Guest Post John Adams: Response to Bernardi Article

Given the violent reaction here on the Cat to my op-ed regarding my Senator Cory Bernardi op-ed, Bernardi fails national economic test, which was originally published on the Spectator Australian website, I thought I would come back with some comments to respond to my critics given the seriousness of some of the issues which the column covered.

As a first order of business, I should note that a critical paragraph in the op-ed piece was accidently not published by the Spectator Australia (through a computer malfunction with their publishing system) which may give the reader additional context. Hence, that critical paragraph did not make the version which was published on Catallaxy Files. For those interested, the corrected version is now on the Spectator Australia Website and I would encourage readers to read the piece again.

Secondly, I wish to reiterate for the record that I resigned from the Liberal Party on 13 May 2016 and that I did not for vote for the Liberal Party at the 2016 election and have no intention of voting for them at upcoming elections whether they be federal, state or local. Hence, any accusations that I am operating as an agent of the Turnbull Government or the Liberal Party is incorrect. I am not a member of any political party and remain independent in my views and associations.

Thirdly, when I called for a whole host of activities or objects to be ‘eliminated’, I didn’t not mean eliminated by the government through new laws or regulations which has been one interpretation. Rather, what I meant was that these things need to be eliminated culturally by individual Australians making conscious economic decisions which would lead to substantially less consumption and substantially more savings. That is a change of habits individually made on a voluntary basis.

Fourthly, on the issue of race, it is ridiculous to suggest that my comments were an attack on white people or white bashing. Australia has historically (even before WWII) had high rates of consumption and debt and low rates of savings. The 1880s and 1920s (prior to mass continental European immigration came to Australia) are two periods which bear this out.

Moreover, Australia’s over 150 years ongoing current account problems is also an indication of a society which has long relied upon foreign capital and an inability to save for its own domestic investment and consumption requirements. Anne Henderson’s biography on Joseph Lyons clearly calls out that Australia was the most indebted nation in the British Commonwealth leading into the Great Depression. London Bond holders in 1929-30 were in fact very nervous that Australians would not meet their obligations to paid back the debt which they had borrowed during the roaring 1920s. If Jack Lang, the then premier of NSW got his way, we wouldn’t have.

There are definite Australian cultural habits, specifically as it relates to alcohol and gambling which have been long ingrained into Australian culture and they date back to the establishment of the colony of Sydney. I don’t think it is racist to call out this cultural behaviour and link this to attitudes relating to consumption, savings and debt.

Being the son of two immigrant parents who came to Australia in the 1970s (I was born in Australia in 1981), I have been able to witness clear differences in attitudes to work, consumption, savings, debt, etc between myself and my peers in the Illawarra region in southern in NSW. I have also been able to talk to many 2nd generation Australians from non-British and non-Irish backgrounds who have witnessed some of the same differences in cultural behaviour that I have observed and whose parents also saw the same differences when they came to Australia in the 1940s, 1950s and 1960s from Southern or Eastern Europe.

It may be uncomfortable to talk about some of these differences openly, but it doesn’t make them any less true. One can hardly claim that it was Greek or Italian Australians who created the laid back Australian culture can they?

My parents were fortunate enough to pay off their house in 5 years in the 1980s through significant hard work and economic sacrifice. Also, my wife and I were fortunate to pay off a $313k mortgage in 4.5 years in recent years which involved us saving anywhere between 50% – 75% of our income through the financial year and putting it on the mortgage.

If more Australians saved at these sort of levels, Australian financial institutions as well as individual Australians would have more capital to invest in domestic projects which have high capital requirements particularly in the mining, infrastructure (including transport and utilities) and agricultural sectors.

Fifthly, I have been writing in several publications for more than 12 months and have been talking to members of Parliament for years about significant structural imbalances which exist in the Australian macroeconomy. Some of my columns have been republished on Catallaxy Files have warned readers on Australia’s household and foreign debt bubbles.

You can also see some of my concerns on news.com.au, particularly the article titled “Australia headed for Economic Armageddon.”

Australians have racked up record high debt in the non-government sector more so than the 1880s and the 1920s (two periods which preceded economic depressions). I am deeply concerned about this development and what this means for the Australian middle class in the event of an international economic shock.

Most Australians today are completely asleep to the significant systemic economic risks which they are currently exposed to. I do acknowledge that government policies have played a significant role in building up the current structural imbalances and bubbles. Having said this, one cannot ignore cultural or sociological factors which have contributed to current trends in Australian consumption and asset allocation decisions. Both have to be considered as part of the broader debate.

