WE ARE ALL THATCHERITES in 2024. Neoliberalism may be on its way out in favour of a new mercantilist order, but the fundamental concept-order behind how we structure political economies remains. Ministers are the custodians of legislation, and of budgets, and of the administrative/regulatory state, and those three levers are all they have. Outside the State lies the impartial market, the working of which determines prices and conditions. Simple dichotomy: on one side the rule of human laws, on the other side the rule of economic laws; a divide that makes sense, so long as you shut your eyes and don't know what economics or politics is.
As late as the 1980s liberal democratic States were deeply involved in the setting of prices for things, for commodities like beer and cigarettes, but also of the price of rents, the cost of imports and exports, the levels of wages and wages growth, and they answered for them election-to-election. As Thatcherites, the democracies shrugged off the direct responsibility for price-setting, really leaving only the price of money in the hands of the Government, until Paul Keating could dream of a leadership of heating up and cooling down the economy with a single rates lever, like an old-time engine driver getting the perfect fire in the locomotive. It's a way of doing things that has a level of abstraction; so long as you have a reliable fiscal policy, prices will go where they 'ought' to be, and everyone gets rich, and everyone gets a share.
It worked until it isn't working any more. Funnily enough, the democratic electorate still finds States responsible for prices and material conditions, and blames Governments thoroughly for rises in them, despite their actual effective lack of control. Consider housing, where the Productivity Commission is struggling to work out how to commission productivity:
The Albanese government has struggled to get its ambitious five-year target of 1.2 million new homes on track, weighed down by parliamentary and procedural hurdles and by the lack of policy levers at the federal level.
Conscious of that limitation, it has opted for a "carrot" approach of offering grants to states, territories and others in exchange for policy actions.
In fact it's not clear to me that parliamentary or procedural hurdles, or regulation, or policy levers, really have anything to do with the state of the housing market at all. Prefabrication has been a part of construction for decades (in prefab trusses, structural elements, and items like doors and windows, which are all standardised). The States and Councils who approve and regulate planning are much less the barrier than the lowish number of applications being submitted. It's very difficult to automate construction work in the way it's possible to do it for other sectors, or introduce much more productivity in the form of attacking labour conditions ('work harder!').
Australian housing is incredibly productive, world-beatingly productive, in the one sense that matters, which is storing wealth for owners in the context of our specific retirement system. The great barrier to making more and cheaper housing in Australia is the cost of land. It's really really expensive. There's no productivity cure for one class of people who own things, not wanting to give up their hold over the price of the thing that makes them rich. There's only the political need to get it back.
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