The American Spectator

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Political Hay

(Page 3 of 3)

In 1972, Australia elected a Labor government led by Gough Whitlam, a smooth, pragmatic-seeming lawyer, who came to office with an image of suave modernity not dissimilar to that of Rudd today. It took Whitlam and his cabinet, enthralled by economically illiterate populism, only a few months to reduce Australia to economic chaos. Inflation went from 4.5% to 16.9%, devastating the lives of pensioners and others on fixed incomes (Mrs. Whitlam dismissed it as "a lot of hoo-hah"). A later Labor finance minister, Peter Walsh, said: "Most of the time Whitlam behaved as if the economy didn't matter. Most of the 10 or 12 dominant ministers were economic cranks."

When Whitlam came to power, Australia had an unemployment rate of 2.4% and falling. It went into double-digits. Economic growth rate went from 4.9% in 1972 into minus figures. In September, 1974, with the country ravaged by inflation and unemployment, the Whitlam government approved a 32.5% increase in government spending. By the end of 1974 this had risen by 45%, the budget deficit had gone from 0.6% to 4.2% of GDP, and unemployment had more than doubled over the year.

The crackpot Jim Cairns, sometime deputy prime minister and treasurer, was probably a Soviet agent of influence (Whitlam himself tacitly admitted to the U.S. ambassador that Cairns was a security risk and would not share U.S. intelligence briefings with him). Cairns as treasurer printed money ever faster in an attempt to destroy capitalism. A multifaceted attack was made on the federal system, with the intention of destroying the states lest they obstructed grandiose plans of social engineering. It culminated in a bizarre attempt by the federal government to borrow money from Iraq for an undisclosed quid pro quo. Finally, with the government in complete dysfunction, the governor-general intervened to call a general election. Australia has strong democratic institutions and traditions and it survived. Nonetheless it took many years to recover from the economic damage. Though the Whitlam government's wrecking activities were limited by its relatively short term in office, the lesson is chilling: Australia elected a government of Llosa's idiots once and it could do so again.

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