Archive for June, 2010

A Delusion of Grandeur: Kevin Rudd in Politics

If Graham Freudenberg was able to write of Gough Whitlam’s political career that it exhibited “a certain grandeur”, then for Kevin Rudd we might speak of “a delusion of grandeur.”

Many of his most vocal supporters shared in this delusion. For instance his lead cheerleader amongst the Australian intelligentsia, Robert Manne, even went so far as state that Rudd’s critics did not seem to understand that the colossus from Griffith was “an intellectual in politics,” who was “struggling” to simultaneously both “understand and change” the world. No self respecting philosopher king can take seriously Marx’s clarion call in the Theses on Feuerbach.

For Rudd ,and Manne, such an injunction is too modest by half.

Rudd seems to have seen himself as some sort of philosopher king with a Hawkian “special relationship” with the Australian people to boot. His political legitimacy and authority resided in his own personality and talent.

This delusion of grandeur proved to be his undoing.

How else to explain his claim that he did not owe his leadership to the ALP? How else to explain the sheer contempt that he showed the party during the course of his leadership? For example, by coming and going as he pleased at the last ALP national conference? By announcing on radio, well away from the conference, that its resolutions, especially on tax reform, are irrelevant? Not even Paul Keating would have displayed such brazen contempt.

By sidelining cabinet, even to the extent of exiting cabinet meetings to attend to petty media interviews? How else to explain the extraordinary level of centralisation that he vested in the leader’s office, against more than a century’s worth of Labor tradition that places primacy upon the parliamentary party?

He treated both the Labor Party and the Labour movement with contempt. He did so because of his grandiloquent view of himself, but his leadership was based on nothing else other than high standing in the polls. When those polls turned against him so did the party he viewed as an irrelevant appendage.

He was not able to see this until the end. Such are the delusions of grandeur.

A good deal of commentary has focused on the manner in which Rudd was replaced as leader.

Attention has been especially drawn to the role of factional and union power brokers in his ousting and the efficient manner in which they organised his “assassination.” This aspect of the Rudd downfall has been best encapsulated by Mark Latham and Paul Kelly. Writing in the The Australian Financial Review Latham observed that (AFR, 25 June 2010, p24), “the leadership of Australia’s oldest political party has become a transit lounge, controlled by poll and media obsessed appartchiks.”

Latham surely has a point.

The ascension of Gillard did not follow on from policy or ideological differences. This is not a political party that is struggling with its soul, with its policy direction, with its goals and visions, and so has changed its leader. “Our princess” Julia Gillard was seen as a better prospect at the next election. So the powers that be helped to elevate her to the leadership.

Commenting upon the Latham thesis Kelly states in The Australian today that the Rudd ouster, “reveals a party governed not by ideas but powerful interests that span networks of factional, trade union, family and special interest group connections that thrive on the patronage, finances and appointments that only incumbency can deliver.”

That is also true. However, it is possible to overcook this view.

What Latham and Kelly state is surely correct. But there were more issues and, crucially, more players involved. There is a widespread view amongst the Left side of Australian politics that Tony Abbott, and those around him, are rabid right wing extremists. It would be a disaster for progressive politics in Australia should the Liberal Party win the next election. This has played an important element in the change of leader.

The focus on factions and so on is important, but it should not obscure this part of the equation.

Perhaps the most important institutional factor in the demise of Kevin Rudd was big business. It is big business that, ultimately, determines the leadership of the Labor Party. One reason why the corporate media turned viciously against Mark Latham is because big business did not trust him.

To be sure, as Robert Manne pointed out, up until then Latham was the most right wing Labor leader in history. However, Latham always had the dangerous class warrior lurking within him. I saw it. I perceived it. I liked it. But, the rich saw it, they perceived it, they did not like it.

At times his use of the idiom of class sounded almost Marxian. He would not give big business a trusted place in his office. He would, in short, not “consult.” The big end of town did not trust him and so it was easy for the corporate media to portray him as an unhinged nut.

