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March 09th 2012 print

Peter Smith

Wayne’s Fanciful World

Swan’s article weaves together the standard left line that stands the test of time; because it moulds and massages economic history so as to depict economic progress as a triumph of government intervention. It is all nonsense from start to finish; yet it’s the basis of his whole political philosophy (and the Left’s political philosophy).

 Most of the comment on Wayne Swan’s article in the March issue of The Monthly seemed to concentrate, so far as could tell, on his criticism of a few mining magnates of great wealth who’ve had the temerity to be critical of government policy. He suggested that they “misrepresent their self-interest as the national interest”. It is not surprising that he is piqued. He sees opposition to the mining and carbon taxes as undermining Australian equality and that tackling inequality “remains the horizon towards which we always march”. Strange stuff!

Personally, I would be shocked if mining billionaires became altruistic. I would certainly sell some shares. So maybe Mr Swan has a point, albeit a trivial one. Yes, indeed, mining billionaires are self-interested. But, to paraphrases Samuel Johnson, they are never so innocently employed as when they are looking after their own interests. I can sleep better at nights for knowing that this is what they’re about, even if it disturbs the sleep of Mr Swan. At the same time, it is hard to feel very sorry for a few billionaires facing a few barbs from a stalwart of the Left.

It is the other parts of Mr Swan’s article that are more important than his resentment about the treatment he sees meted out to him and the government by a few billionaires. These other parts weave together the standard left line that stands the test of time; because it moulds and massages economic history so as to depict economic progress as a triumph of government intervention. Sleights of hand, leaps of logic, and economic illiteracy are required to sustain the argument. That always proves to be no impediment. Certainly Swan was not inconvenienced.

Apparently industrialisation and technological advances in Britain and Europe in the 19th century “bred a winner takes all mentality that left many worse off than they had been before”. Here is the key to Swan’s and the Left’s mindset. Firstly, of course living standards improved markedly for most people. The industrial revolution led to better housing; better and more variety of food; better clothing; rail transport; gas lit streets, and other benefits. Of course, grinding poverty was common and many people lived at subsistence level but that had always been the case. Swan ignores the big picture and concentrates on many who he says were worse off. Leaving aside how many is many, I doubt there has been any period of economic progress, even under a Labor government, when some have not ended up worse off. It is a trivial and misleading revision of history. But that is only a small part of it.

Swan claims that the benefits of industrialisation went “overwhelmingly to the fortunate few”. Well what did they do with it all? If you take him at his word, the fruits of productivity in manufacturing and agriculture must have been hoarded by the rich. They must have stockpiled clothing and food in vast warehouses; and wrapped thousand and thousand of empty houses in barbwire estates; kept trains and later motorcars and cameras and all kinds of goods in giant storage parks with armed guards around the perimeters. Ill-gotten booty denied to the populace. How they made a profit out of that only Swan knows.

It is all nonsense from start to finish; yet it’s the basis of his whole political philosophy (and the Left’s political philosophy). He can’t afford to acknowledge that all of our growing prosperity since the industrial revolution is attributable to free market capitalism, so he has to build an internally contradictory story which sees the gains commandeered by a few.

However, we are told, Australia saved the day by creating a more equal society. Swan tells of “the greatest achievements of the last two centuries: a living wage, a welfare system, public health care, mass home ownership and accessible technical and higher education”.

None of these things are remotely possible without the ingenuity, productivity, and prosperity that free market capitalism brings and has brought. Swan compares Australia favourably with America whose “rich have left many of their fellow citizens behind”.

The rich don’t leave anybody behind in capitalist economies. The rich get richer in capitalist economies (as distinct from in crony capitalist or socialist economies where special pleading and corruption rules) by employing people, directly or indirectly, and by providing goods and services that others want to buy. The rich make lots of people better off. The more dynamic and competitive an economy the more likely it is that there will be wide disparities of wealth. This doesn’t matter. It is a good thing.

Swan bemoans the growing inequality which started with the Thatcher and Reagan revolutions. He doesn’t catch on quickly. Thatcher and Reagan dragged the United Kingdom and the United States out of serial economic stagnation. That produced growth, prosperity, and growing inequality. Would Mr Swan prefer shrivelling equality?

Then there is whole list of cherry picking (to back his misconceptions) and non sequiturs – is our economy really in his hands?

Lobbying to reduce regulations caused the GFC. No mention here of Congress pressing banks to make bad loans and the complicit activities of the quangos Fannie Mae and Freddie Mac. Greed gets a mention as does the OWS crowd. No mention of overpaid Hollywood stars just of financiers. He quotes the Archbishop of Canterbury in context of pointing to the possibility of the riots in London last year being connected with “far-right economics”. Hasn’t the UK just had 13 years of Blair- Brown Labour governments, which further engineered a self-absorbed, entitlement society, while stripping the coffers bare? Maybe that had something to do with the riots?

Apparently, “our egalitarian sprit… informed our stimulus response the GFC”. No, he didn’t appear to be kidding. This “meant we avoided the kinds of immense social dislocation that occurred elsewhere”. This is now becoming folklore of the most fanciful kind. Every developed country put in place a stimulus package but strangely it only worked here. Could it have anything to do with the resources boom, the scope this gave the Reserve Bank to reduce interests rates, and the healthy state of our banks? No. It was Wayne to the rescue armed with our egalitarian spirit.

If logic and commonsense always held sway, the Left would perish. The world is imperfect. Hence the Left.

Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics