Are Australian Consumers Better off as a Result of Economic Rationalism - Coursework Example

ARE AUSTRALIAN CONSUMERS BETTER OFF AS A RESULT OF ECONOMIC RATIONALISM? Name Institution Course Date Are Australian consumers better off as a result of economic rationalism? Introduction The phrase ‘economic rationalism’ is one of political classification, and approval as well as condemnation. Even though economic rationalist contemplation and policy were element of a wider global trend, the term itself corresponds to a predominantly Australian contribution to political rhetoric. It was deployed first in the 1970s to acclaim the ‘economic rationality’ of Gough Whitlam’s Labour government, and then the term became very common in the late 1980s and early 1990s to criticize market-oriented trade and industry policies, economics as well as economists. For the duration of this later phase, supporters and antagonists of the economic restructurings of the succeeding Labour governments of Bob Hawke and Paul Keating (1983-86) frequently argued their case within the language of economic rationalism. Economic rationalism, in its easiest formulation, is a term that was applied to the viewpoint of government action that gave bigger precedence to hopeful market forces. The followers of economic reforms desired to minimize government involvement in the economy with the objective of boosting the responsibility that markets, prices as well as economic competition could play (Leach, 1991). Practically, economic rationalism entailed policies aimed at: (a.) Reducing or limiting government expenditure in addition to lowering taxes, (b.) Privatizing and corporatizing the public sector, and (c.) Deregulating the economy. Deregulation of economy involved abolishing controls on the exchange rate, as well as deregulating financial and labour markets. The main intention of such policies was to minimize constraints upon markets and capital, in addition to promoting economic development and efficiency. It is however argued that these policies had irregular as well as unforeseen results, and were not always successful in accomplishing their goals, (Quiggin 1997; Fenna and Tapper 2012). This paper thus tries to evaluate whether Australian consumers are better off as a result of economic rationalism. Definition of the term Economic Rationalism The best way of defining ‘economic rationalism’ could be that it is a term referring to a move towards a trade and industry policy that recognizes the pre-eminence of markets. The approach comprises the implementation of market indicators as the suitable standards for any actions to be conducted by the government (Battin, 1991). It was summarized by the Campbell Committee while adopting a criterion through which to regulate the monetary structure. In its view, the Committee stated that the most effective way of organizing financial movement was through a competitive market structure that is subject to a reduced directive as well as minimized government involvement (Australian Financial System Inquiry 1981:1). A liberally running market produces prices indicators that correctly reveal the requirements of customers. The standards of the inputs to manufacture are drawn from the worth that customers put on the goods that they themselves can produce. The competitiveness inbuilt in a market financial system encourages effectiveness in the utilization of capital. Lastly, a competitive scheme promotes novelty (the formation of new commodities) and entrepreneurship (the instigation of novel projects) since the persons who carry out these actions benefit greatly from what they produce (Pusey, 1991). The effects of economic rationalism to Australian consumers: The results of economic rationalism in Australia have been dramatic. The supporters of the economic reform would say that Australia now has a well-built financial system, one that endured the Asian meltdown of 1997 unharmed. They can also argue that employment is high and interest rates are low. Moreover, Australia is powering on and indeed among the leading countries as far as development is concerned with GDP increasing with an average of 3.5 % per year. Indeed this is true. The economic rationalism has delivered to the economy of Australia as projected. For instance, twenty years from 1980, when the reforms were initiated, to 2000, the entire remuneration share had dropped from 60 per cent to 54 percent as the revenue proportions grew from 17 per cent to 24 per cent (Head, 1988). The national account of Australia keeps records of proportions obtained by each party by dividing state revenue into three portions: the government proportion; the salary and wages proportion; and gross operational surplus (the earnings proportion). To the surprise of many including the opponents of economic rationalism, and in comparison to other OECD countries, the government proportion of Australia has remained at relatively the unchanged low level (Mendes 2003). For more than two decades now Australia has had low levels of government expenditure and a comparatively diminutive public quarter in relationship to other OECD countries. There were predictions by the opponents of economic rationalism/liberalism like Peter Reith and John Howard that the government share would be bloated. However, this has not been the case since the labour cost has fallen for over twenty years and we saw that by 1996, working people could save 75 dollars per week as retirement benefits. This meant they could retire from the deregulated labour market at the age of 55 and continue living as employed people from pension (Carroll, and Manne, eds. 1992). However, looking deeper into the matter, we notice that the trade and industry restructuring has brought about a redeployment of revenue, ability as well as resources from the rural to the urban, from the public quarter to personal quarter, from family unit to the market financial system; from customers to manufacturers. The GST (Goods and Services Tax) subtracts 10 % from the production expenses of companies and charges it to the customer, from the bottom 70 percent of remuneration earners to the top 10 %; and, the big one, from employees to firms. Corporations are the only huge gainers from the economic reforms as it was planned (Carroll, 1992). The common man in Australia is now