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How to Lose Elections and Alienate Voters: A Labor Case Study

December 4, 2010

This will be a series of blogs, as this is going to lead into my central thesis and modus operandi concerning politics. If anybody actually wants me to write about a particular topic, give me a yell, otherwise I’m going to continue my self-indulgence. After all, this is just the articulation of my thoughts.

There was a funny story two years ago, in which one of Obama’s advisers, Richard Danzig, took a leaf out of Winnie the Pooh – “If it is causing you too much pain, try something else”. I feel it’s a very apt lesson for the ALP. Yes, I’m aware that the nation understands how awful Labor’s campaign was (from both a political and policy perspective), and how hugely opportunistic the Coalition’s was, but I feel that Labor’s entire first term represents a fundimental misunderstanding of two supposed polar opposites – idealism, and pragmatism. Particularly, the notion of “political capital”, which has somehow gained mainstream acceptance, is jarring, and in my opinion an insult to all voting communities.

The Labor government began strongly – Rudd’s unorthodox measures of appointing cabinet himself, signing Kyoto before officially sworn in, and delivering his sincere and well articulated apology to the Aboriginal people, all represent a supremely confident Prime Minister (and so he should have been), and an energetic new government ready to make Australia a better place after eleven years in the shadow benches. This was the confidence that allowed them to take the very rational policy of government spending in the time of the Global Financial Crisis – the Reserve Bank was absolutely spot on with its interest rate adjustments, unlike the US Fed which I would argue was one of the causes of the subprime meltdown, but the Rudd government’s policies were well thought out, with the exception of the First Home Buyer’s Grant (I have no issue with incentives for construction of new houses, but tripling a grant to purchase existing houses does nothing but add to inflation – it’s tax payers money going to wealthier home owners), the Insulation Scheme (neat idea, poorly executed – you completely compensate households for such a scheme, as we’ve seen it led to seriously suspect organisations with poor OHNS, which wasn’t properly regulated due to the high casual demand, confident of a government rebate), and the tax cuts which Rudd promised in the 2007 election campaign, which were purely a tax cut for the upper incomes, adding little to domestic demand and contributing towards higher inequality.

But I digress, otherwise an appropriate response to a global threat. I give credit to the conservatism of Peter Costello for ensuring that our seventeen years of uninterrupted growth were not wasted, as somehow other governments managed to do in the same period. Costello could have used the money wiser, and there could have been many less handouts and tax cuts, contributing to high inflation, but credit where credit’s due, he was at least sensible. Labor’s level of debt was sensible – perhaps a slight overreaction, but certainly nobody expected the Australian economy to do as well as it did – many of us were expecting much worse, so the evasion of “technical recession” by less than 0.1% of GDP was something that few expected, and a testament to effective fiscal and monetary policy.

Yet you certainly wouldn’t have known this from Labor’s politics. The Coalition quickly took the populist approach – declaring any form of spending as “reckless” (unless it was vote buying in Howard’s case). Its case against government spending was rather laughable – while I’m not a great believer in economic modelling, it was clear cut that due to the automatic stabilisers (welfare payments and taxation), the budget would have gone into a similar deficit under the Coalition’s watch, unless they cut spending to balance the budget. Interestingly enough, this is what both Herbert Hoover and originally Franklin D. Roosevelt argued during the Great Depression – in fact I remember [I can’t find the source unfortunately, I’ve tried] Tony Abbott almost directly quoting FDR, by saying along the lines of “Governments, like households, can not afford to live beyond their means”. Fortunately, FDR soon embraced a policy reversal, under the New Deal, understanding that cutting spending in a recession only worsens the issues and creates deflation.

Now what I would have advised Labor to do, and what they in fact originally did, is argue the case for their spending. They condemned the circumstances surrounding the GFC, they were grave but bold considering the economic circumstances – yes there would be a recession (and there was, the “technical recession” is a baseless requirement and inapplicable to the real world circumstance of decreasing economic activity, regardless of two consecutive quarters of negative growth or not), but that we had to mitigate the best we could. Yet, Labor became defensive as the Coalition harped on about “debt and deficit” – one of Turnbull’s lesser moments – including the laughable week in which both Rudd and Swan refused to say the word “billion”, afraid of a Coalition TV ad around the election (keep in mind, this election was more than a year away). Ross Gittins accurately described this as Labor’s inferiority complex – had this been the Coalition’s policy, they would have called the opposition on their bluff, and argued every reason why they performed such action and why the opposition was against the national interest by opposing it. By not calmly or even indignantly rebutting their ridiculous claims of “huge debt”, they conceded the issue that debt is bad, and even worse, unnecessary. They didn’t remind people of the Coalition’s inability to magic up finance that wouldn’t have been there. It began the decline of Labor’s electoral standing, although just a minor reduction at the time, and subsequently began the decline of their confidence, despite having the safest and strongest Western economy in the world.

Unfortunately, unlike The Pooh, Labor never learned to stop repeating actions which were causing it harm. This was the beginning of numerous acts of political cowardice, in which by attempting to appeal to the broader public, they were rejected by a public which had elected them in for the very purpose of establishing bold reforms and policies that the Howard government would never had done. How were they surprised that when they turned their back on their electoral mandate, the public turned their back on them?


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