My apologies for a long time between new threads. COVID’s fault, of course.

However, I hope you will all appreciate (in the broadest sense of the term) the following analysis by Michael Keating from John Menadue’s brilliant Pearls and Irritations (republished with permission):

Neo-Conservatives want to believe that Reagan and Thatcher achieved smaller government, lower taxes, and a booming economy. The reality, however, is very different.

Recently the Treasurer sort to appease his conservative base by citing the legacies of Reagan and Thatcher. Both are believed to epitomise small government, lower taxes, and improved economic performance. But as will be shown below, both Reagan and Thatcher’s actual record did not live up to the myths that their supporters want to believe.

Size of government and lower taxes
First, taxation did not fall under Reagan or Thatcher. While both leaders cut the amount of taxation paid by the rich, total revenue did not fall.

Instead under Reagan total current receipts represented 30.5 per cent of GDP, when he took office in 1980, and were still at that level when he left in 1988. While in the UK, under Thatcher, receipts increased by one percentage point from 37.7 per cent of GDP in 1979 to 38.7 per cent in 1990.

Furthermore, neither Reagan or Thatcher were able to seriously reduce government expenditure, although there was lots of stinginess and under-funding of government responsibilities. Thus, in the US, total government outlays as a percent of GDP rose from 33.7 per cent of GDP to 36.1 per cent under Reagan. While in the UK, over the lifetime of the Thatcher Government, total government outlays hardly changed; representing 42.6 per cent of GDP in 1979, and still as much as 42.1 per cent at the end in 1990, after peaking at 47.5 per cent in 1981 and 47.3 per cent in 1984.

Reagan also notched up large and continuing budget deficits to pay for his tax cuts to the rich. As a result, there was a massive increase in US gross public debt from 37.7 per cent in 1980 to 52.2 per cent in 1988. This debt was financed by bond sales, where the Chinese became the biggest holders of American bonds. Thus, somewhat ironically, the Chinese helped pay for the handouts to rich Americans. And it was only after the election of a Democrat, Bill Clinton, that the American budget was finally repaired, but the US budget was again plunged into deficit by future Republican Administrations.

Economic performance
Second, the evidence does not sustain the view that the economic strategies followed by either Reagan or Thatcher resulted in a strong economic performance.

In many ways the best way to assess a country’s economic performance is to compare it with that of other countries that have a similar level of development. On that basis, neither the US or the UK stand out as having a strong economic performance during the Reagan or Thatcher years respectively.

In the case of the US, under Reagan the US economy averaged the same annual rate of economic growth – 2.8 per cent – as the average for the other developed countries which were members of the OECD (Table 1). But this moderately good result reflected the fact that US population growth was substantially higher than average, and therefore employment growth also needed to be higher than average.

Table 1. US and UK comparative economic performance in the Reagan and Thatcher years respectively

	US or UK	Australia	OECD
US The Reagan years 1980 – 1988
GDP growth %	2.8	3.3	2.8
Employment growth %	1.8	2.0	1.1
Productivity growth %	1.0	1.2	1.7
UK The Thatcher years 1979 – 1990
GDP growth %	2.0	3.1	2.7
Employment growth %	0.5	2.3	1.1
Productivity growth %	1.5	0.8	1.6

The counterpart, however, is that US productivity growth at an annual average of 1.0 per cent under Reagan was well below the OECD average of 1.7 per cent. Interestingly, when the US economic performance is compared with Australia, which also had a fast rate of population and employment growth, we find that the Australian economic growth rate over the Reagan years was about half a percentage point higher than the US on average, with Australian employment and productivity growth both being higher than in the US. And during most of this period, the relative success of Australia reflected the policies of the Hawke Labor Government.

Turning to the UK under Thatcher, we find that on average annual economic growth was significantly below the average in other similar developed economies (Table 1). The main reason for this was the relatively low rate of increase in employment, and the rate of productivity growth in the UK under Thatcher was about the same on average as in the rest of the OECD.

But even that average economic performance hardly rates as an endorsement of the Thatcher policies. These policies were very divisive and had other longer-term negative consequences which will be discussed below.

Increasing inequality and its longer-term economic consequences

The outstanding feature of both Reagan and Thatcher economic policies was their legacy of increasing inequality.

In fairness, income inequality rose in most developed nations during the 1980’s because of the impact of changing technology and to a lesser extent, globalisation. In many countries, however, governments intervened to assist their workers to adapt to these changes, and they also improved the social wage, so that the increase in inequality was very much mitigated.

By contrast, the fiscal policies adopted by Reagan and Thatcher, which deliberately sought to redistribute income in favour of the rich, made inequality worse both absolutely, and relative to almost all other countries. Furthermore, this rising inequality had very damaging economic consequences for both countries.

In the US, in particular, the negative growth in the typical family’s disposable income over the almost two decades preceding the global financial crisis, was partly offset by these families going deeper into debt. That way the risk of economic stagnation, due to low consumer demand, was postponed.

But postponement was all that could be achieved. Eventually the build-up of poor quality debt in the US became unsustainable. US bankruptcies increased and the property market collapsed to half its value, thus precipitating the global financial crisis.

In sum, the economic record of the Reagan and Thatcher Governments was not only poor during the lifetimes of those governments. The rising inequality that their policies aided and abetted directly led to the global financial crisis, and the continuing economic stagnation that has followed since.

Luckily now, in response to the Covid pandemic, governments are finally repudiating the Reagan and Thatcher heritages.

My father served in the RAAF during the second world war. He was – officially – ground staff: aircraft crew – servicing the planes etc.. But from the little he disclosed to me towards the end of his life, he not only did that incredibly important job, but sometimes was – illicitly – up in planes, navigating them, sometimes even flying them. This post is a tribute to him, and all of the brave women and men who risked and lost their lives.

