Being a blogging skeptic and policy critic I am always amused when I read rating agencies assessments of political economy like that offered recently by Moody’s:
Very strong institutional and policy framework. Australia’s monetary policy and banking regulation and supervision are vigilant and responsive to economic and financial conditions. The Reserve Bank of Australia (RBA) has a very long track record of delivering stable inflation at moderate levels. Compared with many other central banks in advanced economies, the RBA has retained more space for conventional monetary policy, the effectiveness of which is better established than that of unconventional measures. On banking regulation and supervision, the Australian Prudential Regulation Authority (APRA) has implemented measures that should diminish the probability and reduce the negative consequences of a potential downturn in housing.
Yada, yada, yada. Yet when I list the recent compromises and corruptions of our political economy that have come to light it feels more like the collapse of Australian governance is upon us. In the last month alone we’ve seen:
- The Coalition’s Andrew Robb off to Moelis & Co to plunder his trade contacts;
- The ALP’s George Wright off to BHP to fight the very policy he’s created;
- Bob Carr pumping Chinese-funded questionable views;
- Sam Dastyari likewise;
- FIRB’s Brian Wilson not even bothering to resign as he joins buyout group Carlysle to give it the inside run.
It’s across the entire leadership class, business, the executive and the bureaucracy.
With hindsight it is perhaps understandable. Long time reader Gunnamatta yesterday described the epochal moment in which we find our nation the “late stage bubble era” and that helps capture the central driver of the corruption of Australia that we are witness to. Our plutocrats are so busy shoving their snouts in the trough of the existing trends of narrowing growth that they are unwilling or unable to imagine an alternative path for the nation even as risks pile up.
If this is to be addressed then we need to understand the drivers. There are three that I can see, each of which is overlapping and intertwined but can best be understood separately.
The first is the rise and rise of loon pond economics. It is a kind of half-bred libertarianism that champions both individual freedom and corporate power. The contradiction does not matter to the loon ponder. He is free, and government is his enemy. Thus it is virtually his duty to undermine and destroy regulation wherever he sees it and having done so in government he is then at liberty to join the very private parties that he has just set loose. To the loon ponder this an intrinsic good, irrespective of the sector or the actual economics. He sees himself as a libertarian disrupter, a bizarre kind of policy-wrecking entrepreneur.
This is related, in part, to the point that Australia’s economy is in this “late stage bubble era” in which the national economic pie is being torn apart by the multitudinous grasping hands of rent seekers. In Australia’s houses and holes model that means banking, mining, oil and gas, real estate, super, manufacturing and many other smaller industries are all desperate to retain market share by hanging on at the public teet.
The second driver is Chinese influence which appears to have erupted out of nowhere but has clearly been at work for some time. It is not just focused upon disruption of the sovereign, it appears equally to have the objective of ensuring Chinese business interests in the emerging ‘citizenship exports’ sectors are entrenched. As I explained earlier this week, the two actually go hand in hand. Patronage is a way of life for Chinese business folk but Australia’s open democracy is not prepared for it. We have no laws against donations or even taking money privately nor is there a Federal corruption watchdog. Both political parties actually appear completely dependent upon the system for dough.
The third driver is the collapse of objective media. On the Newscorp side of the duopoly we have a mouthpiece for loon pond economics. On the Fairfax side we have a real estate whore that would sell its mother before disrupting “confidence”. It has morphed into a bizarre kind of lifestyle feed with the integrity and consistency of a real estate spiv. As such, there is nobody to bring consistent pressure to bear upon corruption (I will say that the AFR’s recent work on Chinese bribery has shown what good media is capable of).
There are a number of big, dumb rules we could apply to fix this. For the first and second drivers simply banning donations and applying a statute of limitations to public servants shifting to private (say three years before you can work for someone) would do it. On the third you’ll just have to punt on MB.
But how these simple solutions are ever going to be applied amid the corruption itself I have no bloody idea.
