Promise less, prepare for worst

July 15, 2008

 SOMETIMES the best way to make voters forget their ills – real and imagined – is to promise them less and prepare them for the worst case.

If politicians followed the rule of the possible when talking to the public, they would be better able to sell reforms. Perhaps they could even keep the electorate on side in the event of recession.

This advice come from George Megalogenis, senior writer for The Australian and is applicable this side of the Tasman too.

Remember the shock of Paul Keating’s “recession we had to have” press conference in November 1990 came not from the news itself, but from the denial of reality that preceded it. The then treasurer had repeatedly said that there would be no recession.

Imagine, for a moment, that Australia’s luck finally runs out, and a recession that may be engulfing the US and Britain reaches our shores by the end of the year, or early in2009…

Obviously, Kevin Rudd won’t want to talk the local economy down when the chances of recession seem low. But how would he go about changing the national conversation if things suddenly went pear-shaped? The Prime Minister would, of course, blame the previous Coalition government, and the rest of the world, in that political order.

Yet the lesson of recessions past is that governments lose credibility long beforehand, by overselling their ability to run the economy. They claim credit for the positive numbers, then look for scapegoats when the national accounts throw up a couple of quarters of negative growth.

It is a little difficult to remain credible when you claim the credit for economic growth which largely happens in spite of your government then deny responsibility for a downturn which is happening, at least in part, because of your policies.

The truth, if any leader were prepared to admit it, is the role of government is limited when the economy is humming. Stay out of the way of the market, take the opportunity to secure reform because change is easier to implement in good times, and keep a lid on expectations. The last bit is always the hardest, because in good times leaders err on the side of the bribe.

That brings to mind interest free student loans and a variety of other baubles we tax payers are funding.

It is only in recession that governments are really called on to manage the economy. They provide the safety net for those who lose their jobs and the public investments to prop up demand.

Sadly, we are cursed with politicians who spruik their expertise when it is not required, and who dodge their responsibilities when systems and markets fail.

Who does that remind me of?

 

p.s. I had to look up Spruik so in case you don’t know what it means either here’s a couple of definitions:

From Encarta  – to promote goods services or a cause by addressing people in a public place;

And from Wordsmith – to make an elaborate speech, especially to attract customers.


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