This election is acquiring quite a few back-to-the-future touches.

There’s John Howard, in robust campaign mode. One of those he’s spruiking for is the embattled Tony Abbott, with a letter to Warringah voters, a video and a planned street walk.

Then there’s a prospect that independent Rob Oakeshot might be set for resurrection. Oakeshott, remembered for that 17-minute speech when he (finally) announced he’d support the Gillard government, could strip the Nationals of the northern NSW seat of Cowper.

And bizarrely, there’s Clive Palmer, becoming a player to be reckoned with.

Only last June Morrison said of Palmer’s renewed political push that he thought Australians would say “the circus doesn’t need another sideshow.”

Well, the sideshow’s here and the Liberals are grabbing a prize from its spinning wheel, with an in-principle preference deal with Palmer’s United Australia Party (still to be formally announced by the UAP on Monday).

With Morrison, preferences are a matter of cost-versus-benefit.

That assessment led him to declare recently the Liberals would place One Nation behind Labor. Given the expose of One Nation’s cavorting with the US gun lobby, and how vulnerable the Liberals are in Victoria, Morrison needed to make a gesture.

Read more: View from The Hill: James Ashby rocks a few boats, including his own

Anyway, the One Nation preference issue is most relevant to the Nationals, and the edict didn’t apply to them.

Indeed on Thursday, Nationals’ senator Steve Martin announced the Tasmanian Nationals Senate how-to-vote card will have One Nation third, behind the Liberals (and ahead of Labor) after an agreement between the two parties. “One Nation is less objectionable than the Labor/Greens cohort,” Martin said.

A cost-benefit analysis leads Morrison to turn a blind eye to the times Palmer stymied the Coalition government when he had the power to do so, let alone his business practices, including leaving his nickel refinery workers in the lurch. As is his style, Morrison simply throws a blanket over such inconvenient history.

Read more: View from The Hill: Can $55 million get Clive Palmer back into parliamentary game?

Preference deals are all very well but if Palmer’s comeback takes more votes off the Coalition than from Labor it’s damaging for the government. They won’t all be returned via preferences. Of course Pauline Hanson also has a lot to worry about from any Palmer surge.

The Australia Institute, releasing its latest round of Senate polling in a report out on Friday, notes a “striking rise in support” for the UAP over its last four polls – from 0.8% in August last year to 3.1% earlier this month.

The current figures wouldn’t get the UAP a Senate seat, the report says. “But if the party’s vote continues to grow sharply, it will be an outside chance in Queensland and (surprisingly) Victoria.”

Victoria sounds far-fetched but in the Senate polling the UAP in that state was on 4.7%. Last week, Newspoll surveys in four marginal seats across the country had the UAP polling an average 8%, and 14% in the Queensland seat of Herbert.

Read more: Poll wrap: Palmer’s party has good support in Newspoll seat polls, but is it realistic?

With two weeks gone in the campaign, there’s a good deal of confusion about the state of play. The public holidays have broken the flow, and while parties have their research, publicly we’re lacking evidence about whether Labor’s 52-48% Newspoll lead of around a fortnight ago has held.

But a couple of points seem clear. First, Morrison so far has more than held his own on the campaign trail; Bill Shorten has under-performed. Second, the Liberals’ relentlessly negative campaign looks dangerous for Labor. This is especially so as Shorten is facing the full weight of News Corps’ hostility.

Labor entered the campaign in a good position. Its challenge is to limit the extent to which its initial advantage is eroded by its opponents’ scare tactics.

Although Morrison is battling for the survival of the government, it can be argued Shorten has more at stake personally.

That sounds counter-intuitive, but think of it this way.

Morrison has been leader well short of a year. The government has been generally written off. If the Coalition’s loss was small, many Liberals would see Morrison as having done a good job.

It would be another matter with a big defeat, but the blame for a relatively narrow one would likely (and rightly) be rammed home less to him, and more to the disgraceful shambles of the whole Coalition outfit.

But a Shorten loss, against the odds and after years of polling in Labor’s favour, would see the blame heaped on him (and shadow treasurer Chris Bowen, a driver of much of Labor’s ambitious policy).

Shorten would be criticised not just for his campaign – more fundamentally, he’d be condemned for adopting the big target strategy, so open to scare attacks.

And he’d be blamed for being who he is, a leader with an X factor when X stands for some hard-to-identify (and seemingly impossible to rectify) political gene that makes voters wary of him.

For two terms, Shorten’s government enemies and critics on his own side have underestimated him.

