Mannkal Economic Education Foundation

Mannerisms

Kevynomics Misses the Mark

Ron Manners

2 November 2009

Check out the author's latest book at www.HeroicMisadventures.com

Recently, Prime Minister Kevin Rudd claimed that the Howard Government was “indolent” when it came to economic reform. There is a kernel of truth in this. There is always more that governments can do on economic reform, and the Howard Government was no exception.

For classical liberals there were many disappointments during the Howard years. The size of the public service was reduced but then grew again. Government spending was cut but then came back with a vengeance. Taxes were cut but they could have been cut by more. More government-owned enterprises could have been privatised, more industries could have been deregulated, and workplace relations reform could have been better implemented.

But there were many triumphs as well. The problem with Mr Rudd’s critique is that ignores a minor inconvenient truth: every single one of the Howard government’s major reform efforts were opposed by the Labor Opposition.

Waterfront reform, the privatisation of Telstra, tax reform and tax cuts, workplace relations reform, spending cuts, independence of the Reserve Bank…need I go on?

Show me a major economic reform that Howard pushed through and likely would have tried to do more on had he had the chance, and I’ll show you a Labor Opposition that opportunistically opposed that reform for base political purposes, rather than doing what was right and what was in the national interest.

The key lesson of the 1980s and 1990s is that for economic reform to be carried out smoothly and successfully, it must largely be a bipartisan project. But Mr Rudd, through his policy actions and now through his words, seems to have rejected this key lesson.

Indeed, the Prime Minister’s bizarre anti-market rhetoric shows that he doesn’t understand the lessons of the last 30 years, and why economic reform has been so successful.

He does not seem to understand how we got here and why we seem to have largely weathered the latest economic storm.

In short, Mr Rudd does not seem to understand what drives our prosperity: individual economic freedom and the enterprise and hard work of millions of Australians – not politicians and government bureaucrats.
When it comes to economic reform, we need leaders who understand our past and who will try to follow the bipartisan, reformist tradition of Hawke, Keating and Howard, taking the best bits from each along the way and implementing policies that maximise individual freedom under the law.

Capturing the bipartisan common ground on economic reform and developing pro-market, pro-freedom policies will not only enhance our prosperity; it is also politically savvy if done right.

In attacking the Howard government so clumsily, Mr Rudd was obviously trying to provoke a reaction. But in doing so he has shown a lack of understanding of economics, and has made a rare (for him) political mistake. He may now have given others the opportunity to seize the bipartisan middle ground on economic reform.

2 Responses to “Kevynomics Misses the Mark”

  1. newson says:

    “independence” of the reserve bank is a farce. appointees to the board are selected by the federal treasurer. anyway, the institutionalization of fractional reserve banking is inimical to freedom and property rights, period. not for nothing was a central bank championed by lenin, and freedom-lovers should be wary of being on the same side of any argument as that creep. after the failure of the wool board, the wheat board, and other failures, can’t we start talking about why money has to be centrally-planned?

    lipstick won’t make the pig beautiful, and approving cosmetic changes to an essentially immoral institution like the rba risk being confused as endorsement.

  2. mark t says:

    newson: you are right on….unfortunately most libeterians in Australia seem to think the RBA encourages financial development without scant regard to the destruction of our aussie currency.