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Wednesday, May 10, 2017

Scott Morrison’s 2017-18 Federal Budget:  Some Good Measures Amidst the Typical Austerity





Admist the Usual Austerity there are some Welcome Surprises in this 2017 Morrison Federal Budget. Though the monopoly mass media is tending to overstate any perceived 'leftward shift' ; inappropriately using terms like 'Labor lite' , where in reality there are very significant assaults on the rights of students and job seekers.






by Dr Tristan Ewins, 10/5/2017



Many media commentators are responding to the 2107-18 Morrison Federal Budget by branding it as ‘Labor Lite’ or ‘worse’.  But how much of that actually stands up to scrutiny? 

Yes the Government is attempting to appear ‘fair’.   And many media figures are throwing around terms like “cash splash” which are commonly reserved to use against Labor governments.  There are pressures in the right-wing monopoly mass media for a ‘right-turn’ in response to any moderation of economic policy under Turnbull.   Bernardi’s ‘Australian Conservatives’ and the libertarian ‘Liberal Democrats’ stand to gain most from this.  But despite years of conditioning from the monopoly mass media Australians may resist these trends given the remnants of our ‘egalitarian spirit’.   The point of all this appears to be stigmatisation of social investments and expenditure ; ultimately leading to a US-style political culture.  Which in turn would support a US style class system based on the absolute destitution of many , and the blatant exploitation of a class of working poor. To the extent Turnbull and Morrison resist pressures for an ‘economic hard right turn’ then that is welcome.

Some Budget changes do appear at the least superficially ‘Labor-esque’.  Many of the billions in cuts and savings originally proposed in the nightmare 2014 Hockey Federal Budget are laid to rest permanently here. The increase to the Medicare Levy will be welcomed by many, and will help provide for the NDIS. (National Disability Insurance Scheme)  The Government claims a ‘$56 billion shortfall’ for the NDIS ; though most of that could have been made up for immediately by jettisoning the Government’s $50 billion in planned corporate tax cuts over 10 years.  (much more over time) $8.2 billion will be taken via the Medicare Levy increase over the first four years.  
A so-called ‘Google tax’ targeting corporate tax evasion is also expected to net more than $3 billion over four years.   (though it is quite insignificant compared with corporate tax  cuts elsewhere)

Further, the ‘big banks’ (including CBA, ANZ, Westpac, NAB) will be hit for $6 billion over 4 years ; apparently including an effective payment in return for the ‘government guarantee’ for the sector. (which began with Rudd’s response to the Global Financial Crisis)   In response there is the question : will the banks hit customers or will they hit shareholders?  If somehow larger shareholders could be targeted that would ensure the most equitable outcomes.  A payment by the big banks in return for an effective government insurance policy makes sense.  Without it ultimately there could be impositions on workers, citizens, tax-payers.  So on this front at least the Government is doing the right thing.  And if the Banks respond by upping fees and charges arguably the co-operative and mutualist sector could ‘step into the breach’.   Were the Commonwealth Bank still in public hands then assuming a ‘competitive charter’ it could have held the rest of the sector accountable , countering tendencies to pass costs onto consumers.  That’s also a good reason for Labor to consider restoring a public-sector bank – perhaps taking advantage of existing Australia-Post infrastructure.

Meanwhile, foreign home owners who leave properties vacant six months or more will be taxed – a measure apparently borrowed from the Andrews Labor State Government in Victoria.  As well as raising some revenue, this measure should also influence investor behaviour ; and effectively increase available housing supply ; with downwards pressure on housing and rental affordability. 

The ‘Gonski 2.0’ measures, meanwhile, are a significant improvement on past Liberal policy, and include needs-based funding.  David Gonski is due to present another report by the end of the year.  The Catholic sector appears to be in the firing line.   More broadly, Shorten points out that despite the gains, here, (including some cuts to some of the richest private schools) the proposals nonetheless still involve an overall $22 billion cut to the sector over ten years compared with the deals previously negotiated by Labor. 

Other constructive policies include significant tax breaks for ‘empty nesters’ to ‘downshift’ to smaller, lower-maintenance accommodation.  That could also increase effective housing supply.  The housing bubble will eventually deflate (or ‘burst’ disastrously). But government could step into the economic breach with public housing.  There is still the need to expand supply to meet underlying human need.  Planned Negative Gearing and Capital Gains Tax reforms from the Government are welcome, but do not go anywhere near far enough, saving just $1.6 billion over 4 years . Stronger action on Negative Gearing is necessary to lessen competition between first home buyers and investors , correcting the Housing Bubble over time.

Also there’s $10 billion for rail as part of a suite of infrastructure commitments. (though these are not as significant as some think when compared relative to infrastructure investment under a ‘traditional’ Labor Government)    

A once-off payment of $75 for singles, $125 for couples – to assist with energy costs – is very insignificant when you consider the rising cost of living.  The Liberals point to renewable energy as the alleged ‘culprit’ here ; but what of privatisation? 

Finally ;  Annual TV Licenses are scrapped in favour of a much lower ‘spectrum fee’ – which makes sense given the changing media landscape – which is hurting traditional media. Arguably the licenses aren’t worth as much anymore.  But diluting media ownership laws will still enable the likes of Murdoch to dominate traditional media.



