How are we going to make a living? How will we provide for our own security? Three things make me worry about those questions. One is the cultural transformation of all Western electoral politics. Another is the way this has been exacerbated by COVID. And the third is the budget.
Over the past decade, political parties in Western societies have changed places. The centre right parties now represent low-income earners, tradies, manual workers, those without a university degree. The centre left parties represent high income earners, graduates and those who sit atop the services sector.
You may have missed the astonishing by-election victory of Boris Johnson’s Conservative Party in Hartlepool in the UK. This seat, in England’s north, has never before been Conservative. For a government to win a seat from the opposition at a by-election is extraordinary. Here is the greatest argument to demonstrate the intellectual corruption of contemporary university education. If just the votes of university graduates had been counted, the far-left Jeremy Corbyn would now be prime minister of Britain.
Similarly, the poorest states now always vote Republican in US presidential elections. In Australia, Scott Morrison is Prime Minister because low-income Queensland electorates preferred coalmines to “green gestures” and working-class Tasmanians didn’t trust Labor.
This is all familiar enough. Day-to-day performance and competence are critical, but the underlying vote indicators are now cultural rather than ideological, or even narrowly economic. But one consequence of the political identity switch is that centre right parties have become structural big spenders, abandoning the conservative wisdom that you can’t spend what you haven’t got.
The need to respond to the COVID pandemic has accelerated this trend. In the US, it is Joe Biden breaking all spending records, but the Republicans are barely less profligate. In Britain, Rishi Sunak is a popular Chancellor because he gives away so much money. Here, Josh Frydenberg, one of the government’s best performers, is the same.
Here’s the new problem. With the centre right parties becoming parties of structural big spending there is no significant political force that preaches plain fiscal common sense (temporary emergency measures excepted).
The centre left parties are torn up by their own contradictions. They cannot keep together the inner-city service industry voters with their traditional working class and trade union base. But that does not mean the victory of conservative ideas.
In Britain, Corbyn was lampooned for saying he won the debate but lost the election. Yet apart from Brexit, that is broadly true. Johnson is now implementing a version of traditional, old-fashioned Labour tax-and-spend. Johnson, like Morrison, does not want to fight any culture wars he can avoid, beyond the key insistence on national sovereignty.
Johnson appeals to working-class voters, beyond giving them money, in his unabashed patriotism, his insistence on national sovereignty and what you might call small “n” nationalism. Brexit was the equivalent of Australia’s “sovereign borders”.
The same was true really of Donald Trump’s appeal to working-class Americans. It fused economics with nationalism. The centre right opposition to illegal immigration should not be conflated with opposition to immigration generally.
But Johnson in Britain and Morrison in Australia basically go along with the left on a great many cultural issues. They distinguish themselves from the centre left parties by being more moderate. As Tony Blair argues, the left is so extreme on identity issues now that a conservative can embrace 80 per cent of the woke zeitgeist but just stop at the edge of madness, sure that the left will keep going well over that edge.
So why am I concerned about making our living and providing for our security? We are now entering a very dangerous budgetary period. Some two thirds of the extra $100bn in last week’s budget was welfare. Once you get people hooked on transfer payments, you can never take them away. Modern monetary theory, which argues that so long as you borrow in your own currency it doesn’t matter how much debt you incur, is complete barking madness.
The US is insulated from the worst effects of only ever funding about 80 per cent of its expenditure by possessing the world’s reserve currency. Europe is partly insulated simply by its size. But Australia could find itself in an inflationary trap with no economic hinterland.
All of the ways in which we earn our living are under attack. China is working hard to create an alternative to our iron ore. It will never go back to the economic relationship we enjoyed five years ago. There is growing domestic opposition to core industries like coal. The International Energy Agency telling us to develop no more fossil fuels is a sick joke. China last year added more than 38GW of coal-fired power, more than twice Australia’s total coal-fired power, to its grid. Beijing plans to keep on building and financing coal-fired power stations, as does India, Indonesia etc. Of all the developed countries, Australia can least afford the anti-fossil fuel madness and we will suffer from it most.
Our physical exports are overwhelmingly dominated by minerals and agriculture which are both subject to sustained green attack, some international trade pressure and geo-strategic uncertainty. We earn significant export income form only two service industries — tourism and higher education — and they are both suspended during COVID.
The only way you can cope with the kind of debt we are accruing is through sustained growth. Growth comes from higher productivity and immigration. There is no sign of higher productivity, and immigration too is suspended for the duration of COVID.
Meanwhile, the budget spendathon contained not one new dollar for any new defence capability. The big capabilities we are buying don’t come along until the 2030s — but we have a threat right now and a potential crisis any time this decade. We are going to continue the insanity of spending billions of dollars on new tanks though not one proponent of the tanks, which we have not deployed in an area of operations for more than 50 years, can sketch any credible scenario in which we would actually use them. Are we really serious about defence?
All this proceeds from twin delusions in our political culture: that our prosperity, and our security, are guaranteed. Even if, very occasionally, we acknowledge intellectually this might not be so, we don’t internalise it emotionally, so it has no real effect on our behaviour. We are living in the most dangerous country of all — unreality.
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