Monday, June 4, 2012

What are Australians angry about?

In her recently published Quarterly Essay, ‘Great Expectations: Government, Entitlement and an Angry Nation’, Laura Tingle, political editor of the Financial Review, asserts that much of the culture and public discussion of Australians contains ‘some suspicion or assertion that we might be being ripped off, that someone else might be getting preferment’. I had two initial reactions. First, where is the evidence that Australians are more suspicious that they are being ripped off than are people in other countries with comparable living standards? Second, doesn’t Australia’s history of protectionism, crony capitalism and ongoing government support for anti-competitive union practices give us reason to be concerned that we might still be being ripped off?

However, Laura states her purpose as to explore ‘something wider’ than the reasons we have to be ‘underwhelmed by our politicians, by our institutions and by the quality of the services that government provides’. Her aim is to:
‘make the argument that as a nation, a polity, we have not sat down and worked out what exactly we expect “the government” – …  its administrative side, as well as the politicians of the day – to be and to do. We haven’t settled the idea of what we think we are “entitled” to get from government. The only things we seem to have been sure about over the years are that government has not met our great expectations that it will look after us, and that we are nonetheless entitled to be looked after’.

That reminded me of the message in ‘The Good Life and its Discontents’ by an American journalist, Robert Samuelson, published in the mid-1990s:
The Good Life and Its Discontents: The American Dream in the Age of Entitlement‘Responsibility poses choices, recognizes limits, and clarifies accountability. Entitlement denies choices, ignores limits, and muddles accountability. Properly construed, responsibility is a fundamental issue that all modern societies must answer in their own way. How much should people do for themselves and how much should government – that is, the people acting as a collective – do for them? What are the respective roles and competencies of individuals, families, social organizations, profit-making enterprises, and government? What answers best fit our traditions, values and common sense?

Unfortunately, I don’t think the United States has taught us a great deal over the last couple of decades about how to answer those questions. The US still seems to be in the middle of what Samuelson described as ‘an ugly accommodation to reality’. (People who still see the US as characterized by small government may find this difficult to understand. They need to reconsider whether the US is actually characterized by small government. Size of government in the US is now greater than Australia. It would probably be more accurate to characterize the US as a country with inefficient government, rather than a country with small government.)

Much of Laura Tingle’s essay is designed to show that a sense of entitlement has played a strong role in Australia since its inception as a penal colony. The scarcity of labour in the colony apparently gave convict workers a great deal more power than slave labour would be expected to have. They were paid for finishing the job, rather than on the basis of hours worked and were allowed to earn private income when not at their government labours. Education was provided for the children of convicts. Emancipists had legal rights that ordinary people did not have in England at that time.

Laura also shows that disrespect for politicians has been a characteristic of Australia since the middle of the 19th century when the franchise was extended to almost all adult males. She quotes John Hirst: ‘The people elected parliamentarians who could not look down on them and whom they did not have to look up to’.

The general picture that Laura presents of Australians tending to have an inherited sense of entitlement to be looked after by government is probably correct. Australia could certainly be viewed as an early starter in the ‘entitlement stakes’ – particularly welfare entitlements - and this may mean that more of us have a stronger sense of entitlement to middle class welfare than people in most other countries with comparable living standards.

Laura’s treatment of recent economic history suggests that if Australia is any better placed than any other countries in coming to terms with an entitlement culture this should be attributed to the efforts of the Hawke-Keating government i.e. the government in which Paul Keating was treasurer, rather than the later government in which he was prime minister.  Keating told Australians that they were living beyond their means and that reforms were needed to produce better outcomes for their kids and to provide economic security in the longer term.

Rather than painting a picture of the entire period of the Hawke-Keating and Howard-Costello governments as a reform era, Laura reminds us that the entitlement culture began to return while Keating was prime minister and was fuelled by the expansion of government spending under Howard and Costello. It was appropriate to be reminded that the Howard-Costello government was a big spending government - and only seems fiscally responsible in retrospect because of the strength of revenue growth associated with the mining boom at that time and the subsequent behaviour of the Rudd and Gillard governments.
So what does Laura have to say about Kevin Rudd:
‘Rudd was “Kevin from Queensland”, the bureaucratic nerd who was “here to help”. There was no more discussion about the withdrawal of the state. Government was not just here to give you hand-outs but, once again, to look after you properly. Rudd made public servants fashionable, even trendy. He spoke the incomprehensible language of bureaucracy, and for a time people found that engaging and endearing. Here was what we needed, someone who actually understood the system and could get it working for us’.

As Laura says, Kevin Rudd raised voters’ expectations to a risky degree. It wasn’t all that clear when he was elected in 2007, however, that this was happening. Some of his policies were certainly pie in the sky. It was stupid to propose a carbon trading scheme that was not conditional on action by other countries. The grocery watch and fuel watch schemes were obvious gimmicks. But there was some reason for hope that his ambitious proposals to sort out some of the problems associated with overlap of federal-state responsibilities might have worked. The main problem seemed to be that he turned out to be somewhat lacking in the management skills required of a prime minister.

Some people are angry that Rudd disappointed them. More seem to be angry that he was deposed by his party and that his successor seems incapable of keeping her own promises, let alone leading a government that is capable of living up to the inflated expectations created by Rudd. Some see Julia Gillard as acting like a puppet of the unions and the greens, while pretending to be an advocate of opportunity and responsibility. Laura suggests that there are other things Australians are angry about, including minority government and the uncertainty of the economic and political outlook. She writes:
‘It is wrong to see the anger of the last few years as a “one-off”, which might go away at the next election. The things we are angry about betray the changes that have been taking place over recent decades. As we have seen, politicians no longer control interest rates, the exchange rate, or wages … [etc.]. Voters are confused about what politicians can do for them in such a world. While the levers available to government to protect us have been removed, the expectation that we will still be protected has been fed by the failure of our politicians to explain their new impotence’.