Focusing on non-government debt is important economically because economic research has shown that an economic collapse in the non-government sector will result in a deeper and longer lasting economic calamity relative to a government going bankrupt. Having said this, my comments does not mean I do not want substantial cuts in Commonwealth and State government spending.

On the contrary, I once argued with Finance Minister Matthias Cormann at a Young Liberal dinner in 2010 that Fraser’s and Howard’s conservative economic credentials should be questioned given that they both failed to return Commonwealth spending as a proportion of Gross Domestic Product (GDP) back to pre-Whitlam levels (i.e. 18% of GDP).

I strongly argued with Cormann that the Coalition under Abbott should seek to return Commonwealth spending to pre-Whitlam levels which would have required a real cut in government spending by approximately $200 billion of the forward estimates, which would have been the largest cut in federal government spending in Australian history.

Hence, for all those on Catallaxy files who are seeking substantial cuts in government spending and a reduction in the role of the state, I am agree with you whole heartedly.

Finally, many people have not appreciated my article because they believe that I should be directing fire at Turnbull, Shorten and Di Natale given how far away they are from libertarian and conservative ideals. While I agree that neither the Coalition, the ALP or the Greens do not share my values and are not addressing my core policy concerns, this does not mean that politicians on the right such as Bernardi or Hanson should not receive critical scrutiny, particularly when inadequate policies are put forward to address national public policy challenges.

I am not a tribalist and will not blindly follow any false messiahs. Conservatives and Libertarians need to articulate well considered policies and actually persuade ordinary Australians at the grass roots level that our philosophy and policies are the best for them, their families and the nation as a whole. Putting forward poorly considered policies will ultimately be bad for Australia and will be politically disastrous for the broader movement as people will lose confidence in our philosophy and policy prescriptions.

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35 Responses to Guest Post John Adams: Response to Bernardi Article

  1. sabena

    Methinks you protest too much.

  2. Chris

    Thanks John both for the earlier articles and for this update.
    I fear that in my own household, we can agree all I like on no 1 priority being to pay off the mortgage, but the old cafe smashed avocado with friends seems to still get a nod.
    I fear that the stupidities of our society persist because fashion is too strong for us, as a herd of Aussie sheep, no-one is offering values, principles or morals that work to counter the hedonism that our media teach.

  3. Big_Nambas

    How about proof read and typo fix prior to posting?

  4. True Aussie

    Typical entitled first generation immigrant attitude. You have to go back John.

  5. Entropy

    The point is that fringe parties would have no oxygen if the majors were doing their job.

  6. Suave Dave

    Adams’ biggest problem is that he seems very self-obsessed.

    Most of the rest of his shortcomings follow from there – including that he is obviously very sensitive to views different to his, and takes criticism extremely personally. He also seems way too sure that his own views (and lifestyle, judging from this latest effort) are inalienably correct and beyond reproach. Even when a lot of them are clearly quite misguided, as it happens.

    He is also not helped by his writing style, which is fairly average (and boring) and contains a lot of basic typos. The first piece he wrote (now, by his own admission) was ambiguous and quite laborious to read – and this one is not much better.

  7. Speedbox

    Australians have racked up record high debt in the non-government sector more so than the 1880s and the 1920s (two periods which preceded economic depressions). I am deeply concerned about this development and what this means for the Australian middle class in the event of an international economic shock.

    Most Australians today are completely asleep to the significant systemic economic risks which they are currently exposed to“.

    Well I certainly agree with that. Government debt is one thing (and is too high) but the levels of personal debt are simply incredible. It seems to me that everyone wants the new/better car, boat, holiday house, jet ski, caravan etc. now and because borrowed money is relatively cheap, and apparently plentiful, household debt levels are at stratospheric levels.

    Any half decent global economic shock could be catastrophic to millions of families. On the bright side, those with cash will be able to pick up bargains. During the last GFC, some folk made millions buying up shares at what are now bargain basement prices. (remember when CBA shares were about $25 in early 2009.)

  8. Stimpson J. Cat

    Putting forward poorly considered policies will ultimately be bad for Australia and will be politically disastrous for the broader movement as people will lose confidence in our philosophy and policy prescriptions.

    Conservatives are directly responsible for this.
    You are not the answer.

