Your social betters are most disappointed by your populist backsliding
Neoliberal elites will soon need to elect a new people
The old Washington Consensus was built on the premise that if leaders got the economics right, then politics would follow. Cheap consumer goods would keep voters happy at home, trade ties between nations would destroy the incentive to wage war, and the desire to compete in global markets would encourage authoritarian regimes to liberalize. Reality has not been kind to those predictions… The new consensus on trade taps into a much older understanding of economics, sometimes referred to as “political economy.” The basic idea is that economic policy can’t just be a matter of numbers on a spreadsheet; it must take political realities into account.
Rogé Karma, The Atlantic (18/5/24)
Today’s rulers of China see cautionary tales in consumer-driven American capitalism: de-industrialisation, over-financialisation, destabilising booms and busts, social atomisation, populist ferment, and digital platforms with wealth and power to rival the state… Manufacturing can help ensure self-sufficiency, prized by Chinese leaders since Mao Zedong. Mao’s successors relaxed on that fixation, not because they became true converts of the economics of comparative advantages, but out of necessity to attract Western capital and technology. Unlike other industrialised economies, which tend to outsource legacy industries as their companies move up the value chain, China has never truly trusted transnational division of labour.
Yanme Xie, AFR (22/5/24)
I was raised in an age of liberal triumphalism. Liberal democracy won the 20th century — imperialism, fascism, and communism all collapsed, and by the end of the century the U.S. and its democratic allies in Asia and Europe were both economically and militarily ascendant. Even China, which remained an autocracy, liberalized its economy and parts of its society during this time. Even scholars who turned up their noses at Francis Fukuyama’s “end of history” were generally favorable to arguments that capitalism and/or liberal democracy fostered peace, happiness, and prosperity. There was an overwhelming sense that freedom — the freedom to speak your mind, to live as you liked, to buy and sell what you wished — was the thing that won. Just two decades later, that idea is deeply in doubt. The wave of democratization and social liberalization went into reverse. The U.S. has been riven by social and political chaos, and its weaknesses in manufacturing and homebuilding have been starkly exposed. Meanwhile China, the ascendant superpower of the early 21st century, has moved back toward a more dirigiste economy and a more totalitarian society under Xi Jinping. A number of people I know who travel to China these days come back with starry-eyed tales of how wonderful it is compared to the U.S.
Noah Smith,
“A society to be successful must maintain a balance between nurturing excellence and encouraging the average to improve.”
Lee Kuan Yew
Being the kind of person who wonders about things, I’ve often wondered how French and Russian nobles conducted themselves prior to the events of 1789 and 1917.
Did they sit around at lavish banquets bemoaning the rising wave of populism?
Did they shake their heads to each other, wondering why the ignorant peasants couldn’t recognise all the self-evident upsides of a monarchical system (i.e. stability, tradition, quick decision-making, less scope for corruption, a long-term approach to policy making)?
As is the case with many oft-quoted quotes, there’s no evidence Marie Antoinette ever actually said, “Let them eat cake.” But if she had, would she have been tempted to ask the logical follow-up question – “Why aren’t those surly proles more grateful for all the cake they get to scarf down thanks to the good offices of the King and I?”
Qu'ils mangent de la brioche, 21st century-style
I was reminded of those long-departed European aristocrats while watching Insiders last Sunday morning. If you want to consult the primary source, you can find it here. But the tl;dr version is that there was much distress expressed by the panel (Peter Hartcher, Laura Tingle, Phil Coorey) and host (David Speers) about populism in general and Dutton’s proposal to bring down (unprecedentedly high) immigration levels in particular.
I should begin by stressing I’m a long-time fan of the work of all the panellists, and ‘Speersy’ as well, and none of the following is meant as a personal attack. But there’s no getting around the fact everyone on the program was a member of and spokesperson for the ancien regime.
