This comic is our attempt at depicting a “what-if” scenario. Robert didn’t believe me when I first told him that Tony Abbott’s new plan is to buy up all the fishing boats in Indonesia so that none of them can be used for people smuggling. The quotes in that article pretty much sum it up: the immigration minister points out that Indonesia is an archipelago (of over 17,000 islands) whose primary industry is fishing, while Tony Abbott’s response is that the plan is “common sense”. Apparently the going price for an Indonesian fishing boat is between $1-5k, which is not an attractive proposition if, you know, you need it for your entire life’s income. Also, people smugglers can earn between $5-8k per person smuggled, so I figure they’re even less likely to trade in their boats. Do the Coalition know all these figures? Of course they do, they know them in more detail than I do. But what people need to realize is that it’s not about effecting real change: it’s about saying something simple that sounds good if you don’t think about it too hard, in order to get elected.
Hold onto your seats, because this newspost is about to entwine itself around asylum seekers, economics, and election spin all at once. They’re all related, but it might be a bit of a bumpy ride getting there.
So given the exorbitant spending on Indonesian boats, how is Tony going to deliver a surplus? Well, he’ll start by treating human beings worse, for a start (this also appeals to his prerequisite ‘tough guy’ image). He’s also promising slower internet (at a higher long-term cost), and dodging around which other areas will be cut until the last possible second, when most voters will have probably made up their minds and be unlikely to change them anyway.
So why all this talk of ensuring a surplus anyway? Running a deficit and delaying immediate repayment isn’t an inherently bad thing when put in context of the economic climate, but that sadly doesn’t make a nice electable soundbite. The Economist has said that a continued Labor government will be better for the economy, and their opinion is nothing to sneer at (and incidentally, I enjoy their comment that “the main mark against Labor’s policy card is that it has shifted a long way towards Mr Abbott’s position on asylum-seekers”).
So why isn’t this kind of criticism dealing larger blows to the Liberals’ campaign?
The problem is, they get away with this kind of thing because they are safe in the knowledge that the proverbial man in the equally proverbial street doesn’t know a great deal about economics. I’m just talking general philosophies here, not even formulas. It’s easy to perpetuate the concept that “having lots of money” is better than “spending lots of money” in the same way that “having a fast car” is better than “having a slow car”; at face value it seems intuitive. But there are all sorts of reasons you might want a slower car. Maybe you need a tractor instead of a Ferrari. You’ve gotta ask, what do I actually want this car for? To bring it back to economics, it’s the same with surpluses and deficits. Wanting the budget in surplus sure sounds good for the economy, but it’s actually better to maintain momentum for the time being in our current economic climate. To mix my analogies, getting a surplus for a surplus’ sake is like buying a designer label – you’re paying for the label, not the usefulness of the garment. It’s unfortunate that the “surplus” designer label is being paid for at the expense of the public pocket. I don’t care about labels. I just want my economy to fit comfortably and not shrink in the tumble-dryer of the international market.
I think the main issue with this flawed intuition a lot of people seem to have with economics comes from comparing a country’s budget to an individual’s budget. It’s the same reason quantum mechanics is initially confusing to people; you can’t compare it usefully to things that happen in your everyday experiences. It’s a different set of rules for an entirely different set of circumstances. If you’re in debt, saving money from your income and paying it off is obviously a good move. So it’s easy to draw the comparison that if your country is in debt, saving money and paying it off is a good move too. Which would be true, if the analogy wasn’t false. Governments have to spend money to stimulate their economies, not stop spending – a better analogy is the human circulatory system. Blood has to get pumped around to keep the body alive, and money has to change hands to keep industries going. This is why austerity measures tend not to work; just look at the Eurozone. They stopped spending and their economies had cardiac arrests. Heck, if you don’t believe me, go back to the late eighties and look at Japan – they decided to start saving and pay off their debts, and they effectively killed the next decade of their economy. The yen’s still recovering from it now. Call it austerity measures, call it “living within your means”, call it whatever you like, it’s historically a sure-fire way to sink your country into a depression.
This kind of raises the question of why super-rich people like Gina Rinehart and Rupert Murdoch want the economy-scuttling party to win so badly, if it’s going to be so disastrous. It has a very simple answer too: it makes labour cheap. Depressions kill jobs, and when there are less jobs going, the people who need them will work for less. If you’re a billionaire and you make sure your investments are overseas – I hear the Canary Islands are very popular this time of year – you’re pretty much set.
As an aside, for further proof about the effectiveness of borrowing, being super-rich is kind like being a country. Clive Palmer didn’t make his first million dollars by scrimping and saving; he made it by borrowing ten million and then investing that for an eleven million return. Later, he could pay the ten million back, and he’s now sitting on a cool million he didn’t have when he started. I just made the dollar figures up there, but it’s the basic principle that’s important.
One of the reasons Australia is lucky enough to be one of the few countries still enjoying a triple-A credit rating (and to have emerged comparatively unscathed from the GFC) is because we’ve been spending like mad mo-fos. We’ve been pumping money through the economic circulatory system like a cash-borrowing lifeguard giving CPR. Borrowing money isn’t inherently evil incidentally; it helps the global economy, which we are a part of. People seem to forget that as well, but no man is an island, and neither is our country (okay, Australia may literally be an island, but not in an economic sense). Money doesn’t leave our country when we borrow and then spend; it enters it.
Tony Abbott keeps going on about how our budget is in “crisis”, which is a lie. This is not my opinion, it is a fact: let me quickly tell you some statistics from the world-leading credit rating agencies. By S&P credit ratings, Australia has the second best economy in the world, after the UK – and they’re marked as “negative outlook” while we’re “stable”. Fitch credit ratings puts us as the best economy in the world, as does Moody’s and the Japanese Credit Rating Industry. I don’t understand how more Australians don’t know this. Wikipedia has a nice table of all this data, which is great because it saves me having to make a table myself.
The US government bailed out big businesses during the subprime crisis not because they felt like using taxpayer money to subsidize greed, but because stimulating the economy means spending money: this is an extremely basic tenant, which just happens to be particularly easy to disguise and obfuscate. If you’re insistent on the shaky ‘country as individual’ analogy, look at it this way: if I buy a house, I’ll have a mortgage. I’ll be in debt. But I’ll also have a house, and if I work from home I’ll be working to pay it off. Or, I could say that all debt is terrible and not buy the house. I’d have no debt, but I’d also be homeless and not making any money, which is not a great position for me (or, analogously, Australia) to be in. Renewable energy is guaranteed to win in the long term because fossil fuels are finite and will be used up pretty soon; economically this translates to “the mining boom won’t last forever”. In the “buying a house” thing, the mining boom is the food I have in my coat pockets, effectively. The analogy collapses pretty soon after that though, because like I said, quantum mechanics and circulatory systems.
I wish more people would take an interest in economics. It’s not even mathematics, if that’s what you’re worried about! The history of economics is getting to see the stories that were originally hidden between the lines of numbers. It’s the stories that are important for that man in his street to know. The fact that books, and movies, and comics and videogames exist proves that people love stories. Don’t believe me? Just read that Wikipedia page I linked to before. It’s a tale of intrigue, adventure, manipulation and loan sharks gaining power on the high seas. The seas just happen to be made of money.
I don’t like Kevin Rudd for a variety of reasons, but I do like human rights and having a healthy economy, and as the Economist points out, Tony Abbott is a little bit worse at both of them. I don’t care which party you vote for on the 7th, but please, make sure you actually know what that party’s going to do, and be sure you’re actually getting what you want first.