It’s hard to know whether to blame the pollies or the press gallery more for the sorry standard of political and economic debate in this country. Did that golden age Paul Kelly used to talk about when Paul Keating had everyone trained to cross swords on the arcana of economic levers actually ever exist? Anyway, as non-farm growth fell into negative territory and the Reserve Bank cut rates again (moving them back into an expansionary posture), all eyes were on Julie Bishop‘s cat claws, and her non-performance was at the centre of the parliamentary stage.
But perhaps, although he presumably wouldn’t welcome the Bishop meltdown, Malcolm Turnbull isn’t too worried about the level of triviality in the great economic management debate. The budget deficit yardstick went missing yesterday (that was so… last week) and Turnbull might not like to be reminded of his inconsistency and constant contradiction – whatever happened to that “economic narrative” we apparently were awaiting from him? Anyway, Malcolm Turnbull doesn’t think there’s much of a global financial crisis any more – because he hasn’t heard of any “big events”. Presumably events only happen if they’re on the front page of Australian newspapers. He might like to check out the leading indicators of the credit crisis which suggest we’re not exactly back to normality. But so parochial are our political leaders and media that debates about the restructuring of global finance and the dangerous leadership interregnum in the United States are apparently off our radar.
But there’s another disconnect happening in the economic sphere too. The 7 30 Report last night made much of the “grim summer of 2008”. Yet pundits were somewhat taken aback that retail spending actually increased in October. What could this mean? Here we need to remember one of the big lessons from the 2007 election campaign – political traction is gained through focusing on the lived economy rather than the sorts of numbers that excite economists. There’s a dialectic at work of bits and pieces of news and impressions being filtered through personal experience and anecdote. Most folks are also not going to be crying tears about big losses by bankers. If employment holds up reasonably, and the Rudd government can continue to shape public perceptions that times are difficult but everything that can be done is being done, confidence in the consumer sector may be more resilient than anticipated. Interest rates led stimulus of $600 a month over three months for those with a 300k mortgage won’t hurt, and neither will tax cuts and the Christmas fiscal package.
Current events are underlining the fact that economies rely on the creation of shared realities and that the “laws” of economic behaviour are shaped and varied through perception and sentiment. The Rudd government will be hoping that the retail figures are also an index of how those perceptions are being constructed among voters and consumers in Australia now.