This has happened many times to Labor in the neoliberal era. Recall, for example, the role of the corporate media and the big mining interests in the ouster of Gough Whitlam and Rex Connor. It is not ideological orthodoxy that big business seeks from the ALP. It is important that Labor tends to its interests. Because of the party’s roots in the Australian working class the ALP always represents a risk for corporate Australia.

The main function that the faction system in the ALP serves is to take away the risk of democracy that the rich at all times face.

Consider the case of Bob Hawke. The so called “Hawke ascendancy” and his own “special relationship” with the Australian people was a corporate media fiction. Throughout the 1970s the corporate media pushed the Hawke bandwagon, which was resisted by the Labor caucus almost until the 1983 election.

In office Bob Hawke did not disappoint his corporate patrons. For the rich the Hawke era was a veritable bonanza. But Hawke was ousted precisely because of his adherence to neoliberal orthodoxy. He was successfully challenged by Paul Keating during the depths of the 1990-1991 recession, the one “we had to have.”

Throughout this deep recession Hawke was maintaining neoliberal orthodoxy. Keating, by contrast, was brazenly abandoning neoliberal austerity in favour of fiscal stimulus and loose monetary policy. Keating understood that when the rich get in trouble they want the nanny state to bail them out.

Hawke didn’t and so the corporate media, reflecting the consensus of big business, turned on Hawke and the rest is history.

They made Hawke and then they broke him.

Rudd seemed to understand that “the Latham debacle” represented big business disciplining the Labor Party into proper behaviour. Under Rudd’s leadership the door for big business was widely opened. Commentary at the time reflected how much better the relationship between the Labor leader’s office and big business was when Rudd took over the leadership. Prior to the 2007 election meetings with business leaders were frequent, even formalised on a weekly basis.

Compare that with the relationship that Rudd has had with big business in recent times.

Though his tax reform policies were designed to assist corporate Australia as a whole, though he has extended a helping hand to the financial services industry, though he ditched the ETS to mollify big business, none of that was enough. When the mining industry turned on him because of his minor infringement after announcing the resource super profits tax, which is what the tax is, big business was loathe to come to his defence. Laurie Oakes has spoken of a “disastrous” meeting with the Business Council of Australia days prior to his ouster.

Comments and analyses on Rudd and the Rudd style in the corporate media thereby recently became frequent. The Rudd “brand” was rendered toxic by precisely those who helped to craft it in the first place. The mining industry decided that it would destroy Rudd and destroy him they did. The change over has been fulsomely praised by all of Australia’s peak business bodies. The ascent of Julia Gillard comes with the promise that they will be “consulted” better, as if they have not hitherto been consulted enough already.

In other words, Gillard knows her place unlike the grandiloquent Rudd.

Mark Latham and Kevin Rudd lost the leadership of the Labor Party because they lost the confidence of corporate Australia. How is that Rudd was able to forget the lessons that corporate Australia dished out to the Labor Party during “the Latham debacle?”

This owed to his delusion of grandeur. He saw himself as striding the Australian political stage on the back of his own unique vision, drive and capability. However, a minor infringement against those who really run the country, the big moneyed interests, was very much the big nail that was driven into his political coffin.

Corporate Australia has brought Kevin Rudd back down to Earth with a thud. It is indeed ironic that this is just as it was with Mark Latham. The element of the delusion of grandeur in Rudd’s case immediately brings to mind Marx’s refrain in The 18th Brumaire of Louis Napoleon, “Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.”


The emphasis on the factions and patronage is thereby only half the story. The Labor Party’s power brokers do seek office in order to dispense patronage and thereby secure institutional prerogatives. But they understand that this can only be achieved by looking after the needs of big business. If they lose touch with corporate Australia they lose elections.

One interesting aspect to the latest developments in Canberra is the announced departure of the socialist minister for deregulation, Lindsay Tanner. He was widely praised in the corporate media following his announcement. In fact, he earned high praise too from financial market economists for his commitment to economic rationalist orthodoxy.

Tanner was a person who, in his maiden speech to parliament, declared himself to be a socialist. His departure from parliament is now mourned by financial market economists, who shall miss his economic rationalist zeal. This has been taken as praise, but such valedictories by financial market economists are a fitting end to Lindsay Tanner’s career.