feeling the pinch of economic rationalism. The economic reform is moving resources away from the common man in Australia in small bites and spreading it widely across huge groupings over a prolonged period of time. Most of people living in middle status are worrying that the rich people with lots of assets, and people with high incomes as well as big businesses are the major gainers of economic reforms/rationalism. People in the middle have been missed out by economic rationalism. The neo-liberal economic theory tried to make the middle people accept as true that the market was the most excellent method of recompensing citizens for exertion. In contrast, alterations in the allocation of revenue replicate exertion, value, as well as due compensation for the bona fide contributions of the individual stakeholders to the big financial system (Head, 1988). People in Australia now worry about jobs more than early 1990s and they accept as true that the job prospects and incomes of Australians are deteriorating. Most people feel more insecure in their jobs now than they felt before reforms started in 1980s. Middle Australians also feel that labour reform is offensive to the nobility of labour (Hyde, 1991). They feel that their own occupations have been converted into a tradeable product. Economic reform has also affected negatively the Australian families. After all these years of reforms, the Australian families find themselves having both parents in the employment market instead of one, delay childbearing, acquiring additional schooling, relocating in pursuit of well paying occupations, and after doing all that, going into huge debts (Quiggin 1999). To them the economic rationalism has reduced the quality of life. Parents are in agony seeing their own grown-up kids encounter a future in which they have to be contented with less – a globe where the kids are not expected to have possession of their own residence and one in which education and quality health care possibly will cost them more than they can manage to pay for (King, and Lloyd, eds. 1993). Most middle Australians feels that big businesses have too much power and are exploiting them. They are urging the government to regulate the corporations more firmly. The unrestricted competition has led to an industry being dominated by a single producer. The industry is now involving unrestricted economies of scale so that big corporations can manufacture at lesser unit charge than minor companies. Free market strategies are destroying the Australian financial system and causing difficulties as well as financial ruin for millions of Australians. Economic rationalism has been viewed as a policy which implies that ‘markets, financial systems and wealth provide the only dependable way of place worth on anything’ and which plans to mess up our public and societal foundations to make it happen (Brennan, 1993). Conclusion Economic rationalism, which is now known as globalization, is Australia and world at large has portrayed human beings similar to calculating machines whose sole purpose in life is to maximize one’s own personal wellbeing. Economic rationalism has contributed to the development three major values that are in contradiction to the values of society in Australia. First, everybody is now materialistic. Comparing with the days before economic reforms, it is difficult to deny that materialism is a central driving value nowadays. Money has become the new god of Australian people and has become a dominant driving force of their behaviour. Secondly, there is a lot of utilitarianism. The society is mainly concerned with the measured usefulness of processes, people and objects. This has led to decisions being determined around comparative helpfulness of people or processes, the perception of rivalry and the free market to establish the comparative usefulness of different people and processes. Individualism is the third value propagated by economic rationalism. We are encouraged to strive for personal achievements, sports stars are accorded god-like status and elections are determined around individual leaders and not the policies. The economy of Australia is going sour due to economic reform. To reverse this, the government should make sure that the economy serves people rather than people serving the economy. A well-organized social order calls for well-built markets and well-built vigorous governments as well as strong families all functioning mutually to place the citizens first so that generosity can prevail ideology. References: Australian Financial System Inquiry (1981). Final Report, AGPS, Canberra. Battin, T. (1991). What is this thing called economic rationalism? Australian Journal of Social Issues November: 294–307. Brennan, G. (1993). Economic rationalism: What does economics really say? In S. King and P. Lloyd eds. Economic rationalism: Dead end or way forward? Sydney: Allen & Unwin. Carroll, J. (1992). Economic rationalism and its consequences. In J. Carroll and R. Manne eds. Shutdown: The failure of economic rationalism and how to rescue Australia. Melbourne: Text. Carroll, J. and Manne, R. eds. (1992). Shutdown: The failure of economic rationalism and how to rescue Australia. Melbourne: Text. Fenna, A. and Tapper, A. (2012). The Australian welfare state and the neoliberalism thesis. Australian Journal of Political Science 47(2): 155–72. Head, B., (1988),‘The Labor government and "economic rationalism"’, Australian Quarterly, 60, pp. 466-77. Hyde, J. 1991. The case for rationalism. Weekend Australian 21 September: 27–28. King, S. and Lloyd, P. eds. (1993). Economic rationalism: Dead end or way forward? Sydney: Allen & Unwin. Leach, B. (1991). Review of M. Pusey, Economic rationalism in Canberra, 1991. Social Alternatives 10(4): 61–62 Mendes P. (2003) Australian Neoliberal Think Tanks and the Backlash Against the Welfare State, Journal of Australian Political Economy, 51, pp. 29-56. Pusey, M. (1991). Economic rationalism in Canberra: A nation building state changes its mind. Port Melbourne: Cambridge University Press. Quiggin J. (1999) Globalisation, neo-liberalism and inequality in Australia, The Economic and Labour Relations Review,10:2, pp. 240-59. Quiggin, J. (1997). Economic rationalism. URL: http://www.uq.edu.au/economics/johnquiggin/JournalArticles99/econrat99.html. Read More