A political economic analysis of Australia

Illustration from article titled -Is Singapore at risk of becoming a rentier society?

I have long been a fan of MacroBusiness. An Australian economic analysis website.

The economists at MacroBusiness -David Llewellyn Smith and Leith van Onselen have released a series of three Easter podcasts -total length about 1 hour 15 minutes, where they describe Australia’s economic and political situation.

Initially the conversation starts slowly with a detailed description of Australia’s commodity exporting situation.

The discussion heats up though when the conversation turns to why the federal government and all major political parties baulk at the prospect of addressing Australia’s economic imbalances. That the politicians have retreated to articulating ideology rather than defending their positions with evidence based responses. The economists cover the symptoms they observe in the housing and energy markets, along with the rise of ad hoc, vested interest protecting policy. They speculate this protection of vested interests rather than the public in general is a cause of Australians becoming disenchanted with mainstream politicians and some of the core mainstream economic policy positions embedded over the last generation.

What might be of interest for those of us outside of Australia is the discussion about the effects this is having on the political process. I suspect a similar process is happening elsewhere in the Angloworld -in New Zealand for example. The MacroBusiness economists assert there is corruption of the political system, as a fake Labour Party, fake environment Green Party and fake free market Liberal Party of rentseekers all struggle against the issues that concern the public -immigration and housing -and to react to the populist One Nation Party -a single issue party -advocating large cuts to immigration.

My explanation for what has been happening in Australasia, is we have been living in the story -“The Emperor’s new clothes”-a short tale written by Danish author Hans Christian Andersen. A story about two weavers (rent seekers -people who want something for nothing -the modern day landed gentry who weave a story of ever rising asset prices and debt being a sign of success) who promise an Emperor (Prime Minister Howard in Australia and then Key in New Zealand) a new suit of clothes that they say is invisible to those who are unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects (voters -in particular baby boomers -the biggest voting block) in his new clothes, no one dares to say that they don’t see any suit of clothes on him for fear that they will be seen as “unfit for their positions, stupid, or incompetent”. Finally, a child (MacroBusiness) cries out, “But he isn’t wearing anything at all!”

“The Emperor’s New Clothes” ends

“But he hasn’t got anything on,” a little child said. “Did you ever hear such innocent prattle?” said its father. And one person whispered to another what the child had said, “He hasn’t anything on. A child says he hasn’t anything on.” “But he hasn’t got anything on!” the whole town cried out at last. The Emperor shivered, for he suspected they were right. But he thought, “This procession has got to go on.” So he walked more proudly than ever, as his noblemen held high the train (of cloth) that wasn’t there at all.

Listen to the podcasts for MacroBusiness’s full explanation.