Saturday, 11 November 2017

A good start

The new Public Policy Institute at the University of Auckland kicked off yesterday with a public lecture by Professor John Hewson on 'The most risky and unpredictable global outlook in my lifetime'.

You'll most likely know Hewson not as a professor but as the former leader of Australia's Liberal Party. As Leader of the Opposition he lost the "unloseable" 1993 Aussie general election to Paul Keating and in the unsentimental way of politics was rolled in 1994 by Alexander Downer.

He left parliament in 1995 - inevitable, perhaps, but a loss. He was ahead of his time with his Fightback! economic policies, but as his Wikipedia entry notes, "apart from supporting right wing economics, [he] also supported abortion, gay rights and working mothers", making him one of that critically endangered species, the economically literate and socially liberal politician. And irrespective of where you stand on Fightback!, it's clear that Hewson would have made a better party leader and Prime Minister than several of the EQ-less muppets that followed him.

His arguments about high unpredictability? Economists' analytical tools have broken down: printing money hasn't led to inflation, the Phillips curve has vanished, "impossibilities" like negative interest rates have materialised. Europe: common currency stresses haven't fully played out out, and he's pessimistic about the Brexit endgame. US: on top of everything else problematic, notably the Fed's challenge of normalising interest rates without knackering the US or global economies, there's  now Trump. Hewson had a great line, that what worried him most about Trump's 3.00am tweets was that Trump wasn't drunk at the time. China: debt, pollution, demographics, corruption, faked GDP growth, foreign policy adventurism. Everywhere: a breakdown of trust in established political processes. Geopolitics: North Korea in particular, where we're now at the mercy of an accident or miscalculation, but also elsewhere.

He spoke for nearly an hour without notes and (as the old TV panel game used to say) without hesitation, repetition or deviation: a class act. There was time for a few questions: I snuck one in, about what structural reform still needs doing in Australia. Lots, was the answer, across all policy areas, but only limited prospects of progress given the "Nope!" style of Aussie oppositional politics, for which he rightly fingered Tony Abbott. Another in the audience asked if Hewson saw any way of reducing the growing political polarisation we're seeing in a range of countries: short answer, no.

Not comforting, in sum, as a seasoned take on the global outlook. Personally, I'm more in "the world economy will muddle through" camp: the latest JP Morgan / Markit composite index of global economic activity continues to show ongoing (and likely accelerating) growth in the global economy, and if you take a look at The Economist's collation of the latest forecasts for next year you find that virtually every country of any consequence is expected to keep growing in 2018 (ex the haplessly mismanaged Venezuela). But equally I wouldn't be too surprised if some of Hewson's scenarios came to hand, either.

It was a lively start for the new Institute, which has also posted a first batch of policy briefings and which now provides some competition to AUT's established Policy Observatory and its set of briefing papers. I'm hoping for a bit of intellectual diversity, too: the market for academic hand-wringing over the evils of "neoliberalism" is already well supplied.

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