In this episode of the Australia Together Podcast on Substack, I read Part 8 of Chapter 6 and the Epilogue of my latest book, The Public Interest Economy: the path to wellbeing, security and sustainable consumption in a democratised Australian economy.
Chapter 6 sets out a program of democratic institutional reform that will enable Australians to maximise their chances of building an economy in the public interest.
The program is built on a foundation of six pillars of reform:
Pillar 1 involves centring macroeconomic policy and governance in the federal Treasury (as opposed to the reserve bank) so as to integrate the operation of fiscal and monetary policy by use of effective functional finance.
Pillar 2 is to revise the National Competition Policy so as to reverse the damage wrought by neoliberalism on services essential for the wellbeing of all Australians.
Pillar 3 is to strike a National Accord on Wealth, Welfare and Wellbeing – an agreement between the people of Australia and their governments on the principles of fairness in economic decision making.
Pillar 4 is to establish an Independent Commission for National Democratic Engagement and Integrated Planning to give all Australians a forum in which they can:
exercise their voices as equals in democracy; and
collaborate to build a coherent long term plan to safely secure everyone’s wellbeing and that of the planet.
Pillar 5 is to establish a National Economic Transitions Commission to enable Australians to safely shift from unsustainable to sustainable economic compositions, as and when needed.
Pillar 6 is to establish a National Public Interest Collaboration – a democratic process by which Australians and their governments can collaborate to build an economy in the public interest, starting by establishing a social new deal in which Australians and governments agree to introduce a fair universal basic income matched with fair tax reform, and in the process, secure affordable access for all to the services that are essential for their health and wellbeing, including most notably fee-free tertiary education.
In this episode
In this episode I cover the sixth and final pillar in the reform program – the Australian Public Interest Collaboration; and I then move on to the Epilogue to the book. The Epilogue is about the contrast in the possibilites of life with and without a public interest economy, and it shows what governments will need to do to release Australians from the yoke of neoliberalism before it becomes impossible to create a sustainable future on the Earth.
The six pillars of reform suggested in Chapter 6 are core to our chances of defeating neoliberalism. They are our quickest way out of catastrophe because they allow us to democratise our economy. In turn that will allow Australians to overcome the political failures that have arisen from the capture of our governments by corporations.
Neoliberalism is like a fifth horseman of the apocalypse – a harbinger of the other four horsemen: pestilence, war, famine and death. Worse, it is the active and very well organised enabler of that dystopic future. And it is ramping up the pace of our destruction, pushing us far too close for comfort to the brink of extinction. This applies whether we believe in climate change or not. …
The good news, though, is that an effective response to these emergencies is close at hand. It is sitting right at our fingertips. All that is required is for us to realise that even though we may be perilously close to destruction we are also only millimetres away from the path to permanent prosperity. The permanent maintenance of prosperity is literally within our reach. And the barriers to it are only barriers of the mind. They are not real. There is no physical or financial barrier to our prosperity. On the contrary, there is enough money and resources in the world for everyone to live well.
We can also live well within the boundaries of the planet, because nature is resilient and the planet itself will survive, although it must be acknowledged that it may not survive in a way that suits humans. The planet, in its own time, can recover from climate change; but we may not recover from neoliberalism.
To ensure that we do recover from neoliberalism Australians need to conceive of an alternative method of economic decision making. This should take the form of a democratised approach to economic planning in the public interest.
A wonderful life is still possible in Australia if we warm to the idea of a public interest economy and recognise that it is not at all hard to build it; but it does require a well organised commitment to national integrated planning and it requires our governments to think differently about how money works and how it can best be deployed in the service of our wellbeing, financial security, and safety. It requires governments to abandon the neoclassical economics that is propping up neoliberalism.
Building a public interest economy - where do we start?
If Australians want to build an economy in the public interest, the best place to start is in a national conversation to design and establish a UBI. In fact, a national conversation to design a UBI is probably the only place where it would be feasible to start the transition to a public interest economy. This is because a public interest economy will require a new deal to be made between Australians and governments for their economic and financial security.
