Economic elites around the world are rightly alarmed by the rise of right-wing populism, many streams of which (like the Brexit movement and Donald Trump) have directly challenged previous policies of free trade and capital mobility. Here in Australia, the One Nation party exemplifies some similar isolationist and xenophobic tendencies.
However, the main response of these elites to the challenge has been to simply double down on their standard argument that globalization as currently practiced is universally and self-evidently beneficial. Apart from temporary "transition difficulties" (that could easily be addressed with assistance for training and relocation), everyone is a winner. To counter the rise of populism, they urge governments to step up their efforts to "educate" concerned citizens about the virtues of free trade. Commonwealth Treasurer Scott Morrison made a strong statement in this vein recently to a business audience in Sydney.
Unfortunately, the real world economy doesn't actually work like the theoretical models predict, and denying that anyone is permanently hurt by globalization both flies in the face of empirical evidence, and will be ineffective in countering populist arguments. Instead, politicians should acknowledge that globalization is producing both loses and winners, and implement policies to reduce the costs and share the benefits. Here is Director Jim Stanford's commentary on Mr. Morrison's speech, published in the Huffington Post.
It was a "sleeper" issue in the recent election, and led to the defeat of some high-profile Liberal candidates. But now the debate over penalty rates for work on weekends and public holidays shifts to the Fair Work Commission. The economic arguments in favour of cutting penalties (as advocated by lobbyists for the retail and hospitality sectors) are deeply flawed.Read more
Voters typically rank economic issues among their top concerns. And campaigning politicians regularly make bold (but vague) pronouncements regarding their competence and credibility as “economic managers.” In popular discourse, economic “competence” is commonly equated with being “business-friendly.”Read more
By Jim Stanford, May 2 2016
In the lead-up to tomorrow’s pre-election Commonwealth budget, much has been written about the need to quickly eliminate the government’s deficit, and reduce its accumulated debt. The standard shibboleths are being liberally invoked: government must face hard truths and learn to live within its means; government must balance its budget (just like households do); debt-raters will punish us for our profligacy; and more. Pumping up fear of government debt is always an essential step in preparing the public to accept cutbacks in essential public services. And with Australians heading to the polls, the tough-love imagery serves another function: instilling fear that a change in government, at such a fragile time, would threaten the “stability” of Australia’s economy.Read more
by Jim Stanford, April 5 2016
The latest “big idea” on tax policy from the Coalition government is to grant independent income tax powers to the states. This would be accompanied by a devolution of funding responsibility for big-ticket services like health care, hospitals, and schools. Prime Minister Turnbull argues that forcing state governments to raise the money they spend will lead to more accountability and efficiency in public service delivery. And it’s a politically convenient response to the demands from states for more revenues: “If you need it so much, go out and raise it yourself.”Read more