How to deliver economic growth but lose an election

How is it possible to preside over a booming economy and yet still lose a national election?

Australia’s outgoing Prime Minister John Howard may be puzzling over that question as he conceded defeat to the opposition Labor party in just-concluded federal elections.

“I have reformed the Australian economy and left it the envy of the world,” said a subdued Mr Howard as he conceded defeat after 11-and-a-half years in power. He had previously won four general elections and has presided over Australia’s booming economic growth since becoming prime minister in 1996.

Indeed, Mr Howard’s Liberal-National Coalition’s campaign theme was that the economy is safer in their hands than in the hands of an “inexperienced” Kevin Rudd, a former diplomat, the leader of the opposition and now prime minister-elect.

Booming economy but…

Most Australian voters obviously didn’t buy that argument. The Australian Labor Party swept to victory with over 53 per cent of the votes. In the process, as many as six Cabinet ministers and parliamentary secretaries in the ruling Coalition may have lost their parliamentary seats. Even Mr Howard’s own seat hangs in the balance, pending the final tally.

Despite the booming economy, many Australians may not have benefited from it. In a recent speech to the National Press Club, Mr Rudd (picture, left) charged that Mr Howard’s government “has failed to ensure along the way that the boom delivers not just for the national economy as a whole, but for working families and the household economy as well…It is a government that has grown insensitive to the living pressures facing working families.”

The staunchly pro-business orientation of the government may have turned many working Australians against them. One of the most contentious issues in this election was about WorkChoices, a sweeping set of industrial relations reforms pushed through by Mr Howard that was supported by business federations but which critics said hurt workers.

“Mr Howard treats working people as economic commodities,” decried Mr Rudd.

Lessons for Singapore

The results of the Australian elections provide some valuable lessons for Singapore. Just like the outgoing Australian government, the Singapore government has always boasted about its stellar management of the economy and its ability to “deliver the goods” (i.e., economic growth) to the country. It has strongly argued that the only way forward for Singapore is to “enlarge the pie” by growing the economy (read: help big businesses become more profitable) as this will eventually prosper all Singaporeans, including those at the bottom of the pyramid.

This “trickle-down economics” theory in reality is often just that — a trickle. Voters in open democracies have been known to reject this political rhetoric. Back in 2004, India’s ruling party, the BJP, also suffered a shock defeat at the polls despite its slogan of “India Shining” and the “feel good factor” from the economic growth fuelled by the strong IT services sector. Analysts saw the defeat as a result of a backlash from the impoverished masses of people who had not benefited from India’s economic growth.

I was in Australia recently and almost all the opposition television commercials I watched focused on the rising cost of living, reduced workers’ rights protections and higher interest rates. Sure, the war in Iraq and global warming played a part in swinging public opinion against the government, but they were probably minor factors.

The bottom line is that elections, even in advanced democracies and booming economies, are still always fought on bread-and-butter issues. Voters are not impressed by impressive macroeconomic growth figures. The government of the day may claim to have delivered the economic goods, but if those goods don’t reach the doorstep of the average working family, they might be shown the exit door by the electorate, just like in Australia and India.

Sydney Morning Herald article on Singapore "disproportionate, unbalanced…misleading"

A reader, “Indochina“, posted a very well-analyzed comment on my blog post, “Myanmar junta leader’s family reportedly in Singapore” (Oct 2). This was in response to a Sydney Morning Herald article, “Singapore, a friend indeed to Burma” (Eric Ellis, SMH, Oct 1), which I linked to in my original blog post.

I’m reproducing it below because it is such a good piece on its own:

The actions of the Burmese junta are repulsive and beyond contempt and deserve the universal condemnation it is receiving. My friends there have suffered greatly and have seen family and friends die in the last uprising. In a heartbeat, I would be all for sending in an ASEAN peacekeeping force to mitigate the unbridled tyrannical power.

Nevertheless, I take issuance with Eric Ellis on his article. Its not that there isn’t a small element of truth in what he writes, but it’s disproportionate, unbalanced and a bit misleading.

Although he is well known writer, there is a sense that he writes with some underlying Australian chauvinism – sentiments which seem to be shared some of his fellow countrymen. The same sentiments are evoked in reading comments from Quantas, Telstra and so on. In any case, Ellis’s article has been carried with great speed through the Oceanic press which seems to indicate some popular position.

Perhaps in the Australian psyche, there’s a fundamental insecurity which arises from an inability to handle Asia rising, including ASEAN, in which Singapore stands as a prototype of increasing success – with many many warts and failings, but certainly not the Nee Soon whorehouse that one suspects that Ellis would prefer Singapore to have remained.

His previous articles – also criticisms of Singapore – the hanging of the Australian drug runner, the Shin Corp involvement in Thailand; were all tinged with some sense of the personal ire.

Why not talk about Thailand or the UK which are by far the top investors in Burma? Or castigate the Japanese, French, Belgians and Chinese who are also there. In the following “dirty list”, there are many nationalities to be accused, the least of which are Singaporeans. http://www.burmacampaign.org.uk/dirty_list/dirty_list_details.html

And why not make it clear that, by and large, Singapore involvement has been in economic development with the airport with new hotels and development of tourism. Or even that Burma and Singapore have long been linked and that ties goes back to the 19th century and this is evidenced in the earliest Singapore road names – Rangoon, Mandalay, Pegu, Moulmein, all testify to this.

Why not look at possible outcomes and compare this with Singapore’s investment into Vietnam, which at one time was the largest investor, and how this in its own way helped trigger the economic boom that is making Vietnam the second fasted growing nation and that this boom is resulting in increasing individual freedoms – and how this was ASEAN’s overall objective of engaging with the whole of Indochina from the mid 90’s.

He writes that without Singapore’s support the Burmese Junta would weaken and fail; that’s nonsense – the Burmese army is 3 million people and they are paid by the oil revenues from the UK.

Looking at some of the accusations Ellis makes, contrast this with what Burmanet (Burmanet.org) which is an online resource on Burma – and which is not afraid to say offensive things about the junta – has this to say about Tay Za.

“He knows that the regime has no future and is plagued with internal fighting. He also knows that his close ties with the top dogs make him vulnerable….Sources also report that Tay Za is keeping an eye on Deputy Snr-Gen Maung Aye, the army commander-in-chief, who has reportedly taken a dislike to him.”

Its not that I know anything personally about Tay Za or Lo or for that matter anyone in any way related to them, its just that the reporting is basically prejudiced and unbalanced in such a way as to be offensive.

With regards to the drugs trade in Burma, let us not forget that it was 2 divisions of the Kuomintang who were ordered by Chiang Kai Shek into northern Burma to develop the drugs business to fund the nationalist army. “To fight a war, you need guns. And to buy guns, you need money. In these mountains, the only money is opium. (General Tuan, speaking about why his Nationalist Chinese (KMT) troops were involved in the opium trade in Upper Burma)”. Go check it out, these guys were CIA funded

Finally, in considering Ellis’s accusation of Singapore’s complicity in perpetuating the Burmese junta, lets look at Australia’s high morals.

With regard to East Timor, Australia gave Indonesia economic and military assistance throughout the 24-year occupation and advocated on its behalf in the international community. The occupation resulted in the deaths of about a third of its East Timor’s population who got bombed with Napalm, with women raped by the thousands, and many tens of thousands more beheaded, tortured or simply disappearing. The report of the East Timor Commission for Reception, Truth and Reconciliation (CAVR) concluded that Australia was influenced by a desire to get the most it could out of maritime boundary negotiations affecting oil and gas reserves.

Ellis would do well to “take out the log from his eye first”

Thanks Indochina for the comment.