Opposition in Crisis
Tim Mooney explores the motivations of those who reject global consensus as the way to recover from the financial crisis.
In March this year, the Finance Ministers and Central Bank Governors of the G20 nations agreed that steps to fight the financial crisis needed to include ‘bank recapitalisation’ and ‘fiscal expansion’. In other words, they advocated bailouts of failing banks and significantly increased government spending. In early April, the G20 Leaders’ Meeting confirmed these policies. The G20 includes wealthy liberal democracies, developing nations, and authoritarian states, including governments of every political stripe. An agreement between such a diverse group of leaders on a framework for economic recovery demonstrates the depth of global consensus on how to emerge from the current crisis.
This consensus between nations is not matched on a domestic level. In the United States, only one Republican senator out of 41 voted for the American Recovery and Reinvestment Act of 2009, President Barack Obama’s February stimulus bill. In the same month, the Coalition opposition in Australia voted against the Household Stimulus Package. In contrast, the conservative Prime Minister of New Zealand stated that his government’s approach differed from Australia’s only insofar as New Zealand had less money to spend on surviving the recession. There has been far more disagreement within nations than between them.
We might expect such conflict from opposing political parties. However, the present conflict appears to be based on neither ideology nor conviction. In the first place, both conservatives and liberals who hold government have agreed on a broad range of solutions, whereas their opponents have not.
Secondly, political oppositions have been a mess of contradictions on how to fight the recession. There are many sincere people with well-articulated reasons to oppose bank bailouts or financial stimulus. However, many of those who have jumped on the anti-government bandwagon during the financial crisis have done so opportunistically. In the recent Senate elections in the United States, non-incumbent members of all parties opposed bailouts of failing banks. Democrat Bruce Lunsford ran against the Republican Mitch McConnell, the senate minority leader. Lunsford sought funding from the Democratic Party for an advertisement that criticised McConnell’s support of the banking bailout. Charles Ellis (“Chuck”) Schumer, head of the Democratic Senatorial Campaign Committee, approved the funding. Hours earlier, Schumer and McConnell had worked together on the final draft of the bailout bill.
In Australia, the Coalition’s policy has been similarly confused. The Malcolm Turnbull-led opposition has stated that running the budget into deficit and amassing debt is “mortgaging our future”; but at the same time, it argues for tax cuts and public spending on infrastructure, a combination that would also blow out budget deficits. In New South Wales, the Coalition argues that budget deficits are necessary.
“Many of those who have jumped on the anti-government bandwagon during the financial crisis have done so opportunistically.”
Why do oppositions act in this way? The first answer is that even though governments may be punished for poor economic performance, a government that is given credit for saving the country from a serious crisis could make an opposition irrelevant for years. Franklin Roosevelt came to power in 1932 promising to bring the United States out of the Depression. He succeeded in returning the nation to growth, and the Republican Party was out of the White House until 1952. The economic recovery under Ronald Reagan in the early 1980s led to 12 years of Republican presidencies. Even now, Kevin Rudd is riding a wave of popularity, as the public perceives him to be capably managing the economy through the crisis. An opposition that meekly agrees with an incumbent government risks losing its relevance in public debate. An opposition that criticises the government at every turn has some hope of planting seeds of doubt in the public mind.
The second answer is that if the economic conditions remain adverse, the incumbent government will probably fall regardless of what the opposition does. The first Bush presidency fell during recession, even though Bill Clinton was an economic neophyte. John McCain’s status as a member of the incumbent party convinced voters that he could not be trusted on matters relating to the economy, even though Barack Obama had previously had almost no involvement in economic issues. Governments may be punished even after a recession is over. Paul Keating’s government fell three years into economic recovery, and John Major left office nearly five years after the currency collapse that most believe spelled the end for his government. Voters do not even seem to mind what economic policy an opposition advocates. In the depths of the stagflation crisis in 1980, Ronald Reagan won office, even though his own running mate called his economic strategy “voodoo economics”. Having an economically discredited opponent was enough to ensure victory.
Sniping from the sidelines may be a sound political strategy. However, it detracts from the collaborative development of effective solutions to the crisis. Political dissonance creates public division and doubt at a time when economic confidence and harmony is most crucial. Employing the usual political tactics may be easily forgiven if this is a transitory crisis. However, if the world does slide into a long-lasting recession, political oppositions may soon regret their knee-jerk reactions.
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