The Down-Side

But there’s a very significant ‘down-side’ to this Budget as well ; including ‘traditionally Liberal’ attacks on vulnerable groups ; and treating tertiary students like ‘cash-cows’.
Higher Education stands to lose almost $3 billion a year – with students hit hardest.  The Turnbull Federal Liberal Government claims that its fee increases – and its reduction in the minimum repayment threshold to $42,000 a year (down from $55,000) “better reflects the lifetime benefits reaped by higher education graduates”.  But these measures will start ‘kicking in’ affecting people on approximately half the average wage.  Hence in places the measures really bear no relation to any alleged private financial benefits for students. The logic behind these measures also neglects entirely the gains by business and society at large from a more highly educated populace.   There is some progressivity as those with much higher incomes will repay at a significantly higher rate.  But this does not excuse or make up for a 7.5% average increase in tuition fees.  In response Labor needs to raise the threshold somewhere much closer to the average wage ; and higher over time ; while entrenching a progressive scale in the rate of repayments.   Exceptional groups such as the disabled should probably be forgiven their debts, here : or at least have them frozen. The inevitable effect of this will be to deter many poorer students from study, reducing the nation’s pool of ‘human capital’ over time, and impacting on ‘equal educational opportunity’.  It is dubious at best to consider educational investments a ‘bad debt’.

The 0.5 per cent increase in the Medicare Levy is supposed to reassure voters that Labor’s warnings on health are only a ‘scare campaign’.  But while the Levy is re-indexed the forsaken increases to Medicare’s coverage in recent years are not made up for.  Medicare might still be eroded by stealth ; and that is ‘de-facto privatisation’ in the sense of intermittently eroding the coverage of ‘socialised’ public health proportionately.  This was always what Labor alluded to , but for some reasons ‘the waters were always muddied’ in the mass media, with throw away lines like ‘Mediscare’.

Also , while the Medicare Levy is rising, the 2 per cent Deficit Levy is gone – directly benefiting the wealthy in the final balance. There are ‘traditionally Liberal’ distributive  outcomes, here, despite claims of the Budget being ‘Labor Lite’.   (that is, the Budget favours the wealthy) 


Payroll tax on foreign workers will also be replaced with a levy of $1500 to $5000 per employee raising $1.2 billion over four years “to improve Australian workers’ skills”.  To an extent this will take some of the wind from Labor’s sails on related issues. 

Other measures include punitive attacks on the rights of the  unemployed, with the threat of payment suspension for those who miss a job interview or refuse a job offer they don’t want.  And reversion to a ‘cashless welfare card’ for anyone found to have illegal drugs in their system.  5000 people will by thus tested – and effectively humiliated – in order to create a ‘Trojan Horse’ for the introduction of cashless welfare.   Already Australia has one of the most negligent and punitive unemployment benefit regimes in the advanced capitalist world.  But ‘cashless welfare’ will see Australia revert to Depression era ‘Susso’ style ‘payments’.  The ‘Susso’ basically provided threadbare material subsistence (rations and vouchers) for the long-term unemployed.



Conclusions


Claims to the effect this Budget is ‘Labor Lite’ do not really stand up in the longer view historically when you consider pre-1980s relativities on the Economy ; and more recently with the ‘relative economic centrism’ of former Liberal leaders like John Hewson. The reality is ‘convergence’ on right-wing, economically Liberal policies ; though Shorten has begun to ‘break away’ to something more recognisably ‘left of centre’. Ironically,  the “Abbott Purists” will likely claim the austerity has not gone far enough. Though they may be upset by the attacks on Catholic education.  But it is THEY who have abandoned ‘traditional Catholic Centrism’ on welfare, labour and the economy.  (a tradition which interestingly had parallels with other ‘Christian Democratic’ parties in Europe)

This government is restrained by its own inflexible “small government no matter what” Ideology.  (spending is set at no more than 26 per cent of GDP ; well below the OECD average)  This drives various ‘cuts to the bone’ (as Gillard would have put it) , because it leaves no other option than harsh austerity.  Ultimately, Scott Morrison will have to make a choice: real people or Economically Liberal ‘small government’ Ideology.


Terry McCrann of the Herald-Sun calls the Budget ‘a disgrace’ for not sufficiently addressing government debt.  And Jeff Whalley (also of the Herald-Sun) argues that government debt amounts to “$375 billion” or “$15300 for each man, woman and child” .   But while government spending can have a positive ‘multiplier effect’ on economic activity,  austerity also has a negative multiplier effect ; dragging the broader economy down in sympathy.  

Also we must remember  that private household debt is the much bigger problem, and is connected with falling real wages.  (Why the cuts in Penalty Rates, therefore, we might ask! ; which will lead to lower tax revenue also)  And reducing investment in PUBLIC owned infrastructure presents its own associated problems of passing inferior cost-structures on the broader economy. Indeed, investments in some services (eg: Education) and infrastructure add to productivity – and the public sector (natural public monopolies) can often do the job more efficiently.  So Morrison’s ‘good debt’ and ‘bad debt’ has some substance. (a pity in the past they did not apply those principles to Labor governments!)

In conclusion ;  The Herald-Sun reports with an air of alarm that taxes will be up $23 billion over four years ; and spending up $15.7 billion over four years.   Indeed, Commentators are complaining that income tax is becoming more significant proportionately.  Though really, this need not be a problem if total income tax is progressively restructured, and also the rest of the taxation mix.   Also keep in mind the economy is worth approximately $1.6 trillion.  So in reality spending is up by less than a quarter of one per cent of GDP.  The revenue gap has at least been appreciably narrowed.

