A kick in the behindsight

Politics is usually interesting and 2007 was no exception.  First, what we've learned during 2007:

Past performance is no guarantee of future results

This warning is so obvious it's usually ignored.  Or else it is in such small print at the bottom of the disclosure form that comes with financial products that people don't realise it's there.  It's no certainty that simply because a stock has returned growth of 20 per cent a year for four years in a row that therefore such a performance will be repeated in the fifth year.  The same applies to election victories.  In fact, winning four consecutive elections increased the chances of John Howard losing the fifth.  As has now been revealed, this truth dawned on nearly every member of the former prime minister's cabinet during the Asia-Pacific Economic Cooperation meeting in Sydney in September.  The pity, in retrospect, is that no one did anything about it.

Time is of the essence

For all the good things achieved by the Howard government, there was a sense that after its first few years in power it was willing to keep on delaying big reform until after its next election victory.  Against Simon Crean or Mark Latham, the assumptions upon which this strategy was based were reasonable.  And the memories of the helter-skelter approach of Paul Keating's last years led Howard's ministers to caution against undue haste.  However, eventually time runs out.  The coalition's "aspirational" aims for tax reform announced during the election campaign could have been implemented years ago.  With the honourable exception of the Northern Territory intervention, policy making during the 11 years of the coalition government was not usually characterised by any sense of urgency.

Cicero was right

Two thousand years ago, the great statesman of the Roman republic, Marcus Tullius Cireco, wrote that people were more likely to fail than to succeed.  And in any case, success can be the product of luck.  Cicero argued that therefore people should be judged according to what they strived to achieve rather than according to what they did achieve.  Such a criterion ensures a far more sympathetic treatment of some of the Howard government's initiatives than would otherwise apply.  For example, the intention of Work Choices was admirable to free up the labour market and stimulate economic growth.  The problem was that once Work Choices was put into practice it turned into a blancmange of complexity.  The ultimate legacy of Work Choices might be the Rudd government reregulating the labour market to produce a system more inflexible than that which Howard inherited in 1996.  If this is indeed the outcome of Work Choices, Cicero would have been amused but not surprised.

Here's what we might learn in 2008:

It's not easy being green

It is one thing for United Nations bureaucrats to propose cuts in greenhouse emissions of 60 per cent.  It's amore difficult task for elected national politicians to implement those cuts.  UN bureaucrats don't face the electoral consequences when households' electricity bills double.  As yet the Australian populace hasn't realised the economic costs when the Prime Minister commits to whatever scheme follows from Bali.  If we want to save polar bears, we'll need to pay more for petrol.

You never hear the one that hits you

This is what soldiers say about bullets.  The same could apply to economics.  A year ago there would have been a bare handful of federal MPs who knew what a sub-prime loan was.  One year on, the corridors of Parliament House in Canberra are filled with worried conversations about the impact of falling house prices in Orlando, Florida.  What will occupy the minds of Treasury officials over Christmas will be, as Donald Rumsfeld put it, "the unknown unknowns" of the world economy.

The proof of the pudding is in the eating

We will soon find out whether Kevin Rudd really is a "fiscal conservative".  And we'll soon find out whether the Labor Party really has changed since it was last in power.  So far the signs are encouraging.  Wayne Swan saying that he will deliver Labor's promised tax cuts was a good first step.  And we'll soon find out whether the new government will resist the urge that ultimately overcomes all federal governments, which is to regulate and centralise anything that hasn't already been regulated or centralised.

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