Something is profoundly wrong with the way we live today. For thirty years we have made a virtue out of the pursuit of material self interest: indeed, this very pursuit now constitutes whatever remains of sense of collective purpose. We know what things cost but have no idea what they are worth. We no longer ask of a judicial ruling or a legislative act: is it good? Is it fair? Is it just? Is it right? Will it help bring about a better society or a better world? Those used to be the political questions, even if they invited no easy answers. We must learn once again to pose them.
Tony Judt died on August 6, and wrote Ill Fares the Land during the advanced stages of his two-year battle with Lou Gehrig’s disease. The time of writing the book was not an optimistic time, and as its title suggests, the book does not paint a glowing picture of the present condition of many Western democracies. It contains a stern message to the generations that follow: the United States, United Kingdom, and other predominantly Anglo-Saxon nations including Ireland, Australia and New Zealand have spent 30 years deconstructing various components of the welfare state in pursuit of greater economic efficiency and the accumulation of private wealth at the expense of the public good. Something must change. We can do better than this.
Drawing heavily on the research of Richard Wilkinson and Kate Pickett’s The Spirit Level, Judt notes that inequality has grown in the last 30 years. In 2005 21.2 per cent of US national income accrued to the top 1 per cent of income earners, and between 1977 and 2007 the majority of jobs in Great Britain were created at either the very high or very low ends of the pay scale. Intergenerational mobility has collapsed, the poor increasingly stay poor and economic disadvantage translates into ill health, missed educational opportunities, mental illness, and minor criminality. As inequality increases mistrust grows. Thirty years of growing inequality have made chronic disadvantage appear “natural conditions of life”.
At a time when some economists call for austerity packages and inhibiting fiscal rules in the United States and Great Britain Judt reminds us that fiscal conservatives “take pride in being tough enough to inflict pain on others”. The days where toughness consisted of an ability to endure pain rather than inflict it upon others appear long gone. The arguments for fiscal consolidation in the United States and United Kingdom have largely been based on unsubstantiated fears that bond markets will punish governments that provide added discretionary stimulus to economies functioning well below capacity.
In the United States in particular bond yields at the long end of the spectrum do not indicate that stimulus spending has raised inflationary expectations. I am also yet to hear a convincing argument on economic or moral grounds that the deleterious effects of slightly higher levels of inflation (that in any event are yet to materialise) are comparable to double digit unemployment.
Although Judt’s essay is tinged with sentimentality and nostalgia for the post World War II era, there is the lingering recognition that the “past was neither as good nor as bad as we suppose: it was just different”. This does not mean we should immediately discount prior experience. Perhaps the only thing worse than succumbing to a sentimental view of history, is after all forgetting it. Perhaps worse than forgetting history is wishfully believing that progress is a naturally occurring thing, or that all change brings progress. Judt’s motivation for revisiting the post-war era is not to repeat it - rather we must revisit this period because legislators, business people and other authority figures have stopped talking about the collective “good” in the way that generation did.
Judt contends that following the horrors of war and depression there was a general consensus that if governments could convert whole countries to the task of total war, then they could also mobilise the people to achieve full employment and alleviate various social ills. This take is not particularly original. Most advanced economies took steps towards the universal provisioning of social services such as health, education, transport, housing, old-age pensions and unemployment insurance during this period. Social democrats managed to sustain full employment for nearly 30 years, while maintaining higher growth rates and lower levels of economic volatility than the pre-war free market epoch could achieve. They were motivated to achieve a more civilised global order and beneficent state so that the great upheavals and avoidable suffering of the recent past could be avoided.
These collective achievements could not have taken place without high degrees of mutual trust. Homogeneity and size of communities positively impact upon levels of co-operation and trust, whereas “cultural or economic heterogeneity can have the opposite effect”. In more recent decades increases in immigration to many developed nations have corresponded with declines in the reported degrees of social cohesion and trust that are so crucial for social democracy to thrive. What worked 65 years ago will not necessarily work today, and the essential work of the contemporary social democrat is to build trust in institutions, and among disparate peoples. This poses an interesting challenge for Julia Gillard, suggesting as it does that a political dialogue that gives oxygen to racial mistrust, whether intentionally or not, will undermine the preconditions necessary to pursue a Bevanite reform agenda.
Judt accuses the new Left of rejecting the collective ideal of their predecessors, and clearing the path for today’s ascendant individualism. Private objectives, “doing your own thing” and Carol Hanisch’s famous bon mot “the personal is political” have taken precedence over genuine concern for the other, the universal provision of public goods and a true sense of collective purpose. According to Judt during the 60s “the Left fragmented and lost all sense of shared purpose”. To be a radical in the 60s was to be “self regarding, self-promoting and curiously parochial in one’s concerns”. These are strong criticisms indeed, and in my view broadly applicable to today’s post-modern liberal elite also.
Judt draws attention to one of the chief fallacies raised in favour of privatising essential services - that associated with the benefit of transferring operational and other assorted financial risks onto the private sector. Drawing an analogy with “too big to fail” banks during the crash of 2008 he reminds us that government’s simply cannot allow transport, electric or gas utilities to grind to a halt. Governments always bear the electoral and financial risk of these essential services either operating poorly or failing entirely, whether in public or private hands. In the public mind, the operational failures of the private sector operator rest largely with the government. The new owners know this and it represents a massive risk of moral hazard.
Judt also reminds us that privatisation can sometimes be accompanied with allowing the State to relinquish moral obligations to care for the elderly, sick and the poor. Value for money should not be the only criteria considered when outsourcing essential services. We should be asking what impact privatisation will have on the fabric of communities, and broader government outcomes. Transport for instance is never just a “fee for service” arrangement. It is a means of connecting people with employment opportunities, education, health services, loved ones and friends. We also mustn’t neglect the reasons why certain essential services such as aged care and prisons were left to the State in the first place: services such as these invariably require a large degree of regulation and cannot be left to the market alone.
I do not advocate wholesale opposition to public private partnerships as some commentators do, largely on ideological grounds. I believe in a mixed economy, and simply say that if the private sector can do a demonstrably better job and deliver better outcomes to the broader community, then all well and good. As Keynes rightly put it: