National Affairs: Economic conversion for Democrats' leader?by Colin TeeseNews Weekly
, November 4, 2000
It would be tempting to rejoice in what appears to be the sudden conversion of the Leader of the Democrats, Meg Lees, to the path of righteousness and away from economic rationalism. But the hardnosed will be more cautious.
Some will be tempted to believe that her conversion is motivated more by politics than enlightenment. Is she, one might ask, with an eye to the next election, trying to ride a rising tide of objection to an idea (economic rationalism) ahead of any change of direction of the main parties. Doing so could settle the Democrats on morally higher ground, while, at the same time, differentiating them from the main parties. The big question is, however, whether the electorate will take Meg Lees' conversion seriously.
Certainly, her party needs a new kick-start. Having, since the last election, taken up a position of de facto member of the Coalition, the Democrats are in desperate need of a new, divergent, identity - particularly in the country. To an outsider at least, the Greens seem to have taken the ground which the Democrats once held.
Another factor calling into question the Democrats' commitment to the new conversion is the fact that Meg Lees, in particular, and ultimately the party in general, supported the Coalition on a GST, even though much of the vote the party attracted at the last election was on the assumption that Democrats would join Labor and oppose that measure.
Whether voter disenchantment has dissipated sufficiently to give the party another chance is a matter for conjecture. At the very least they will want to see more of the colour of the Democrats' money. Does the party, and Meg Lees, know that a consumption tax is a central pillar of the economic rationalist position? Its purpose is not, as the Democrats were apparently persuaded, to improve the tax structure, but to support globalisation by shifting the tax burden from big business to small business and to consumers.
To this extent at least, the Democrats' leader is, to put it mildly, compromised, and perhaps confused on economics. She has come late to the idea that we have a current account deficit, and we are entitled to ask why.
Concern over the current account has a long and distinguished history going back to Bob Santamaria's time. He was rightly lamenting our appetite for foreign debt, when current orthodoxy was consigning him, and his opinion, to the dust-bin of economic Ludditism.
The question that the Democrats must answer, and convincingly, is this: fine, so you now oppose economic rationalism - what are you going to do about it?
Let's see your proposals for reversing what has been done and how you intend to give effect to them. It's not enough to lamely proclaim that we have done everything the international markets wanted and it hasn't worked, so now we must try a different tack.
More important still: how durable is the party's conversion? At this stage we must take it on trust. The Democrats leader is not well informed on the true impact of economic rationalism - she has been notably silent on its impact on unemployment, on manufacturing industry, and on country people.
The states of both the current account and the dollar, which appear to be the basis of Meg Lees' conversion, are merely the more obvious manifestations of these wider considerations.
Those who oppose the application of neo-classical economic policy prescriptions (i.e., economic rationalism) are not opposed to the idea of conversions. All new supporters are welcomed, but only if they fully understand the implications of what they are supporting, and where it might lead them.
The Democrats may turn out to be effective supporters of those in favour of a turn-around in economic policy, but they are not there yet.