Good riddance, Comrade Tanner. Don’t ever come back.

Categories: ALP

Despite Julia Gillard’s Support for Neoliberalism, Now is the Time for Progressives to Back Her

Australia has a new Prime Minister after the bursting of the Rudd asset price bubble. As I stated long ago, when the Rudd bubble was in full flight, his leadership of the ALP was based on little else but his high poll numbers. These numbers were a bubble, I had argued, for Rudd was a leader distinctly lacking in substance.

Mark Latham summed him up very well in his diaries.

I had stated that the Rudd bubble might prove to be a dilemma for the ALP in the future. I had not expected that the bubble would burst so suddenly and with such force. If the property bubble, that the former PM has helped to sustain, bursts like the Rudd bubble then heaven help us.

Julia Gillard has achieved the highest political office in the land by betraying her socialist beliefs and her core working class constituency. If she had not done either of these things during the course of her political career, rather than being PM, she would be organising the next Altona ALP chook raffle. Lindsay Tanner, who has done the same, was right to have characterised her as a “careerist”.

In the Tanner lexicon no pejorative ranks higher.

Although in media commentary much as been made of Gillard’s working class roots, this all should not be taken too seriously. Gillard has announced, loudly and clearly, her whole hearted support for neoliberalism and her dedication towards the further pursuit of neoliberal reforms.

The Age reports newly minted PM Gillard as stating today that

“I give credit to the Labor giants Bob Hawke and Paul Keating as the architects of today’s modern prosperity,” she said.

“I give credit to John Howard and Peter Costello for continuing these reforms,” she said

These remarks are truly amazing. The former socialist Gillard even has gone so far as to praise Howard and Costello for continuing and extending neoliberal reforms!! This is how low the ALP has sunk since Gough Whitlam took away the power of the organisational wing.

If Gillard stays true to these comments then this change over will amount to what Keating would have called “embroidery.” Gillard might change the style and packaging of neoliberal Labor, but the essential commitment to neoliberalism, one of the defining features of the Rudd leadership, will continue to obtain.

The ALP power hierarchy will remain committed to neoliberal policies and programs so long as the current structure of the party endures. The ALP requires root and branch reform if it is to return to being a genuine working class party.

Changing leaders could be a start. However, if so the new leader would need to be dedicated toward the dismantling of the Hawke-Keating legacy. That, Gillard has stated, she won’t do. Quite the opposite. She will continue the neoliberal programs that Hawke and Keating, but also Howard and Costello, did so much to bring into being.

There can be little doubt ,however, that a Gillard government would be better than an Abbott government. It would truly be a disaster for progressive politics in Australia if Abbott should win the next election. He is a rabid right wing extremist. So are the people pushing his cart.

I don’t expect much from Gillard, but in saying this I nonetheless maintain that she should be supported by progressives. Those of a left wing persuasion should not allow their justified scepticism of Gillard to obscure the huge stakes involved in the next election.

I sincerely hope that both she and the ALP win the next election. When she does, we should continue the struggle against neoliberalism. That, judging by these remarks, will mean that the Australian left will end up opposing her.

I submit that now is definitely not the time for all that. I submit that it is possible for progressives to support Gillard but also at the same time to continue to work against neoliberal policy and ideology.

Surely Gillard still has some place inside her that remains true to her old fiery and passionate commitment to social justice. I don’t think there was anything of that in Rudd. If there was, he kept it very well hidden.

Hopefully, some of that old passion will emerge during her leadership. I personally doubt that it will, but we always have “the audacity of hope.”

Categories: ALP

The Resources Super Profits Tax and Decoupling: Is Australia Still Coupled to America?

The proposed Resources Super Profits Tax has consumed the nation. Most of the focus has been directed toward the affects, real or imagined, that the proposed tax would have on resource corporations.

Less critical attention has been devoted to the government’s proposals for how the proceeds of the tax are to be spent, critical to any moral arguments that invoke “mutual obligation,” and the underlying economic idea behind the whole thing. That idea is that we are about to have another commodity price driven resources boom, Boom Mark II, to match or even surpass the boom that we experienced in the noughties.

