You are here

Joe Hockey - "the asian century" and the cost of welfare


Opposition Treasurer Joe Hockey, on Lateline, warned the public that the Coalition would be looking closely at ''the whole range of entitlements'' - that is, welfare benefits. Hockey said, ''We need to compare ourselves with our Asian neighbours where entitlements programs of the state are far less than they are in Australia.''
Is the "Asian Century" is about downgrading our lifestyles to those of the third-world standards of their teaming and overpopulated cities?

Image: two boys on a concrete wall, overlooking rubbish in Dharavi.
Original description: Inside Dharavi, Asia's largest slum of over one million dwellers. From producing clay pots to recycling plastic, this slum is also home to hundreds of businesses and defying the many myths of poverty.The sum of these small enterprises have an annual turnover of $665 million!

Opposition Treasurer Joe Hockey, on Lateline, warned the public that the Coalition would be looking closely at ''the whole range of entitlements'' - that is, welfare benefits.

Despite Tony Abbot's efforts to manage what messages the opposition sent to the media, Hockey delivered a provocative speech in London and then mismanaged the interview afterwards.

Hockey's thesis was that Western democracies have been spending more than they could afford on ''entitlements''. ''Government spending on a range of social programs including education, health, housing, subsidised transport, social safety nets and retirement benefits has reached extraordinary levels as a percentage of GDP,'' he stated.

Praising Hong Kong in particular, but also the wider region, he said: ''The Age - The concept of filial piety, from the Confucian classic Xiao Jing, is thriving today right across Asia”.   (extended families would be responsible for welfare).

According to the Classic of Filial Piety , Confucius once said: "In serving his parents, a filial son reveres them in daily life; he makes them happy while he nourishes them; he takes anxious care of them in sickness; he shows great sorrow over their death; and he sacrifices to them with solomnity". It is this single principle that holds the families together, thereby binding the society to hold itself, and ultimately protecting the whole race and the nation. At the moment it allows SE Asian economies a degree of advantage over Western economies in terms of avoiding long-term costs.

On Lateline, Hockey said, ''We need to compare ourselves with our Asian neighbours where entitlements programs of the state are far less than they are in Australia.''

According to an article in The Australian, 21/4/2012, Joe Hockey's "age of entitlement" speech to the Institute of Economic Affairs in London this week deserves a standing ovation. The Asian Century demands that the West adjust its economic lens to stay (and in some cases become) competitive in an era it is losing control of.

The Asian Century

Is the  "Asian Century" is about downgrading our lifestyles to those of the third-world standards of their teaming and overpopulated cities? 

The Age, 16/3/98, reported this statement by Phillip Ruthven, Chairman of IBIS Business Information:
"By 2025 Australia was likely to have ceded some sovereignty over population and some financial and legal matters to a grouping based on our closer neighbours in the Asia-Pacific Economic Co-operation (APEC) countries".

Graeme Campbell former MHR, founder of the Australia First Party, stated on 26/1/96 that Barry Jones (MHR) has said that Australians must decide whether they want more growth, more migrants, or retain their standard of living - they simply can't have both.

The Weekend Australian, 9-10/5/98 reported that governments  will face increasing pressure to erode both wages and welfare in line with global economic trends. Note, not just wages, but welfare, such as medical treatment, hospitals, pensions.

In the interests of the good of humanity as a whole, and for the benefit of our GDP, will Australia become a third world, polluted, over-crowded, Asian country, living in poverty?

The "Lucky Country" sold overseas and eroded

In 1995 Australia was the richest country on earth (World Bank survey, reported in the Australian, 18/9/95).  Australia used to be the "Lucky Country", but it's been exploited by attracting the overseas market for property investment, and mass immigration.  Decades of poor leadership and lack of patriotism is dragging us down to falling living standards and poverty. 

Industries have closed down, farmers have been driven off the land and our foreign debt continues to sky-rocket.  We have massive unemployment, poverty and appalling social problems. 

Our economy, our GDP, is mean to serve the people of Australia, and a system to pay for benefits such as pensions, infrastructure, public services etc.  However, the Economy has become a purpose, an  end in itself, and is being forced to bite the hand of those who have fed it!

