it was the trajectory of net debt, rather than the level compared with other countries, that concerned him.
"' Sure we're currently at a very low level relative to the rest of the developed world, but frankly we don't want to find ourselves where the rest of the world is,' he said." (here)

And Leith van Onselen, from Macrobusiness, in his own data-free post says:

"While I agree with Davidson that increasing public debt is not necessarily 'bad' if it is used to boost the productive capacity of the economy and raise living standards - making the extra debt 'self-liquidating' - I do feel that he has underplayed the very real medium to longer-term pressures facing the Budget as the once-in-a-century mining boom unwinds and the population ages." (Emphasis added; here)

So there. Bugger the data. It's all a matter of "feelings" and "concerns".

That's not good enough, even though these are individuals expressing their personal feelings and worries only.

But it gets worse. Abbott and Hockey don't have that excuse: their "feelings" and "worries", their hysteria will not only hurt us at the bottom of the pecking order, they may yet throw Australia into a recession.

Gavin Mueller: Chicken Littles of the Right.

I don't know if this has happened to you, but often pieces others wrote make me feel jealous. Gavin Mueller's piece at Jacobin magazine (h/t David Ruccio) is a good example.

Commenting on The American Spectator (here and here) June issue (see below), Mueller makes many points I myself have made here and he adds many more I haven't made.

Poor rich people, how they suffer.

Among other things, Mueller mentions the so-called bourgeois morality, so popular of late. For personal reasons, however, I found this particularly noteworthy:

"When Marx undertook his analysis of capitalism, he sought to describe its internal laws and tendencies independent of any malice, greed, or hatred among individual owners. But the class system on which capitalism depends (unlike Piketty, Marx didn't argue that capitalism produced inequality, but that it started from it) produces a real loathing, and fear, of the poor on whom it relies." (here)

I've written about this. Indeed, Marx chose to leave malice, greed and hatred out of his analysis of the capitalists and capitalism itself (see here). But the truth is that same malice, greed and hatred are there and we (see here, or here) and ironically, Marx himself (see here, or here), are their targets.

Mueller concludes:

"Remember this: no matter how many country clubbers flip through Piketty's book, at bottom, the rich hate us. They disdain us. They mock us. And they fear us, even though the current balance of forces favors them overwhelmingly and sometimes 'common ruin of the contending classes' seems like an optimistic outcome.
"Yet I have to fall back on some advice I got as a kid: If the American Spectator wants to cry about class warfare, we should give them something to cry about."

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As if intended to prove Mueller right, The American Spectator scornfully replies: "Jacobin Magazine is the Best (Marxist) Show in Town"

The Abbott Shogunate.

or Sesame Seeds and Australians are Very Much Alike. The More you Squeeze Them, the More you can Extract From Them.

Queensland MP George Christensen (National/Liberal Coalition: "conservative, centre-right, libertarian") ordered the peasant rabble to shut up: we are allowed, nay, encouraged, to protest under Labor governments, only, not under his party's government.

Instead of whingeing about Tony Abbott's efforts to lower Australian living standards to third world levels, we must embrace Asia's example:

"Aussies should do tour of Asia & live like locals to put these 1st world complaints re budget in perspective" (here and here)

This is the example the Coalition wants Australia to follow:

