One thing both the left and right can agree on is that Australia’s economy is under-performing and that living standards are beginning to decline. Australia’s GDP growth rate has been sluggish, on average it is only just in positive territory. Real wages are at their lowest in 17 years with wage growth now lower than the inflation rate. Australia is coming to an economic crises, but where the left and right differ is how to remedy it.
The left last week didn’t put forward so much of a solution, but what is to blame for our current situation. The new far left Secretary of the Australian Council of Trade Unions Sally McManus during her speech to the National Press Club last week claimed Australia’s current economic hardship was caused by neo-liberalism saying it ‘has run its course’. Former Labor Treasurer and Prime Minister Paul Keating who spearheaded many key neo-liberal reforms stated ‘well, duh’. The case against neo-liberalism was elaborated by Guardian columnist Greg Jericho who claimed that supporters of neo-liberalism were ‘flogging a dead horse’.
Neo-liberalism is the term used to refer to the late-20th century revival of original free-market capitalist policies. It was met much scepticism as many saw it as the foundation stone for socially-debilitating concepts like open borders. Similarly, many supporters of capitalism actually frowned upon some aspects of the new neo-liberal version of their ideology for rejecting limits when it came to what the market could do. Today, it’s a point of contention even within the right, with right-wing ideologies, such as traditionalism, rejecting neo-liberalism, while more libertarian right-wing ideologies support it but prefer to use the term free market economics.
While neo-liberalism is a controversial topic on both sides of the spectrum, using its blunders to attack capitalism is a highly irresponsible act. The left’s use of slurs, such as “neo-liberalism” and Hillary Clinton’s favourite “trickle-down economics”, to attack capitalism in general render that side of the spectrum as both superficial and lacking in economic knowledge.
The claims by McManus are a classic leftist tactic to paint the picture that we are living under a brutal free market, dog eat dog economy and the solution is to embrace big government policies, a large welfare state and a more socialist economy. Nothing could be further from the truth, although our economy is freer than it was 40 years ago, the trend in recent years has been for more government involvement in our economy.
The size of our government is still very large, government spending is currently at 36.5% of GDP, we are spending so much that our current debt is over $500 billion and rising. Our current highest personal income tax bracket is 49%, nearly half of a person’s income. Our social security system is still very generous, you can still visit a doctor for free, send your children to school for free, receive a government benefit for unemployment, disability or being a carer. Our minimum wage is one of the highest in the western world being $17.70 for an adult over 21. We hardly have a government that leaves people to fend for themselves in the free market, and this is hardly neo-liberalism.
The reverse is true, as our economy has worsened over the past decade at the same time the role of government has increased. The labour market has been re-regulated with the Fair Work Act, the pages of government regulation passed each year is in the thousands and we are ranked 80 out of 140 in terms of the burden of government regulations on companies.
We have also seen the emergence of massive subsides for renewable energy during this time with the establishment of the Clean Energy Finance Corporation and the Renewable Energy Target as well as the short-lived carbon tax. It is no surprise then during the last decade we saw Australia’s manufacturing sector shut down and the price of electricity rise, all hitting the most vulnerable in our society.
Despite the massive size of our government it is somehow the free market’s fault and we need more government. The left’s solution, it seems, is to continue on this path that resulted in economic hardships in the first place. Although McManus’ speech did not offer a specific solution we were left in no doubt into what she has in mind when she talked about ‘wage theft’ and called for workers to ‘resist exploitation’. She wants a socialist economy where the wealthy and corporations are taxed to the limit and more is given to the workers and unemployed. It is not alarmist to claim this as we have seen both Bernie Sanders and Jeremy Corbyn campaign on these platforms proudly wearing the socialist label.
Apart from being unjust and immoral, you don’t need to do much research to see what a disaster socialism is. A prime example has been unfolding in once wealthy Venezuela with food shortages now leading citizens to eat their pets and other stray animals. On the contrary you only have to look at how capitalist countries are the world’s most advanced, along with how more capitalism has benefited once poor nations such as China and India.
It is clear which path is more desirable, Australia is in a difficult situation but if the comments by McManus, Keating and Jericho are adopted it is still possible we could descend down the path to third world impoverishment. The opposite is needed, we need to stop crippling ourselves with red tape and green tape which is sending our jobs overseas and increasing the price of everyday products. Overall the free market reforms of the 1980’s have benefited us and made products that were once out of reach to ordinary people now common in modern households. The trend over the past 10 years has been towards more government, not less. This is the lesson we need to learn from our current crises if we want to rescue our nation. Socialism is the last thing we need.