On Keating and AUKUS

Keating was always about the big picture. So much so that he often came across to the average Australian as an elitist. He liked to wear expensive Italian suits and shoes and to buy beautiful antiques and listen to classical music. In those respects he was the opposite of the Prime Minister he displaced, Bob Hawke. And yet it was Hawke who went to university (Oxford, to be precise, on a Rhodes Scholarship) while Keating was a high school dropout raised in a fibro home in the working class western suburbs of Sydney who worked his way up through the Labor Party from the bottom.

Whatever his sophisticated tastes in clothing and works of art, Keating was a junkyard dog kind of politician. His supporters would hate the comparison, but he has a lot in common with Trump. Both of them are political brawlers and the differences between their style of brawling are partly the differences between Australian and American culture.

To take just one point of comparison, Trump became adept at pinning his chosen epithets on his opponents: Crooked Hilary, Sleepy Joe. Keating had previously anointed John Howard as “the desiccated coconut” and John Hewson as “the feral abacus”. His best line, however, was the description of ex-Treasurer Peter Costello as “all tip and no iceberg”. Much like Trump’s epithets, these work not just because they are clever but because they are true. (The interested reader can find a collection of Keating’s best insults here.)

Keating has not been in the public eye much since his retirement from politics in the mid-90s. His post-politics career followed the usual pattern of sitting on boards of companies, banks or various institutions. What drew him back to the public limelight was his criticism of the recent AUKUS deal whereby Australia agreed to pay enormous sums of money to buy nuclear submarines from the United States.

Keating had criticised this deal when it was originally rolled out by the then Morrison government but, perhaps more surprisingly, reserved his “bazooka” for the newly-minted Albanese government’s formal acceptance of the deal. Surprising because Keating has always been a rabid Labor Party man. For Keating to criticise the party in such a public way is a sure sign he really thinks this deal is bad for the country.  

Keating has been speaking on Australia’s geopolitical interests for many years with a specific focus on China. We can summarise the core elements of his outlook as follows:

• China already has a bigger economy than the US and it’s only going to get bigger. He expects it to end up at least twice as big as the US in aggregate terms
• The US has never had a coherent “pacific strategy” and when Obama announced the “pivot to Asia” this was a containment strategy for China which made little sense since China aims to expand inland by building up Eurasia
• The US strategy should be to allow China its sphere of influence where it’s going to get it anyway (Eurasia)
• The US should then shore up its sphere of influence around the Atlantic which would include Russia’s integration into Europe (note: Keating had been saying this long before the Ukraine War)
• The US would then be able to play the role of arbiter in the Pacific to balance China’s growing power in the region

This overall vision for the world hasn’t changed much since Keating was Prime Minister back in the early 1990s. Australia has done a pretty good job of balancing its relationships with both China and the US all the way up until the Morrison government where it seems a decision was made, or maybe an ultimatum given, that we were going to have to pick a side. We chose the United States. The AUKUS agreement reflects that development and, not coincidentally, comes on the back of corona where Australia played the role of propagandistic attack dog against China on the US’s behalf. China duly punished us with various trade restrictions.

Given Keating’s pre-existing analysis of the geopolitical chessboard, his criticism of the AUKUS deal makes perfect sense. The deal is not in Australia’s strategic interests because it amounts to tying our military to the US. This is not a new development, of course. In the Vietnam War, the then Prime Minister, Harold Holt, promulgated the phrase “all the way with LBJ” (referring to the then US president Johnson) to signal Australia’s commitment to our major ally. The Pentagon Papers subsequently showed that one of the main drivers for the Vietnam War was to contain China.

It seems history is repeating and Australia is lining up to play its usual role as lapdog to empire. But the world is very different now and the empire in question is no longer in the ascendant as the US still was in the 60s. The situation now is far more like that of the world wars with the US in the role of Britain and China in the role of Germany. The difference from Australia’s point of view is that Britain was both our main ally and our main trading partner back then just as the US was in the 60s. This time, our main ally is the US and our main trading partner is China. It’s this key strategic problem which Keating felt the need to remind the country of last week.

Keating’s dream of an Asia-Pacific where China is the main player while the US exerts a balancing influence where necessary is, therefore, the ideal scenario for Australia. His problem with the AUKUS deal is that we did not even bother to stand up for our own interests. We apparently did not even try to tell a story that would help our cause. Rather, we rolled over and gave the Americans whatever they wanted.

Whether Australia could do anything to change American minds is highly doubtful. But speaking out would at least have the benefit of defining a genuinely Australian position on international affairs. We would have defined to ourselves what our own interests are. Our unwillingness to do so points to a lack of confidence. This is a subject that Keating has been talking about for decades: our lack of confidence in our own identity and specifically one that can stand apart from Britain and the US.

One of Keating’s best moments in parliament was his cultural cringe speech. It’s a fantastic piece of oratory that also reveals much of his underlying philosophy which might be summed up as “economics and progress”. He spends most of the speech talking about how various economic metrics have improved over the decades. That was the kind of dry, technocrat talk that used to bore the public but at the end he shows some fire in the belly and ties the growth in the economy explicitly to the desire to become an independent nation.

For Keating, Australia becomes more independent, and therefore creates a unique identity, to the extent that we remove ourselves from our British past. Our trade links with Asia were a core element in making that happen. Keating’s economic reforms were designed to turn Australia’s economy more to Asia which was the fastest growing region at the time and still is. The Liberal Party might have desired to retain the old links to Britain but their economic policy was practically identical to Keating’s. In fact, it was more Keating than Keating.

