RESURRECTING KEYNESIAN ECONOMICS

by Eric D. Butler
Just as Victorian Premier Kennett has in a few short weeks achieved the impossible, by elevating the controversial Marxist John Halfpenny to a hero status, the type of economic policies favoured by the Kennett Government, paralleled by those of Dr. John Hewson's Federal Opposition, have produced a resurgence internationally of support for Keynesian economics.

"Free market" economics have failed disastrously in the U.S.A., which is why Mr. Bill Clinton is now the new President. It is open to debate whether President Reagan was responsible for the collapse of the Soviet Empire, or whether it was an irreversibly internal rot which Gorbachev tried to manipulate, but there can be no argument that the Reagan administration resorted to massive deficit financing, as did Bush. Unable to finance the Gulf War on its own, the U.S.A. found itself in the position where it had to ask other nations, including Japan, to make substantial contributions.
It is incontrovertible that "free market" economics in the U.S.A., where the power of the unions is relatively weak, have failed to avert the disastrous economic conditions, which swept Clinton to office.

Much has been made of improved industrial relations in New Zealand, but there is no evidence of an end to the depressed state of the economy. No longer is it possible for the free marketeers to point to the United Kingdom, where Margaret Thatcher went in for de-regulation and privatisation in a big way, with the power of the unions dramatically reduced. John Major is presiding over a nation in which there is no sign of any relief from worsening recession conditions.

The Japanese "miracle" has exploded and desperate efforts are being made to stimulate the economy with Keynesian-type financial deficit spending.

Originally Treasurer Paul Keating was a devotee of de-regulation and "balanced budgets", along, of course, with a progressive lowering of all forms of protection so that Australia could become "internationally competitive". Now he is also supporting Keynes and letting Australian manufacturers and others know that he is softening his attitude on protection. Keating has heeded the message of the Wills by-election where pro-protection Independent Phil Cleary swamped both Labor and the Liberals. Dr. John Hewson does not appear to have heeded what is taking place, nor does Premier Jeff Kennett, who supports Federal Opposition policy.

No objective observer disagrees about the necessity for industrial reforms. But attempted imposition of such reforms can have no effect whatever on the basic finance economic problem now driving every industrialised nation in the same direction of attempting to solve internal problems by organising into trade blocs and engaging in trade wars. The growing use of Keynesian deficit financing, adding to the current astronomical debt burdens, can only worsen an explosive international situation. Unfortunately, a resurrected John Halfpenny in Victoria will attempt to take every advantage of a situation, which Jeff Kennett should never allowed to have arisen.

AN INSPIRING ATITTUDE

BRIEF COMMENTS

While we have no doubt that Prime Minister Paul Keating is concerned about his teenage children, we suspect that his sudden interest in television violence has more to do with his bid to retain political power. Mr. Keating and his advisers know that the women's vote could be crucial at the next elections. The polls reveal that if Paul Keating could obtain the same level of electoral support from women as he does from men, he already has the next election sewn up".
Dr. John Hewson and his advisers are also keenly aware of the woman factor, with the result that the Opposition leader lost no time in stating that he, like the Prime Minister, was also concerned about the content of many television programmes.

While we are also concerned about much of what appears on television, we would like to point out to parents that every television set bought has a switch for turning it on and off. Parents concerned about what their children might be watching have the power to use the switch! Violence and pornography will disappear from the television screen when enough viewers simply switch off and also let the sponsors of the offending programmes know.

W.A. INC. AND THE ABUSE OF POLITICAL POWER

The second part of the Report of the Western Australian Royal Commission into corruption in politics recommends significant changes to the State Government. We have yet to see a deeper analysis of the Report, but according to press reports, the role of the upper house, the Legislative Council, is to be reviewed. A special Commission will also be suggested to investigate corrupt and improper political conduct. This Report suggests that the W.A. Legislative Council become a true house of review, saying:
"If the council is to be constituted as a true house of review, elected on the basis of proportional representation which allows for significant minority interest representation, it would be quite inappropriate that it retain the power to block supply. In such circumstances, that power should be denied in the Constitution. We could not disagree more. The very fact that the Council has the power to block supply indicates that it is already a house of review.

