I had intended to do an update on my Monday Forum post to try to encourage discussion. Instead, my attention was been caught by something else, the shifting lines of ideological warfare. This short post records my observations for later discussion.
While you won't have seen many signs of it yet, my recent reading has been heavily focused on economics and the economy. I have been updating my knowledge, for we are now at another shift point.
As part of my updating, I have been again buying the Australian Financial Review. I enjoy it, it still has real content and my attention is constantly struck by things worth writing about. However, last week reading the editorial in association with the columnists, I found myself wondering just when the Financial Review first started reading like the Australian? It's been quite recent. I wasn't conscious of it even a few months ago, but now the stamp is unmistakable. As an example, you find an editorial on the need for budget restraint juxtaposed with guest columns from people connected with the Institute of Public Affairs.
The wording used has started to catch my attention. For example, in a recent piece, the writer talked about Australia's straightened budget position, that the country could no longer afford the welfare measures of the past.
I thought, hang on a bit. The past the writer is talking about is not the immediate past, but the longer term past. Looked at it in this way, the comment is silly. The Australian economy is far larger than it was in the past. Relative to that past, Australian Governments have the capacity to do far more than when certain welfare measures were introduced. The question is not one of capacity to pay, but of our willingness to pay. That is the dividing line around which the ideological fight revolves.
As a general personal statement, while I know of little empirical evidence that the size of the Government sector actually matters in terms of relative economic performance within at least broad ranges, I do believe that there are advantages in minimising the size of Government. Simply put, smaller Government means, other things being equal, that more resources are available for private activities.
That standard economists' qualification is important. In all the debate about the size of Government, we have been under-investing in key things: we have naval ships withdrawn from service because nobody could find the money to invest in preventative maintenance; we have a social housing stock that ran down so much in quality terms that the rising cost of basic backlog maintenance almost bankrupted the public housing system; we have university colleges in just the same position; we have growing gaps in infrastructure, including the collapsing minor country roads that once formed an integral part of the community backbone. It seems to me that the only infrastructure that gets built now is that where a direct price can be extracted, and then we get it wrong!
We talk about an entitlements' culture. I'm damned if I know what that actually means. The only "entitlements" I can see around is an expectation by predominantly middle class Australians that they can impose their view of what they perceive to be right on others. As the political ability of Governments to actually do declines, they focus on the areas that they can still control or at least think that they can control, and that's behaviour. We can no longer do a simple thing like maintain a ship or a house or a university college, but by hell we can regulate down to the minutest detail when it comes to just how a teacher or social worker works.
We are in a mess, and not one of the nostrums now being peddled by the Financial Review will help.