It’s assumed that Australia will benefit from a sustained boost to the terms of trade on the back of industrial production in China and India out to 2050, according to Ken Henry. The deputy head of the Reserve Bank, Phillip Lowe, argues that Australia is now “decoupled” from the United States. The old saying, when Wall Street sneezes Australia catches a cold, no longer applies. If America experiences a Japan style “lost decade” this won’t matter much. We’ll have China and India to save us. Lowe even is of the view that the Chinese and Indian booms have “decades to run.”

Decoupling is the critical idea underpinning the government’s economic strategy.

The RSPT is needed because we need to avoid all the problems associated with the “two speed” economy that we had during Resources Boom Mark I. For example, our resources were being exported to industry in China that was crowding out Australian manufactures in global markets.

Geelong and Elizabeth were losing because Tom Price and Broken Hill were winning.

Canberra, sensibly enough, wants to avoid such distorting effects during Resources Boom Mark II. The RSPT is a part of the government’s strategy to ease our way through the inevitable big boom.

Australia, however, has not decoupled from the United States. Despite the growing economies of China and India, what happens in America is still far more important for Australia. China and India are just transmission belts. The real game is still played in America.

I myself have been guilty of falling for the decoupling argument, but I see now that the case for decoupling was always pretty weak. Let me explain why.

Industrial production in Asia has depended upon exports to the United States and Europe, but especially to America. What has allowed this to happen is globalisation. Because of the globalisation of production industrial corporations have increasingly shifted factories, and even call centres, to low wage countries such as China and India. But, crucially, this is done with the objective of selling goods and services back to the US.

The strategy of export led industrialisation that the Asian based economies have pursued has thereby relied on demand from the US consumer.

The first resources boom, so the party line goes, happened because of the booming Chinese economy. On the face of it that’s true. But China was going gang busters because of the asset price bubble fuelled economic growth in the United States. Australia’s terms of trade was boosted, during Boom Mark I, by the US consumer purchasing cheap Chinese products. To export goods to the US market Chinese factories needed our raw materials. Even the construction boom in China, ultimately, owed its origins to America.

Our mining boom was therefore based in the United States, not China. But, one might well say, look at what has happened since. China has stayed up while the US went down. Commodity prices had picked up following big falls in 2008-2009. Australia has been riding on Red China’s back and thereby avoided recession.

It is true that China has been growing at an impressive click while the US has been stuck in the doldrums following the bust up on Wall Street and the collapse of the property bubble. However, when the crisis erupted on Wall Street in 2008 growth in China declined sharply. Since then the Chinese economy has picked up on the back of a massive fiscal stimulus, the ability of Chinese authorities to stimulate the economy by command rather than through indirect incentives and an asset price bubble, especially in the property sector, fuelled by cheap money.

In many respects this is similar to what has happened in Australia. We have avoided a recession because of the Rudd government’s stimulus spending and a deliberate strategy to prop up our own property market bubble.

However, the Chinese cannot stimulate their economy forever. In Australia we hope to keep the economy going by government stimulus until private demand picks up again. If it doesn’t then we are in trouble.

The same applies in China, except in this case Beijing is hoping that private demand from the US kick starts export led industrialisation again. If it doesn’t then China is in trouble. Likewise the property bubble in China has been stoking inflation. Beijing has moved to dampen the economy and global commodity prices have fallen in recent months as a result. Many analysts even go so far as to say that Resources Boom Mark II has now come to a close, well before 2050 it might be added.

The measures that Beijing has put in place since 2008 are temporary band aids. So long as China, and the rest of Asia, rely upon export led industrialisation then a stagnating US economy will prevent a long run resources boom in Australia. The debt crisis in the Euro zone does not help matters.

Should the US consumer continue to rely upon debt to fuel consumption, and the US financial system is not reformed to prevent further financial crises, then continued global economic instability will be difficult to avoid. This would prevent something akin to a multi decade long resources boom of the type commonly forecast to come about. We might add that US consumers now have little option but to deleverage. Cheap labour in China will dampen wages growth in America. There is something fundamentally amiss in the current makeup of the global economic order.

