Drawing heavily on the research of Richard Wilkinson and Kate Pickett’s The Spirit Level, Judt notes that inequality has grown in the last 30 years. In 2005 21.2 per cent of US national income accrued to the top 1 per cent of income earners, and between 1977 and 2007 the majority of jobs in Great Britain were created at either the very high or very low ends of the pay scale. Intergenerational mobility has collapsed, the poor increasingly stay poor and economic disadvantage translates into ill health, missed educational opportunities, mental illness, and minor criminality. As inequality increases mistrust grows. Thirty years of growing inequality have made chronic disadvantage appear “natural conditions of life”.
At a time when some economists call for austerity packages and inhibiting fiscal rules in the United States and Great Britain Judt reminds us that fiscal conservatives “take pride in being tough enough to inflict pain on others”. The days where toughness consisted of an ability to endure pain rather than inflict it upon others appear long gone. The arguments for fiscal consolidation in the United States and United Kingdom have largely been based on unsubstantiated fears that bond markets will punish governments that provide added discretionary stimulus to economies functioning well below capacity.
In the United States in particular bond yields at the long end of the spectrum do not indicate that stimulus spending has raised inflationary expectations. I am also yet to hear a convincing argument on economic or moral grounds that the deleterious effects of slightly higher levels of inflation (that in any event are yet to materialise) are comparable to double digit unemployment.
Although Judt’s essay is tinged with sentimentality and nostalgia for the post World War II era, there is the lingering recognition that the “past was neither as good nor as bad as we suppose: it was just different”. This does not mean we should immediately discount prior experience. Perhaps the only thing worse than succumbing to a sentimental view of history, is after all forgetting it. Perhaps worse than forgetting history is wishfully believing that progress is a naturally occurring thing, or that all change brings progress. Judt’s motivation for revisiting the post-war era is not to repeat it - rather we must revisit this period because legislators, business people and other authority figures have stopped talking about the collective “good” in the way that generation did.
Judt contends that following the horrors of war and depression there was a general consensus that if governments could convert whole countries to the task of total war, then they could also mobilise the people to achieve full employment and alleviate various social ills. This take is not particularly original. Most advanced economies took steps towards the universal provisioning of social services such as health, education, transport, housing, old-age pensions and unemployment insurance during this period. Social democrats managed to sustain full employment for nearly 30 years, while maintaining higher growth rates and lower levels of economic volatility than the pre-war free market epoch could achieve. They were motivated to achieve a more civilised global order and beneficent state so that the great upheavals and avoidable suffering of the recent past could be avoided.
These collective achievements could not have taken place without high degrees of mutual trust. Homogeneity and size of communities positively impact upon levels of co-operation and trust, whereas “cultural or economic heterogeneity can have the opposite effect”. In more recent decades increases in immigration to many developed nations have corresponded with declines in the reported degrees of social cohesion and trust that are so crucial for social democracy to thrive. What worked 65 years ago will not necessarily work today, and the essential work of the contemporary social democrat is to build trust in institutions, and among disparate peoples. This poses an interesting challenge for Julia Gillard, suggesting as it does that a political dialogue that gives oxygen to racial mistrust, whether intentionally or not, will undermine the preconditions necessary to pursue a Bevanite reform agenda.
Judt accuses the new Left of rejecting the collective ideal of their predecessors, and clearing the path for today’s ascendant individualism. Private objectives, “doing your own thing” and Carol Hanisch’s famous bon mot “the personal is political” have taken precedence over genuine concern for the other, the universal provision of public goods and a true sense of collective purpose. According to Judt during the 60s “the Left fragmented and lost all sense of shared purpose”. To be a radical in the 60s was to be “self regarding, self-promoting and curiously parochial in one’s concerns”. These are strong criticisms indeed, and in my view broadly applicable to today’s post-modern liberal elite also.
Judt draws attention to one of the chief fallacies raised in favour of privatising essential services - that associated with the benefit of transferring operational and other assorted financial risks onto the private sector. Drawing an analogy with “too big to fail” banks during the crash of 2008 he reminds us that government’s simply cannot allow transport, electric or gas utilities to grind to a halt. Governments always bear the electoral and financial risk of these essential services either operating poorly or failing entirely, whether in public or private hands. In the public mind, the operational failures of the private sector operator rest largely with the government. The new owners know this and it represents a massive risk of moral hazard.
Judt also reminds us that privatisation can sometimes be accompanied with allowing the State to relinquish moral obligations to care for the elderly, sick and the poor. Value for money should not be the only criteria considered when outsourcing essential services. We should be asking what impact privatisation will have on the fabric of communities, and broader government outcomes. Transport for instance is never just a “fee for service” arrangement. It is a means of connecting people with employment opportunities, education, health services, loved ones and friends. We also mustn’t neglect the reasons why certain essential services such as aged care and prisons were left to the State in the first place: services such as these invariably require a large degree of regulation and cannot be left to the market alone.
I do not advocate wholesale opposition to public private partnerships as some commentators do, largely on ideological grounds. I believe in a mixed economy, and simply say that if the private sector can do a demonstrably better job and deliver better outcomes to the broader community, then all well and good. As Keynes rightly put it:
The important thing for Government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.
