Sent: 09-10-2012 15:30:03
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Swan Attacks Cranks and Crazies
Thinking that cranks and crazies are taking over the Republican Party risks misreading the seriousness of the policy debate under way in the USA.
Australian Treasurer Wayne Swan has assumed a role as ideological bulldozer for the Labor Party. In a series of recent speeches, Swan has sought to sharpen the philosophical edges between the two parties vying for government in Australia.
The thrust of Swan's interventions is that one side of politics is populated by crazy uncaring rich people while he is surrounded by the rational, everyday folk who really matter.
To sharpen the distinction, Swan used a 21 September address to the Financial Services Council to draw a contrast between "political gridlock" in Europe and the USA where "the politicians aren't stepping up" and here in Australia where "the grass is so much greener" and "the foundations of our economy are rock-solid".
No doubt, politicians in Europe and the USA have failed to tackle aggressively the major economic issues facing their countries. Postponement of vital decisions to rebalance government spending and revenue has exacerbated the magnitude of the adjustment that now must occur.
However, in choosing to label parts of the US Republican Party "cranks and crazies", Swan went one step further and pointedly sided with the "goodwill and strong efforts" of the Obama administration in the ongoing policy debate occurring in the USA.
In opting to support Obama, Swan has failed to recognise that all participants have staked out strongly ideological positions at a time when political power has become increasingly diffused.
The absence of strong, dominant personalities able to carry large segments of the populace has hindered progress. At a time when the world has needed political architects to design new institutions and ways of solving the existing fiscal problems, Europe and the USA have been led by the equivalent of political bricklayers.
In the USA, the increasingly acrimonious debate about the economy is also a mirror of the virulent divide on many other topics. With no political leader being able to garner enough respect to marshal a majority of votes, the noisiest advocates are tending to dominate policy debate.
Much of the noise is directed against some of the worst excesses of legislative deal making. Congressional Democrats and Republicans alike have enjoyed the benefits from pandering to powerful lobbyists.
A Supreme Court that has given corporations unfettered power to fund elections has injected a further dimension into how policy is made.
In this polity, the noisiest, most aggressive, most generously funded policy advocates have the best chances of their views being made law. The Tea Party and other right wing zealots are, in their view, simply doing what it takes to put right a broken system.
True, some of them were prepared to have the US government default on its financial obligations to demonstrate how vehemently they opposed the build up of government debt.
This was scary. Arguably, anyone prepared to take this route is a greater threat to the stability of the world than Al Qaeda or genuinely loony North Korean or Iranian dictators.
The question is not whether this is dangerous behaviour. The question that should be entertaining the minds of Swan and his peers in other governments is whether insulting people with strongly held philosophical views is the best way to dissuade them from such dangerous behaviour.
Political activists on both sides of the ideological divide in the USA are engaged in a very serious debate about the role of government, the extent to which the US taxpayer is prepared to fund a range of entitlement programmes, how companies can be encouraged to invest and the effect of taxation changes on the willingness of small businesses to employ more workers.
Over the next few weeks, the world is again going to confront the consequences of this debate not having any clear-cut conclusions. From the beginning of 2013, already legislated spending cuts and tax rises are set to cut US GDP by around 3%. If allowed to happen, there will be a US recession and possibly a global one as well.
Once government spending cuts impact business sales, US companies will lay off workers. US law requires notices of layoffs to be filed 60 days ahead of when a company anticipates a triggering event. This means the first notices from the private sector are likely to go out at the beginning of November. Government layoffs need 90 days notice so the impact on companies and individuals is imminent.
Wayne Swan might feel that he has an opinion about whose views on these highly complex matters should prevail but succumbing to the temptation to shout "cranks and crazies" at the participants risks marginalising the influence of all international leaders just as they should be seeking to exercise more sway on the outcomes.
Australia ought to be using any moral or diplomatic authority it might have to make clear, with other countries, the dangerous consequences for everyone in the international community of the US failing to address its fiscal shortcomings.
Shoring up one side at the expense of the other potentially reduces the chance of compromise when the interests of the rest of the world require agreement.
When the US administration wants to talk about containing China, Australia should be responding unambiguously that the greater threat to global economic stability is in Washington.
In the extreme, world leaders should be making clear to all political leaders in the US that they will forever lose the moral authority that gives them support in other countries if they endanger the well being of the world by failing to reconcile the competing ideological positions that are pushing the US economy to the edge of the fiscal cliff.
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