Australia would be truly decoupled from the US only if Asia proceeds to engage in regional integration, which is occurring to a limited extent, of the type gradually being implemented in Latin America and Beijing rejigs its economy towards domestic consumption. In the absence of these two changes Australia’s prospects will continue to be ultimately coupled to the economy of the United States.

The Rudd government’s economic strategy seems to be based on a complete misreading of the global economy and Australia’s role within it. Of course, this has no bearing on moral arguments for the resources tax which appear sound. When it comes to the poor “moral obligation” is accepted without demur. The rich insist, naturally enough given Adam Smith’s “vile maxim”, that they be exempt from mutual obligation.

Categories: Aus Economy, Globalisation

Why We Have to Save Kevin Rudd from Oblivion

I can’t stand Kevin Rudd. I have always believed that Rudd is exactly as Mark Latham described him in his diaries. Recent events have borne this out, and the Latham view is now widely shared in Australia although its provenance continues to be denied. When Rudd was flying sky high in the polls I had called him a “flaky” and so on. I had also characterised his standing in the polls as Labor’s “asset price bubble.”

The bubble, never based on substance or “the fundamentals”, has now well and truly burst just as the country prepares for a federal election. This is a disaster for the progressive side of Australian politics. Rudd needs to be saved from oblivion. Now is not the time for progressives and progressive commentators to sink the boot into Rudd. I say this as someone who, accurately, had characterised Robert Manne as an intellectual with a proclivity to kiss Rudd’s arse. So, at least I have some credibility on this issue.

Now is the time for progressives to call time out on putting the boot into Rudd.

This is because the only realistic alternative would be very bad for progressive politics in this country. Tony Abbott, and all those pushing his cart, are rabid extremists probably on the same wavelength as the right wing of the Republican Party in the US. If Rudd sinks into oblivion then it is clear that an Abbott led Liberal Party will come into office. The Abbottites promise to turn the clock back to rabid neoliberal labour market reforms, to cut public spending more than Labor, to dither on climate change, to pander to the mining lobby, to take the lead in Oruzgan province in Afghanistan and so on.

People of a progressive bent need to think of such matters as the federal election approaches. Despite Rudd’s cynical essay criticising neoliberalism his government has operated well within the dominant neoliberal consensus. But the level of commitment to neoliberal programs exhibited by Labor and the Liberal Party is not the same. The different levels of commitment largely flow on from institutional imperatives. The debate on the Resource Super Profits Tax is a case in point.

The debate on the RSPT largely focuses on the impost, real or imagined, that the tax will have on cashed up resource corporations. The Rudd Government largely structures the argument for the tax on, what are largely uncontroversial in other contexts, mutual obligation grounds. The resources of Australia belong to the people of Australia and the people ought to get a fairer share of the gains that those resources accrue. The debate simply assumes that the second, crucial part of the argument, is accurate.

However, the proceeds of the RSPT are meant to finance a cut in the corporate tax rate, to support changes to superannuation that are effusively welcomed by the financial services industry, still making “super profits” despite the GFC, and to fund infrastructure developments to aid corporate activities (including resource corporations).

The RSPT is not to be used to fund active labour market programmes to skill up the unskilled and the long term unemployed for what Ken Henry believes will be a coming skills shortage. That’s avoided because a tight labour market, absent skills migration, will lead to better wages for the Australian population. Ken Henry doesn’t want that, big business doesn’t want that and neither does Rudd Labor.

The Rudd policy is largely beneficial for the corporate sector in Australia as a whole. That is why opposition in the corporate media to the RSPT is not uniform. The Government’s backflip on the ETS might need to be seen, partly, in this context too. Backing up on the ETS probably was a preemptive sweetener for the resources sector. We should notice that resource corporations do not complain about the investment uncertainty that this decision on the ETS, that tends to their interests poses, poses for energy companies.

