The Yoga Place Blog

Raising Global Consciousness

Australia - the myth of strong economic management and the march towards dictatorship

We are being offered a new form of direct participation in democracy in our coming federal election. It is called Senator On-Line.

What is it?

To use their own words " Senator On-Line is not aligned to any other political party - it is neither Liberal nor Labour. Senator On-Line is a truly democratic party which will allow everyone on the Australian Electoral roll who has access to the internet to vote on every Bill put to Parliament and have its Senators vote in accordance with a clear majority vie"

In other words Senator On-Line stands for nothing. They are nothing more that an empty vessel or conduit for us to participate directly in the political process.

At one level the suggestion of a system that lets me bypass party based thinking and have my own say in political decisions sounds very attractive. But I have some questions. Apart from the obvious question of whether it will work in practice there is the issue of accountability. Why should I give power to someone who has no responsibility and stands for nothing.

May I loose power with this system rather than gain it? What about the twin concepts of "there is power in numbers" and its corollary "divide and rule"? This looks like it fits into the category of "divide and rule".

And what about the potential for subtle manipulation? This is easy to do and used frequently by barristers in court cases and politicians who want to create false ideas in voters minds - if you to see research on this have a look at Stephan Lewandowsky report titled Memory for Fact, Fiction, and Misinformation.

When I heard about the senator on-line proposal on the ABC's "In the National Interest" radio program on Sunday 28th October it seemed like the idea was a natural extension of a trend I have been observing emerge.

The emerging trend I have observed is that governments have become more powerful at the same time that they are simultaneously doing less and less to deserve that power. And the key logic that politicians are using to justify their position is an apparent process that they have called "Strong Economic Management" . Governments and politicians have increasingly found ways to shirk or offload responsibilities and accountability. And it is not only the liberal party playing the game - labour is at it too. But should we worry? If you believe John Howard "Australian's have never been better off". We have a new master called the economy. And this apparently requires a new skill - "Economic Management".

Running the country using the principles of "economic management" is a great job if you can get it. If any existing part of your government responsibility is becoming an electoral liability then eliminate your responsibility for it in the name of economic sense - either blame the states, transfer responsibility for running it to the states (or the federal government if you are a state) or sell it to the private sector.

Avoid making any new investments in the future because this would make you responsible for something that might go wrong. Besides that might mean you would have to do something unpopular like raising taxes or something "irresponsible" like borrowing money. Let the "market" make the investment. That way if things go wrong you can blame it on "market forces" that you have no control over. However if things work out you can take credit for having the management insight to let the market work.

Remember that globalisation is your best friend - use it properly. When the economy benefits from it (Chinese lead mining boom) it's because of your strong economic management. When interest rates go up though blame it on global forces out of your control. But remember that when they go down it is because of your "strong economic management".

With all the tax dollars you have now that you don't need to make investments you might be able to stay in power for a long time. You can use some of it to pay back government debts and claim fiscal responsibility. You can use some of it to pork barrel marginal electorates. You could even use some of it for "creative advertising". Last but not least you could hand it back as "tax cuts" targeted at your support base.

And don't forget to spend big on spin doctors to help you justify it all - it is amazing how gullible the voters are and how easy it is to manipulate them with fear. They will let you get away with almost anything if they feel they are getting wealthier.

Excuse me if this sounds cynical but if the hat fits then wear it.

Lets have a look at the federal election we are about to have. In essence John Howard's pitch is that the major issue facing Australia is "economic management". We should vote for the liberal party because of their record of "strong economic management". And they are playing the fear card big time too. A vote for labour is a vote for destroying the economy - labour equals high interest rates and union power. Howard and his spin doctors are obviously well versed with Stephan Lewandowsky's insights on the use of fiction and misinformation to implant erroneous fact in the minds of the public.

But what does "strong economic management" supposedly entail and how does it translate into a sustainable long term future?

What are these guys managing? Where are the key performance indicators they are measuring themselves against? Why are these key performance indicators the right ones? How is economic performance translating into sustainable long term social benefits?

In my opinion the KPIs are no where to be found - targets bring responsibility.

Instead there has been a tendency to equate economic management with interest rates, the repayment of government debt and running budget surpluses. And because this has been done in the absence of key performance indicators it is fair to ask the question - at what cost was this achieved? How much of the reduction in costs was at the expense of cutting or scrapping existing services (as opposed to delivering them more efficiently) or reducing investment in the future (such as the run down in education spending) or flogging off the farm (privatisation of Telstra etc.)

One golden rule of "good economic management" is that government debt is bad -the private sector should be making these investments - the invisible hand of the market is the best way to make investment decisions.

Lets take a close look at the validity of the private sector / market logic. Why can't the government make the same investment and let the invisible hand of the market do its wonders? Since when has the private sector had a monopoly on the market? And if we want to take it one step further, if the market is so efficient, why then do we have the emergence of "private equity" . The "private equity" logic is that they can be more efficient that the stock market because they can take a longer term perspective that the stock market will allow them to. And isn't long term investment for the future what we expect governments to be making?

