By Joe Montero
Judith Sloan’s article in the Australia (19 July 2018) deserves a response. The piece in question, titled “Wayne Swan’s bizarre speech to a largely irrelevant ACTU,” was not only condescending but downright wrong.
It was condescending because, she takes up the high brow label of an economist to tell us that Swan doesn’t know what he is talking about. She says any sensible economist would not use the term “trickle down economics.”
Time here for some basic truths. The term was first used in the United States in 1896, by presidential candidate William Jennings Bryan, who in a speech suggested: “… There are those who believe that you just legislate to make the well to do prosperous, that their prosperity will leak through to those below…”
The theme was later taken up by David Stockman, who was Ronald Reagan’s budget director and a champion of Reaganomics. With the rise of what became known as neoliberalism, economists and politicians of this school began to use the term, which meant that if you look after the investors’ interests, they will put their money in the economy, make it grow, provide jobs and everyone is better off.
Stockman himself later observed that “it’s kind of hard to sell trickle down, “so the supply-side formula was used to get tax policy that was really trickle down. Supply side is really trickle down.”
Over the years since the Reagan tax cuts at the top end, and the continuing application of a generally similar economic regimes the term neoliberalism also came into fashion, not only in the United States, but in other countries, including Australia. As this direction began to bite, both terms became increasingly unpopular, and taken up by opponents to point the finger at those ho brought it about.
There is a simple reason for this. The trickle down didn’t happen.
Judith Sloan wearing the title of economics professor at Flinders University, with qualifications from Melbourne University and the London School of Economics does not change this. Although I merely have economics qualifications from La Trobe and Melbourne universities, I know that in terms of the claim of benefiting everyone, her supply side school of economic theory has been a dismal failure in practice.
She uses the name of Thomas Sowell, to claim authority that sensible economists do not use the term Trickle Down Effect. Well he did. But like Stockman, came to realise that it was not a good selling point. She distorts Sowell to make her case.
Her problem is that it hits a raw nerve.
She also attacked Swan for suggesting, “after taking into account taxes and transfers, incomes in Australia are much more equal than in many other developed economies. When it comes to low wages growth, we should not think that Australia is alone Wage growth in this country at about 2 percent a year, is actually higher than a number of other developed economies.”
But what is she saying? She doesn’t disprove the assertions that wage growth is stagnant and that Australia has become a more unequal place. You can’t do this by suggesting that someone else is even worse off. As far and suggesting that taking into account tax cuts and transfers levels the playing field, it cannot apply, when most of us don’t have the advantages of generous tax loopholes, a massive tax evasion system, and lucrative government contracts and handouts.
when this is not distributed equally, is dishonest.
Judith Sloan is blinkered, not so much because she is an economist, but because of her ideology. She is rusted on with the Liberal Party, involved with the associated think tank, the Centre for Independent Studies, The Lowy Institute and is a long-time member of the HR Nichols Society. She was appointed to the Productivity Commission designed to, the Howard WorkChoices Australian fair Pay Commission was deputy chair of the ABC, which she has continually tried to slap down.
She also sits on the boards of Mayne Nickless, SGIO Insurance, Santos, and is chair of Primelife, which is a division of the Lendlease Group. And she is a leading writer for The Australian, Rupert Murdoch’s flagship in this country, which has its own political agenda.
As a neoliberal specialist in labour market economics, she believes that the market is the best regulator and the union movement is a key impediment to this. Although she tilted the lance against Wayne Swan, the real target was the Australian Council of Trade Unions (ACTU). On the one hand, she branded it as irrelevant and the Council’s congress as irrelevant. On the other, she took a swipe at its endorsement of the ACTU led Change The Rules campaign.
In another article, she came out swinging against the vote of Michelle O’Neill as the new president of the ACTU, the same way as she got stuck into Sally McManus, when she became the secretary. In the Michelle O’Neill case, it was about the CFMEU consolidating its power. So much for her view as irrelevant and ineffective.
In yet another article, she complains that the ACTU is claiming to act for the majority, when it only represents a minority. But if it is irrelevant and ineffective as she claims, what is the problem? She knows that her accusations not true. That’s what it is.
Bringing in popular Hollywood actor and activist Danny Glover to help the ACTU’s campaign has got to hurt.
The Change The Rules campaign is generating a steep rise in union activity and garnering support through the Australian community. The campaign is fighting for a change in the industrial relations environment that will raise the power of workers and lower that of employers, Which, has been strengthened significantly in recent years. To Judith Sloan and those who agree with her, this is beyond the pale, and threatens what they have been working so hard for, the imposition of Trickle Down Economics. Or should we say service to the big end of town.