In some ways this Budget is better than we might have expected from the Liberals after the horror Hockey ‘Lifters and Leaners’ Budget from 2014. But a lot of that Ideology is still there.  And the cuts are still significant ; with the introduction of ‘cashless welfare’ setting a precedent for the further future humiliation of job-seekers.  And shutting many lower-income Australians out from Higher Education.  An Opposition with strong, traditional Labor policies on distributive justice can still ‘outflank’ a Liberal Government which cannot help but govern primarily in the interests of its core constituency: the unambiguously well-off.


Friday, April 21, 2017

Social Democracy and Capitalism : A Critique





originally written for a Fabian Society Forum ; Melbourne ; 19/4/2017

A finalised version of this will be submitted to ALP policy development bodies for consideration ; PLS provide feedback if you think it may help me improve the final version...

Restoring 'a traditional social democratic mixed economy' is part of the solution to current economic maladies ; but at the same time it is only the beginning of the journey...

by Dr Tristan Ewins , April 2017



Capitalism and its benefits



1)     Capitalism is an economic system based on the private ownership of the means of production, exploitation of labour by Capital, and markets as vehicles for distribution and exchange.  



2)     Capitalism has benefits and failures ; which can be maximised or ameliorated via economic policy, and by the struggles of ordinary people for justice



3)     Capitalism as we know it has the benefit of promoting innovation through the dynamics of competition ; The competitive market system drives capitalists to innovate and respond to the intricacies of consumer demand.  It also leads to the development of the means of production.



4)     Capitalism also has the benefit of driving efficiency and productivity gains via those same dynamics of competition





Capitalism’s Flaws





5)     But Capitalism’s failures include the following



Canadian economist Jim Stanford estimates that ‘the capitalist class’ of top owners and management dominates control of the economy despite only comprising about 2 per cent of the population.  This has implications for the viability and meaningfulness of democracy.



Capitalism has also always involved a ‘business cycle’ ; characterised by fluctuations in consumer demand and investor confidence. This could be sparked by the collapse of investment bubbles and the spread of ‘bad debts’; and in response to the use of interest rates to contain inflation , or because of ‘supply shocks’. (eg: the Oil Shocks of the 1970s)   And these crises spread in the context of world capitalism because of increasing global economic interdependence.  At its worst this has occurred in the context of Depression , and more recently with the Global Financial Crisis.  These were only eventually overcome in the context of stimulus , government guarantees and other interventions , and in the past (eg: WWII and post-war reconstruction) also because of the ‘boost’ provided by rearmament and war.   The Great Depression put paid to the economic Liberal argument that ‘perfectly free markets’ ensured the full mobilisation of all ‘factors of production’. Arguably the right kinds of stimulus, intervention and regulation can reduce the severity and duration of the associated downturns.   This includes what Keynesians call ‘demand management’.  Downturns are a good time to invest in infrastructure, for instance ; though there are arguments to invest in productivity and quality-of-life enhancing infrastructure outside of that context as well.  Indeed stimulus can create ‘a multiplier effect’, creating jobs indirectly as well as directly.  But government (or ‘the people’) should not shoulder all the costs and risks, here ; with little in return.  Some of the concerns socialised to restore stability during the GFC should arguably have remained socialised.



6)      Left to its own logic capitalism leads to economic monopolisation or oligopolism – which in turn can lead to the abuse of market power.  It also leads to systemic inequality.  Though this can be ameliorated through labour activism , labour market regulation , progressive tax , and the social wage and welfare systems.  And also by competition policy ; or enforcement of competition via Government Business Enterprises with charters on promoting competition. Again, though, the ‘capitalist class’ as such comprises only 2 per cent of the population ; and yet has the power directly or indirectly to veto any public policy through destabilisation and/or a ‘capital strike’.  Unless ‘the people’ are sufficiently conscious and organised to oppose those strategies.



7)     Nation States also pursue their economic interests attempting to extend their economic sphere of influence through control of – and access to -markets in other countries (including key strategic resources) ; or in the past through more direct expansionism.  This can involve military force or economic and cultural pressure ; and was described by the British liberal social theorist John.A.Hobson as “Imperialism” ; a term which was then seized upon by Vladimir Ilyich Lenin to explain the First World War.



8)     Marxists once believed in ‘absolute pauperisation’  and ‘absolute bifurcation’  under capitalism; with the destruction of the middle classes through the dominance of monopoly capital and the inability of small business to compete.  In reality the ‘middle classes’ have re-emerged in diverse forms.  Via the professional classes ; via emerging small businesses in new industries where monopolies have not yet consolidated ; and more recently as contractors who compete against each other to provide goods and services for monopoly capital , or in other contexts via small jobs for private consumers and households. Meanwhile, the working class generally includes all wage labourers – skilled and unskilled, manual and mental.  The wealthy , and Ideological economic Liberals and capitalists, try to play the middle classes off  against the working classes and the disadvantaged.  As well as playing the working classes off against the most vulnerable with ‘anti-welfare’ narratives ; and using narratives around ‘political correctness’ as a wedge against the progressive liberal, social democratic and socialist Left.  Also capitalists try and play manual labourers against intellectual labourers ; appealing to intellectual labourers that they are ‘middle class’. (and hence do not share the same interests)  In democracies the challenge is to build a stable progressive electoral bloc to fight this.  Swedish sociological theorist Walter Korpi referred to a ‘democratic class struggle’. Arguably Labor could do better to consolidate its support bases around the working classes and the vulnerable by playing more directly to their interests and challenging dominant Ideological themes; while maintaining the support of middle class liberals.