  9. As a native born Australian, (1971), with ancestry in Australia going back to the early 1880s, I entirely agree with your observations on the cultural unwillingness of Australians to save and for their propensity to throw away their money with just about any excuse. I only came to this understanding myself after I spent 10 years outside Australia without returning during that period.

    I was by no means immune to this behavior but before it could get me into serious trouble I was fortunate to marry a lovely Dutch girl whose attitudes to money were entirely contrary to my own. The Dutch are a nation of savers. They are so tight that they may the Scots appear positively profligate. By the example that she set I learned not only to save money but to love doing so.

    Two weeks ago we left Australia for good for life in Holland. Family reasons were a major part of the decision, but another big factor in the decision to go was the Australian economical situation. Australia and Australians are a nation and people in complete and total denial. I lived in Italy in the first decade of this century when their economy went to shit but they’ve got nothing on what is happening now in Australia. The difference was that the Italians are also a nation of savers, not comparable to the Dutch, but far superior to Australia. That mentality has so far saved them from their government’s economic ineptitude.

    But Australia is on a fast train to economic ruin that is cheered on by the passengers and the drivers of that train. The government and the people are in it together. I have had so many conversations with my fellow Australians over the last few years on topics ranging from spending habits, to saving habits, to the purchase of homes, and to the willingness to take on extraordinary amounts of personal debt.

    They are in complete and total denial. As far as they are concerned, real estate always, and I mean always increases in value, no matter what happens overseas or may have happened in Australia’s past. And if you ever dare to suggest that they might be better of servicing those enormous loans instead of going out for their smashed avo breakfast then just sit back and watch the infantile temper tantrums.

    It’s over. The only thing holding it up is the mass importation of 2nd world peasants to give the growth rates a temporary false veneer. That and the fact that Australians refuse to even think about it. Willful denial will still get you a hell of a long way. But when it gets set off, when the bubbles all burst in an awful domino effect, then Australia really will have become the banana republic of the South Pacific that we were once warned about, ironically enough by one of the worst offenders in this entire debacle.

  10. Arky

    (I was born in Australia in 1981),

    ..
    Fuck me.
    You’re basically a foetus.
    Why are you having an opinion on anything?
    I have socks older than you.

  11. Bob in Castlemaine

    No violent comment here but Cory is absolutely correct!

  12. Haidee

    ‘I ……. will not blindly follow any false messiahs’
    Well, it would be unwise to do so. Having a need to state that is sort of self-regarding.

    Bernardi will do well

  13. The Pugilist

    Most Australians today are completely asleep to the significant systemic economic risks which they are currently exposed to. I do acknowledge that government policies have played a significant role in building up the current structural imbalances and bubbles. Having said this, one cannot ignore cultural or sociological factors which have contributed to current trends in Australian consumption and asset allocation decisions. Both have to be considered as part of the broader debate.

    I would argue that the government is actively encouraging these cultural and sociological tendencies. The modern Australian equivalent of bread and circuses. There are no politicians willing to have the honest public conversations that Australia needs. Abbott and Hockey half heartedly tried, got their arses handed to them and no one has had a crack since…

  14. Craig

    Following the cat’s comments, the author is not far off the mark about Australia going to shit. Fellow cats can dismiss the author as a young whatever but there are economic signs that don’t bode well. Personal debt is too high and 6 dollar cups of coffee as an example is just nuts and something I refuse to pay.

    Yep, we are headed for the cliff and there are a few cats who are a bit nervous at the thought of it, I can understand why so I hope the crash is not too heavy and we all get thru somehow.

  15. Baldrick

    Given the violent reaction here on the Cat to my op-ed regarding my Senator Cory Bernardi op-ed …

    The word snowflake springs to mind.

  16. Muddy

    I can’t offer any substantive response given that I’m an economics dunce, but I find bits in both John Adams’ and Adam (now-Dutch Cat)’s posts thought provoking. Living on a lowish income in an area where owning real estate is beyond my reach, I’m certainly concerned about the future.

  17. a happy little debunker

    More Australians would save at higher levels, had their earnings matched yours @ around a $250000-$300000 per annum.

    However most Australians earn significantly less.

    How easy would you have done it on around 1/4 those earnings?
    Try to do it on 1/8th (or close to the minimum wage)?

    Oh and by the way those on minimum wage, don’t do minimum work.

    Or you could be like me and be self employed (in real work, not as a consultant) & be lucky to earn half the minimum wage.