Australia's wealth of ineffective politicians

The first target should be a reduction of politicians.  We are over-governed and burdened by expensive and ineffective politicians.  The three tiers should be scrapped to a Federal and local administration, and parliamentary privileges slashed.  The expensive and generous parliamentary retirement packages should go.  They belong to an age of privilege and of the gentry, something  that doesn't belong now. 

Good policies sacrificed for a bigger GDP

GDP is the value at market prices of all goods and services produced in the economy.  It depends on natural resources.  Just as there are limits to growth in the natural world, there are some physical limits to economic growth.

Governments  are facing increasing pressure to erode both wages and welfare in line with global economic trends.

There's an assumption is that a higher GDP growth rate will translate to a better quality of life and greater prosperity for the people.  Conventional economic thinking assumes that raw materials are unlimited and economic growth can continue indefinitely.

Steady-State economy- the better alternative

19th century John Stuart Mill, pioneer of economics and gifted philosopher, recognised that capitalism and the pursuit of wealth had to be restrained and regulated lest the desire relentless growth over-tipped  the capacity of a system to renew and sustain itself.

Under a steady-state economic model the GDP is fixed, with stable energy and a stable population.  However, it’s a growth in GDP by the standard measure that economists use to define GDP.

There are “tipping points” for economic growth, and once they are reached, growth becomes negative in impact.

Herman Daly, one of the founders of the field of ecological economics and a leading critic of neoclassical growth theory, defines a steady state economy as:
An economy with constant stocks of people and artifacts, maintained at some desired, sufficient levels by low rates of maintenance ‘throughput’, that is, by the lowest feasible flows of matter and energy from the first stage of production to the last stage of consumption.
Daly, Herman. 1991. Steady-State Economics, 2nd edition. Island Press, Washington, DC. p.17.

Image: two boys on a concrete wall, overlooking rubbish in Dharavi.
Original description: Inside Dharavi, Asia's largest slum of over one million dwellers. From producing clay pots to recycling plastic, this slum is also home to hundreds of businesses and defying the many myths of poverty.The sum of these small enterprises have an annual turnover of $665 million!

Comments

What Hockey obviously fails to remember is that in most 3rd world countries they don't pay any tax, unlike the extortionate taxes in Australia...So if they want to reduce our living standards to 3rd world, then the taxes stop being paid..simple.

Although Hockey's comments leave me speechless not so much because of what he says but the sanguine way he expresses it, I can't let it pass. I guess he is talking about the hoy polloy-rather than himself

I listened briefly to Hockey's comments, and I found myself agreeing with him a little. Perhaps our entitlements programs do make individuals less ambitious. But then I tried to work out some counter arguments, and I saw some faults in his arguments. They do have a lot of unemployment and underemployment in those nations, perhaps as much or more than Australia. Those people are provided for by their families instead of the state, which is possible because the cost of living is far, far lower. Try to switch Australia over to such a model and you'd have to lower the cost of living substantially. i.e. reduce consumer spending, a lot. I don't think any politicians would like that very much.

Asian growth is all quantitative, with no clue.

Asian third world has an insecurity complex driving its proud governments to show the West, see we can be like you!

Well the West sees lots of development, tall buildings and choked traffic like the 20th Century West's ideals.

So Asia is still Asia, still mimicking the West. China only has leading stats due to its breeding frenzy. But try living like a middle class Chinese in a shoe box competing with billions!
Ching life vision is Medieval.
Where is the wealth generation? Where is the innovation? Where is the leadership? Where is PER CAPITA wealth?
So the World looks back to the USA to recover in its own right.

John Marlowe

Compared with Australia, which allowed is manufacturing base to be destroyed by Whitlam[1] , Keating and Howard, amongst others, China and other Asian economies can appear to be a long way ahead. While Australia turns itself into a big hole in the ground, the Asian countries use what we dig up from that hole to produce all sorts of seemingly marvelous and innovative devices for their own use and to export back here.

