Peter Smith

The bad language of economics

The Modern Cargo Cult 

Recently some so-called stimulus money was given to Detroit residents. Rather like the free money handed out by the Rudd government late last year and early this year, but in Detroit targeted at a limited number of people who could show that they were homeless or on the brink of eviction. An interview with one recipient of this money was revealing, amusing and irritating; all at the same time. 

When asked about the money and where she thought it had come from she said it was, “Obama money … from Obama”. When asked where she thought he got the money she said, “I don’t know, his stash”. 

Let us be generous, people can be confused about where government money comes from. Many years ago my maternal grandmother told my Dad, to his exasperation, that she couldn’t vote for the (British) Labour Party because they had no money. She presumably thought the Conservatives had a “stash” that the Labour Party did not have. 

Perhaps people are entitled to be confused, if they listen to governments and to those that want things from governments and to sections of the media. The political cacophony is all about what government has done, will do, must do, and should do.  When I lived and worked in Papua New Guinea in the middle 1970’s, the cargo cult, though marginal, was alive and well.   There, it was based around goods coming out of the sky in aircraft and the closely-guarded secret behind this. To cult adherents, being privy to this secret was surely the key to receiving cargo. Here and elsewhere, the real key is getting the ear of government. Governments apparently can provide “cargo” as they so choose. 

This is not about the government providing and funding a range of basic services; for example, law enforcement services, public transport, hospitals, schools, a welfare safety net, it is about the add-ons and also about who pays for the lot. 

In Australia, government can subsidise first home buyers. This is better than a loan from a bank or even from a family member because the government, generous to a fault, will want nothing back even if the home later doubles in value. Government can subsidise child care and ask nothing in return. Government can renovate your local school needed or not. Government can give you free, yes free, ceiling batts.  Government can undertake to spend $43 billion on a broadband network without a feasibility and cost-benefit study. And governments in the US and Australia, as we have recently seen, can give you free money. Who wouldn’t want to line up, businesses and individuals, and get their cut of the stash? This is the greatest cargo cult there has ever been. This isn’t a few goods coming down by aeroplane. This is billions of dollars and all provided by “the government”. 

Governments are fond of claiming credit for what they spend and, in fact; often seek re-election on that basis. There is no partisanship in this area of political life; all political parties and governments subscribe to it. I took at random Howard’s speech launching the 2001 election campaign and a few randomly selected extracts. 

“Over the next few years our $3 billion science and innovation plan…the greatest ever single provision for science, technology and innovation by any Australian Government.”

“over the next term we will invest $1.7 billion to reform Australia’s welfare system.”

“the Coalition will introduce the first child tax refund.”

“the Coalition will provide $100 million … in additional capital funding for aged care homes in rural …” 

In this speech, as you can see, not only is the Government providing the money but also the Coalition: from its stash presumably? The Detroit lady’s observation and my grandmother’s seem not so silly in light of this. Nowhere so far as I can tell does Howard refer to taxpayers – you and me and our neighbours, “us”, – actually paying the bill. How much less is the ALP or any left of centre party going to mention that? 

If we are ever to stop governments wasting our money we have to begin to change the political lexicon. Each time political parties talk about what additional amounts they intend to spend in government, they should be reminded that their intention is to spend taxpayers’ money and that is the way it should be expressed. Moreover, they should be asked to estimate which particular sections of taxpayers will be footing the bill and how much they will be paying. This seems only fair. Imagine the reaction if you or I were to decide to spend other people’s money on this or that scheme and not reveal to them who was paying what. Imagine the reaction if the scheme were fanciful and without proven economic benefit. At issue is how to produce this level of transparency and accountability. Only conservatives – in the media, in think tanks and in politics – have the philosophical wherewithal to begin the job and to persist with it.

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