9)      Current emphasis on ‘no real wage rises without productivity improvements’ leaves some labour-intensive professions (eg: cleaners) with little or no prospect of a real wage rise, ever.  That is: without increases in the intensity of labour – a disturbing notion given we are already talking about some people who are engaged in hard and demanding physical work. Hence the creation of effective poverty traps. Workers in other areas like Primary and Secondary Teaching would also be hard pressed to achieve ‘productivity gains’.  It also leads to absurd scenarios ; for example in higher education ; with academics measured by  their ‘academic output’ ; often excluding deep thought and study of particular areas ; and getting in the way of good teaching.



The Imperative of Capitalist Expansion ; and the Associated Waste


10) Capitalism involves a dynamic of expansion ; Its survival depends on it.  Waste at various points in the production process means capitalism must continually expand into new markets – or more thoroughly exploit old markets - to remain viable.  That waste includes cost structure duplication because of competition, and also the cost of continual revolutionisation of the means of production to maintain competitiveness.  There are also areas of unnecessary costs in areas such as marketing, dividends, executive salaries, and so on.  Getting rid of this waste and duplication could arguably be qualitatively good for the economy, and for consumers : freeing resources to be deployed elsewhere.  Decisions need to be made as to where natural public monopolies are viable (eg: transport and communications infrastructure) ; as well as where existing corporate competition (eg: Samsung versus Apple) actually does drive innovation which improves peoples’ lives.



11) There is also extensive waste in other areas.  For example the fast food industry involves enormous waste ; and domestic food consumption alone also involves $8 billion of waste every year.   But approximately 2 million Australians depend on food aid every year.  Also there is the spectre of planned obsolescence (for instance white goods and electricals): that is, things are not made to last because that ‘would be bad for business’.  This might warrant some kind of regulation re: minimum warrantee length for said electricals, whitegoods and so on.



12) But also there are limits to how far capitalism can succeed by extending its reach into new markets or more thoroughly exploiting old ones ; Over the past century capitalism has driven greater labour market participation: for instance that of women.  It has integrated most of the world economy also.  Now capitalists are demanding changes which grate against social democratic principles, interests and values.  This led to what social theorist Jurgen Habermas called a ‘Legitimation Crisis’.  That is, capitalism could not or would not deliver any longer on the post-WWII social democratic historic compromise.  This was dealt with in the form of attacks of social democratic Ideology ; that is – convincing people to renounce their own social and industrial rights on the basis that neo-liberalism, greater inequality, privatisation, and austerity were ‘natural’, ‘inevitable’ and according to Margaret Thatcher that ‘There is no Alternative’. (‘TINA’)  This also involved twisted Ideological narratives of individualism and meritocracy which ‘naturalised’ and justified inequality and exploitation.



13) In response to the systemic imperative to expand into new markets – or more thoroughly exploit old ones - capitalists are demanding increases in labour intensity, longer working lives, and longer working days.  Capitalists are also pushing down on wages, conditions, welfare, the social wage and so on – to ‘create room’ for profits.

 

14) But this creates as many problems as it solves. Cutting welfare, the social wage, and so on may provide a short, local boost to profits of particular enterprises.  But it also reduces consumer demand and consumer confidence , and probably increases the costs of crime.  As well there is an intensification of inequality, and a hit to quality of life.  We are producing more on this planet than ever; and yet we are told we most work longer and harder ; and not simply enjoy the benefits of greatly improved productivity in some areas.  Also capitalist measures of production (eg: GDP) often take no account of social capital, and the benefits of voluntary work, and ‘intangibles’ (to capitalism) such as free time, happiness and the environment.



15) Left to its own logic capitalism creates great inequality. Certain social democratic policies can ameliorate this without a full transition to a qualitatively different economic system or mode of production.  (which is not currently an option)  Though we should not feel inhibited in imagining alternatives ; and discussing where current problems could ultimately lead.


Socialisation  and the Welfare State could still  ‘Save Capitalism from Itself’


16) Firstly, a bigger public sector can actually be ‘good for capitalism’ to a significant degree.   Reversion to natural public monopolies in several areas could reduce cost structures, creating efficiencies which flow on to the broader economy.  This includes in communications, transport infrastructure, energy, water, and potentially with a single public-sector job search and welfare agency.  Cost structures would be reduced because of a cut in waste, duplication and unnecessary or inappropriate competition (eg: in energy) ; as well as because of a superior cost of borrowing for Government.  Again there are some areas (eg: energy) where ‘competition’ is ‘anti-intuitive’ for consumers ; and confusion leads to abuse of market power by energy retailers.  For policy makers there is also the danger of nepotism through the privatisation process ; including Public Private Partnerships which facilitate the ‘fleecing’ of consumers.



17) Secondly ; while capitalism needs to expand into new markets to survive, at the same time it undermines itself insofar as in its current form it is failing to create full time work for all those who want it. It is also failing to create full employment for all who want it; and indeed depends on ‘a reserve army of labour’ to discipline workers into accepting its demands on wages and conditions.  Proactive industry policies should endeavour to create full employment , and full-time employment for all who want it.  This involves the more thorough exploitation of old markets and well as taking advantage of new ones.  And with real creativity government can act as ‘employer of last resort’ through programs which provide for genuine social goods ; not merely pointless schemes ‘painting rocks’ and the like.



18) Further, strategic government business enterprises in areas like banking, general insurance, medical insurance – could counter attempts by private oligopolies to exploit their market power and fleece consumers.  That would mean more disposable income for average consumers upon whose demand the economy depends.



