“If this guy prints more money between now and the election, I dunno what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous – or treasonous in my opinion.”
“This guy” is US Federal Reserve Chairman Ben Bernanke. The speaker is Texas Governor and recent entrant into the race for Republican 2012 nomination, Rick Perry, on Monday.
They were no idle comments, no good ol’ boy porch talk. The remarks prompted an angry reaction not just from the Obama Administration and “liberals” (in the US sense, of course) but from business leaders and more mainstream Republicans. “Not a presidential statement” opined onetime Perry adviser, and now apparently foe, Karl Rove. But Perry overnight backed up his statement, saying “I am just passionate about the issue and we stand by what we said.”
Perry — one-time Democrat, Al Gore campaign chairman and Texas secession advocate (speaking of treason) — was doubtless keen to show the Tea Party, locked in a remorseless tug o’ war with the Republican mainstream, that he has the Extreme Right Stuff for them. But the comments bear close examination for what they reveal of a mentality that is primarily that of the Tea Party but draws on wider strands of thinking on the Right.
The issue isn’t so much a US Governor threatening the chairman of the Federal Reserve with assault, imprisonment or execution (treason is a capital offence in the US, and presumably would be in Perry’s breakaway Texas republic). Leaving aside Perry’s repetition of “printing money” — the sort of usage that encourages the idea of Weimar-era, barrows-of-cash hyperinflation, when American policymakers are still grappling with the possibility of deflation — the comments are a natural extension of the profoundly anti-state views of the US Right.
For the Tea Party, for greenthumbed astroturfers like the Koch brothers and the hard Right – the type that regarded both Bushes as hopeless faux-Spendocrats – government isn’t a means to an end in achieving community welfare, but a disease to be kept at bay, if not eradicated, at all costs. The effectiveness of government is irrelevant – it must always be shrunk.
From such a perspective, even traditional liberal rationalism, which assumes government is best kept out of the way of markets but acknowledges an important role for the state in addressing market failure – that is, the size of government is less important than its role in maximising community welfare – is indistinguishable from socialist ratbaggery.
In that context, even government efforts to stimulate the economy and keep citizens in work, or bring citizens back into work, are illegitimate, because everything governments do is per se illegitimate, beyond a few narrow functions limited to what the Founding Fathers — and only the Virginians, certainly not that appalling tax-and-spend liberal Hamilton — thought appropriate. Trying to stimulate the economy is thus automatically a political decision, and therefore suspiciously partisan – even when the partisan concerned is a conservative Republic appointed by a Republican Administration – indeed, by Perry’s predecessor as Texas Governor, Dubya himself.
The preferred alternative is complete deregulation and tax minimisation to enable “job creators” — the people formerly known as “the rich” — to generate economic growth.
That give you some indication of exactly how bad the economic prospects are for the United States; not merely has its political class waited until the worst possible moment to curb the US deficit, but a substantial part of that class regards the very idea of economic stimulus as gross partisanship deserving of punishment.
How different is the thinking among conservatives here? Well, there continue to be those on the Right who claim that stimulus doesn’t work, like the unfortunate Stephen Kates. Two weeks ago he offered an amusing effort on the ABC site that began with a howling error about the carbon pricing package revenue and proceeded to conduct a tour of 2009’s finest arguments about why Australia in fact had a recession and to the extent that it hadn’t was the responsibility of John Howard and the Chinese. Even Michael Stutchbury has long since moved on from that rubbish.
Then there are critics of stimulus programs, mostly resident on talkback radio and among News Ltd journalists, who have entirely confected claims about both the efficacy and efficiency of stimulus programs, usually for partisan reasons but also, one suspects, because they despise the prime beneficiaries of the biggest components of the stimulus programs, construction industry workers.
But actual ideological opponents of any stimulus at all are rarer in Australia. That is, until now. The Coalition’s attack on the Government this week has primarily been around whether its commitment to return to surplus next financial year still holds.
Labor’s commitment to that surplus was always political and intended as a last line of defence of its economic credentials after utterly failing to sell its significant GFC achievements to the Australian people (then again, that’s what happens when you knife the guy who was the architect of those achievements). To that extent, it’s entirely a mess of is own making.
But what should a government – any government – do if another GFC smashes growth, or China stumbles, or Australia otherwise finds itself confronting significantly lower growth than forecast? Should it make up for the tens of billions that will be slashed from corporate tax revenue, via spending cuts, to preserve a surplus, thereby locking in a recession? If things get bad enough, should there be another round of stimulus?
Asked the other night if, in the event of a recession, his policy would be to cut Government spending “as hard as you possibly could”, Joe Hockey refused to reject the idea, instead saying that returning to surplus was “a starting point”.
With any luck, the question of another stimulus package will never arise. But if it does, it’ll be the ideological equivalent of lifting up a rock to find out what crawls beneath.
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