Treasurer Joe Hockey. Photo: Glenn Hunt
So the class war is over, according to a recent speech by Joe Hockey. It’s certainly in the Treasurer’s political interests to expel ideas of class distinctions and divisions from Australian public debate, ridiculing them as outmoded 1970s rhetoric.
Hockey must articulate a convincing political narrative to revive the fortunes of a government struggling in the opinion polls – as a consequence of its own poorly explained budget policies. In particular, Hockey needs a plausible rationale for dismantling Australia’s welfare system: inequality is OK, apparently, provided it enhances economic performance.
It suits many business leaders and the business media in joining a chorus of derision directed at anyone who challenges the "natural" logic that Australia is blessedly classless, and that the nation’s inequalities of income and opportunity are also "natural".
There’s only one problem; a large percentage of the Australian people don’t believe this nonsense. How do I know? Because in early June, a Lowy Institute poll told us so.
Significantly, the Lowy Institute discovered this disillusionment when it asked Australians for their views – not about the economy, but about our democracy.
According to the poll, many Australians believe that democracy is not working. Only 60 per cent believe democracy is preferable to any other form of government. Just 42 per cent of Australians aged 18-29 believe democracy is preferable.
Think about it: we have been unable to persuade a majority of young Australians to have faith in democracy.
These responses are a shameful indictment of an apparently well-educated and prosperous democratic community.
Surely, if Joe Hockey’s claims of a vibrant and classless Australia are true, then our democracy is universally celebrated by the people as the foundation of a free exchange of ideas, innovation and commerce?
It seems that the inequitable distribution of our national wealth has eroded Australians’ faith in democracy. 42 per cent of those polled by the Lowy Institute believe that "democracy serves the interests of a few and not the majority of society".
Perhaps Australians have lost faith in democracy because, as French economist Thomas Piketty asserts in his new book, Capital in the Twenty-First Century:
"When the rate of return on capital exceeds the rate of growth of output and income, as it did in the 19th century and seems quite likely to do again in the 21st, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based."
Thomas Piketty’s Capital is a compelling study of our 21st-century political economy, and as such, it is not just a book about money; it’s about democracy, and seeking a balance between the needs of capital and the needs of community. It’s a balance that over the past 30 years, Piketty believes has become radically lop-sided in favour of the rich.
Let’s take one recent Australian example from the Abbott budget: the proposal to increase the cost of university tuition fees and allow the universities to charge students what they like. Financially rational? Perhaps. These proposals certainly attack opportunity, potentially denying school leavers a reward for meritorious effort.
Appearing to undermine meritocracy might prove a fatal error of judgment by the Abbott government. Pricing the young out of a university education sends a disastrous political signal. It robs both aspirational parents and children of the future.
The key measure of a healthy democracy, as Piketty insists, is the distribution of wealth and reward for effort. Who gains the rewards of economic productivity? How fairly is national wealth shared? People notice when the distribution of wealth is not flowing their way. They absorb the economic lesson, and respond politically.
That transition is also simply plotted: a direct line from economic insecurity, government service cuts, job losses and welfare reductions to Britain’s anti-immigration party UKIP, the Front National in France, our own Palmer United Party. It’s still democracy, but it’s a path marked by bitter points of disillusion, fostering an angry politics of resentment and exclusion.
Why has the first Abbott budget left Clive Palmer enjoying the prospect of the political opportunities laid before him? The PUP can take its pick of unpopular measures. Opposing the budget’s age-pension cuts, Palmer will peel away an important bloc of the government’s electoral base.
Palmer’s opportunity is fueled by the government’s inability to explain persuasively why dismantling the welfare state is in the interests of the Australian community.
Business leaders and the business press have been little better, resorting to arrogant dismissals of protest: "take it or leave it". No dissent is tolerated, no discrimination allowed between the measures presented and the exploration of alternative savings.
Treasury secretary Martin Parkinson recently complained of the Australian people’s "lack of reality". Australians needed to accept the government’s proposed spending cuts without question.
Parkinson revealed his own disconnection from the reality faced by many Australians, who are routinely confronted by the increased casualisation of work, unending demands for productivity trade-offs in exchange for small wage increases, and the bureaucratic micro-management of those struggling on welfare. It was a budget calculated to aggravate an anxious community.
The juggernaut of global capital has not cowed Thomas Piketty; he’s an optimist. He believes that fundamental change is possible, including a fairer distribution of capital. Democracy, he insists, "will never be supplanted by a republic of experts" in determining economic policy.
Yet it was democracy – a community debate over the appropriate distribution of national wealth – that the Abbott government’s experts, the Commission of Audit, wilfully set aside, and which in turn the Abbott budget disregarded.
As Piketty observes, there is a "fundamentally subjective and psychological dimension to inequality" that policymakers must respect. How we feel about ourselves, as citizens or producers, cannot be reduced to mere calculation. Piketty better understands the connection between an equitable economy and a healthy democracy than either Tony Abbott or Joe Hockey.
Celebrating inequality is not exactly an appeal to the better angels of our own nature, is it? It is the Abbott government’s budget policies that will foment social tensions and agitate the discordant democracy revealed by the Lowy Institute: neither a strong nor happy base for nation building.
Dr Mark Hearn is a lecturer in the Department of Modern History and Politics at Macquarie University.