I think Laura is about half right. People would still feel uncertain about the economic situation in Europe and the implications this might have for China and the Australian economy even if politicians still had control of all those ‘levers’. The security that government control of the ‘levers’ appeared to offer was just a mirage.  There are no levers that can enable governments to defy economic reality. And I don’t think uncertainty about the economic situation necessarily translates to anger with government. Good political leaders can win respect for government in uncertain times by taking the public into their confidence.

Laura is right about the need for political leaders to come clean and explain what governments are and are not capable of doing. It is a good sign that Joe Hockey, the shadow treasurer, has recently been making efforts to explain that we cannot have greater government services and more government involvement in our lives with significantly lower taxation. The big challenge posed by the entitlement culture that has developed in all high income countries, it seems to me, is in persuading middle-income earners that they should look after themselves rather than expect governments to accept responsibility for their happiness.


Lorraine said...

1. What you call entitlement is what I call expectations, particularly since this is something you identify as a disease peculiar to high-income countries. I don't like the word entitlement because it sounds like an insult. In my country relabeling safety net programs as "entitlement programs" is clearly a propaganda move, and I'm making a studied effort at not jumping on that particular bandwagon. Austerity is simply code for lowered expectations, and not just expectations for "handouts" (as right-wingers derisively call them) from government. Civil service layoffs mean more competition over private sector employment. Fewer people on assistance (all other things being equal) means even fewer consumer dollars to market to. For a while it seemed like maybe lowered expectations in the area of economic security were to be balanced out by higher expectations in overall prosperity; the old risk vs. reward canard. I'm starting to lose that belief. I don't think I'm the only one.

2. If an angry public opinion climate corresponds with an emerging consensus that politicians are unable to control the levers of the economy, then I suggest what they are really angry at is the economy itself. The invisible hand is what's holding their heads under water.

3. Positing a dichotomy between entitlement and responsibility is really insulting. The opposite of entitlement is humility. The opposite of responsibility is, well, irresponsibility.

Winton Bates said...

Hi Lorraine
1. If entitlement has become an insult we are in strange territory indeed. When those on middle and upper incomes are asked to lower their expectations of what governments can do for them, there seem to be noisy complaints that entitlements are being withdrawn. The complaints are along the lines: 'We paid our taxes, so we are entitled to receive benefits in return'. The problem is that in many countries the taxes are required to pay the interest bill on debts incurred to meet inflated expectations.

2.There isn't much point in being angry about the invisible hand, or angry about the irresponsibility of past governments in Greece or Spain etc. Perhaps there is some point in being angry about the irresponsibility of the banks that lent them too much money, but we need to be careful that our anger with the banks doesn't lead us to shooting ourselves in the foot.

3. I like the way Robert Samuelson makes the point that we need to consider who should be responsible for what. It seems to me that people who are capable of looking after themselves are being irresponsible when they expect governments to accept responsibility for all aspects of their well-being.

Winton Bates said...

Sheila N has left a new comment on your post "What are Australians angry about?":

Hi Winton,

Interesting views on Tingle's essay published here.

Although Tingle mentions that the French Revolution took place almost simultaneously with the establishment of the first settlement in Australia, her knowledge of its impact seems negligible. She talks vaguely of human rights and accuses Australia of not being interested or involved in these because, she implies, Australian rights came almost seamlessly bestowed by the bureaucracy. She gives no examples of the Australian rights to which she alludes (unless she means the ability of freed convicts to buy land and to be paid for work), but she also seems to be unaware that these rights and many more are enshrined at law in the bulk of European polities through Napoleon's civil code and its imitations, all of which followed on from the first part of the French Revolution. Various rulers during the long period of revolution tried to convince the French people that they were pretentious and suffering from 'entitlement' and wars were fought by Britain with other royal houses and the church to stop them getting democracy, but today the French have real rights and so no upstart can accuse them of empty attitude or 'entitlement'.

Australia has no such citizens' rights enshrined at law. Perhaps once, when we had state banks, state assets (like Telecom) and state housing and government unemployment services, and universal pension rights, we could speak of rights provided by institutions, however. As such institutions have been privatised and deregulated by Hawke, Keating and Howard, we have of course lost those implied and institutionalised rights, just as the governments have lost the power to provide them. What is left is the right to vote (for governments with no means to power) and the right to rent land for housing from the banks via extortionate mortgages (but not the ability to own it outright because population growth has inflated its cost).

I think there is some point in being angry with the banks and the politicians who have dragged us into debt. Iceland is refusing to pay its debts and pursuing 200 bankers with criminal charges over the GFC. Every country should consider defaulting on debts to financial institutions that fed the housing bubbles.

I could go on in some detail, but I have actually written a review of Tingle's ambitious piece which you can read and comment on here:

Winton Bates said...

Thanks Sheila.
Your comment got lost in the system so I had to retrieve it.

In my view the French people have a huge 'entitlement' problem - they have grossly inflated expectations of what governments are capable of doing. Government spending as a percentage of GDP in France is now higher than in Sweden - that means very high! And while the Swedes seem to be trying to contain government spending, France isn't.