Economy

Apr 4, 2018

Greens’ embrace of idiot fringe economics ruins years of credibility

Subsidised mortgages and universal basic income show that the Greens have lost the plot on economic issues, Bernard Keane and Glenn Dyer write.

Bernard Keane and Glenn Dyer

Politics editor / Crikey business and media commentator

Following their Batman debacle, the Greens appear determined to abandon their remaining economic credibility by embracing nonsensical housing and welfare policies: today at the National Press Club, leader Richard Di Natale will announce new policies on the Reserve Bank offering discounted housing mortgages and a universal basic income.

Both policies are the kind of magic pudding stuff that the Greens abandoned years ago in favour of more rational economic policies, including some eventually embraced by the major parties.

Free Trial

Proudly annoying those in power since 2000.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions

109 comments

Leave a comment

109 thoughts on “Greens’ embrace of idiot fringe economics ruins years of credibility

  1. Marcus Hicks

    Sorry, Bernard, but I’d rather have policies like the ones The Greens are advocating, over the clearly failed, status-quo “neo-liberal” economic policies still being loudly advocated by the Laboral Party.

    1. Arky

      Well, that’s a convincing argument. Bonus points for “Laboral” as if the party that wants to finally bring an end to the negative gearing distortion in the housing market and the party that wants to shovel 60 billion into the pockets of big business are exactly alike.

  2. Dog's Breakfast

    Yeah, a bit of a facile attempt to take down the policy.

    I haven’t read the Greens policy, but it sounds like Nicholas Gruen’s highly credible idea of using the RBA to provide basic retail banking, among other reasons to set some competition in the least competitive sector in the nation (ok, the energy sector might be worse)

    If it is just Nicholas Gruen’s policy prescription, I’m all for it, but I recognise that they will have to manage the issue of pumping up the mortgage market. I suspect that Nick Gruen has some policy ideas to defeat that problem.

    As for UBI, your review doesn’t even make it to facile. If we have a minimum wage (we do!) then I’m not sure how this could be used to undercut wages. And the maths, well, this is where the case has not been made strongly, but it would involve a complete re-set of the tax code, which we need in any case. Companies would have to start paying it, for one. People on big wages would have to pay much more at the marginal rates. It probably requires a cross over where people earning more than say $180K will pay more than they make out of the UBI and their current tax component, but everyone below that ends up better.

    Flow on positive effects of a UBI haven’t been remotely considered by the geniuses of economics. You continue to labour under the impression that classical economics has some useful insights, and mostly that isn’t the case. Things considered axiomatic are largely dreamland fantasy world assumptions.

    Bill Mitchell has much more useful to say on the subject. I’ll defer to his greater study where he is inclined to advocate a universal jobs guarantee, which would also work, but also requires classical economic theory to take a back seat.

    Personally, I want classical economic theory to be thrown off the bus rather than take a back seat, but then again, I’m inclined to look at something that has failed miserably for the last 20 plus years and decide that maybe that’s long enough.

    1. Draco Houston

      You just let wages stagnate forever and when people complain you go “Look, you got UBI, what are you complaining about?”

      Not to mention people above the minimum wage who would continue to have their benefits taken away bit by bit except now you got a UBI, nothing to complain about!

      It is just legislating Cashies

      1. Howard

        I’m not sure you understand the principles involved in getting to a society that is prepared to introduce a UBI. It certainly won’t be run by the likes of our current self serving politicians indebted to the elite ruling classes who contribute to their election coffers.

        Once the concept is accepted by the masses, an indexed basic income (as opposed to a minimum wage), would apply to everyone, irrespective of employment/unemployment, ability/disability and gender.

        Any other income would be market based and entirely separate from a UBI as far as wage negotiation is concerned. The ‘you’ you are referring to won’t have the power they have today as workers won’t be as financially vulnerable and so wouldn’t be as desperate to accept unreasonable wages. Bad employers just wouldn’t survive.

        And no, it’s not ‘legislating cashies’ as we will be living in a cashless society long before any UBI is likely to be introduced.

    2. Arky

      You think wages can’t be undercut because there’s a minimum wage?

      Um, that just sets a floor. That’s even assuming a minimum wage would remain in place with UBI (because the business people pushing UBI would certainly argue there’s no need when people are getting a minimum payment already) and that it wouldn’t be greatly reduced (it would be).

      I’ve yet to see a coherent argument for UBI which explains where the money for UBI comes from without slashing social services and infrastructure something drastic. It’s not a left wing progressive idea at all, it’s a nasty little thought virus coming from anti-government libertarians who don’t like welfare, regulation, universal healthcare, universal education etc and instead of spending taxes on those things want money just dumped in the hands of citizens.

  3. Deb

    Actually Bernard, as you know, the Greens do have excellent policies around health and education. There was never a suggestion that the UBI would replace those. And remember the role taxes play (or should) in income equalisation (and funding health and education). I’m happy to see new (or old) ideas being thrown into the same boring old trickle-down mix of the 2 main parties – and sorry to see you dismiss them in such a superficial way.

