John Howard, the Economic Genius

According to conventional wisdom, the Coalition are the ones to be trusted on economic management. A current poll offers these distressing statistics:

The Coalition is strongly ahead as better economic manager — 40 per cent, compared with 12 per cent who put Labor as the better manager of the economy.

I’m sure many Labor insiders bridle at these sorts of statistics, because like most conventional wisdom, if you really try and investigate the logic behind it, you don’t come up with much. For instance, according to Wikipedia – a source that Howard’s own staff are free to edit:

During Howard’s tenure as Treasurer, the 90-day cash rate peaked at 21% on 8 April 1982, while home loan mortage rates were capped at 13.5%, and inflation peaked at 12.5% in September 1982. Peter Costello commented, in 2007, that “The Howard treasurership was not a success in terms of interest rates and inflation… he had not been a great reformer.”

Traditionally, conservatives have been less inclined to deficit spending than progressives. When managing a household budget or company books, this is perhaps the essence of fiscal responsibility. But there’s a big difference between using a credit card to buy a plasma TV and issuing government bonds to invest in vital long-term infrastructure programs. Under Howard, it’s fair to say we’ve gotten a lot more TVs than highways. For the resources boom that even Liberals must acknowledge has little to do with their handiwork, we’ve gotten some big surpluses but have very little to show for it: sub-standard broadband, crowded roads, chronically underfunded universities and hospitals. Only the Defence Force has consistently reaped a bumper harvest, with defence spending increasing 46% in real terms under Howard. I also wonder how many Australians feel they got $1 billion in value by keeping 1700 asylum seekers from filing their paperwork on the mainland.

Time Colebatch points out today that there are only two countries in the world in recession: Zimbabwe and East Timor. Many countries are enjoying record low unemployment. The Australian situation is nothing if not typical. Arguably, as the largest exporters of iron ore and coal we should be doing even better than we are. What good times we are enjoying aren’t due to some Government economic genius – it’s just their good fortune to be the Government during a boom.

Have they nevertheless been competent administrators or just bumbling along while the good times roll? I think the jury is still out on this one. Although we do have large surpluses, there has been a deterioration in services and lack of investment in infrastructure and education that is sure to retard economic growth in the future. (And who will get the blame then?)

A more sinister take on the PM’s economic track record was offered a week or so ago by Andrew Charlton in a Fairfax opinion piece. Howard’s economic policies make sense, he says, if you look at them instead as policies to cement the Liberal party’s hold on power and weaken the opposition. Underfunding universities and introducing Voluntary Student Unionism steers students away from the humanities and helps stunt the growth of the next generation of intellectuals and lefties. The massive subsidy of private health and private schools disinvests people in from these social (and socialist) institutions. And WorkChoices, of course, is a direct frontal assault against the trade unions – the largest financial backers of his political opponents. In summary,

In each of these policy areas, Howard’s record seems almost incoherent from an economic point of view, but clinical and logical from a power perspective.

With luck this strategy will prove ultimately futile. But it will be our skills-strapped economy that will pay the price.

(Originally from http://claytonsouthlabor.blogspot.com/)