Aug 13, 2015

Launch of Dennis Glover’s an economy is not a society


Economist Joseph Schumpeter argued that turmoil was a necessary ingredient for achieving progress in a capitalist society.

His Theory of Creative Destruction holds that in order to create a new economy, we must continually annihilate the old one.

This is an economic determinism that is indifferent to humanity.

Dennis Glover’s book stands in stark contrast to Schumpeter’s assertions.

This is a book that puts people back into the economic equation.

An Economy is Not a Society, argues that the benefits of economic reform must always be balanced against the human costs they incur.

It asserts that progress needs to be achieved without having a disregard for negative consequences.

Dennis writes:

In the field of public policy, if human feeling cannot trump mathematical calculation, we are in danger of becoming a mere economy, rather than a society; digits on some economists’ spread sheet, rather than human beings living in actual communities.

I agree.

There is no humanity in viewing workers as mere economic units to be moved about in accordance with textbook theory, rather than as real human beings with families who are a part of a community.

There is no doubt that more than two decades of continuous economic growth has lifted average living standards and that many individuals have benefitted from this growth.

Dennis’s book is a thoughtful reminder that these years of economic growth have not come without cost.

He skilfully illustrates his point by transporting us to his boyhood home town of Doveton, about 35km southeast of Melbourne.

When Dennis was growing up in Doveton in the 1970s, it seemed to him that everyone had a job.

His Dad worked at the Holden factory.

His Mum worked at the Heinz factory.

All of his friends parents’ were also employed in manufacturing and his community, while not affluent, was secure and functional.

The workers of the area felt genuine loyalty for their employers and had a sense of identity.

Work was seen by employer and employee as a co-operative partnership – something not so common these days with the casualization of the Australian workforce.

Move forward 30 years and a lot has changed in Doveton.

While the removal of government support for manufacturing has delivered benefits for many, people who remain in Doveton tell a different story.

Dennis reveals that while the factories of his youth provided 7500 local jobs, economic change of recent decades has destroyed all but 500 jobs.

The unemployment rate sits around 21 percent.

The most compelling images of this book come early on when Dennis writes of returning to the street where he grew up.

While the street featured tidy, well-kept homes and a lively family atmosphere, it had become a picture of disorder.

Yards concreted over. Green areas overrun with weeds.

Indeed, his old family home was littered with car wrecks and it turned out the occupants were using it to run a backyard wrecking business.

Dennis writes:

… it’s because of all the sacrifices that the people of Doveton have involuntarily made that people in more affluent places get to drive their Audis and BMWs.

Dennis describes this process as “the revolution the little people lost’’.

An Economy is Not a Society is a passionate and unflinching critique of Schumpeter’s concept of creative destruction.

It is a brave and thought-provoking book.

You can feel Dennis’s strong and thoughtful passion on every page.

In many ways it is a polemic.

It should be of interest to all who believe in reform, particularly those who believe that Labor’s historic role is to represent the interests of those who most need an interventionist state.

It is also a book which has a moral purpose – something that can be lacking in the pure science of economics.

I don’t endorse all of Dennis’s sentiments.

But I agree with Dennis’s core argument that whatever benefits we believe can be gained by reform must be weighed against the costs.

While it is the role of government to achieve progress, we must not allow it to crush the legitimate interests of average Australians, working hard to raise their families.

Indeed, if we are serious reformers, we must accept that with change comes a responsibility not to leave people behind.

In my shadow portfolio of infrastructure, I’ve always argued that when considering whether we should build a new road or railway line, we should conduct cost-benefit analysis.

Dennis’s book is a reminder that we must apply the same discipline to the task of economic reform.

While Dennis’s canvas is his own community, his observations are relevant right across this country.

Here in Sydney the inner west industrial belt around Marrickville and Sydenham once provided many more jobs for unskilled workers, particularly from migrant backgrounds, than they do today.

There’s another example not far from here at Millers Point, in the shadows of the Sydney Harbour Bridge.

For decades, the Maritime Services Board provided public housing in Millers Point for dock workers and seafarers whose base was Sydney Harbour.

Generations of workers lived in this area, which grew into a real community – the type of place where people check in on their neighbours and look after each other.

Residents might have been poor financially, but they have always been rich in their sense of community.

However, the Baird State Government is selling the properties on the seemingly rational economic basis that the proceeds can be used to build more public housing elsewhere.

Economic rationalists know the price of everything and the value of nothing.

No-one in the Baird Government has considered what is being lost in this transaction – a living, vibrant, caring community.

When Mike Baird looks at Millers Point he sees dollar signs.

When I look at Millers Point, I see a community made up of people who deserve respect and care.

However, elderly residents of some of these homes have received eviction notices slipped under their doors.

The message being sent is that these people are disposable – that you can just put them out like the rubbish.

Never mind that many have lived in these homes for their entire lives and have established strong and effective support networks within their community – networks that have value.

We might not be able to express that value in dollars and cents, but we are fools if we pretend it does not exist.

Here is another example.

Right now, across Australia’s major cities, demographic change linked to the economy is ravaging communities.

In the past decade, there has been a shift in the location of jobs growth in our cities.

Previously, jobs growth was strongest in the suburbs in industries like manufacturing – close to where people could find affordable housing.

But the rise of the Digital Age has seen a shift, with jobs growth now concentrated in inner suburbs in service industries.

This means many Australians now live in drive-in, drive-out suburbs – suburban communities where housing is still affordable but where jobs are scarce.

Tragically, this means that many people spend more time driving to and from work than they spend playing with their children.

This development, linked as it is to shifts in the economy, requires a government response to preserve people’s quality of life and protect the economy from erosion of the productivity needed to create jobs.

Yet the Abbott Government is apparently unaware of this problem and has no strategy to meet its challenges beyond building a few more toll roads.

If it had any interest in the quality of life of average Australians, it would tackle the drive-in, drive out phenomenon by investing in better public transport and roads, tackling housing affordability and lifting housing density along established public transport corridors.

But that is the problem with this crowd.

They think of Australia as an economy, not a society.

As Dennis has pointed out so well, Labor Governments need to remember that the economy serves the people, not the other way around.

Or, in Dennis’s words:

Making the economy stronger is not an end in itself; creating a better society is.

Early in this book Dennis poses the question: “Can an economic theory exist in the absence of a moral position?’’

To that I say absolutely not.

Former US President John F Kennedy once provided a more eloquent answer.

Kennedy said:

Economic growth without social progress lets the great majority of people remain in poverty, while a privileged few reap the benefits of rising abundance.

In 2015, Labor must stand for economic reform.

But never without social progress.