If governments go to the "market" to look for players to make these "risky" long term infrastructure type investments instead of doing them themselves are we really likely to get them done more cheaply? Have we got any case studies?

Evidence of past deals indicates that Private investment is more expensive than government investment. A close inspection of corporate behaviour will indicate that big corporations are on the whole not the risk takers the public might perceive them to be. Risky innovation is usually done by small companies. Corporations buy the succesfull innovators after the risky phase is over. Corporations are unlikely to get into speculative long term investments unless they have all the possible risks covered which means we will have to pay a premium to cover for events that may never happen. For example the privately built Sydney cross city tunnel demanded returns of 16% p.a. David Dohmkins, then National president of the Australian Institute of Project managers, said that the Sydney cross city tunnel deal was like buying a house using a credit card rather than a home loan. His opinion was that the government could have borrowed at 6% and outsourced the project management skills to make up for their lack of in house capability.

The truth is that if governments were really the "good economic managers" that they claim to they would be able to be able to make long term investments more cheaply than the market or some form of private public partnership. Governments have access to cheaper capital and they don't need to make a profit.

Private investment and PPP's also lock governments into long term fixed contracts. This reduces the capacity for governments to change social policy without paying compensation fees.

I am not suggesting that there is no role for private investment or that all governments should do it all. To get back to my original point, I feel like I am being asked to vote for governments that want power but are also trying to avoid the responsibility that goes with it.

The senator on-line idea seems to be taking this one step further - "an empty vessel". Power with no responsibility at all.

I wonder how well the senator on-line system would work if it was put into practice. What quality of decisions would come out of it? How easy would it be for special interest groups to hijack? What sort of capacity does the average voter have to assess senate level issues and realistically how much time would they need to spend to do this well?

The track record is that we have governments that claim to be good economic managers. Yet it is clear that they fail in this task when measured against conventional definitions of management. What is the take away message? Are politicians ignorant of what real management is about and believe what they are doing qualifies as good? Alternatively do they know that what real management is about and recognise their failures but claim success and believe that the voters are too ignorant to know any better? If this second option is the case and voters are really that ignorant then what hope could we have that a senator on-line type democracy would result in good outcomes?

Personally I think that liberal democracy is a species on its last legs. We have a looming global crisis of depleting renewable resources exacerbated by climate change. We are already using our renewable resource at 139% of capacity. In other words we are heading for a disaster even if we keep our global population and per capita renewable resource usage at today's level.

The only way we can avoid future disaster is to reduce both population and per capita renewable resource usage. Democracy in Australia is taking us in the opposite direction in both measures. The key competitive selling point in our coming election is which party do we believe can grow the economy more - historically an increase in economic growth is correlated to increased per capita renewable resource usage. On the population front our current government is trying to increase the population by offering a $5000 bonus for each new baby. Other countries are behaving in similar ways - economic growth wins votes.

We are threatened by long term global issues that require collective action and restraint. But we are governed by self interested democratic systems that are growth orientated and have a short term focus. This is a structural recipe for disaster.

One way or another many people will die as a consequence of global warming and a collapsing renewable resource base. The questions are who, where and when. How will people respond to this situation? What forms of government will emerge when the going gets tough? Liberal democracies are competitive systems that compete with each other over the short term by offering more. The future environment will be one off less not more - generation Y are already feeling this effect and are earning less that Generation X did at their age. Housing is increasingly unaffordable. Our ageing population coupled with declining health and will exacerbate this effect.

I have my bets that a dictatorship or multiple war lords will be the likely form of government that will emerge when times get really tough . At one level we are heading towards a type of dictatorship at the moment. We have already lost substantial freedoms in the name of the war against terror and the government's power to invade privacy and detain without trial has increased. Freedom of information is being curtailed. And politics is becoming more and more about the leader rather than the party

On the international front we can see similar losses to "democracy". In the USA, George Bush has immense power to act above the law thanks to the "war" status. If Hilary Clinton is elected as the next president we will have either a Bush or a Clinton in the top job for 23 years (1989-2012). In 2000 the result of the US election wasn't decided by the electorate - six members of an arguably stacked supreme court made the decision. In Russia it looks like President Putin may have found a way to effectively side step constitutional laws that limit a President to two terms in office. He will simply run for the position of Prime Minister instead of President and carry on as usual.

History shows that when times are tough people like a tough man at the top. We need to look no further back than the 1930's to see the effects of economic difficulties on government structure - some people called this the age of dictators. "In the 1920s democracy flourished, but the Great Depression brought disenchantment, and most of the countries of Europe, Latin America, and Asia turned to strong-man rule or dictatorships. Fascism and dictatorships flourished in Nazi Germany, Italy, Spain and Portugal, as well as non-democratic regimes in the Baltics, the Balkans, Brazil, Cuba, China, and Japan, among others. Together with Stalin's regime in the Soviet Union, these made the 1930s the "Age of Dictators"" (Wikipedia quote)