  4. drsmithy

    The Greens take a step back from the neoliberal cancer that has nearly destroyed civilisation, as opposed to the “go harder, it has to start working soon” perspective and they’re the crazy ones ?

    What’s the definition of insanity again ? Doing the same thing over and over expecting a different result ?

    1. Draco Houston

      UBI is neolib as hell.

      1. Howard

        As stated previously, I don’t think you fully understand the concept of a UBI or the forces behind this social approach to wealth distribution which has nothing to do with the failed neoliberal ‘trickle down’ economics that have got us into the current predicament of high profits and stagnant wages.

      2. drsmithy

        Some UBI proposals are neoliberal. The ones that want to use a UBI to replace all welfare and social services, and privatise all public services and assets.

        That is certainly the line taken above and by your local Rupertarian.

        But it is not, so far as I can tell – details are sparse – what is being proposed by the Greens.

        1. kyle Hargraves

          “Some UBI proposals are neoliberal. The ones that want to use a UBI to replace all welfare and social services, and privatise all public services and assets”

          Indeed but such is not the point of a UBI at all. If you wish the UBI to have a label then “Marxist” is as good as any because the point of a UBI is to redistribute the asset base. As someone pointed out it ought to be known as U.B wealth.

          Another correspondent suggested that examples ought to be considered from what occurs overseas. Such a proposal doesn’t assist either. As pointed out the proposal is a bit like the matter of the republic : there are any number of models. The idea is anything but new; in fact it has been around for decades.

          “But it is not, so far as I can tell – details are sparse – what is being proposed by the Greens.”
          Are you in possession of any proposal by the Greens that does possess detail with definitive procedures? The party has not published a single analytical document that is anywhere near tertiary standard; heaps of J.W. -like sheets of A4 : Yes.

          Complete with NIMBYism and keeping the rif-faff at bay in their suburbs there is an excellent chance that the big announcement from di Natale will barely amount to a belch.

          1. drsmithy

            Indeed but such is not the point of a UBI at all. If you wish the UBI to have a label then “Marxist” is as good as any because the point of a UBI is to redistribute the asset base. As someone pointed out it ought to be known as U.B wealth.

            The “point” of a UBI is generally dependent on who is pushing it.

            Some people push it as a form of citizens’ dividend.

            Some people push it as a way to privatise welfare.

            Are you in possession of any proposal by the Greens that does possess detail with definitive procedures?

            None whatsoever. Just what was mentioned by Di Natale.

  5. Nudiefish

    I too, believe that a people’s bank is not such a terrible idea. After all, the Commonwealth Bank did very well for decades putting pressure on the other banks in making them perform under true competition. Selling off the Com Bank was a capitalist’s wet dream come true.

    Of course, you would need firm rules to keep out the wealthy rorting the system, but that shouldn’t be too hard if the determination was there.

  6. Mike Smith

    Cost 10s of billions? But we make the AUD. Whilst the GDP is ok, printing money is irrelevant

  7. Gram Stoker

    >If you advocate UBI — paying everyone an non-means-tested basic income — you’re either a fool, or you have an interest in undercutting wages

    It might be smarter to reserve name calling until there is more data from experiments in various countries.

    1. Woopwoop

      There are a few experiments in limited areas, but I can’t see them working.
      How would the shelf-stacker in Alberta or wherever it is feel to discover a fellow shelf-stacker was getting the same wage PLUS UBI because s/he was living in the experimental UBI area?

      1. Howard

        Well if I was the ‘shelf-stacker in Alberta or wherever’, I’d be thinking, I hope this temporary experiment works, because I’d like to see it become permanent and universal.

        However, I’d imagine that the wages would be the same in both situations as the UBI would be subsidising the wage, rather than being additional. This in turn would lead to extra funding being available for more jobs.

  8. Howard

    I agree with your concerns about the Greens new policy on housing finance, but not your analyses of a UBI.

    Everybody is entitled to have their basic needs met, irrespective of their abilities or disabilities and this would be met by the UBI. However, just about everyone has additional needs and wants that they would be able to satisfy through various competitive endeavours. This would lead to entrepreneurialism or employers having to offer reasonable wages to entice aspirational workers over to their businesses.

    As for ‘whether people living in cities get more than people living in country towns’, why should they? When those subsisting on the UBI realise they can have a higher quality of life by living in a country town, the drift from country towns to the big cities would be reversed, solving two of our current biggest problems as follows:
    The continuing dysfunction of our cities due to population growth outstripping available, suitable housing and infrastructure and all the negative social consequences of cities that are just too big. And,
    Our dying country towns with the consequent neglect of health care, educational services and infrastructure spending.

    Our regional and country towns would be growing, as would their infrastructure and employment needs.