19) Finally, as the Nordics have shown , growing the social wage and welfare state is also good for people ; good for the economy. Greater equality can mean greater happiness ; and also greater consumer demand – as those on lower incomes spend a greater portion of their income.

Through these strategies capitalism can be made ‘more survivable, more fair, and more stable’.  These do not provide a final answer for capitalist instability and injustice.  But ‘with no way out’ for now to a qualitatively better system of production the amelioration provided by such responses is crucial for those who will have to live and work under capitalism.

Better Outcomes for Consumers, Workers, Taxpayers…



20) The Social Wage and Welfare State can also contribute to happiness and well-being by providing a living income for the disadvantaged and vulnerable , and support for carers.  The social wage, welfare state, and other areas of state provision (eg: infrastructure) can also provide a vehicle for ‘collective consumption’ by taxpayers via the tax system – providing much better value for money than were the associated goods and services purchased by atomised, private consumers.  As already alluded to ; the same applies in relation to ‘collective consumption’ with regard natural public monopolies re: certain infrastructure and services ; and in areas of health, education and so on.  Even if people pay more tax over the short term, they end up better off – with more disposable income after non-negotiable needs are provided for. 



The social wage and welfare state demand higher taxes as a proportion of the economy ; but for the reasons stated actually tend to leave most people materially-better-off.  And with more choice ; that is, more purchasing power – not less - after essentials are provided for.



Democratic Socialists and Social Democrats must look to the best tax mix also. The overall tax mix must be progressively structured.  Arguably for fairness corporations and the wealthy must pay more ; as far as it can be sustained. If there are consumption taxes, for example (perhaps to prevent tax evasion), the bad distributive effects of this must be fully offset through progressive taxes and social wage measures elsewhere.  A bigger role for progressive income taxes, taxes on dividends, taxes on wealth and capital – is desirable.  Social security, welfare and the social wage (perhaps including a guaranteed minimum income) must raise the ‘floor’ of inequality as high as can be fairly sustained. (that is, higher minimum wages, including the effect of the social wage)  Currently there is exploitation of the low paid and unreasonable inequality in the labour market and in wealth ownership ; but there are arguments that reasonable reward for effort, unpleasant labour, past study and skill - should be factored in. (as most people accept)  There should be much less inequality ; but some inequality is justified even under democratic socialism.



Tax can also comprise a ‘lever’ for gradual socialisation over the long term in strategic areas of the economy.

Finally the broad Left and Centre-Left cannot morally abide by a system which uses the threat of descent into an ‘underclass’, or classes of ‘utterly destitute’ and ‘working poor’ – as a way of ‘disciplining’ other workers. Neither can we tolerate ‘middle income’ demographics having their material living standards (interpreted here as material consumption) rest upon exploitation of the working poor. What is needed is broader solidarity to the point where there is no class of working poor or utterly destitute. 



21)  As well the social wage and welfare state can provide the following:  High quality, comprehensive universal health care for all ; Providing  high quality Education for all – including education for personal growth, political literacy,  and hence preparation for active and informed citizenship; as well as education to meet the demands of the economy and the labour market.  Other important areas include public and social housing, legal aid , child care, financial services, access to information and communications services and technology , assistance for equity groups , Public sector media such as ABC and SBS with charters to maximise participation, support extensive pluralism, support local culture ; Broader support for diverse local culture, recreation, sport, and so on.  Creating ‘the good society’ involves more than ‘hands off’ and ‘leave it to the market’. New needs are also always arising as the economy and technology develop.



22) Further ; there is a growing push for a ‘guaranteed minimum income’ for all ; which makes sense given the looming problem of distributing the productivity gains of future automation ; But also providing a ‘basic floor’ below which no citizen will be allowed to fall.



Automation is inevitable and governments must intervene to ensure the full economic benefits are passed on to workers and consumers.



23) The emerging economy should provide flexibility where possible on workers’ terms.  Again ; Those wanting part-time work should be so provided.  And those wanting full-time work should be so provided.  All people should have the prospect of a fulfilling life ; with a mix of varied manual and intellectual labour.  There should be scope to devote time to personal growth ; including creative labour , study and recreation.  Industry and labour market policies must aim to update skills, and also strive to nurture new industries which draw on existing skill sets where jobs have been lost. 



24) As Professor Andrew Scott explains in his work ‘Northern Lights’, the Danes have a policy they call ‘flexicurity’. Rather than focusing narrowly on 'flexibility for employers to dismiss workers', the Danes also emphasised 'the provision of generous unemployment benefits for those who lose their jobs' and 'the provision of substantial and effective Active Labour Market Programmes (ALMPs), [with] quality training to help unemployed people gain new skills for new jobs …'  (Andrew Scott, p. 135, (pp. 152, 154-55).  By contrast Australia suffers 'the lowest level of unemployment benefits  in the OECD for a single person recently unemployed.'  Furthermore, ‘Work for the Dole’ programmes are punitive and provide little in the way of relevant skills for job placement. (Andrew Scott ; pp. 136-38).  Denmark’s active labour market programmes are expensive says Scott, but are worth the investment in radically higher workforce participation.   Achieving an economy which operates at ‘full bore’ – as the Swedes achieved for a significant time - also means more revenue for social programs.  Industry policies ensuring more high wage employment also enhanced those outcomes.





