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Friday, October 24, 2014

‘ Unmitigated disaster’? We fact-check News Corp’s Whitlam haters –

‘ Unmitigated disaster’? We fact-check News Corp’s Whitlam haters –

‘Unmitigated disaster’? We fact-check News Corp’s Whitlam haters

News Corp columnists have been tripping over themselves to slam Gough Whitlam’s economic legacy. But economist Tom Westland says in their haste they have overlooked quite a few salient details.

If you’re in the market for a new hobby, I find there is
nothing more enjoyable than speaking ill of the dead. To prick an
overinflated reputation, to throw an egg at a solemn and recently
deceased visage: these healthy pastimes are as rewarding as actual
blasphemy ever was.

When Gough Whitlam died a few days ago, it was all but
inevitable that the tone of the coverage would be rather sugary. So I
was pleased to see that there was in Australia a whole tabernacle choir
of lone voices, each prepared to hold up the process of beatification by
having a word or two about the economy under Whitlam. And to be fair,
they all have the sliver of a point.

The Whitlam years are unlikely ever to be remembered for
superlative macroeconomic management. Then again, there aren’t many
Western leaders of the mid-1970s who come off looking like geniuses in
this respect. And while I can full-throatedly endorse Greg Sheridan’s wish
that “a few more people would check the facts on the Whitlam
government”, and though some of Whitlam’s friends can be suspected of
remembering his accomplishments with advantages, the case for the
prosecution as it currently stands is decidedly clumsy.

The first person who might consider checking “the facts” is
Sheridan. He asserts rather confidently that under Whitlam, “inflation
got above 20% at one stage”. His confidence is misplaced. During
Whitlam’s government, inflation as measured by the consumer price index
peaked at 17.7% in the first quarter of 1975. Since the beginning of
Australian Bureau of Statistics records, inflation has only exceeded 20%
in three quarters, and in all three of them, it was Robert Menzies’
pyjamas that were tucked under the doona in the Lodge. (Perhaps Sheridan
could let us know if “ruinous” is the right adjective with which to
garland our longest-serving prime minister.)

Things don’t get much better when Sheridan turns to the
international scene, where he is apparently more of an expert. Here we
discover (and though Sheridan generously allows that there was a tiny
little oil shock to contend with) that on the question of inflation,
“the outcome in Australia was much worse than in comparable countries”.
This might have come as a surprise to Aldo Moro, the then-prime minister
of Italy, where inflation reached 24%, or to Harold Wilson, who
presided over a British inflation rate of 26.6%.

Other commentators trying their hand at sacrilege fared no
better. Thanks to Gough, Miranda Devine lamented, “half the ­nation is
now on welfare”. In 2012, the last year for which the Department of
Social Services has released data, only around a quarter of the
population over 15 was receiving some kind of income support payment. A
bit under half of these are old age pensioners. Presumably, sans
Gough, we would have adopted work-for-the-pension schemes or simply
euthanised the elderly to spare them the moral decay of Devine’s
“culture of entitlement”.

Meanwhile, Andrew Bolt, making the daring argument that
Kevin Rudd was merely Whitlam digested and reconstituted, credited the
former with “the same debt blowouts” as the latter. When Whitlam left
office, Australia had negative net debt. But did not Whitlam “lose
control” of the purse, as Alan Mitchell wrote? Of the three budgets
prepared by Whitlam’s government, two resulted in surplus; deficits
accounting therefore for a third of his budgets. That fiscally continent
duo Bob Hawke and Paul Keating, on the other hand, recorded 10 deficits
from 13 budgets (about three-quarters in the red).

For all of the ruin occasioned by Whitlam’s supposedly
disastrous programs, government spending has, as a proportion of
economic output, never retreated to the levels seen before 1972.
Whatever else the electorate might have thought or now thinks of the
government he led, they have never really shown much interest in
reversing the increase in the size of government he oversaw. In this
sense, budgetary history since 1975 has been a remarkable vindication of
Whitlam rather than an repudiation.

You don’t have to accept my assessment of his legacy, of
course. It doesn’t require a great deal of inventiveness to compile a
case for the prosecution in the trial of Gough Whitlam, economic
helmsman. But I think we might say that Whitlam — a man whose opening to
China gave breath to an economic relationship that is probably our most
important, and who unilaterally cut tariffs by 25% — deserves a better
class of critic.

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