There is an alternative
By TOM MORTON
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
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
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 ozemail.com.au