Australian PM stirs up debate on neoliberal economics
Updated
As world leaders continue to struggle with the spiralling economic disaster, part of Australia's debate is being shaped by seven-thousand Prime Ministerial words.
The Australian leader Kevin Rudd published an essay of that length in February on what's gone wrong with the global economy and what needs to change.
And while not dismissing the market out of hand, he's stirred a deep pool of entrenched opinion about how free the market should be. And he's opened an avenue to again discuss the role of government.
Presenter: Linda Mottram
Speakers: Malcolm Turnbull, leader of the Australian Opposition; Greg Barnes, former Liberal party adviser, republican activist and author; Steven Keen, Associate Professor, School of Economics and Finance, University of Western Sydney; David McKnight, Associate Professor, Journalism and Media Research, University of New South Wales
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MOTTRAM: One essay deserves another it seems, Kevin Rudd published his in February, in recent days the leader of Australia's main opposition Liberal Party Malcolm Turnbull published some thoughts too. Mr Rudd had blamed uncontrolled neo-liberalism for the world's current economic woes, social democrats must now save the system from itself he argued, not through an all providing state but with a balanced role for government in the marketplace. Mr Rudd's opponent Malcolm Turnbull saw hypocrisy. Mr Turnbull, himself a very wealthy man pointed to the wealth of Mr Rudd and his wife Therese Rein who runs a job placement service made possible by earlier government deregulation.
TURNBULL: I do criticise Kevin Rudd when he stands up and bites the hand that fed him because it was the policies of deregulation and privatisation and outsourcing of government services under the Howard government and to some extent under Paul Keating that enabled him and his wife to build a very considerable fortune and make him the richest man ever to sit in the Prime Minister's chair. I make no criticism of him of that. My point is his hypocrisy, not his wealth.
MOTTRAM: But does any of this point a way out of the downward spiral of economic gloom? Mr Rudd's essay received few accolades in the popular press in Australia where conservative economic views hold sway. Among the recent replies was one from former Liberal party advisor, Republican activist and author Greg Barnes who says Mr Rudd's is a dangerous knee-jerk reaction.
BARNES: What he seeks to do is to return to the days of the 1960s and 70s where we had highly interventionist governments which led to a sense of sclerosis in the economy, poor service to consumers and exaggerating the gap between rich and poor and in particular in global trade which meant high protectionism and therefore high cost of goods to consumers.
MOTTRAM: And Greg Barnes says the Rudd government is putting extreme interventionism into action by propping up the ailing and ever pleading Australian car industry and the banks.
BARNES: We've had in Australia 500 million dollars in the past two months Kevin Rudd has given the banks in guaranteeing their bonds. Now that's fantastic if you're a shareholder of those banks, but if you're a taxpayer you're on the hook for the tune of 500 million dollars, and that's the big concern that there are long term implications for knee-jerk reactive politics.
MOTTRAM: Mr Barnes describes the essay as unoriginal and a grab-bag of ideas that have only become fashionable since the global meltdown. He also says critically that it's a reflection of Mr Rudd's view of himself as a philosopher guru. Others point to intellectual weakness in Mr Rudd's essay, for example his definition of neo-liberalism. Steven Keen is a self-described sceptic of accepted economic wisdom, and Associate Professor in the School of Economics and Finance at the University of Western Sydney.
KEEN: If you look at the initial side of it it's really saying that neo-liberalism has failed but what it describes as neo-liberalism ends up being everything the Liberal Party did and nothing the ALP did, and that to me is its failing.
MOTTRAM: Because governments of both political stripes in Australia have followed neo-Liberal policies of deregulation and privatisation. Professor Keen says the Rudd prescription is false hope held out not just by Kevin Rudd.
KEEN: It's the same thing coming out of Gordon Brown in the UK and to some extent Obama in the States.
MOTTRAM: Steven Keen also says Mr Rudd's essay was written to signal an about-face by a Prime Minister who had promised a government more economically conservative than the conservatives but who was then like the rest of the world hit by a calamity. But David McKnight, Associate Professor in Journalism and Media Research at the University of New South Wales says Kevin Rudd has been signalling his concerns about economic governance for some time.
MCKNIGHT: I went back and checked his first speech in parliament and in that speech in fact he warns exactly about the deregulation of banks in the finance system.
MOTTRAM: David McKnight dismisses claims the essay lacks intellectual rigour and says the point is it's still being talked about.
MCKNIGHT: It's not normal that a Prime Minister writes a seven-thousand word essay on if you like an intellectual or ideological topic and I thought it would be dismissed and it was, people tried to dismiss it but the debate around that statement has gone on and on and on and it has really, I mean you say it has started to set an intellectual agenda.
MOTTRAM: And it's a divisive one going to the core of beliefs about running a modern economy and government.
