ANALYSIS, Australia — The significance of Kevin Rudd beating substantively John Howard as Australia’s leader cannot be overstated in terms of global politics.

Background for our global readers: Rudd is from the Left, although a moderate. Howard was from the Right, and part of a NSW branches of the Right that are increasingly moving far-Right, by Australian standards (although not yet Neo-Conservative).

And Australia generally prefers moderates and punishes radicalism.

The true significance of this win, has been lost on some commentators. Here’s why…

The significance of Rudd win

Australia politics are a barometer of sentiment in global developed English-speaking countries.

A government measured on economic scores of low unemployment, relatively low interest rates, budget surpluses and sustained growth was removed from power.

The Australian voters chose a government promising a plan of action. The exiting Howard & Treasurer Costello were generally still perceived as the better economic managers.

The PM Howard even lost his own seat (almost). It’s down to handful of postal ballots, which may favor him.

In politics there is a saying, oppositions don’t win, governments lose. Yet Howard lost whilst ‘lead indicators’ said people were ‘well-off’.

As we don’t have fixed terms in Australia, Howard had been in power for almost 12 years.

So the incumbent government were ‘kicked out’ whilst the economic party was going on, and the NSW Right were passing around the cocktail umbrellas. Howard should have taken more care in listening to the NSW Right.

Significance to innovation

Globally the significant issue was that the citizens prefer governments who try to deliver services. People expect some ‘care’ from the State.

This fashion for removing ‘all state intervention’ from the economy, and the persecution of Keynesians, has been significantly set-back.

The significance of this victory is a swing back to the State providing some services to the public. And that is significant in a world where the far-Right have ’stolen a march’.

We need more moderation, the market alone is not ‘perfect’, and the State is better at some things. That’s the Wisdom of Crowds, for you.

Conversely, Howard argued the government should only step-in in market failures, if then. Everything should be private.

Under Howard most health-care became private, with more expensive yet highly-decreased levels of service for most patients. Schools became increasingly private. Roads became increasingly toll-ways. Telecoms became private, but we still don’t have world-class broadband internet. Howard also outsourced most tax collection to business owners.

Peoples’ houses tripled in price, and they ‘never had it so good’. And jobs became easy to come by. So they borrowed more and more, paying more and more for the same house.

It seems silly, but if everyone says your house is worth 300% more in 4 years, then it is. And Australians see property as ‘easy-money’.

But significantly they had to work harder and harder. They may have been able to eat in fancy restaurants, but especially for the younger generation (under 30) who voted Howard out, they increasingly realized that it was getting harder every year to get education, home, marriage, kids – which is what most people of all backgrounds want.

3 in 4 young people polled were voting against Howard. Baby Boomers were mostly for him.

Now of course property prices are stagnant in most locations, except WA, where Howard still enjoyed strong support. So some of those battlers and baby boomers turned.

But the catch-22 for the wealth: under Howard everything was ‘user-pays’.

The electorate said, rather than economic indicators, we’re full now and we want to ‘feel better off’ and that means the State taking caring of some basic services.

They would rather have the State take care of healthcare, education and basic services in some instances and pay more taxes. They would like better roads. And there are instances in nation-building where government should foot the bill.

Broadband, world-class universities, some research, childcare assistance.

It’s like the West Wing episode about the man sending his child too college. “It’s should be hard, I like that… but not too hard.”

They told Howard that for those under 30, and some under 60, it was too hard !

Howard dolled out tax-cuts, but it actually worked against him. Polls showed it.

It’s about balance, and ‘ideology’ never fits with balance.

The lesson is ‘State Providing Services’ is back again

And balance between private and public. A moderate position.

Extreme: Under Howard food production in Australia has been partly outsourced to China. We are the foodbowl of Asia, and yet we outsource basic food to China. There have been numerous safety scandals here in food and goods and in the USA. The profits have not been passed onto consumers in lower prices. They have been retained by ever-larger companies. If anything basic good and food prices keep rising.

People know when they are getting a raw deal on basic goods. That is what people talk about at home. They know when quality decreases over time.

And Howard gutted John Button’s great manufacturing /export incentives.

Rudd won primarily on a few issues, but mostly he won on the perception he had a plan to give people services: other than tax cuts.

Howard made the mistake of most Right-wing economics true believers — he forgot how well off is about how people feel, and that people fear losses more than they appreciate gains.

You have been informed, this is a nascent 2% stage trend. Expect to hear more. Services are important to tax-payers.

Good bye Mr Howard, perhaps we can get some balance back and remove some of your extreme-economics.

And Mr Rudd, congratulations, and we hope you stay moderate.

PS> MORE POSTS ON RUDD HERE (including our accurate predictions of the victory)

Take care,

Christopher