To put it succinctly, if we are to establish a public interest economy, a trade will need to be made between Australians and their governments – a trade in which the government promises to secure our welfare and wellbeing in exchange for tax reform. That sort of deal is unlikely to get off the ground unless it is made in the context of establishing a UBI.
A national conversation to design a UBI is likely to be the only place in which that deal can emerge in such a way as to make all parties feel safe in the making of the deal. It is the only place where the deal can be done, because it is the only conversation that will enable both parties (Australians and their governments) to secure what they want without fear of loss.
What Australians want is income security.
What governments want is tax reform.
Neither party is likely to get what they want unless they have a conversation about a UBI. It’s a circuit breaker, a point where we can safely call a truce in the battle between Australians and governments on public spending and taxing – a battle in which neither side has had a win since the rise of neoliberalism in Australia.
A conversation to design a UBI is essentially a conversation to re-design tax in Australia so that it is fair. It is a conversation in which everyone and every government can come out as a winner. Corporations may not win much – other than the benefit of operation within a stable and sustainable economy. But everyone else will be significantly better off. They will have given themselves the chance to live in an economy where their wellbeing and prosperity are maintained, better equipping them to meet coming challenges (including those of climate change) from the best possible position.
The likelihood is that if a UBI is introduced, net incomes after tax will rise for all Australians, depending on how we choose to arrange tax in these conversations. Net incomes are likely to rise substantially for the least well off.
But regardless of the extent to which net incomes may rise, a conversation about tax – or more specifically, how to fairly share out the burden of the taxation necessary to control inflation – is the clincher in any deal enabling us to establish a public interest economy.
Conversations about a UBI will need to result in a really good design of an integrated welfare and tax system that increases the confidence of Australians that they will be taxed fairly in future and in such a way as to secure their wellbeing and prosperity – permanently.
What is the trade we need to make in the social new deal?
If Australians agree to tax reforms in exchange for a UBI, they can establish both:
their own income security, and
the security of all the services that are essential for their wellbeing and safety.
As long as governments are prepared to agree to a UBI that is set at or above the poverty level, Australians will be able to say in reply that
OK, we’ll unlock the barriers to tax reform if you agree to fully fund our welfare and wellbeing.
This sort of deal also offers the advantage of a stable and sustainable economy, in that it gives governments permission to adjust total tax, up or down, in any given year to stabilise prices. And if complemented with:
the new policy approach to economic re-composition suggested for Pillars 2 and 5, and
the new governance arrangement for management of the macroeconomy suggested for Pillar 1,
the economy will have been stabilised in such a way as to create full employment in sustainable industries. This will be absolutely essential as the world enters the age of Artificial Intelligence (AI).
No government should even think about entering the age of AI without putting these pillars of reform in place; otherwise millions of Australians will be left destitute.
How easy will it be to make the deal?
A social new deal should not be difficult to make. It will depend on the political weight that corporations have relative to the weight of all the other members of the democracy. A refusal by a government to countenance the sort of social new deal that can be devised in a design process for a fair UBI with fair tax reform should be taken as testimony that a government has either:
been corrupted by corporations to favour corporate and financial sector interests, or
adopted a policy arrangement that gives little or no weight to the public interest.
By contrast, an acceptance of a social new deal that has been developed consistent with principles of fairness in economic decisions – like those that can be included in a National Accord on Wealth, Welfare and Wellbeing – should be taken as evidence of a government’s commitment to putting the public interest above corporate interests.
If the government favours corporate interests it will be unlikely to make a social new deal which delivers income security and services security. If it favours the public interest, it will be easy to build a fair deal that benefits all Australian households.
This is a simple, safe and life changing trade. Effectively, it releases every Australian from the threat of falling into financial difficulty and especially protects them from being unable to afford all life’s essentials. It gives them, on one hand, financial autonomy, and on the other hand, an underlying guarantee of access to essential services.