"However, it is important to emphasize that, despite the recent tendency to question the characterization of Tokugawa Japan as feudal and its peasants as serfs, those peasants were, in fact, subjects whose reason for living, as the ruling class saw it, was solely to work the land and provide for the economic needs of the samurai. If 6 percent of the population expropriates 50 percent of the land's bounty, and leaves over 80 percent of the population to subsist on what remains, one does not have to be a Marxist to see in this system a classic case of exploitation. This was the conscious policy of the Tokugawa ruling class. An eighteenth-century Bakufu [i.e. Tokugawa shogunate government bureaucracy] official asserted, 'Sesame seeds and peasants are very much alike. The more you squeeze them, the more you can extract from them.' Ieyasu, the founder of the Bakufu, said that the samurai, in their behavior toward the peasants, should act as arrogantly as they wished. 'When the peasants see ordinary samurai behaving in such a manner, they will be terrified all the more of high officials and will not dare harbor treacherous thoughts. If the peasants are allowed to be self-indulgent, they are bound to stage peasant uprisings.' Another high Bakufu official told his subordinates, 'The peasants constitute the foundation of society. To govern them, a certain principle must be followed. First of all, the boundaries of each peasant's plots must be firmly established. Then, they should be allowed to retain what they must actually consume during the year. The rest should be taken up as annual contributions. The peasants must be governed in such a way that they have what is essential but no more.' The Tokugawa ruling class also believed in keeping the peasants ignorant. 'A good peasant is one who does not know the price of grain' was a saying common among officialdom. 'Peasants and townspeople,' it was said, 'should be forbidden to attend school'." (Mikiso Hane, "Peasants, Rebels, Women, and Outcastes: The Underside of Modern Japan")

Joe Hockey's New Age.

Or That's Your Heavy Lifting.


The sculpture below represents the majority of the world's population, carrying a privileged minority. Most Aussies (but not all) were among the latter. Perhaps because of that, we didn't do much about it. We were looking somewhere else.

Survival of the Fattest, by Jens Galschiøt and Lars Calmar. [A]

Now it's our turn.

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Politicians, particularly those of a "conservative, right-of-centre, libertarian" persuasion (but not only them) believe in tough love. The Abbott government, for instance, claims to be "tough with a purpose".

These people see their role as disciplining the rest of us, just like, once upon a time, stern parents would cane and belt their kids. For their own good, obviously.

However, the line between "tough love" and "sadism" is getting painfully tenuous:

"Facebook pages lit up with despairing and disturbing messages.
" 'So with this budget, I'm screwed!' said a post on one forum.
" 'I've considered taking my life over everyday struggles now, let alone when these changes happen.
" 'Anyway my point is, do I try and save for a big all weather tent NOW!! Or give up and take my kids with me!!' " (link)

Or ask Melbourne mother of three Kaye Stirland.

To add insult to injury, the supposedly independent commentariat echoes that: the government is "being cruel to be kind". "We had to have this budget". Bottom line: shut the fuck up and don't fucking whinge.

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Kindness has nothing to do with these people's cruelty. For one, there was no need for the cruelty. We didn't have to have this budget. The fictitious budget crisis was engineered to justify the measures they wanted to take: it's an excuse, nothing more.

Take the state premiers' phoney outrage at their own party's federal leader, PM Abbott ("conservative, right-of-centre, libertarian") budget cuts:

"NSW Premier Mike Baird has lashed out at the Abbott government, saying the federal budget is a 'kick in the guts' for people in his state"

Twenty four hours later:

"NSW Premier Mike Baird has softened his rhetorical assault on Tony Abbott's budget cuts, vouching his 'absolute support' to the government's budget repair objective".

And then, out of the blue, WA premier Colin Barnett comes with the idea of raising the GST to solve the conflict. It's just coincidence that now PM Abbott has an excuse to do what he promised not to do: "I'll have to raise the GST, because the devil [sorry, the premiers] is making me do it."

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Meanwhile, as the talk of the day is about the budget, the (ironically) named Fair Work Commission, out of kindness and very quietly, cut casual weekend loading by a third to casual hospitality workers. If in the process their employers have lower costs and higher profits, then it's a win win situation. After all, "what the Eye sees not, the Heart rues not. Men may have Losses, but if they be unknown to them they give them no Trouble".

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Treasurer Joe Hockey decreed the end of the "age of entitlement", no? But his "heavy lifting" was designed so that you carry the weight, while his voters remain unburdened (which would explain why the commentariat has been so lenient with the budget).

Truth is, these people hate and despise you. Now, you see why the picture above makes sense, don't you?

Image Credits:
[A] "Survival of the Fattest", licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license. My usage of the file does not suggest its author endorses me or my work. Source: Wikipedia.