this past week in Oz

Rob Schaap rws at
Sat Aug 19 01:11:17 PDT 2000

There is an alternative


THE AGE (Melbourne)

Tuesday 15 August 2000

It's time for politicians and

journalists in Australia to

'fess up. It's time for them

to come clean about their

affair with TINA.

TINA stands for There Is

No Alternative. She is the

High Priestess of

Globalisation. Journalists,

in particular, like to repeat

her mantra over and over again: globalisation is

inevitable, it is a process that imposes the same

restraints on governments everywhere, and there is

nothing anyone can do to escape its iron embrace.

TINA decrees that all governments have to submit to

the same basic rules: low taxes, small government, lean,

mean welfare, and less and less control over the

functions of the body politic.

Though harsh, TINA is a comfort for her devoted

servants, because she relieves them of the need to

think. TINA is a queen of illusion, a murmurer of

half-truths and seductive simplifications.

But if TINA really rules supreme, why is it that some of

the most open economies in the world, the nations most

deeply integrated into the global economy, also have

the biggest government sectors and the highest

spending on welfare?

This is the startling, counter-intuitive truth discovered by

Dani Rodrik, the John F. Kennedy professor of

government at Harvard. Rodrik carried out an

extensive study of the relationship between trade flows

and government spending throughout the OECD and

came up with an extraordinary conclusion: countries

such as Austria, Denmark and the Netherlands, which

have very open economies with high levels of trade

flows relative to GDP, also have high levels of taxation

and welfare spending.

Rodrik's hypothesis about why this should be so is

simple, but compelling: "Societies seem to demand (and

receive) an expanded government role as the price for

accepting larger doses of external risk."

In other words, governments in these countries have

realised that the price of openness, flexibility and the

greater insecurity that goes with globalisation, is a

strong safety net to catch people when they fall.

His analysis is complemented by the work of Paul Hirst

and Grahame Thompson, British academics whose

book Globalisation in Question neatly pulls the

prayer mat out from under the knees of TINA's


Hirst and Thompson show that Denmark and Holland

have been able to retain the best features of the welfare

state while running open, highly competitive economies.

Holland, in particular, has been "a crucial experiment

for the effects of globalisation on the welfare state,

since it is one of the most highly internationalised

economies in the world, and has been for some time".

Like Australia, the Netherlands went through a period

of difficult and sometimes highly unpopular restructuring

of the welfare state in the late 1980s and early '90s. But

the results have been very different.

Unemployment in Holland, according to the latest

OECD figures, is running at around 3 per cent. The

Dutch labor force has increased by 25 per cent since

the early 1980s but, unlike the Anglo-Saxon

economies, the price of a growing economy has not

been growing inequality. The Netherlands, conclude

Hirst and Thompson, "have achieved a remarkable

turnaround, boosting unemployment, reducing the costs

of welfare without fundamentally undermining the

welfare state, and achieving modest but non-inflationary


Well, you might ask, so what? What do we have to

learn from a nation of tulip farmers?

In some ways, Australia and Holland are not that

dissimilar. We have similar-sized populations and

economies. What's different about the Dutch, it seems,

is a kind of enlightened pragmatism.

Rather than blind adherence to the precepts of

neo-liberalism, the Dutch have approached the

challenges of globalisation in a practical,

problem-solving way. Labor has accepted that the cost

of job creation is less regulation and greater flexibility

and uncertainty. Capital has accepted that the cost of

deregulation and a more flexible workforce is

continuing support for a strong welfare state, paid for

by relatively high taxation. In Holland, it seems, you can

have your gingerbread and eat it too.

In Denmark, which has a very similar system, the

gingerbread comes with certain strings attached. As our

own Federal Government prepares to deliver its

much-awaited welfare reforms, the Danish version of

mutual obligation makes an interesting contrast. Young

unemployed people must accept jobs or training

courses that are offered to them, or lose the dole. But

dole payments are much more generous than in

Australia. As a result, the Danes have a highly flexible,

deregulated labor market: because the stress of moving

in and out of employment is much less severe.

Why shouldn't this be the case in Australia too? Why

do most of our leading commentators and our

politicians, both Labor and Coalition, persist in a blind

advocacy of the Anglo-American model?

It's hard to resist the conclusion that we can't break the

habit of 200 years of forelock tugging. But this may be

unfair. It's probably truer to say that critics of

neo-liberalism have failed, until now, to present clear

and coherent alternatives to the cult of TINA.

Those alternatives exist, and not only in Holland and

Denmark. It would be a mistake to abandon

unswerving devotion to TINA for a similarly

single-minded infatuation with a Dutch or Danish

model. The left in Australia now should be

promiscuous, drawing its ideas from as many sources

as possible: from the lively debates about stake-holding

and new forms of social ownership taking place in

Britain, from the new forms of "citizens' work" and

social entrepreneurship being pioneered in the

arch-conservative German state of Bavaria, and from

the revived discussion of universal incomes in the US.

The sterile, sham "debate" about trade at the recent

ALP national conference only provides further evidence

that the Labor Party is not yet ready to forsake TINA.

If Labor really wants to win back the confidence of

voters, it should be courageous enough to open up

debate about new responses to globalisation, not close

them off.

Most importantly, though, the broad left in Australia

needs to speak the unspeakable: the simple truth that

good public services cost money and have to be paid

for by those who use them - we taxpayers.

The election of a Labour government in New Zealand

with an explicit commitment to raising taxes and

rebuilding the public sector shows that voters will


Kim Beazley has taken a step in the right direction by

refusing to rule out tax increases if Labor is elected. He

should now show that the party has the guts to govern

by explicitly linking modest tax rises to increased

spending on health, education, child care and job


Tom Morton's Background Briefing on the future of

the left will be broadcast on ABC Radio National

tonight (Tuesday) at 7.10. E-mail: eurytom at

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