  18. GerardO

    Let’s take stock of the facts: Stagnant wages; skyrocketing house prices & rents; increased casualization of the labour force; the virtual elimination of low-skill labour; the decades-long movement towards a service-based economy.
    Given these realities, how are Australians ever going to become a nation of savers?

  19. the sting

    Grace Collier writing in the Weekend Australian a few weeks ago had a good line ”there are those that vote for a living, and those who work for it”. Those who work for a living are angry that our governments are not trying to reduce our country’s debt burden and lead by example.

  20. Warty

    I think Adams is fighting a losing battle here: there is a hint of the wowser in his approach.
    Having said that, we are living in rather different times, compared with say fifty-sixty years ago. We are more hedonistic. There is that drive towards instant satisfaction, and technology itself manipulates and depends on this drive. It is what fast food is all about, as opposed to the more laborious, out of vogue cooking-at-home regime. Even relationships have become disposable, so why not people’s spending habits and their associated foibles.
    The other point made by a number of readers is that Adams seems to have been overly defensive in his response to his critics. He has been at pains to outline his credentials; the publications that have accepted his articles; the people he has consulted, in other words just how authoritative his articles should seem.
    There is nothing wrong about giving a bit of background to one’s article, but to lay it on to the degree he has does the opposite of what was intended.
    Finally, should one receive a welter of negative responses, it is better to simply wear it. The unfortunate thing is that the individual that commits pen to paper, and gives it over to public scrutiny, invariably reveals a lot about him or herself. And then, some may like what is written some may not: that’s life. One opens oneself up to ridicule if one takes it personally.

  21. iampeter

    I would argue that the government is actively encouraging these cultural and sociological tendencies.

    +1 Pugilist, you beat me to it. If Australian’s are being irresponsible it’s a good bet the government is to blame.

    I mean why save for educating your kids, your healthcare when the state has promised someone else will pay for all these things for you and the wealth seized from your paycheck for your super will provide for your retirement?

    Also I’d add that even if people are choosing to be irresponsible with their money it’s not a function of government one way or the other.

    As others have said in the previous thread, if politicians are going to be focusing on any irresponsible spending they should start and finish with themselves.

  22. True Aussie

    Fuck me.
    You’re basically a foetus.
    Why are you having an opinion on anything?
    I have socks older than you.

    You old fucks had everything handed to you and you pissed it all away. You are the reason our country is fucked. Why should any of us want your opinion?

  23. OneWorldGovernment

    On the contrary, I once argued with Finance Minister Matthias Cormann at a Young Liberal dinner in 2010 that Fraser’s and Howard’s conservative economic credentials should be questioned given that they both failed to return Commonwealth spending as a proportion of Gross Domestic Product (GDP) back to pre-Whitlam levels (i.e. 18% of GDP).

    The Menzies Liberal Party died when Sir Robert Menzies died.

    The Labor Party without U was always self centered.

  24. Rob MW

    From your article in question: – “Hence, if Bernardi believes that it is common sense for Australia to impose an economic embargo on Qatar, then it makes even more common sense for Australia to impose an economic embargo on Saudi Arabia as well as other Islamic countries that have a history of funding international Islamic terrorism such as Kuwait and the United Arab Emirates.”

    John – your have to admit that that statement is pretty bloody stupid given that sanctions and other like measures are pretty much universal for any number of reasons these days, and singling out Bernardi is an own goal, particularly on the issue of terrorism and given responses from Egypt et al to Qatar including a demand that Al Jazeera be shut down. Bit fucking rich criticizing Bernardi on this.

  25. Yohan

    As a native born Australian, (1971), with ancestry in Australia going back to the early 1880s, I entirely agree with your observations on the cultural unwillingness of Australians to save and for their propensity to throw away their money with just about any excuse. I only came to this understanding myself after I spent 10 years outside Australia without returning during that period.

    I was by no means immune to this behavior but before it could get me into serious trouble I was fortunate to marry a lovely Dutch girl whose attitudes to money were entirely contrary to my own. The Dutch are a nation of savers. They are so tight that they may the Scots appear positively profligate. By the example that she set I learned not only to save money but to love doing so.

    Two weeks ago we left Australia for good for life in Holland. Family reasons were a major part of the decision, but another big factor in the decision to go was the Australian economical situation. Australia and Australians are a nation and people in complete and total denial. I lived in Italy in the first decade of this century when their economy went to shit but they’ve got nothing on what is happening now in Australia. The difference was that the Italians are also a nation of savers, not comparable to the Dutch, but far superior to Australia. That mentality has so far saved them from their government’s economic ineptitude.