By that, I mean they came of age in a society that was either still unabashedly Keynesian or at least hadn’t been comprehensively ‘neoliberalised’. I’m not familiar with the personal circumstances of any of the ‘Insiders’, but I’d imagine they’ve all been able to live out what used to be called the Australian dream – a reasonably paid job, home ownership, marriage and children (if so inclined) and a comfortable retirement to look forward to. (Not coincidentally, all those ‘on the couch’ were Boomers or Gen Xers.)
While nobody working in the media ever has complete job security, both the panellists and the host have the next best thing. Barring exceptional events, all would seem to be grandfathered in. (Tingle and Speers are public servants. Hartcher is reportedly one of the ‘Fairfax Four’ judged by upper management to be irreplaceable. Business papers have weathered media-industry disruption better than most, so it’s also unlikely Coorey will find himself out of a job.)
In short, everyone who appeared on last Sunday’s program has done pretty well for themselves. In all likelihood, they will continue to do pretty well for themselves. And good luck to them – far be it from me to begrudge the increasingly rare media worker who does manage to do alright for themselves.
The elite blindspot
However, because the system works so well for them, insiders understandably struggle to comprehend how poorly it serves outsiders.
I suspect if an ‘Insider’ had a chat with one of their younger colleagues – one of the ones who must churn out 2-3 articles a day rather than 2-3 columns a week, one of the ones still living with their parents well into their twenties, one of the ones wondering if it will ever be financially feasible for them to get married and have children, one of the ones terrified that Gen AI is about to put them out of a job – they might find it easier to comprehend why not everyone is as delighted as they are about hundreds of thousands of vibrantly diverse migrants showing up year after year.
As an aside, I’ve started taking note of amusing juxtapositions of elite and non-elite perspectives. For instance, those Rotten Tomato reviews of Dave Chappelle’s Netflix specials that receive 99% per cent audience approval and -10,000 per cent critical disapproval.
When looking at the SMH home page a few days ago, there appeared to be a column about Dutton being the new Trump, or possibly the next Hitler, or some such. Right underneath it was an article headlined ‘Voters favour deeper cuts to migration as Labor misses budget boost’.
How come you’ve broken the eggs but failed to produce the omelette?
Vocally unrepentant advocates of neoliberalism seem to be going through the denial, bargaining and anger stages of grief all at once. I imagine they’re now in the same world of pain experienced by those militant union leaders and ‘old’ Labo(u)r types who saw their comfortable and familiar world swept away in the 1980s.
Heroically, the neoliberals are going down fighting. At the time of writing, they are continuing to insist they’re still right about everything. And that the 70-80 per cent of the population well to their cultural right and economic left are short-sighted bogans who will soon be righteously punished [insert foreboding nod to North Korea, the USSR, Venezuela, (pre-Milei) Argentina, late 1970s Britain here] for their recklessness.
After all, doesn’t everybody know “economic irrationalism” simply never pans out?
I mean, sure, industry policy may have worked in Germany, the US, Japan, South Korea, Singapore, Israel and, most undeniably, China. But everybody who is anybody understands that doesn’t change the fact that industry policy doesn’t work and never has.
Likewise, it’s just a scientific fact that having hundreds of thousands, or ideally millions, of migrants arriving in your nation is nothing to get worked up about. All the clever people know that mass migration – into countries that have spent decades underinvesting in housing and infrastructure – is always and everywhere an unalloyed economic and social good.
In the unlikely event there are any issues with mass/uncontrolled migration, those-in-the-know know the answer can only ever be even more migration. After all, if migrants aren’t going to build houses and pick fruit and tend to the sick and old, who the hell is? Those already living in the country? What is this, 1954?
