Australia, this is an intervention – Malcolm is here to help…

The fate of the last three prime ministers is intimately linked to their failure to explain the rapidly changing economic fortunes of this country.

Australia’s multi-decade boom in living standards is now confirmed as over. All the economic indicators and global forces are universally pointing to a once in 100 year structural adjustment.

The implications of this for political leadership lies in the fact that in the same way that Australia’s economic boom was mostly the result of luck and incredible timing, its medium term demise is primarily at the behest of external forces.

The last 25 years of political and economic leadership has seen the government of the day blame all the bad fortune on previous governments and the good fortune on the sitting government. John Howard proved the success of that model during the largest economic expansion in post war history, largely related to the ballooning levels of household debt and asset price inflation.

Kevin Rudd, Julia Gillard and Tony Abbott each tried to replicate this previously successful model of taking claim for the good news that came not as a result of good management, but external forces and internal expansion in private debt fuelled growth. The problem is, this strategy no longer works once the good luck starts to run out.

If you sell your key credentials as being able to direct and manage economic fortunes, the inevitable deterioration of those economic fortunes flows straight back to the ballot box and the party polling machine.

Over-promising and under-delivering is a recipe for losing your job in any business. And disappointment is electoral poison amongst Australia’s spoilt masses.

We have developed a back-patting cult of singularly talking up the Australian economy, to the complete detriment of any ability to talk honestly about the severe challenges we now face, and explain the long overdue reforms and shared sacrifice that is required to navigate them. Our undeserved exceptionalism has inadvertently been the death of the last three prime ministers.

And so it is that Malcolm Turnbull, the moderate voice of hope that represents the small-L liberal light on the hill has stepped up to the plate with some most interesting rhetoric. His first few sentences as leader were a pledge to engage Australians with honesty and intellect about our economic challenges and necessary reforms.

Malcolm’s true-liberal social and environmental policy credentials may be the great hope of the Left, (more of whom seem to like him than voters from the Right), but his approach to economic leadership and reform is the main game. It’s the reason Abbot was ousted, and the yardstick by which Turnbull will be measured. Indeed, the Left will undoubtedly be bitterly disappointed by the new Prime Minister’s failure to jump over to the progressive social and environmental vision to which most Australians aspire.

But that’s because like it or not, the economy is now the urgent priority, and in order to get traction on economic reform, Malcolm will need to keep the conservatives in his party happy by maintaining previous policy stances on what he rightly or wrongly views as lower priority issues. So prepare to be disillusioned by further inaction on climate change and important social issues.

But if Malcolm Turnbull can do as he claims, and properly explain the economic challenges ahead, he may yet break the cycle of political leaders being singularly blamed (both fairly and unfairly) for deteriorating economic circumstances.

As Australia continues to plunge into the massive economic structural adjustment ahead, if the new prime minister fails to honestly explain the external forces driving the adjustment, and make the very complex case for shared sacrifice and genuine reform, then Labor with the help of the newly reformist Greens will be elected in 2016.

If however he can succeed in this most unlikely task, Australians will be less surprised as their living standards continue to slide indefinitely. Labor will likely return to power in 2019 on a genuine anti-austerity ticket, as the dual mining/housing bubble finally bursts and leads Australia to join the rest of the developed world in punishing debt deflation.

Either way, as I’ve been saying for years, this electoral cycle and most likely the next few were always set to be a poisoned chalice. Out of that poisoned chalice will likely emerge a complete shakeup of the stale and repugnant “claim-and-blame” political circus of the last few decades, as Australians realise what they actually need is leadership that can force it to look itself in the mirror and face up to the worst of its excesses.

Like the reluctantly repentant drug addict, incapable of describing and resolving its own dependencies (in our case to private debt, asset speculation and rent-seeking, or “unearned” income), we are finally craving some boundaries and an intervention.

The myth of being a functional addict is only fun as long as we have a capacity to grow the size of our habit further. Our habit must continually escalate in order to overcome increasing resistance to the economic high that comes from the illusory wealth-effect of household debt expansion.

Deep down we intimately understand that the good times are over, but we need that fact to be explained to us by someone we trust and respect, someone with integrity and authority.

Whether or not that person is Malcolm Turnbull remains to be seen. I am very sceptical to say the least. Probably more likely is a political entrant from left field, as other countries currently in advanced stages of economic, social and political crisis have seen demagogues and ideologues suddenly become electable in the face of failed duopoly systems, systems that long ago sold their democracies off to the financial oligarchs of our post-capitalist era. We are not there yet, but it won’t be long.

We need solutions to our own ignorance and complacency, not just someone to tell us that everything is going to be alright and that Australia is exceptional. It’s plain for all to see that it’s just not true anymore, and most likely it never was.

As the unresolved imbalances and internal contradictions of finance capitalism continue to destroy the world’s economic, financial, social and political structures, Australia must inevitably suffer a similar purgatory to the rest of the developed and developing world. It must clear the decks from three decades of exponential private debt growth, and rampant financialisation and concentration of our once dynamic and productive economy.

Who has the courage and strength of character to tell Australia that it’s time to check into rehab? And will we thank them?

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