However we need to be careful about how we assess the benefits of privatisation. A more sensible and holistic appraisal of the costs and benefits of privatisation must be undertaken. We should more carefully consider who really bears the risk associated with these projects if they fail, or are poorly run. We should also be more sceptical about how the risk analysis surrounding these projects feeds into the management fees charged by private operators. I think more and more these things are happening, and the public private partnerships of the future will be better than those of the 80s and 90s thanks largely to experience.
Judt’s analysis of the growing trend towards privatisation paves the way for one of the most telling passages in the book: If public goods, public services, public spaces, public facilities - are devalued, diminished in the eyes of citizens and replaced by private services available against cash, then we lose the sense that common interests and common needs ought to trump private preferences and individual advantage. And once we cease to value the public over the private, surely we shall come in time to have difficulty seeing just why we should value law (the public good par excellence) over force.
The case in point being of course the preemptive war in Iraq, but this is just one colossal example of the daily victory of realpolitik, and might against right that takes place in the every day lives of ordinary people. Idealism and altruism are suffering under the foot of self-advancement and self-interest in all walks of life. Numbers wishing to attain a business or legal education are increasing, whereas those seeking to enter the public service or obtain a liberal education have declined. Indeed business schools didn’t really exist anywhere until 20 years ago. No doubt this is aided and abetted by the growing requirement for students to privately finance their own tertiary education. These trends bread cynicism and undermine civic engagement and democracy itself.
Overseas, cynicism concerning politicians and political institutions has been manifested in low voter turnouts and political demobilisation. In Australia it has been manifested in growing claims that neither side of politics can be differentiated from the other, declining civic participation and membership of the traditional conservative and Labor parties. Alarmingly many of the baby boomers that currently dominate political debate “do not seem to believe very firmly in any coherent set of principles or policies … They convey neither conviction nor authority.” We seem trapped in a descending cycle of cynicism, suspicion and mistrust. Convinced that there is little they can achieve, today’s politicians do little and thus the cycle continues unabated. Need we look any further than the current Australian election which appears to be descending into a battle over who can promise least.
According to Judt our current Leaders are “beneficiaries of the welfare states whose institutions they call into question, they are all Thatcher’s children: politicians who have overseen a retreat from the ambitions of their predecessors.” As a young person I can viscerally relate to this criticism. The baby-boomers benefited from full employment, free university education, and high quality public services and now they try to unwind many of these rights for their own private benefit. These are decisions that would have been unthinkable to the great post war generation of liberal statesmen. We seem to have lost touch with that Burkean, yet strangely mutualistic conception of the social contract as a partnership between the living, the dead and those yet to be born.
Judt bemoans the fact that following the fall of communism and the “end of History” politics has lost its idealism. Politics devoid of idealism is reduced to a form of social accounting, management speak and the day to day administration of men and things. While this probably warms the hearts of many conservatives it is toxic to the Left. Need we look any further than Gillard’s election slogan echoing that most managerial and meaningless of phrases “going forward”. I imagine this slogan is profoundly alienating to the base of the Labor Party. How sadly it compares to Ben Chifley’s rousing “light on the hill” speech in which he defined the role of the Labor movement "not as putting an extra sixpence into somebody's pocket, or making somebody Prime Minister or Premier, but as a movement bringing something better to the people, better standards of living, greater happiness to the mass of the people”.
If I had to level a criticism against the book it is that economic growth, or growth in nominal income terms appears to be a bit of straw man. Economic growth does not by itself imply the unsustainable exploitation of real resources or the environment, however perhaps as the mantra of free market ideologues it may appear thus. In the developing world kick-starting economic growth will be crucial to reducing global inequality in the coming years. However economic growth without addressing the externalities of climate change and environmental degradation will be disastrous. We can have sustainable economic growth that creates opportunities for future generations and lifts billions out of poverty so long as there are mechanisms within this system that ensure that the real limitations to growth are fully taken into account. Although I concede that this may very well be easier said than done and by no means assured, this is a possibility that Judt may not have grasped.
Overwhelmingly I am sympathetic with Judt’s thesis that much of what is wrong with contemporary politics can be addressed by the classical political language of injustice, unfairness, imprudence, immoderation, inequality and immorality, and to a certain degree social democrats have forgotten how to talk about these issues. However, the current malaise of social democratic politics goes beyond a simple failure of prosecuting the age old arguments forcefully enough.
Ultimately the failure of the speech act has revealed a wavering of belief or confidence in social democracy as a universal “good” in itself. What is needed is a renewed sense of confidence that peace, full employment, and the universal provision of social services are achievable and worth fighting for.
Judt has provided an inspiration for defending the gains of the past, and prosecuting the case for the “incremental improvements upon unsatisfactory circumstances” urgently required. I heartily commend this book to those who share his concern about 30 years of neo-liberal dominance of the public policy landscape.
NB: If you enjoyed this commentary PLS join our Facebook group - to link up with other readers, and to receive regular updates on new material.