25) The Housing Affordability Crisis is driving an economic wedge between Housing Market Investors, Home Owners, and those struggling to (or unable to) purchase their own homes.   Simply releasing new land (the traditional Liberal ‘solution’) is not a viable answer unless services and infrastructure investment matches it.  Large public and social housing investments in growth and transport corridors could increase supply, however, and if introduced in phases may be able to ‘deflate’ the boom without a ‘crash’.   Labor’s negative gearing policies would also mean less competition between first  home buyers and housing portfolio investors.  Again , Combined with increased investment in public housing, and implemented properly, it should be possible to ‘deflate’ the bubble without a crash.   Public housing construction should  involve expansion of ( largely ‘non-clustered’) public housing stock to at least 10% of total  stock over several terms of Labor Government. ‘Non clustered’ stock aims to avoid traditional stigma against public housing, as well as the creation of poverty ghettos. Though there is the opposing argument that (implemented properly ; with the right infrastructure and services) clustered housing can create thriving communities.



26) There are those who argue capitalism cannot deal with looming environmental crises.  As a system based upon growth and the production of ever-more consumer goods, with a ‘growing environmental footprint’ , there are reasons to take these claims seriously.  That said: renewable technologies are advancing.  And information, culture and service industries – if emphasised – could involve much less of an ‘environmental footprint’.   A guided shift of emphasis to those industries could be key to environmental sustainability.  At the same time, though, we want to remain an economy which ‘makes things’.  Manufacturing will remain necessary ; and working conditions in manufacturing tend to assist the organisation of labour.  But we do not know yet just how far automation will go.  Automation could be good for people in their capacity as consumers, but bad for organised labour.



The Big Picture and ‘The Good Society’



27) Finally, Labor needs a vision of ‘the good society’  which includes redistribution and rights of labour – including labour market regulation (with an increased minimum wage) ; But at the same time goes further.  Marxism involved an implied moral critique of exploitation. But also of what was called ‘alienation’ ; That is, the impact of physically onerous, repetitive and/or mentally punishing labour.  And the lack of creative control workers enjoyed over their labours, and the products of their labours.  This ‘alienation’ could be addressed partly through increased free time for workers in such demanding areas.  And increased opportunities to explore such diverse areas as philosophy,  science, art, and leisure.  Though Marx also envisaged a time when fulfilling labour would ‘become life’s prime want’.   ‘Automation’ could actually create opportunities here IF implemented properly.



Also Labor should have an appreciation both of the importance of constitutional liberal democracy ; but also of its limits.  Democracy needs to be extended into production and work.  This could involve support for diverse models of co-operative enterprise and mutualism – on both large and small scales. Not only would this model by-pass exploitation: it could also provide workers with creative control over their labours ; including the kind of intimate control and identification that may go with co-operative small businesses.  (eg: co-operative cafes)   Furthermore, mutualist and co-operative associations could contribute to full employment in a situation  driven by contextual human need , and not only ‘share value maximisation’ – which is the modus operandi for capitalism-as-we-know-it.



Large scale co-operative and mutualist associations could also occupy crucial points in the economy in areas like health, motor insurance, and general insurance, and  credit/banking.  Government could play a central role of ‘facilitation’, here) Strategic ‘multi-stakeholder’ co-operatives could also be created through co-operation between Government, Regions, and workers.   That model might have been applied in the case of SPC-Ardmona ; and may even have been applied (much more ambitiously) to save Australia’s car industry.  Ambitious ‘mutli-stakeholder co-operatives’ should be considered by Governments, Workers and Regions for the future.

Other options for economic democracy include: growing the public sector , promoting ‘democratic collective capital formation’ (for example, like the Swedish ‘Meidner wage earner funds plan’) – though perhaps inclusive of all citizens and not only workers.  As well as ‘co-determination’ (worker reps on company boards).  Sovereign Wealth Funds or Pension Funds also socialise wealth and investment, and could be crucial to fund expenditure and investments (eg: infrastructure) into the future. 



Superannuation is entrenched now, and provided for peoples’ retirement without the political problems of raising taxes. It was seen as having democratic potential ; but it also had problems of reinforcing inequality in retirement (also affecting women) ; requiring low income workers to make contributions they could not afford ; and reinforcing the capitalist focus on share value maximisation regardless of other need.  Arguably pensions need to be more generous and broad-based ; but the superannuation system may lead to the marginalisation of the Aged Pension into the future.

In conclusion ; We should talk of capitalism and not only ‘neo-liberalism’. Because to name capitalism is to make it relative.  And one day the way may open for something better to become possible.  At the end of the day all wealth does derive from labour and Nature: and now just as in ‘the Heyday of radical Social Democracy’ this implies a moral critique of capitalism and class.




Dr Tristan Ewins has been a  Labor activist for over 20 years. He has written for many publications including 'The Canberra Times' ; but most prolifically for 'On Line Opinion' ;  see:  http://www.onlineopinion.com.au/author.asp?id=208


References

Scott, Andrew,
  'Northern Lights: The Positive Policy Example of Sweden, Finland, Denmark and Norway',   Monash University Publishing, Melbourne, 2014

Stanford, Jim
  "Economics for Everyone - A Short Guide to the Economics of Capitalism" , Pluto Press, London, 2008



Friday, March 3, 2017

POLICY DISCUSSION re: ‘Skills and Knowledge’ component of the ALP Platform’



Dear comrades ; what follows is a series of Ideas for reform of the Platform which I have developed.   This paper was originally developed for the Victorian Fabians Forum held on Feb 15th 6.00  2017 till 8.00pm at the Blue Room in the Multicultural Hub, 506 Elizabeth Street. Thereafter it was revised and extended.