The Constitution of W.A. is older than the Australian Constitution, and included the implied power to block supply for very good reasons, as was demonstrated in the Commonwealth Parliament in 1975, to Mr. Whitlam's rage. And the council already represents the minority interests of rural W.A. by weighting the value of the rural vote in much the same way as the "gerrymandered" Queensland House of Assembly once did.

THE CORRUPTION PROBLEM

W.A. and Queensland are not the only States to suffer from political or even bureaucratic corruption. If properly investigated, the corruption in N.S.W., and probably Victoria, would equal anything revealed by the W.A. Royal Commission. The Commission's suggestion that Members of Legislative Council not be eligible to serve in the Executive is a good one. Political corruption should be a prime target of the Council, which could be better staffed, and have increased powers to deal with it.

Far more dangerous than corruption is the abuse of political power. The increasing dominance of the Executive (Cabinet) over Parliament needs urgent attention. The Parliament, the elected body, should be pre-eminent, but the growth of the rigid control of the party has corrupted the whole process. Only a few weeks ago, Sir Max Bingham, the retiring chairman of Queensland's Criminal Justice Commission, called for an upper house in Queensland to restrain what he called "naked executive power". Queensland's upper house was abolished in 1922 by a Labor Government, who stacked it with Labor appointees, who voted to destroy it. The price? Their salaries for life.

INITIATIVE AND REFERENDA

Perhaps the best remedy for the abuse of power by the Executive is to both strengthen the upper house of review and introduce a more direct veto from the electorate. The Swiss system of the voters veto, coupled with the opportunity for the voters to initiate legislation, could force a dramatic change in attitude of politicians - and of electors.

THE TELEVISION DEBATE

REDUCE IMPORTS

from Port Lincoln Times (S.A.), October 20th
Enough is enough. "My frustration at our political leaders has reached a breaking point. "I listen every night on the news to Keating and Hewson arguing over their policies to bring about a better commercial and industrial Australia. "Apart from childish personal abuse they throw at each other, neither of them have the answers. "The basic aim is to reduce imports and increase exports yet these buffoons cannot see the answer. "The answer is to set up a Commission of Enquiry and look into imports that need not be imported because they can be made locally; to stop overseas manufacturers half completing a product then sending it to Australia, completing the item and putting on a 'made in Australia' label; to stop items being made overseas and stamped made in Australia; and to increase tariffs on imported goods.

"As an example, if one looks at Woolworths, G.J. Coles, K-Mart, Target, Myers and other national retailers it can be noted that up to 80% of their stock is imported from a host of countries too numerous to mention. "Many of these imports are competing with our local suppliers. "However, if these companies would place their orders with the Australian companies it would mean that our industries would benefit from huge production runs. "This would have the effect of creating employment and reducing operating costs because volume would be increased. "We would therefore be competitive with imports.

"One has only got to look at the import register to see how stupid our ministers can be, for example, eucalyptus oil from Swaziland, fish from 17 countries, tuna from Taiwan, shirts from India, cups and saucers from France - cheap brands, clothing and footwear from everywhere. "If this country is to make a recovery and gain a growth of 4%-5% not l.5%, then the above is what we have to do. "We can not go on fumbling around making stupid industry statements as Button just did. "Our politicians are gambling with our livelihood and our future. "Talk is achieving very little. I appreciate that a balance of trade must be maintained with our trading partners, but not to go overboard; and let's not let those trading partners use us as a cheap dumping ground for inferior goods either.

"Again I reiterate that local industry be given more orders. "It is so obvious what the benefits will be. "Reduced unemployment, less social problems and cost, less crime, and a country which gets back on the move. "A bit of discipline is required in democracy. "Our multi-national companies are making a fortune - many owned by overseas shareholders and money pours out of our country. "This must stop." (P. Freedendal, Management Consultant, Port Lincoln, S.A.)