Do you know the difference between a Fairy Tale and a ‘Sea Story’?

A Fairy Tale begins with the words; ‘Once upon a time’ and a ‘Sea Story’ usually begins with the words; ‘Now, this is no bullshit!’

For readers who may be unfamiliar with the genre of a traditional Sea Story; these were novels written around the late 19th and early 20th century by authors such as Jack London (The Call Of The Wild, The Sea Wolf ), or Rafael Sabatini (The Sea Hawk, Scaramouche), and whose hero’s were rugged individuals and decent Christian chaps with a sense of fair play while laughing in the face danger, and always leaped to defend a maiden in distress.

  This genre was brilliantly parodied in the 1970s and 80s  by the late George MacDonald Fraser’s Flashman series of novels.

In literary terms, the difference between the two is not as great as first seems. Both London and Sabatini drew on authors such as the Brothers Grimm and Sir Walter Scott for character construction and story line,  and overlaid them with personal experiences.

The purpose of this post however, is not a discussion on the merits or lack thereof in either genre but to draw attention to a modern Fairy Tale that has become a Sea Story.

Let’s start with the fairy tale which had its beginnings in 1996 with the election of the Howard government and similarly to traditional fairy tales, used metaphor to convey its message.

“Black holes!” “Balloning deficit and debt!” “The deteriorating state of the Budget!”

Treasurer Peter Costello shrieked these mantras  ad infinitum in his efforts to convince the electorate that the Howard government’s agenda to destroy the foundations of Social Contract and replace them with a Neo-liberal ideology of ‘austerity’ and ‘free markets’ under the guise of ‘economic rationalism’, was not only good for one and all but was also an absolute necessity to escape an impending doom.

The metaphors were deliberately chosen to convey images of collapse, of loss of control, of illness that required immediate emergency surgery.

Government spending became ‘living beyond our means’ and the wicked step-mother of the previous government had ‘spent like a drunken sailor.’

Only Prince Peter with his magic formula of  ‘Budget Surplus’ could awaken and restore the Sleeping Beauty of the economy to its rightful glory.

Before the good prince could save the day however, he had to defeat the trolls who lived in the deep dark woods of ‘welfare dependency’ and were ruled by leprous despots called ‘dole bludgers.’

Armed only with the weapon of ‘working families’, Prince Peter fought valiantly in the dark woods of ‘welfare dependency’ to save the electorate from the awful fate of having ‘unsustainable debt passed on to future generations.’

Triumphant at last, Prince Peter declared that the magic formula of Budget Surplus had indeed saved the day and the paragon of Australian culture, ‘working families’ were ‘now better off than they’d ever been.’

The Howard government was able to sustain the fairy tale for two terms but as children grow older and require more sophisticated tales, so too the electorate began to notice that in fact only a certain strata of ‘working families’ were reaping the benefits of ‘Budget Surplus’ while increasing numbers of them were being forced into the deep dark woods of ‘welfare dependency’.

A new narrative was needed in order to forestall close scrutiny of Prince Peter’s magic formula. The fairy tale needed to morph into a Sea Story.

Prince Peter became the faithful First Mate under the captaincy of ‘Honest John’ whose steady hand on the helm steered the good ship Australia through the stormy seas of ‘union corruption’ and ‘Un-Australianism’, the latter being a reference to any member of the Opposition who dared question the ship’s course.

Few did, and the Opposition such as it was, limited itself to the occasional faint cry of ; ‘Yeah, we’d do that too…’ but in main they stayed silent and allowed themselves to be cast in the role of scurvy Socialist knaves who, at the first opportunity would seize the ship and plunder the treasure of Budget Surplus to their hearts content and therefore ‘burdening our grandchildren with a mountain of debt.’

The skipper Cap’n John, resplendent in his baggy green cap, navigated the heaving seas of economic uncertainty with his trusty First Mate Mr. Peter at his side.

Together they steered the ship of state through perils that would shrink any ordinary politician’s testicles to the size of frozen peas.

By Christ, it was manly stuff!

It was also complete and utter bullshit, and like most cheap novels it all ended for Howard and Costello with whimper rather than a bang.

In the case of the Abbott government, the fairy tale has been forgone in favour of the ‘Sea Story’.

The same cliches and tired metaphors have been dusted off and endlessly repeated and save for a minor re-working of character, the plot hasn’t changed.

Cap’n Tony, a crusty tar soaked in brine, sails the seas of economic uncertainty with his loyal ship mate ‘No-dough’ Joe, the fat controller with N.F.I. who dances a Hornpipe and earnestly tries to convince the electorate; ‘Now, this is no bullshit!’

The only new metaphor added to the narrative is that of ‘heavy lifting’, to carry the image of the ‘tough choices’, ‘hard work ahead’, and the need for ‘all hands on deck.’

As sea stories go, this one is far less Billy Budd and far more Sponge Bob Squarepants.

The reality behind the metaphors both old and new, is simply and factually the following;

“Budget Surpluses are good, Budget Deficits are bad.” Budget deficits are neither good nor bad.

In accounting terms, they represent the non-government (private sector) surplus.

In behavioral terms, they are required when the spending intentions of the non-government sector are insufficient to ensure full utilization of available productive resources.

Budgets are simply the vehicle to achieving socio-economic goals  rather than an end in itself.

“We cannot in all conscience leave a mountain of debt to our children.”

There is no such thing as inherited or inter generation debt!  Each generation can consume only the goods and services it produces.

“The government budget faces the same constraints as a household or business.”

This is the big lie that underpins the selling of neo-classical economic theory so beloved of Neo-liberalism.

Households and businesses are the users of currency and must finance their spending.

A household or business cannot spend indefinitely, due to the risk of unsustainable debt! 

A sovereign government is the issuer of currency and must first SPEND before it can subsequently tax or borrow.

“We’re running out of revenue!”

A currency issuing government such as Australia can never be revenue constrained in the technical sense, and can sustain deficits indefinitely without risk to revenue!

 All of the above are the foundation principles for any economic theory, be it Neo-Classical,  Keynesian, or any other school of thought.

They are to economics as the circulatory system is to Medicine, or the right angle to Building and Architecture.

Anyone, particularly politicians or economic ‘experts’ (especially those in the MSM), who are adherents to Neo-liberal philosophy or Neo-Classical economic theory and argue otherwise,  are simply telling ‘Sea Stories’.

And that’s no bullshit!




















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