At the same time Rudd Labor has announced a tightening of the state’s “mutual obligation” provisions directed towards the long term unemployed. Unlike Clive Palmer and Twiggie Forrest whose rejection of mutual obligation is given wide coverage in the corporate media; this has been ignored in the orgy of commentary that focuses on the tender needs of the super rich. There will be no Rudd backflip on mutual obligation for social welfare recipients nor any high level consultations with their representatives, unlike for the billion dollar resource corporations.

In a previous essay, written after Labor’s decision on the parallel importing of books, I had argued that the rich will not tolerate the slightest deviation from Labor. The rich are greedy and thereby fickle. Despite their many, many millions those two fat shits, Palmer and Forrest, just want more and more. Labor is being disciplined into proper behaviour by the rich.

Although all this remains true, and more could be said about such matters, nonetheless Abbott would be much worse. With Abott all the distorting affects of the 2000s resource boom will repeat. This would follow if a similar boom should repeat, which is by no means a certainty as many commentators suppose. Under Abbott the vile maxim will continue. Under Adam Smith’s “vile maxim of the masters of mankind” the proceeds of any commodity prices boom are to be distributed inequitably, as it was when the Liberal Party was in office. Under Abbott resource corporations will win, but Australia will lose just like under Howard.

If progressive commentators are serious about taking into account the moral consequences of their actions then it follows that a unilateral ceasefire with Rudd and the ALP is now very much in order.

The issue here is not Rudd. I couldn’t care less about Rudd. The issue is the real people all around Australia who will suffer should Rudd lose office. Besides if Rudd were to be turfed now no group in Australia would be happier than the Murdoch press. The ALP should not allow the leadership of the party to be determined in the offices of Rupert Murdoch’s minions.

Categories: ALP

Neoliberalism and Critical Theory: Dissent Disarmed

My attention was directed to an article in the Higher Education Supplement of The Australian newspaper. The article focused on the prominence that postmodernism and the like have achieved at Australia’s universities. I only skimmed through the article but finding the following part attracted my attention, so I decided to read the whole thing.

The neo-liberal ascendancy had to undermine the structures of intellectual authority that resided within the established disciplines. To prevail it had to disarm the capacity for effective intellectual critique they threatened to offer.

The post-disciplinary, postmodernist insurgency from below was unleashed and empowered from above by the managerialists. It was directed against what was strangely constructed on both sides as a common enemy

I had submitted a comment on the topic. Now getting such comments published on the ‘net are mere formalities, so long as one maintains common courtesy. But such is not the case at Rupert Murdoch’s ideologically flagships. The comment that I made went someone like this.

It is entirely appropriate that the author should find a link between neoliberalism and the dominance of various assorted “critical theories” in the social sciences and humanities. In the normal course of events one would expect that the neoliberal project would have attracted great opposition on Australian campuses, especially concentrated in the social sciences and humanities. Instead the rise of “critical theory” acted as a monumental diversion. Instead of concentrating on the big issues of the day attention was increasingly attracted to junk, such as “the deconstruction of the text,” as the neoliberal project proceeded. It is commonly argued that “critical theory” and the like were and are subversive of such projects. However, if critical theorists truly subverted the neoliberal project then they wouldn’t be holding down 100,000 dollar jobs at Australia’s universities. Rather they would be out teaching at Sunshine TAFE or something.

We wouldn’t have faculty seminars with titles such as “sustainability post sustainability.” We wouldn’t be told that the world is moving towards a system of global governance “based on human reflexivity in its plural and singular form.” Self indulgent gibberish such as this would be verboten. That the ideas of critical theory thrived throughout the key years of neoliberal transformation demonstrates the service that critical theorists provided to power and privilege.

Perhaps someone should write a book or paper with the title; “Neoliberalism and Critical Theory: Dissent Disarmed.”

See there isn’t much wrong with that comment. But if I instead put up some quote from Derrida et al and talked a tad “of grammatology” then I bet I would have got a gig. You see the ideological censorship at The Australian proves my point does it not? Talk of pomo, good or bad, is OK. But neoliberalism is sacred.

Categories: Philosophy