However, if we take a long term view of history, remembering that humankind, smart enough to burn fossil fuel had it chosen to, has existed on Earth for more that 25,000 years, John Marlowe is spot on about those economies.

Most of what is made in China, ends up in land fill in a matter of two years and little of what is left remains in use after 10 years, whilst the skies, oceans and land will have become saturated with pollution as a consequence. If we move forward a century or two, the net effect of manufacturing by the Asian 'tigers' will have been to transform the earth's non-renewable bounty of fossil fuels and metals into worthless landfill.

Whilst the Asian 'tiger' economies may seem impressive to some in these times, those who will inhabit the earth, two centuries from now, and their descendants, are hardly likely to concur.

Footnotes

[1] The Labor Government of Prime Minister Edward Gough Whitlam which governed from 1972 until 1975 showed vision and leadership and puts to shame the corporate glove puppets by which we have been governed since then. Its removal in 1975 by Malcolm Fraser, John Kerr and the CIA remains a terrible setback for democracy and Australian national sovereignty. Still, that government exhibited flaws which seem inexplicable in comparison its overall direction. One was Whitlam's removal of tariffs which had protected much of our manufacturing base. Another was Whitlam's collusion with the Indonesian Suharto dictatorship to cover up its invasion of East Timor during his last days in office. Yet another was then Energy Minister Rex Connor's moves to renew Australia's export of Uranium.

Are we entering the dumbed down cheap century?

I am waiting for quality innovative products to appear on Australian shelves from the Asian century.
I would prefer quality innovative products to appear on Australian shelves from local Australian manufacturers.

'Made in Australia' has so much more a feel good ring to it than 'fully imported' - except if you vote Labor.
And where is Gillard today? In Singapore enticing Singaporian foreign investment, Singaporian immigrants, and Singaporian imports, while offering Australia's military will train Singaporian troops.

Gillard has Rudd disease: treason.

John Marlowe

This is all about vilifying older people because they consume too much of the economy, and are causing the threat of an "ageing population". They are absorbing welfare but not contributing to society! This is despite the fact that young people have a much greater dependency on benefits and are the reason for all the infrastructure needed for child care, health, schools, families and urban expansion.

As for ecological succession, there are stages in growth. As in the natural world, for communities and individual species, growth can't go on forever. Once our society and economy matures, the emphasis must be on refinement, on reaping the benefits, of improvement and maintenance. It's time for qualitative evaluation of society, and populations, not for growth that continues to stretch resources.

Economies as well can't growth forever. Once they grow over their optimum size, the losses and costs are greater than the benefits. If our older people are too expensive to rely on for the growth of infrastructure, then governments have lost their focus.

Our economic model splits families up.

This makes it difficult or impossible for many people to follow the Confucian recommendations expected of extended families.

Families are only able to look after families when they live nearby each other. In Australia you are expected to drop everything to serve your employer, to up sticks and move to another state in order to look for work, to commute a hour or more away from your home address. I am always amazed at a similar Joe Hockey attitude in some hospitals where relatives (notably women) are expected to do patients' washing. This does not take into account that the woman in the family may be the main income earner and work irregular hours far from her home, do the cooking and washing, and drive children everywhere due to lack of public transport. Is she then expected, in peak hour probably, to drive to a hospital or hospice on the other side of town and visit the elderly and sick relatives and deal with their washing and bills? The short answer is, Yes, she is, but the reality is that she doesn't anymore.

Our economic model, where people must live wherever they can afford to leaves them with little choice about how far they commute and how far away from city centers and ammenities they live. Our economic model splits families up and that is because big business rules the roost with values entirely based on financial profit and no respect for family or for democracy. Joe fits right into this paradigm.

Some very good comments under this story, for instance about how there are few taxes in some Asian countries and how that explains the lack of services, but Australians pay plenty of taxes, so why do they lack services? Furthermore, of course, we pay for many things now two or three times over. We pay taxes, charges, tolls and GST.

Our politicians have developed a robber mentality and a culture of entitlement. It is particularly hard to listen to a very fat politician talk about how everyone else should pull their belt in. There is something obscene about the notion.