Tuesday, 2 December 2008

Have yourselves a conservative Christmas!

A guest-post by Scott Stephens (originally written for an Australian newspaper)

Conservative politics is now everywhere in retreat. Or rather, it has been routed. Across the Western world, conservative parties are in disarray after suffering a catastrophic series of electoral defeats. Just think of the fate of the Liberal Party after Howard, or the Republicans after Bush, or New Labor in these final, dying gasps of the Blair-Brown regime (which has been overtly Thatcherite in its approach to economic policy).

Conservatism’s now dismal outlook is due, in large part, to the rather fickle affections of the free-market economy to which it has wedded itself. Even during the bad times, it finds itself in a position where it has to keep talking up the benefits of capitalism for fear of losing its political pedigree – that of being the best at managing the economy and generating massive surpluses.

But while political conservatism is everywhere being rolled back, many commentators and even economists find themselves looking to the likes of President-elect Obama for a different kind of conservatism: domestic or economic (in the traditional Greek sense of oikonomia, or ‘household management’) conservatism. Take Chris Patten, former Tory and now Chancellor of Oxford University, who has recently written that ‘the new president’s first task will be … to restore the real family values of saving, thrift, responsibility, and fair reward.’ Fareed Zakaria has expressed the same sentiment. ‘This crisis – dramatically, vengefully – forced the United States to confront the bad habits it has developed over the past few decades. If we can kick those habits, today’s pain will translate into gains in the long run.’

In other words, the new conservative hope is that the current credit contraction will force people to begin living within reasonable means once again, and thus will begin rectifying nearly three decades of fiscal insanity. The figures that measure the extent of our madness over this period are truly terrifying. In the United States, the ratio of private debt to income is 290%. In Australia, it is 165%. Admittedly, these ratios include people’s mortgages. But far from ameliorating these figures, it is the mortgages themselves that prove to be the problem.

One of the most notable trends over the past decade – on the back of the dramatic escalation in home equity due to the housing bubble – is people’s willingness to convert their mortgages into yet another line of credit for spending on luxury items and retail. And so, while under relatively normal economic conditions, the escalating prices of certain staples like food and fuel and clothing would cause a downturn in domestic economic growth, and thus a slowing in the retail sector, in the United States and Australia ‘consumer confidence’ and retail spending has gone through the roof!

And this brings us to perhaps the most obscene political decision made by Australian Prime Minister Kevin Rudd in his first year in office. Rudd inherited a $17.3 billion budget surplus from the Howard-Costello decade, a surplus that already had been amassed by paying down public debt (and thus ignoring social infrastructure) and by converting public debt into private or household debt, which now exceeds $150 billion.

In order to bolster his credentials as an ‘economic conservative’, Rudd-Swan then presented the Australian public with $21.7 billion budget surplus for the 2008-2009 financial year – again, money that could have been invested toward the future in the form of infrastructure, schools, universities, clean energy, and research and development, or money that could even have been used to honour our commitment to the UN’s Millenium Goals!

But instead, at the first sign of a drop in consumer confidence and a slackening off of retail-mania in September, the Federal Government promised to pump $10.4 billion into the pockets of the Australian public at a time of the year when they are guaranteed to spend up big and not pay down debt. Merry Christmas, indeed!

But before you spend it up and thus deepen our present addiction to an unsustainable and self-centred way of life, try reflecting on how we got here. Think, just for a moment, about having yourselves a conservative Christmas, in which we decide that we probably have spent more than enough on tat and trinkets, on leisure and gadgets, most often to the neglect of the common good and our moral obligation to care for one another. And think about what it says about our government, that at the very time when we should begin reshaping our habits and practices, orienting them toward others and toward the future, we are given just what we need to deepen our addiction to unrestrained spending.

Wendell Berry put it beautifully when he lamented that, in the United States, ‘the most alarming sign of the state of our society now is that our leaders have the courage to sacrifice the lives of young people in war but have not the courage to tell us that we must be less greedy and less wasteful.’

The last President to do that was Jimmy Carter, just before he was voted out of office in a landslide. His replacement? Ronald Reagan. And there began our present malaise.

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