Nick Cater writes in The Australian:
Why does Labor struggle with the S-word?
The British Labour Party is led by a proud socialist. Hillary Clinton came close to being trumped by a socialist as the Democratic nominee for US president.
Yet when Mathias Cormann suggested that a socialist is leader of the ALP, Labor-friendly bloggers were indignant.
It was a red scare from a sad and pathetic man, wrote one adjectively challenged writer. “Is it wrong to say ‘piss off back to where you came from?’ ” asked another, shunning the language of inclusiveness.
“Trouble is,” cautioned a third, “that those around me who rely on the Murdoch press are buying it hook line and sinker.”
Socialism — “a theory or system of social organisation which advocates vesting of the ownership and control of the means of production in the community as a whole”, to quote Macquarie dictionary — is back in fashion. Its resurgence demonstrates the gullibility of the intelligentsia and a drought of good policy that leads to the grasping of straws.
It also suggests a careless attitude to history, which tells us clearly what becomes of economies where the technocrats dictate the allocation of resources and how to redistribute the spoils.
The experiment that split central Europe in half, imposing socialism on one side and allowing free markets to flourish on the other, produced conclusive results. When the Berlin Wall came down four decades later, they were driving Audis and BMWs on one side and Ladas and Trabants on the other.
Bill Shorten made a cynical calculation that Australians had forgotten the historic failure of socialism, Cormann said in a speech to the Sydney Institute last month.
“His divisive rhetoric of haves and have-nots is socialist revisionism at its worst,” said Cormann. Labor’s instinct to intervene in markets in the name of “fairness” would make Australia “a duller and less prosperous place”.
There was a time when Labor leaders agreed that a fair society was impossible without prosperity. No matter how meticulously you carve up the scraps on the plate, everyone goes hungry.
“Labor’s social goals cannot be achieved, either in the short or long term, without sustained, non-inflationary growth,” Bob Hawke told the 1988 NSW Labor state conference. “While all Australians have benefited from economic recovery, the greatest beneficiaries in relative terms have been the poor and disadvantaged, and low and middle-income earners.”
Labor no longer believes in what it dismissively terms the “trickle-down effect”. It ignores decades of steady income growth for the poorest as well as the richest and the effects of tax transfers to low and middle-income earners that make Australia one of the most equal and socially mobile nations on earth.
When Labor talks of growth these days it insists that it must be “inclusive”, a qualification Hawke found unnecessary to make. An expanding economy creates new opportunities that the middle class is swift to grasp without any help from the state.
Shortenomics — higher taxes, more government spending and greater regulation — is “a recipe for economic decline and social division”, said Cormann. Shorten is misreading the aspirational spirit of the Australian people by stoking grievance and attacking business and millionaires.
“I find it hard to believe that Australians really want the sort of Australia that Bill Shorten is promoting,” he says.
Yet Newspoll shows that voters are buying the Shorten rhetoric and for that the Coalition shares some of the blame. The Coalition has limply resisted the fairness warriors and at times is tempted to appease them. Increasing the top tax rate, albeit temporarily, and changing superannuation concessions for the relatively well-off were futile attempts to beat Labor at its own game.
If the Coalition is to triumph in the equity war it must regain confidence in its own empowering philosophy of freedom. It must campaign — as Bob Menzies did — on the fair go with its promise of equal opportunity, rather than engage in an impossible debate on equal outcomes.
More than ever, it must defend the principle of economic freedom that underpinned Australia’s steady growth since World War II. It must be clear about when governments should intervene in the economy and when they should not.
For Menzies, the most solemn duty of government was to foster a climate that allowed individuals to prosper and businesses to flourish.
In practice, this meant enforcing fair play with maximum competition.
Labor’s belief in market forces has always been more equivocal. The party’s platform insists that “government should intervene to address market failures and the extremes of capitalism”. It supports an active role for governments in “improving equity, promoting equality and social justice”.
This is where Labor gets scary. The country is paying an incalculable price for the graceless attempts of previous governments to address perceived market failure.
Take energy, for example, where Labor’s subsidies for unreliable technology make stable electricity providers uncompetitive. Market failure, you will recall, was the excuse for building the National Broadband Network, which relies on the coercion of the state to retain its disgruntled customers. Ditto the National Disability Insurance Scheme, a centrally planned behemoth that frustrates clients and providers alike.
Will Shorten learn from these mistakes? It seems unlikely, as Labor moves ever further along the socialist spectrum.
Wayne Swan, one of the intellectual architects of Labor’s inclusive economic doctrine, thinks we need more intervention, not less. Governments should step in to combat “the bastardisation of the market, the rampant abuses, corruption and ruthlessness”.
In so far as Swan’s recent National Press Club speech reflects current Labor thinking, it shows a party heading back to its socialist roots. Swan wants Labor to “build a world-leading progressive taxation system”, as if we haven’t got one already. It must tame corporate excess through reforms to corporate governance; the might of the state must ensure “a radical shake-up of board selection” and to “bust up the directors’ club”.
“What the last 10 years also confirmed,” said Swan, not a little self-servingly, “is that government intervention worked.”
Cormann is undoubtedly right to predict Shorten’s approach will fail and that Australians will turn against it. Cormann expects this will happen before the next election. We can only hope he is right.