    But Australia is on a fast train to economic ruin that is cheered on by the passengers and the drivers of that train. The government and the people are in it together. I have had so many conversations with my fellow Australians over the last few years on topics ranging from spending habits, to saving habits, to the purchase of homes, and to the willingness to take on extraordinary amounts of personal debt.

    They are in complete and total denial. As far as they are concerned, real estate always, and I mean always increases in value, no matter what happens overseas or may have happened in Australia’s past. And if you ever dare to suggest that they might be better of servicing those enormous loans instead of going out for their smashed avo breakfast then just sit back and watch the infantile temper tantrums.

    It’s over. The only thing holding it up is the mass importation of 2nd world peasants to give the growth rates a temporary false veneer. That and the fact that Australians refuse to even think about it. Willful denial will still get you a hell of a long way. But when it gets set off, when the bubbles all burst in an awful domino effect, then Australia really will have become the banana republic of the South Pacific that we were once warned about, ironically enough by one of the worst offenders in this entire debacle.

    Every part of this is true and it is hard to see light at the end of the tunnel. I service B2B and all my clients are only a few steps away from going under. Most have not made any decent money since the GFC, they are just hanging on.

  26. cynical1

    My parents were fortunate enough to pay off their house in 5 years in the 1980s through significant hard work and economic sacrifice. Also, my wife and I were fortunate to pay off a $313k mortgage in 4.5 years in recent years which involved us saving anywhere between 50% – 75% of our income through the financial year and putting it on the mortgage.

    You must have had a very good income, which makes this a point scoring exercise far removed from
    the everyday mortgage holder’s financial ability.

    4.5 years to pay off 313K

    Here you kids, on your marks…

  27. A Lurker

    I was born in Australia in 1981

    A mere infant!

    My parents were fortunate enough to pay off their house in 5 years in the 1980s through significant hard work and economic sacrifice. Also, my wife and I were fortunate to pay off a $313k mortgage in 4.5 years in recent years which involved us saving anywhere between 50% – 75% of our income through the financial year and putting it on the mortgage.

    Bully for them and you. By the way, tell your successes to your average low income earner (not everyone has a top flight job in politics or in law or the public service) who works long hours and yet struggles from paycheck to paycheck and worries if they will be able to pay for food for their children, let alone the next power bill. Savings in the bank is a dream for many ordinary Aussies doing it tough.

    p.s. I originally recommended, and still recommend that the author checks his privilege before demanding others do.

  28. Roger

    Born in 1981, eh?

    Graduated from high school c. 1998.

    Perhaps that explains the inability to write clearly, thus necessitating a follow up article to clarify what should have been made plain the first time.

    Public or private school?

  29. jupes

    John Adams you were an adviser to Arthur Sinodinos.

    What advice did you give that prick in regards to crony capitalism?

  30. Dapto Dog

    Another point to add to the many that others have already made about the personal insecurities and narcissism on display in this and the original article. (By the way, on a quick count, there are 43 uses of “I”, “me” and “my” in the article above.)

    Why specifically promote yourself in the original article as a “Coalition adviser” if you are then going to get upset about people connecting that background to the views expressed in the article? Especially the very specific political attack on Bernardi. It would appear to me that he has been trading on that very background with the Coalition to get space for himself on the Spectator, but then he suddenly wants to disown that background when trying to sidestep criticism?

    He can’t have it both ways.

  31. .

    with ancestry in Australia going back to the early 1880

    You’re basically a New Australia.

    Did John ever advise George Brandis about becoming a police state?

  32. one old bruce

    Talkin’ bout my g-g-g-g-g-g-g-g-generation…

  33. cynical1

    John Adams has over 7 years experience in working within the Federal Government arena both as a member of the Australian Public Service, a policy consultant to government clients and recently a policy advisor to a federal senator, Arthur Sinodinos.
    John has a passion for public policy and a particular interest in regulatory reform, economic policy and public sector and corporate governance.

    How to pay off a mortgage quickly.

    The missus have a cushy gig too?

    These days at that rate, you’ll need about nine years for a dump in Lakemba.

    Still, at least you won’t be near any gambling,drinking bogans with great, great grandad’s
    ball and chain on the mantlepiece.

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