The “debate” over whether the Government should pull back on the stimulus package is a classic case of a press gallery trying to frame a real-world issue into a narrow, political framework that suits its own reporting purposes. It is a collective illusion being foisted on the mainstream media’s ever-smaller audiences by journalists and commentators unable or unwilling to see outside the gallery prism of winners and losers and political personalities.
And it is a “debate” run entirely by the press gallery and the Federal Opposition. There are no — no — economists or business groups who think it is time for the stimulus to be wound back, except for those on the far right or Liberal shills such as Henry Ergas, who opposed the stimulus package in the first place.
That’s because, as Wayne Swan explained at length yesterday in his press conference, without the stimulus package, we would have had negative growth all this year. Negative growth, and another 100,000 or 150,000 people unemployed.
So if there would be no economic growth without the stimulus, why on earth would anyone seriously concerned about growth and jobs withdraw the remaining stimulus elements?
What has happened in the real world is that the Government and the RBA have responded to a colossal economic collapse with stimulus measures that turned out to be reasonably well targeted for what is an inexact science — if it’s any sort of science at all. As Swan noted, it might have been better if the Government could have got more stimulus into the December quarter, but the Government did pretty well to get its cash injection rolled out by Christmas in any event. But with most of the rest of the planet still in deep recession, we’re not going to return to normal conditions anytime soon, and if we want to minimise unemployment then continuing stimulus is necessary.
But for the gallery — particularly, but not only, at News Ltd and the ABC — the narrative has to be a political one, not an economic one and it has to keep moving. The success of the stimulus package is last quarter’s news and now there needs to be a new angle. And the Opposition, which has not made a single correct call on economic issues since December, has to be treated seriously. Is the Opposition’s demand to pull back on the stimulus right? When will interest rates rise? Was the stimulus too big? Has the Government got it wrong?
The working assumption of many political journalists – and perhaps we can blame Paul Keating for this – seems to be that the economy now functions like an easily controlled machine, responding to delicate adjustments to government inputs, instead a vast collation of individual decisions prone to irrationality and poor judgment over which the Government and the Reserve Bank have limited, and very clumsy, control.
“Could you have spent less on the stimulus and still achieved positive growth?” asked Phil Coorey, of Swan, as he left yesterday’s press conference.
“Look at the numbers,” Swan replied.
Coorey, for mine, is one of the best gallery journalists, but the question assumed this economy-as-machine notion and ignored that the real goal of the package was jobs, not keeping the quarterly national accounts in the black.
There are some journalists who haven’t been lured into this groupthink about stimulus withdrawal. Laura Tingle — as usual — grasped the real meaning of the data yesterday and pointed out in the AFR today that the already-scheduled withdrawal of the stimulus over the next six months was going to complicate matters for the Government. David Uren similarly understood the figures and the importance of the stimulus, although The Oz buried his piece in favour of its latest campaign against Julia Gillard.
But it extends beyond the gallery. On the 7.30 Report Ali Moore was badgering Swan about why he wasn’t demanding that Treasury update its economic forecasts. “We haven’t had an update for nearly five months!” she lamented. Presumably half of Treasury should be dedicated to churning out monthly, and wholly meaningless, revisions to forecasts, which would give Moore something to talk about and speculate upon, rather than actually finding out what’s going on in the economy. For Leigh Sales on Lateline the issue was Joe Hockey’s refusal to spell out where he’d reduce the stimulus, not the inanity of his claim that the Government had nothing to do with the growth figure or that the stimulus should be removed forthwith.
Funny thing is, if the Government took the advice of journalists and decided to put an immediate halt to any further stimulus measures, it would be media companies that would suffer as much as anyone. Who has benefited from the extra advertising coming out of stimulus measures directed at car buyers? Who has benefited from retailers advertising to get a portion of the cash stimulus? Who will benefit from retailers advertising to first-home buyers who’ll be moving into their new homes in the next 12 months? Who’ll benefit from a more buoyant economy with higher employment because their fortunes are linked directly to economic growth?
The stimulus package has helped put a floor beneath crashing advertising revenue and will continue to do so.
So calling for the stimulus to be wound back perhaps demonstrates genuine editorial independence. And at least some journalists would end up on the dole queues — alongside the many Australians who’d be turfed out of work if the Government cut off its critical economic support.
In a word, or maybe two
Spot-on
Swan’s interview with David Speers was the best. IN the first half, Speers was after him for not cutting back spending. Later, he was complaining that Swan had reined in spending in some areas. It was laughable — opposition for the sake of it, to fit a narrative — and in fact, I think Swan laughed at him. Worth a look if you can find it/didn’t see it.
Anyone else hear Turnbull on the radio this morning getting his economic history wrong? He seemed to think that governments responded with make-work programs, whereas they actually, mostly, reduced spending and made things worse, much worse, as he would seem to be recommending the government do now. Is he as economically illiterate as he appears to be? Does he actually want the recession to be worse than it is? IDGI.
Eh? The Opposition argument is that by failing to let the corrections actually hurt people the economy can’t recover in a sound fashion and that knocking over unhealthy business is part of capitalism’s creative destruction.
At the very least they have an argument about postponing to future generations the debt burden.
Against that the argument is that the mummy party saved people all that suffering. There’s traffic both ways and merit in both. No doubt.
@Tom: That would be a sound argument. But I don’t think it’s the argument they’re trying to make. Turnbull said that the government should have spent less but spent it in ways that gave greater value. When pressed on how to do that he replied to the effect of: that’s up to them to work out, they’re the government.