The combination puts them in charge of their own individual destinies. It puts them in the driver’s seat on the path to their preferred future. It opens the door to everyone for full participation in the economy.
From this position, Australians can be confident that there will be no risk associated with whatever tax reforms they might endorse. And governments can be confident that there will be no political or economic risk associated with whatever increased spending may be required for wellbeing.
Are there other barriers to a social new deal?
Yes. The devotion of Australian governments to neoclassical economics is a barrier to the formation of a fair social new deal – or indeed, any fair social contract that may be made between Australians and their governments. A fair deal can’t be struck by governments that insist on:
prioritising the balancing of their own budgets rather than helping Australians to balance theirs;
dragging money away from Australians;
refusing to spend what is necessary for their health, education and wellbeing;
imposing austerity; and
managing inflation by stoking unemployment rather than using fair taxation.
If we are to establish the fair trade envisaged in the social new deal, governments will need to suspend – or rather, fully repudiate – their long-held belief that we can only do what we can afford. They will need to dispense with statements like “we can’t fund every good idea” and accept the truth that they can. More particularly, they will need to accept that a government is not like a household and that, indeed, if a government insists on behaving like a household, it will actually be acting contrary to the public interest.
Even so, if governments refuse to countenance the idea of a UBI, there is no reason why Australians should deny themselves the opportunity to hold conversations to design a UBI, replete with fair arrangements for taxation and fair distribution of public spending on services for wellbeing. After all, why should Australians short-change themselves when they need not?
For more information on exactly how Australians can conduct conversations to design a fair UBI integrated with fair taxation, and secure essential services in a social new deal, listen to Episode 73 of the Australia Together Podcast: The Public Interest Economy, Chapter 5, Part 7.
For the latest information on the Australian Public Interest Collaboration visit the ACFP website here.
Want to know more about the falsity and dangers of neoclassical economics?
Neoclassical economics is the name given to the school of thought which holds that:
governments must tax or borrow to spend;
interest rate adjustments are a suitable mechanism for managing inflation;
government debt burdens future generations;
individuals and companies act rationally in free markets to determine prices;
the supply of money is restricted by a government’s ability to borrow;
governments are like households and must “live within their means”, and that government deficits are therefore a bad thing; and
unemployment is necessary to control inflation.
Every one of these theories is false. And to the extent that governments continue to support them, these entirely incorrect theories will embed financial and service insecurity for Australians. There is absolutely no necessity for such an outcome when a government issues money by fiat – as Australia’s government does.
Neoclassical economic theories are favoured by neoliberal policy adherents. They prop up neoliberalism. So they are highly dangerous for people and the planet. Governments must abandon neoclassical economics if they want an economy that works in the public interest. It is not possible to build a public interest economy by following neoclassical economics.
For a succinct insight into the differences between mainstream neoclassical economics schools and those of modern money (MMT) see Gareth Hutchens, Modern Monetary Theory: How MMT is challenging the economic establishment, ABC News, 17 July 2020.
For a more detailed list of the differences between neoclassical economics and MMT see Extracts from The Public Interest Economy, particularly:
Table 1 – Key takeaways for macroeconomic policy and governance reform.
Table 4 – Beliefs of opposing camps in economics.
Table 5 – Australian governments’ preferred approach to economic management versus the approach needed for a public interest economy.
Table 6 – Beliefs of Australian governments versus the mindset needed for a public interest economy
Listen to a full reading of The Public Interest Economy
A complete reading of The Public Interest Economy is available on the Australia Together Podcast commencing at Episode 58 and finishing at Episode 76.
The full book is available on Kindle here.
The paperback is available for mail-order here or click on the picture below. Or visit the Australian Community Futures Planning website to purchase The Public Interest Economy at https://austcfp.com.au/publications#public-interest-economy
Useful insights into The Public Interest Economy
Click on the picture to listen to a radio interview with Bronwyn Kelly about The Public Interest Economy.