The rhetorical turn to the more “cultural” issues in the lead up to the 1993 election was motivated more by political necessity than anything else. He might have been up against the feral abacus, Hewson, but the reality was there was little difference between Keating and Hewson in outlook. Both were true believers in neoliberal economic policy. To the extent that those policies were going to turn Australia even more towards Asia, they were a large driver of our supposed new identity and the only question was whether you cheered it on like Keating or felt uneasy about it like the Liberals. Nothing much has changed since then. Keating is still cheering it on. The Liberals still feel uneasy.

During the 1993 election cycle, the public was also not sure about the matter given that Australia’s economy was in the worst shape it had been in since the Great Depression. Keating was very unpopular and would certainly have been turfed out except that the Liberal Party, in its infinite wisdom, decided to run a candidate that was even more of a neoliberal religious zealot and who managed to make himself even more unpopular than Keating.

Fast forward to today and China has grown to become by far and away our main trading partner (Japan held that title back in the 90s). Keating would no doubt point to the last two decades of growth in the Australian economy as proof that he was right. And if he was right about that, maybe he’s also right about China now.

Was he right? Yes, we’ve had decades of low inflation growth, although at the rate things are going it looks like we’re going to get all the inflation back in the next few years. In the meantime, we’ve also had massive asset bubbles most notably in real estate. Back when Keating was PM, a family on an average wage could afford a quarter acre block in outer suburbia. Now, the rising generation looks like they might never own real estate at all.

As if to highlight where the problem lay, here in Melbourne over the last decade or so many real estate signs in the inner city started to be printed in two languages: English and Chinese. People watched as Chinese buyers showed up to auctions and outbid everybody. Meanwhile, our government even gave the green light for Chinese companies to fly in their workers to do specific jobs on Australian soil.

It turns out there is a relationship between economics and identity. Owning a home used to be a core part of what it meant to be Australian. Now that’s going away. Was this inevitable? Was it just the iron laws of economics? Or was it, in fact, caused by neoliberalism. There were plenty of dissenters back in the 90s who predicted this would happen. The economy should work for the country, not the other way around, they said.

Then there’s the subject of leadership and confidence. The neoliberal agenda was explicitly about removing government from the equation. The market should be left to work its magic. Keating and his neoliberal technocrat advisers spent the whole time in the leadup to the 1993 election resisting the demands of the public that the government do something, anything, to get the economy going again. The public wanted the government to show leadership. The government told the public that the market would take care of the problem in due course. That’s what the neoliberals believed. The government should not lead. It should get out of the way. Any “leadership” was a suboptimal allocation of scarce resources.

I have mentioned in past posts that capitalism was always at odds with the nation state because the former requires inter-dependence and the latter presupposes independence. The neoliberal agenda was in large part a victory of capitalism over the nation state. It was the removal of the nation state in favour of the market. Who managed the market? The technocrats; the new economic priesthood.

Neoliberalism gave Australia a fundamental economic attachment to China. The system was supposed to work by nation states agreeing not to intervene in the market, thereby taking politics out of the equation. China never agreed to that deal but the theory was that, as China grew, its new middle class would demand political freedom. They would assert themselves against the centralised Chinese government.

The exact opposite has happened. The Chinese government has become even more authoritarian. China has devolved more and more into a techno-dystopian authoritarian state with its social credit scores and mass surveillance and the like. It apparently has no intention of providing more freedom for its citizens. I’ve been fortunate to travel to China several times and I’ve worked with some of those members of its middle class. The level of animosity towards the government is palpable. And that was before corona.

For Keating to pop up and say that the Chinese government has been the best in the world over the last three decades simply ignores all these troubles. He sounds a lot like Mr Emergency Act himself, Justin Trudeau, who praised the “basic dictatorship” of China because it could get things done. I’m sure politicians look to China with a measure of jealousy. If you don’t have to give a damn what your citizens want and treat them like disposable pawns, then you can get a lot of stuff done. China has proven that.

Not only do our politicians speak highly of China, they are starting to copy it. That’s exactly what happened in the last 3 years. Our wonderful leaders and their “experts” decided to abandon the established pandemic response procedures and copy the Chinese government. We all got to experience a little taste of what it’s like to live in China.

And this reveals something about Keating which transcends political party allegiance. Keating might not have gone to university but as a politician he surrounded himself with those who had. It was the generation where even union leaders had PhDs in economics. These were “the experts”. The economics experts were the high priests of neoliberalism. The market was their God. Technocracy and authoritarianism fit together nicely. What China has built in the last few decades is a giant testament to technocracy and it could only have been done with an authoritarian government.

So, maybe all this isn’t coincidental. Maybe economics and identity are not separate things after all. We let China into the world economic system telling ourselves that China would become more like us and instead we have become more like China. Whether we want to continue to become more like China should be a serious question for debate.

None of this makes the AUKUS deal a good one, necessarily. Do we really think we’re going to get into a military confrontation with our major trading partner? If that ever happens, we’d be in a world of pain. On the other hand, maybe it’s not such a bad thing to show we’re not going to be steamrolled over. It would be nice if we could do that in the way that Keating suggests, by actually having a separate voice that can tell our own story. But maybe that’s too much to ask and who would listen anyway? As Keating says, we’re entering a time of big power politics and Australia is not a big power.

The Eurasian bloc with newly integrated Russia is likely to become the leading power in the world in the years and decades ahead. The US should never have allowed that to happen. But now that it has, we can’t ignore it. Australia’s problem is that we don’t belong to it culturally but we are tied to it economically. Keating believed the latter would solve for the former. That was almost certainly wrong. The tension between our identity and the geopolitical realities won’t get resolved any time soon.