Here’s a recent classic of the genre from a business publication:
Chalmers is, once and for all, publicly breaking from Labor’s previously claimed belief in the great Bob Hawke-Paul Keating, market-based economic model that helped deliver 30 years of national prosperity. Modern Labor, including Chalmers, never really believed in Keating’s deregulation, reforming and lowering taxes and restraining the size of government… David Pearl, a former Treasury assistant secretary who was also an adviser to former Labor leader Kevin Rudd, says: “The so-called new economic orthodoxy is not new and nor is it economics. It’s mercantilism, the belief that betting taxpayer money on firms that can’t cut it on the market will somehow come up trumps… Economic rationalists are rarely sighted in modern Labor. Economic “rationalist” is now a term of derision inside the party. But what’s the alternative? Economically “irrational”?
Just asking questions
For the sake of argument, let’s accept the proposition that the undeserving citizens of Australia (and the Anglosphere) have been fortunate enough to enjoy forty years of visionary leadership provided by heroically self-sacrificing business and political elites but are now determined to piss it all away in a fit of childish pique.
Wouldn't such a scenario prompt a few questions? Perhaps precisely the same ones neoliberals were asking with increasing urgency throughout the second half of the 1970s?
For example:
*If Keynesianism (neoliberalism) is working so well, why are so many people beset with a sense of malaise and worried their society’s most important institutions are, at best, functioning suboptimally and, at worst, irredeemably corrupt?
*If Keynesianism (neoliberalism) is so wonderful, why are Keynesian (neoliberal) policies increasingly unpopular outside of elite circles?
*If Keynesianism (neoliberalism) has worked so well over the last four decades, how come so many people – on both the Left and Right – are so eager to move on from it?
*If Keynesianism (neoliberalism) has delivered so much prosperity, how come such a large proportion of the population doesn’t feel prosperous?
*Can Keynesians (neoliberals) proffer any realistic solutions to the outcomes that predictably occur whenever their ideology is taken to extremes (e.g. economic sclerosis/wealth and power concentrating at the top of societies)?
*Why has the democratic socialist/libertarian capitalist utopia your school of thought promised failed to materialise? Do you have a credible explanation for why things didn’t turn out as forecast? If so, do you have a plan to course correct?
*What solutions does Keynesianism (neoliberalism) provide for the pressing issues facing today’s societies? Not the issues it addressed – let’s concede successfully – two, three or four decades ago, but the ones cruelling so many people’s life chances right now?
*If ‘There Is No Alternative’ to either sluggish but equitable social democracy or dynamic but inequitable free-market capitalism, how have some nations – Singapore, to take the obvious example – done so well mixing and matching left-wing and right-wing policies? Are you sure it's impossible to enjoy the best of both worlds?
*Do you believe there’s a long-term future in simply continuing to deliver for your backers while life becomes ever grimmer for those sections of society that are not part of your constituency? If so, can you point to any societies that have prospered as a result of either Labour or Capital ruthlessly pursuing its narrow self-interest and grinding its class enemies into dust?
Update: It appears I may have been a little unfair to the Insiders, or at least one of them. Here are the concluding paragraphs of a Phil Coorey article that’s just been published:
After all, those who have benefited most financially from the almost sole reliance on migration to grow the economy in recent decades, have also amassed sufficient wherewithal to insulate themselves from the downsides such as clogged infrastructure, overcrowded schools, disappearing green space and endless sprawl.
“The usual CEOs and big businesses may not like this approach, but my priority is restoring the dream of homeownership,” Dutton said in his budget speech.
He was backed wholeheartedly this week by Queensland Labor Premier Steven Miles who faces an election in October and whose state is heaving under rapid population growth.
The copout for politicians is to say they love migration, but we just need to slow it down until enough houses are built. That’s also code for open-ended sprawl and loss of lifestyle and amenity for most.
These are impacts which resonate at both ends of the political spectrum.
It is also a copout for taking more meaningful action on housing affordability, such as reducing the capital gains tax discount for investors, which weaponised negative gearing.
Migration long ago became a lazy method, adopted by both sides, to generate growth in the absence of any reform or productivity agenda,
As one Coalition source recounted from his days in the previous government, Treasury’s advice was essentially “just keep them coming in and keep the place ticking over”.