Reform, and other lies told by rent seekers

An excellent if highly cynical piece on yesterday's Reform Summit by Liam Hogan in the Guardian:

The one thing I would not have expected out of our democratic, parliamentary, capitalist system in 2015 is how much a lot of its managerial politics would resemble 1970s Soviet “actually existing” socialism.

As a hearkening back to the glory days of the Hawke summits which led to the Accord, it was history repeated as farce: special interest groups and other rent seekers reciting their laundry lists of demands, talking past each other and agreeing only to a meaningless and non-binding communique which was rightly pilloried by Catallaxy Files as being largely pre-arranged. Hogan's cynicism doesn't go far enough.

The appearance of many of the usual suspects from the stable of right-wingers employed by The Australian at an event organised by Labor's Craig Emerson was not all that surprising in view of Nick Cater's summary of the day's festivities, which consisted of listing all the wonderful ways that the Summit would enable Labor to give in to the Right's policy agenda of lowering Australian worker living standards to match those of Asia in the name of "productivity", "flexibility" and "competitiveness" - i.e. to line the pockets of the capitalists in ye olde Reaganite fashion.

If there is to be an actual bipartisan reform platform in this country, it has to be built with a view to the effects of the 1980s reform and how its effects have played out in the intervening decades. Primary among these is how workers were stiffed by the decision of Labor to put a dampener on real wages, because workers have not enjoyed the benefits of their own productivity gains since the 1980s. Meanwhile, capital productivity has lagged considerably even as executive pay has skyrocketed and share dividends have fattened. Multifactor productivity has been dropping over the past decade, by almost a full percentage point, despite labour productivity rising by 1.5% p.a., because capital investment has proved to be wasteful, particularly in mining.

Hogan makes some compelling arguments for the Soviet metaphor, but I also detected some Chinese influence in what is these days an outpost of the Chinese mixed economy. Kevin Rudd may not have been present to speak Mandarin to the assembled mandarins, but there were parallels to the five-year plans by faceless man in the central committees of those other modern faces of the jerry-rigged communist/capitalist hybrid experiment. There was no Xi, or Che for that matter, but one hopes the feng shui of the room was tickety-boo.

Now that the AUD is back within more regular historic parameters, the bleating about international competitiveness should stop. We should not lower our wages and workplace standards to match those of Asian countries, as that is short-term thinking. The next major growth source for Australia is the burgeoning Chinese middle class - and that of India to a lesser extent - and if we are to ride that wave for another boost to prevent recession post the mining boom, we have to work towards an economy which can sell to it.

"Reform" in this country is too often conceived as a zero-sum game where workers and employers fight over the scraps of the world economy in a race to the bottom to serve the lowest common denominator. That is not Australia's natural role in the Asian century. We can't be the Singapore or Hong Kong of the region because those trade hub positions are already filled, and we can't be Taiwan or Bangladesh either with their focus on manufacturing. We can supply the Chinese bourgeoisie with small amounts of high-quality shipped goods and large amounts of low-cost digitally-delivered services. Whatever policies are attuned towards building that scenario are the ones that will underpin our future growth. I doubt anything will come out of the Reform Summit that would come anywhere near towards that.