I am sharing it with comrades here to provide an opportunity for feedback before submitting it for consideration.

If comrades have ideas how the paper can be improved please comment and let me know your opinions.

Sincerely,

Dr Tristan Ewins



Skills and Knowledge



The following are excerpts from the existing platform:


Preamble

Education is Labor's number one priority. It's the bedrock of social justice and cohesion in our society and it will build our 21st Century economy.

Labor will increase investment in Victoria's greatest strength - its people - so they may enhance their development and their participation in work and society.



The following ought to be added to clarify Labor’s values in this area (see above):

ADD: “Not only must education provide for the needs of the labour market ; it must also provide opportunities for personal growth ; and education for informed and active citizenship - which are also highly important. ”






The following excerpt is from the existing document:

Schools  (from the existing document)



     become active, well-balanced, knowledgeable citizens, able to participate fully in a democratic society

     understand our democratic multicultural society, recognizing what should be conserved, changed or improved



The following ought be added to clarify Labor’s position on the  purpose of our schools:


  • Develop political literacy ; an understanding of the social movements and political parties which contest the direction of economy and society ; and of both the interests, ideologies and values they represent ; and of the specific opportunities for active participation in a democracy

  • Develop these understandings in a complex manner ; including but not restricted to the ‘linear left-right spectrum’ ;  including ideologies of egalitarianism and meritocracy and the ways they variously complement and clash with each other, as well as libertarian and authoritarian dispositions ;

  • Develop understandings of society partly based upon but not limited to such differing notions as “conflict theory” and “functionalism”

  • Develop these capacities through content specifically prepared for that purpose in the Humanities, Social Sciences, Economics and English ; Develop a ‘political economy’ facet to Secondary Economics which considers the values, ideologies and interests behind economic theories.



Commentary:  these are important to promote the SPECIFIC knowledge necessary for effective political and social participation.   And also to understand things in their complexity: because the left/right spectrum is no longer – perhaps never was – sufficient to explain differing political and social movements and ideologies.  It is also necessary to present ideas in their complexity to maximise understanding ; empowering students to respond to the nuances in social and political debates, and to be effective, active citizens.  It is also important to address specifics when it comes to active citizenship, and not only deal with those issues ‘in the abstract’.






Emphasis on literacy, numeracy, creativity, and environmental sustainability.



In this part of the platform (see above) we should add the following:

“Provide alternative pathways  for students with specific talents and potential who may not respond to the specifics of the VCE curriculum ; ie: learning/memorising the curriculum is not necessarily the only, or the most important indicator of talent or potential.  Indeed, at the Tertiary level often significantly different means of learning and grading students’ efforts are involved.”


Commentary:  Learning to the curriculum does not necessarily represent all talent and potential ; so there must be alternative pathways ; and VCE and Year 12 should not ‘decide everything’



Letting our Teachers Teach and our Principals be Educational Leaders.

Comment:  In this part of the platform (see above) we ought incorporate the following in some form as well: 

“teachers with limited numeracy skills should not be penalised if they perform well in their fields ; eg: Humanities, English etc.”


And consider the following part of the Platform also:

Funding Schools to Meet Students' Needs   (from the existing document)



Labor will:

     Continue the student resource package (with base, per capita and disadvantage amounts)

     Continue to fund non-government schools in accordance with the financial assistance  model


In this part of the Platform we should also add the following: 

 
[Labor will] “Work to see that revenue shortfalls are addressed through progressive taxation mechanisms without depending on austerity elsewhere ; Labor recognizes that material and human resource shortfalls can only be fairly overcome through progressively structured taxation reform.  Gonski can only be fully and fairly  implemented through provision of the necessary resources without austerity elsewhere.



TAFE


We should add the following:  (nb: Lots of this has been reproduced from earlier in the document ; but it is as relevant here as it was before) :

Add the following:

TAFE must provide pathways for students in diverse fields, and that must include such areas as writing/journalism, liberal arts, music and so on.  The intrinsic value of these fields must be emphasised ; and should not be narrowly based on ‘maximising value in the labour market’;.  If viable Labor governments should ensure all these areas are geographically accessible to students across the state.

Labor will also endeavour to provide pathways and areas of focus emphasising political literacy and opportunities for active citizenship at the level of TAFE.  Again this should include:

·         Developing political literacy ; an understanding of the social movements and political parties which contest the direction of economy and society ; and of both the interests, ideologies and values they represent ; and of the specific opportunities for active participation in a democracy



·         Develop these understandings in a complex manner ; including but not restricted to the ‘linear left-right spectrum’ ;  including ideologies of egalitarianism and meritocracy and the ways they variously complement and clash with each other, as well as libertarian and authoritarian dispositions ;



·         Develop understandings of society partly based upon but not limited to such differing notions as “conflict theory” and “functionalism”



·         …. Explore ‘political economy’…considering the values, ideologies and interests behind economic theories.



Adult and Community Education

Comment:  Here we must apply the same provisions and priorities to Adult and Community Education as we have already discussed in the ‘TAFE’ section of this document. The same priorities and principles apply there as well.

Other issues relating to Skills and Education:

User Pays and Student Allowance in Higher Ed

User Pays in Higher Education has become more and more pronounced since the introduction of HECS with the Dawkins reforms of the 1980s.   The ALP has many priorities, and even if we do raise more tax revenue progressively (I would suggest by maybe 2 per cent of GDP upon taking Federal Government) –  even then we are limited. But we do have some room to move in rolling back user pays gradually, and making the mechanisms progressive and fair.  