    And as for your comment regarding quality education and training or a better health service, the UBI would make it far easier for individuals to undertake the necessary education and training than our current system allows. And regarding a better health service, poverty is a major contributor to health problems and a UBI would greatly relieve the stress, with its consequent health issues, faced by the poor in our current system that is working only for the well to do at the expense of the majority.

    Why can’t people imagine a society where we can afford universal health care and education because we no longer need to rely on a large bureaucracy, police force and military?

    1. Draco Houston

      I’m sure it’ll be real generous and they wouldn’t set it to poverty levels at all! There’s no way it wouldn’t be reduced in real terms ever. If there’s someone I trust with providing the means to live, it is the Department of Human Services!

      1. Howard

        You’re still stuck in the old world here. Who are the ‘they’ you refer to. Surely you’re not still referring to the same old self serving politicians that have delivered us their ‘trickle down’ wealth program for the past twenty years.

        I guess years of capitalist brainwashing can have a deleterious affect on our independent mental faculties eventually. How about thinking ‘outside the square’ and envisaging a fair and just system ‘we’ introduce for the benefit of us all!

  9. [email protected]

    The thing about UBI is (although deeply flawed) it’s a step in the right direction in dealing with the possibility of a workless future, you can chant ‘STEM” all you want for schools but if we’re approaching a time where a significant amount of people are going to be unemployable through no fault of their own…well something has to happen, I’m a bit Dissapointed the article is so short sighted on the matter

    1. Draco Houston

      Progressive reduction of work hours towards 0 is the only path forward and UBI isn’t even a detour to it.

      1. Howard

        Okay, so society is now at a stage where we have reached 0 hours. Where is your income coming from now, given that you don’t trust ‘them’ to pay you a fair wage and you don’t have a UBI in place?

        In a rational society, as productivity continues to improve through automation, the ratio between wages and a UBI would also continue to change.

      2. kyle Hargraves

        Guys (Draco & Howard) why don’t we take a deep breath.
        Firstly, Draco, Applying a bit of C/C++/Ruby programming : UBI_is = !(neolib_as_hell); or, if you prefer Pascal : UBI_is = NOT(NeoLibAsHell); (semicolons are important) for C/C++ but optional in Ruby.

        The current experiments with UBI are being conducted in anti-NeoLib environments. If the strategy was Neo Lib we would be up to our ear lobes in UBI by now. The philosophy supporting UBI is that the product (GDP if you prefer) has already been produced. It it just a matter of “correcting” the Lorenz Curve (or the Gini Co-efficient) to what would be “nice”.
        Such is the essence but as with a discussion concerning a Republic there is a lot of choice and detail.

        Unfortunately, for you both, this “progression” is going to be resisted by ‘capital’ to say the least. Bertie Russell discussed his situation 80 odd years ago in his essay “In Praise of Idleness”. I’ve even found the link : viz., : http://www.zpub.com/notes/idle.html

        As Russel points out, ANY change to the “order of things” will be fought tooth & nail by capital. In fact history vindicates the point. The LAST thing the propertied classes (read ruling classes) desire is a change from the 12-15% of the population (or less) that call the shots.

        Howard observes : “Once the concept is accepted by the masses, an indexed basic income (as opposed to a minimum wage), would apply to everyone ..snip..”

        The problem is, Howard, getting the “concept accepted by the masses”. Damn it the USA can’t “accept” health care. They may want it for themselves but they are damned if they (the yanks) are going to pay for it for the benefit of anyone else. Such is an example of individualism to only a moderate sense. Universal health care works only where the society has some comprehension of social benefit and social cost. In any event ‘capital’ will make bloody sure that the masses do not NOT accept UBI and there are any number of latent head-kickers waiting for safe seats to do that kind of bidding.

        Then, as I pointed out in my post, UBI requires an ENTIRE reform of the tax code and some chopping about with the Constitution. Even if the proposal received 100% of political support tomorrow it is still a huge undertaking. More realistically, we’ll see pigs fly before it happens prior to 2070 (52 years away). I ought to declare that once upon a time I was an optimist.

        1. Howard

          Thank you Kyle. I have taken a deep breath.

          Thanks also for the excellent Bertrand Russell article which I have skimmed through and intend to read in more depth when I’m able to emerge from my current idleness (interesting to note it was first provided to the Massachusetts Green Party).

          I try hard to be an optimist, even though I’m totally aware just how hard capital fights to protect the status quo. This is ever so evident in the US which seems to me to be beyond redemption. However, this hasn’t prevented other nations entering into a fairer distribution of wealth with its citizens.

          As for getting the masses to accept the concept of a more equitable society is concerned, it may seem like bashing your head against a brick wall, but what is the alternative, total capitulation?

      3. AR

        That would be favourite – working towards fewer hours of work.
        If not a detour, UBI would be a good driver-reviver kiosk.

  10. Rais

    OK we know what the Libnats and Labor will be saying. Thanks for the heads up, we’ll be keeping an eye out for the detailed policy announcement. At last something beyond the normal neoliberalism?

Leave a comment

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details

Sending...