Another week in which so-called free enterprise has proved to be very expensive indeed.

The private sector continues to suck insatiably at the public teat and that tingling feeling in your hip pocket is the invisible hand of the market vigorously removing your wallet.

It is all too tempting to write an epitaph:

CAPITALISM. Descended from the line of feudalism, conceived by the propertied aristocracy and born of colonial exploitation and robber barons. Won many wars against the interests of workers and flourished especially in an atmosphere of legislative anarchy, known to its proponents as “choice.” Eventually murdered and devoured by its twin children, Fear and Greed. Greatly missed by gamblers, speculators, stockbrokers, lawyers, chief executives and many other parasites on society.

Tempting, but probably premature. With a little help from its friends and a great deal from unwilling taxpayers, capitalism has survived many crises in the past and will almost certainly weather this one too, in the fullness of time. But even its most zealous adherents have been forced to admit that the system has suffered a setback.

It is a while since Tony Abbott proclaimed: “Capitalism is just another word for freedom,” and he would be unlikely to repeat the sentence this week unless qualified by Kris Kristofferson’s great line: “And freedom’s just another word for nothing left to lose; nothing ain’t worth nothing but it’s free.”

Even John Hewson, who once likened the economy to a rubber sheet (it might bobble up occasionally but there’s no point in trying to push the bobbles down again because they’ll only appear somewhere else) these days accepts that some kind of regulation is inevitable if the framework is to be preserved.

Of course, the truly demented economic libertarians, the ones who think that the “faire” in laissez faire has something to do with justice, are now trying to blame the left for the mess; stealing their lines directly from the American fundamentalists they now say it all stems from misguided attempts to house the poor, and indeed true capitalists would never dream of this, or any other, welfare measure. However, they have no problems with a system that indiscriminately and forcefully thrusts loans upon those clearly unable to repay them.

After all, that’s just business and government should never stand in the way of doing business. It should, however, bail business out when business gets into trouble, because after all the business of America is business: what’s good for General Motors is good for the USA. Hence the American taxpayer is to pay some $700 billion for essentially worthless mortgages, so the banks will once again have money with which to tempt the suckers.

In England the taxpayers will fork out even more — some one and a quarter trillion — but at least they’ll have something to show for it: part ownership of the said banks, indeed the greatest obscenity in the capitalist vocabulary: nationalisation. It is a word unspoken in the west since some 60 years ago, when the Australian Labor government of Ben Chifley put the proposal to the people and lost office, partly as a result. That it can even be entertained in post-Margaret Thatcher Britain is a measure of how desperate things have become. It is considered necessary to destroy the free market in order to save it.

So where does this leave Australia? Well, a little less fraught than the rest of the western world, at least for the time being. The Australian commitment to a mixed economy dates back to federation and even John Howard was unable to unravel it altogether; he never had the scope or the ferocity of his heroes, Thatcher and Ronald Reagan. Our banks were not allowed to get into the kind of free-for-all that has engulfed their overseas rivals, although they stretched the limits when and wherever they had the chance. Kevin Rudd and Reserve Bank Chairman Glenn Stevens are perfectly right in saying that our big four at least are comparatively well placed.

Stevens is also in a better position than almost any other central banker because Australian interest rates are still high by world standards. This means that he has a lot more room to cut than most, and thus more opportunity to stimulate the economy when the world recession starts to cross our borders, as it inevitably will.

On top of that there is Rudd’s infrastructure program, which may take a while to have a material economic effect in its own right, but is still very good psychology. The mere fact that the federal and state governments are going ahead with long term nation building projects is a signal that things remain pretty stable, and this must have a positive influence on business and consumer confidence.

And then, of course, there is China. Like Australia, China will not be immune from the world meltdown; as the Americans in particular stop buying its electronic gadgetry its rate of growth will slow. But Rudd has been told that it is expected to remain around 9%, which will still be more than enough to maintain a healthy demand for Australian raw materials. Commodity prices have fallen, and in the wash up China will end up buying less of our coal and iron ore and paying less for them. However, this decline will be cushioned by the shrunken Australian dollar.

All in all, we remain the lucky country, certainly a lot better off than most. Of course this won’t stop us whingeing and blaming the government for whatever belt-tightening we undergo. As so often, Labor has come to office at a bad time. But Rudd and his treasurer Wayne Swan have so far been steady and responsible, if a shade uninspiring. And with Malcolm Turnbull in egomaniac demagogue mode, they look better all the time.

As I fly out for a fortnight off at the Ubud Writers Festival in Bali, I reflect again that an Australian passport is just about the most desirable possession in the world, especially in the world as it is at the moment.

Peter Fray

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