Oznomics

If publisher Random House’s poorly-maintained website is a guide, Andrew Charlton‘s book Oznomics: Inside the myth of Australia’s economic superheroes, was going to be more humorously titled Does My Boom Look Big In This?: The truth behind Oznomics. But with the precedent of the best-selling Freakonomics and the local Gittinomics Random House must have thought another nomics neologism was more likely to sell books.

Oznomics is a textbook-polemic hybrid. It’s part of a welcome trend of books trying to simplify and popularise economics, taking us through some fairly orthodox micro and macro-economic ideas in the Australian context. But it mixes this with more partisan goals and and a more aggressive tone than the other pop economics books of the last few years.

So along with explanations of why protectionism is bad, we get the protectionists continually referred to as ‘sandbaggers’, because when the ‘tidal wave’ of competition arrives, their first instinct is to ‘stack sandbags on the beach to protect their territory’. The metaphor doesn’t really work as it relies too much on us remembering his original tidal wave metaphor (and how often do Australians sandbag beaches?), and ends up looking like a shot that is a cheap as the Chinese goods that the protectionists are trying to keep out. I’m as against protectionism as Charlton, but the insult was irritating me, and I expect it would be more off-putting for others less used to free trade ideas than I am. People need to be taken gently through counter-intuitive ideas.

And anyone who has ever dreamt of voting Liberal – and there are plenty of protectionists among that group who need to hear Charlton’s message – will quickly be at least bored if not annoyed with his constant sniping at the Howard government. The sub-title of the book explains its main political purpose, which is to argue that Howard and Costello can claim only modest credit for Australia’s long period of prosperity.

Charlton is right that Hawke and Keating did much of the hard microeconomic work that laid the foundation for our current prosperity, but this is hardly a novel or controversial claim (the story is well told by John Edwards). Even Howard pretty much agrees:

this [reversing economic decline] has been the work of both sides of politics in government. Unfortunately, it hasn’t been the work of both sides of politics in opposition. Looking back, broad consensus surrounded the need for five great structural reforms to give Australia a shot at prosperity in the 21st Century. They were financial deregulation, tariff reform, privatisation, tax reform and workplace relations reform. And I’ve always paid credit to the former Labor government for its reforms in the area of financial deregulation and tariffs.

The higher-level political issue has been less what Hawke and Keating did than what their successors might (or might not) do, and this is where Howard and Charlton part company:

where the Coalition supported all of the big reforms undertaken by the Hawke and Keating government’s, the Labor Party, regrettably in opposition, has fought every major reform we have taken to strengthen our economy, they fought getting the budget back into balance, they fought waterfront reform, they fought tax reform, they fought workplace relations reform, they fought the privatisation of business agencies, even though they had supported a similar policy in relation to both Qantas and the Commonwealth Bank when they were in government.

On what Rudd-led Labor might do Charlton goes quiet – perhaps because when he was finishing off his book the newly elected Rudd team had very few policies (Rudd is only mentioned in passing, on IR). But you’d have to say that the last week hasn’t been overly encouraging. Today Wayne Swan is talking about delaying tariff cuts to the car industry. And during the week we’ve populist campaigns on ‘mortgage stress’ and grocery prices. It’s all a long, long way from Keating’s careful explanations of why hard decisions are necessary.

For as long as the public is still gullible enough to believe the implicit economic ideology behind this week’s politicking we still need pop economics books. In that respect, I like half the idea behind Oznomics more than I like the book it turned into.

8 thoughts on “Oznomics

  1. Charlton also has a piece in today’s SMH. He argues that the idea that governments can “manage” the economy is a myth.

    I agree, but would add an important caveat: governments *can* mismanage the economy. It takes a bit of skill and political discipline not to stuff things up and implement bad policies.

    Like

  2. The Howard government deserves all the sniping it gets on this topic. How often do we hear some Howard booster breathlessly congratulate Howard and Costello on how good they are at “managing Australia’s $1 trillion economy”, as if the economy is one big company and they are the CEO and CFO.

    The economy is “managed” by the millions of people who buy and sell what it produces. What the government does is pretty much incidental, especially during the good times.

    Like

  3. This car industry stuff is unbearable. Ford’s decision to close its engine factory has very little to do with price-competition (something that increasing tariffs would presumabley address). The primary cause of the plant closure is a poorly selected mix of products on behalf of Ford – they didn’t identify the trend towards smaller cars with smaller engines. Government assistance and protection will do nothing to stop private companies making bad decisions – if anything, it makes it worse as companies become complacent and confident that if they do make bad decisions, they’ll be bailed out.

    That says nothing about the damage done to the wider economy by propping up an ailing industry. Given most of the workers at the Geelong plant are semi-skilled machinists, they could very easily retrain and seek employment in related fields with serious skills shortages and do very well for themselves. Government support (like the much-touted Federal $7.3 billion Automotive Competitiveness Scheme) just delays the inevitable.

    Like

  4. The economy is “managed” by the millions of people who buy and sell what it produces. What the government does is pretty much incidental, especially during the good times.

    True. But bad government policy wrecks economies. See the Whitlam venture for the perfect case study on how not to govern.

    —————

    Agree James. 100%

    Only thing is Kim Carr would even do more damage.
    The current crop do run an Industry policy of sorts but pretend they don’t.

    The other side are openly for large scale industry policy. Watch the rent seekers get a taste of it soon enough.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s