In honour of your grandfathers, grandmothers, fathers, mothers, brothers, sons, daughters, children – this is for you (and thank you to Pearls and Irritations and – especially – Henry Reynolds – for these words:

This Anzac Day we should question the relentless militarisation of our history and the cult of the digger. These ideals make it easier for Australian governments to commit to wars overseas and more difficult for critics to engage in serious debate.

In 2008, a few months before he suffered the onslaught of a fatal disease the Anglo-American scholar Tony Judt contributed an essay to the New York Review of Books entitled What Have We Learned, If Anything? His concern was that after 1989 the lessons of the past had been cast aside. What then, he wondered is it that we have misplaced in our haste to put the past behind us? In the U.S. at least, we have forgotten the meaning of war.

There is a reason for this. In much of continental Europe, Asia and Africa the twentieth century was experienced as a cycle of wars. War in the last century signified invasion, occupation, displacement, deprivation, destruction, and mass murder.

The United States avoided almost all the horrors. It was not invaded. It did not lose vast numbers of citizens or huge swathes of territory and it was civilian casualties that ‘leave the most enduring mark on national memory.’ Most Americans have been fortunate to live in blissful ignorance of war’s true significance.  As a consequence, the United States was, he believed, the only advanced democracy where public figures glorify and exalt the military, a sentiment familiar in Europe before 1945 but quite unknown today. For many American commentators and policymakers, the message of the C20th is that war works.

How is this relevant to Australia and to Anzac Day? That depends on what feature of Anzac day we consider. The national lament for all the young lives lost in war, the familial grief, the continuing impact on the wounded and scarred should make us all join hands in collective gratitude and regret regardless of the nature of particular wars.

But there is much more to Anzac Day than a paean to lives lost in war. The centenary in 2015 entrenched ideas which have been with us for a long time and which have been endlessly fortified by association with heroic sacrifice. The rhetoric is familiar given its ubiquity. The Anzac landing, generations of children have been told, made Australia a nation. The shores of Gallipoli were where the nation was born.  The spirit displayed there has been an inspiration,  a touchstone, ever since. The message is so relentlessly repeated by national leaders that, to many people, it seems disloyal to subject it to sceptical examination.

But it is an extraordinary proposition! And where did it come from? The idea that nations are born in war was common among Europeans and Americans in the late 19th century and early 20th century. It slipped easily from the tongues of a generation which had little experience of the real thing. Australia’s coming of age was proclaimed during innumerable speeches made while sending the colonial detachments off to the Boer War and then welcoming them home again. But it was an idea that belonged to an era that was coming to an end. By the end of 1915, it was sinking into the blood-soaked mud of the Western Front. It lived on in Nazi Germany and Fascist Italy but had become totally discredited by 1945.

However on earth did such a dangerous, atavistic idea survive and flourish in Australia? Is it an idea we would promote more widely? Proclaim that we came to national maturity by invading the Ottoman Empire at the behest of the British? That we needed to engage in a carnival of killing to be able to stand tall in the world? Apart from anything else, it is a profoundly irresponsible idea to preserve and propagate in the 21st century.

But of equal concern is the way in which the Anzac legend distorts our understanding of our own history. If the nation was truly born in April 1915 what came before is diminished. And it frequently appears that those who proclaim the idea know little about the history of colonial and early federation Australia. Otherwise, how could they cleave to such a proposition which falls apart under even elementary exegesis?

Whatever was it that the new federation lacked at the start of 1914 that was provided by the young men who stormed ashore at Gallipoli? Australia and New Zealand were the most democratic societies in the world and the most prosperous with wealth more evenly shared than was the case elsewhere. It was all the result of more than two generations of nation-building accomplished by thousands of men and women from all walks of life. How can a failed military campaign possibly compare with these diverse, demonstrable, achievements?

And what is even more pertinent is that Australasian political reform and social achievements of the period were known and admired in many parts of the world as the work of Marilyn Lake has established.  In the first decade of the 20th century, Australians saw themselves as ‘a confident, independent, global pioneer in creating an advanced democracy that drew the eyes of the world to the new Commonwealth.’  But when the war was over Australia was deeply divided and the spirit of social and political innovation has been crushed. In an earlier contribution to Pearls and Irritations  (23/4/14) Lake observed that ‘ during World War 1 Australia lost its way. Its enmeshment in the imperial European War fractured the nation’s soul.’

Not that we heard much in that vein during our carnival of commemoration between 2014 and 2018. What stood out was the fact that Australia spent so much and indeed far more than any other country. It all culminated in the extreme folly—the $100 million devoted to a museum in northern France commemorating the achievements of the Australian divisions.

Quite apart from the diversion of money from Australia’s cash strapped institutions it helps create the illusion that Australia was more important in the war than her small contribution of five  out of over 250 allied divisions in 1918 could possibly have achieved even if they did ’punch above their weight.’ But there was in Australia’s commemoration a decided note of triumphalism which might have been understandable in 1919 or 1920 but was odd to the point of aberration a hundred years later when we can see what a catastrophe the war was or as Niall Ferguson observed some years ago ‘the greatest error in modern history.’ Should our contribution to that terrible and avoidable disaster have been commemorated at all? Shame and remorse might have been more appropriate responses.

But there is purpose motivating the relentless militarisation of our history and the cult of the digger. They have contemporary relevance; they have real political power in the here and now. They make it easier for Australian governments to commit to wars overseas and more difficult for critics to engage in serious debate. The heroic image of the digger inhibits any assessment of the costs and benefits of war. Questions about the wisdom of engagements are seen as diminishing the sacrifice and suffering of participants. Without serious debate about our involvement in overseas conflicts, we appear to be shadowing our American allies, who as Judt observed, were convinced that war works.