I believe the following measures must be incorporated into the Platform:

·        Labor has a long term objective to restore ‘free education’, but is limited by other priorities, and the difficulties with raising the necessary revenue over the short term

·        Labor will increase the HECS repayment threshold so that it is significantly above Average Weekly Earnings

·        Labor will contain interest on HECS debts to no more than inflation for fairness ; and will make special provisions for those in a bad position to repay their debts (eg: upon acquiring a disability)

·        Labor will increase Austudy payments in real terms ; easing pressures for students to supplement their incomes with work ; because that can distract from study and increase the rate of students dropping out. That means an end result of wasted resources.

·        Labor will ease means tests for Austudy; again so students can study under conditions of financial security – and commit themselves fully to their study.  Hence Labor will also make Austudy more widely available ; providing it also for all tertiary students except those with very substantial means.

·        provide mechanisms for corporations to contribute more substantially to the skills development they ultimately benefit from.  This must provide room to move in making student contributions fairer and less onerous.



State Schooling ‘at the tipping point’

What is also important is the crisis in state schooling in this country ; especially secondary schooling.  Because of the proliferation of private schools ; of their superior human and material resources ; state schools are near a ‘tipping point’.  That is: the proportion of voters and families (especially in the middle income bands) with an interest in keeping state school viable – especially in years 11 and 12 – has been shrinking.  And this has lessened the electoral pressures – and the electoral benefits – in restoring and maintaining our state schools.  If these influences continue to develop we may permanently be left with a starkly ‘two tiered education system’ ; with a public system markedly inferior in human and material resources.  Then we can really forget about ‘educational equal opportunity’ for good.  Ross Gittins of 'The Age' (15/3/17)  has pointed out that the state school share of students has stabilised at 65% - but that it is down from 79 per cent from 1979.  And without Gonski - and further reforms - this 'stabilisation' may not last.  Gonski must be swiftly and fully implemented under a Labor government.  The resources must be found without austerity elsewhere. And perhaps Labor must go even further in reducing the gap between State and Private schools.  Also the prestige of the teaching profession – the respect accorded to it – must improve.  And this could also find realisation with better wages and conditions for teachers ; with lower workloads/smaller classes ; as well as better job security for those unsatisfied with casual and contract work.

All these concerns must be incorporated into the Platform.

The Humanities and Social Sciences must be Protected and Valued

The Humanities and Social Sciences have long been devalued compared with courses with have a more obvious vocational application.  In many universities they have been cut back.  They have come under attack from Conservatives who see no value in any enquiry which does not have an obvious and immediate vocational application.  With the emphasis on STEM and basic literacy and numeracy – their importance is widely disregarded.  But they are vital for a number of reasons.



·        They have the potential to be the vehicle for a radically democratic civics and citizenship focus – at both a Secondary and Tertiary level.  Harking back to earlier in this paper – the goal is to promote political literacy – comprehension of social movements and political parties ; as well as the values, interests and ideologies underpinning them.  As well as awareness of the avenues open for effective and active citizenship.  Communicated without Ideological prejudice ; the point being to inform – and not to ‘indoctrinate’.   (See earlier in this paper for further details)

·        Historical comprehension and appreciation of the origins of civilizations ; Deep appreciation of culture, ethics and aesthetics ; Engagement with the most profound philosophical enquiries and dilemmas – these and other facets of the Humanities and Social Sciences are enormously valuable in their own right.  Humanities and Social Sciences are also valuable for other reasons: comprehending social trends and phenomena ; understanding them qualitatively and quantitatively.

·        They have practical applications, also – learning how to reason and construct arguments ; broader communication skills ; research skills ; applying social theory and research methods to complex social problems.

·        Humanities and Social Sciences academics contribute significantly to the public sphere ; and hence to our democracy



These concerns should somehow be accommodated in the Platform.


This in mind Labor should commit to these concrete measures in its Platform:



·        Develop concrete ‘civics and citizenship’ and ‘political literacy’ content at a Secondary level ; especially in years 11 and 12. And provide incentives for students to undertake at least one Humanities and/or Social Sciences subject in each year of years 11 and 12.

·        Support Liberal Arts, Music, and Professional Writing Courses in TAFE and if viable in Adult Education (eg: CAE)  Promote these as potential pathways to Tertiary study.  Reform the Liberal Arts curriculum to better incorporate and include questions of ‘political literacy’ ; understanding the values, interests and ideologies underpinning social movements and political parties.  Incorporate an ‘Issues’ component in Professional Writing and Editing – to potentially prepare students for a career in journalism.

·        Perhaps develop courses in political literacy open to all citizens: not only as ‘pathways’ but also because of the intrinsic value of enabling citizens to cultivate their talents in all directions – including political literacy and active citizenship.

·        Set in place incentives (positive and negative incentives) to encourage Universities to support the Humanities and Social Sciences – as they are central to the viability of our Public Sphere ; and hence the viability of our democracy. Take action to stem and reverse the decline of the Humanities and Social Sciences in our Universities.

·        Encourage course structures which enable Tertiary students to undertake supplementary Humanities and Social Sciences content if they so choose ; perhaps at a heavily discounted rate ; with the aim of enabling deeper personal development ; and a civil society comprised of informed citizens.





Dr Tristan Ewins

ALP member of over 20 years ; February 2017