What have laissez-faire economists and user-pays ideologues done for Australia? What have vested interests from some big businesses and some big unions achieved?
Those economists who live in textbooks or espouse philosophies without any thought or any respect for reality are a danger to us all.
In Australia for too long, for example, our competition policy has been driven by laissez-faire, hands-off, eyes-closed, don’t-think economists. Economic rationalists (who I support) are different. A true rationalist will consult textbooks, review theories, hold meetings, study statistics, find facts and bring others along to any decision.
Economic rationalism is obviously not about protectionism; it is about management of an economy and management of the effects of change as our world becomes more and more global. Economic rationalists have compassion whereas economic ideologues care nought about the effect on people of any policy decision.
“The market will decide” is their great catch-cry, indeed the only catch cry of the laissez-faire crew. Rationalists may also use that phrase but with depth of policy and deep understanding of effects and how to manage those effects. The laissez-faire economists will aggressively and belligerently yell out “the market will decide” and then they close their eyes, go to sleep and dream of a world with one business, one government and one economist – their nirvana. When and if they ever wake up they expect to see a perfect world but they never do – poor things – and then they blame everyone but themselves.
So what’s are some examples of economic rationalism managed well?
The management of industry restructuring led by John Button during the Hawke/Keating years and the introduction of the goods and services tax by John Howard and Peter Costello. Both decisions were monumental and changed the Australian economy and our budgetary processes forever.
They were not pain free. In the first instance businesses closed and people lost their jobs, in the second instance the change affected all businesses and could have been chaotic. Both processes needed deep and constant communications for success and this was provided. The process also included the involvement of affected parties in developing solutions and allocating of funds to assist in transition. That’s how you become a practising economic rationalist – by having a few theories of your own but also understanding the impact of those theories and how to manage change.
After the election we know that there will be a battle between economic rationalists and proponents of laissez-faire economics. Please let common sense prevail.
Hiding behind the laissez-faire economists are vested interests. In this small but dominant group are the biggest businesses and biggest unions in Australia. These organisations manipulate policy for their own good. They support the laissez-faire economists because that means they can get away with a lot more than if they were under scrutiny and had to answer questions about their behaviour. Our floundering productivity, our two-tiered workplace relations system and indeed the gap between the wealthy and the not-wealthy has grown due to the success of laissez-faire policies coming from both sides of politics.
After the election, whoever wins, please confront this issue. We in small business have had some good wins in the last few years as the laissez-faire people were ignored. The biggest unions and the biggest businesses will do all they can to restore their economic puppets to a position of influence and remove the focus on small business people and force them from the market place. Then big business can dominate and big unions will have more members.
Let’s see if the future is laissez-faire economics that leads nowhere except to disgruntled voters. Or can we continue to embrace economic rationalism where transparency, engagement and common sense reigns?
Peter Strong is the chief executive of the Council of Small Business of Australia.