The Liberals thought he could be slain at the royal commission into trade unions that Tony Abbott set up. Malcolm Turnbull did not grasp how tough an opponent he’d be in 2016. Anthony Albanese was ready for him to stumble at the Super Saturday byelections.

Once again, facing this ultimate test, watchers are wondering whether Shorten’s has the goods.

Nonetheless, he and others in Labor appear confident of the numbers, even if in the melee it’s not just Coalition seats up for change, but some held by Labor and independents too.

Labor is encouraged that health, its signature issue and at the centre of Shorten’s first-week campaigning, is coming through strongly in its research, and climate change has been climbing up the issues scale.

Now the holidays are over, the campaign will ramp up quickly, with a new Newspoll, increasing voter tune-in, and prepolling beginning on Monday.

Also on Monday, Morrison and Shorten meet in Perth for a debate sponsored by the West Australian newspaper, an encounter where body language might be as revealing as content.

On Friday next week, they’ll be at a “people’s forum” in Brisbane. By then, with only a fortnight left, the trajectory of the campaign may be clearer.

– ref. Grattan on Friday: All is forgiven in Liberal-Palmer embrace – http://theconversation.com/grattan-on-friday-all-is-forgiven-in-liberal-palmer-embrace-116011

The perpetually nearly-finished TPP negotiations perpetuate once again. Cars and cows are the problem, we are told.

The TPP is often said to be a free-trade negotiation between the principal western-oriented Pacific-rim economies, South Korea excepted. It’s not. Nor is it a fair-trade or a balanced-trade negotiation. Rather, it’s simply a multilateral trade-off, based on mercantilist principles.

In proper economics – Economics 101 – the benefit of an exchange is what you get; the cost is what you give up. Thus, for New Zealand, imported cars are a benefit of trade, and dairy products are a cost of trade. Overall the trade is good for us, because we value the cars more highly than the foreign car sellers do, and we value the dairy products (for our own consumption) less than the rest of the world does for their consumption.

Mercantilist economics, on the other hand, is all about production. Ultimately it’s about making money. So, from a mercantilist point-of-view, exports are the benefit of trade and imports are the cost. We may call such mercantilism ‘real-economik’, an economic analogue of ‘realpolitik’. It reflects how just about everyone else, other than economists, think about the international economy. And, most economists are employed by real-economists; so these economists tend to supress their professional insight in order to facilitate their careers. Further real-economics makes a certain amount of sense in real-world conditions. In the idealised world of Economics 101, competition is principally between buyers competing for scarce goods and services. In the real-economy, competition is between sellers competing for scarce buyers.

Thus, in the TTP negotiations, agreeing to more imports is a concession. The aim of each negotiating country is to get the most profit for its producers (especially its exporters), not the most welfare for its consumers. The TTP is like a rugby scrum or jousting contest, with each ‘boofhead’ participant competing vigorously to make gains by forcing concessions from the others.

The talks have stalled in part because New Zealand’s negotiators cannot get an export deal that will compensate for the import concessions made to, for example, American pharmaceutical exporters.

What these partner countries should be doing is negotiating a balanced-trade deal. Rather than trying to undermine the sovereignty of Canada (by forcing tariff concessions on its dairy industry), New Zealand negotiators should be pointing to this country’s 40-year-old current account deficit. New Zealand has spent more than it is earned in every year since 1973. That means that, for decades, other countries have earned more than they have spent. In the TPP, such countries are Brunei, Singapore, Malaysia and Japan.

New Zealand should be encouraging these countries to work less and to import more. They are wealthy countries, and should be persuaded to live as if they were wealthy countries. Better than shipping exports and getting nothing back in return for a portion of them. At least Japan is starting to go down this balanced trade route, spending a portion (albeit a very small portion) of the trade credits that it has accumulated with the rest of the world.

New Zealand should be offering to import less so that Malaysians and Japanese can import more. They have the ‘money in the bank’ to spend on imports. New Zealand does not.

The growth of world trade has little to do with so-called ‘trade-freedom’. (Indeed the gains from free-trade, even under textbook conditions, while real are actually rather small.) Rather, trade growth is principally a leveraged result of world productivity growth. (By ‘leveraged’, I mean that when world incomes grow by say 20 percent, world trade may grow by around 40 percent.) Further, excessively unbalanced growth leads to financial crises – such as the Great Depression, the Global Financial Crisis, and the Euro Crisis – which in turn lead to leveraged shrinkage of world trade.

The best way to boost world trade is to promote balanced trade between nations. Multilateral trade is simply complex barter; ie barter involving three or more parties. Under balanced trade, in any given period of about ten years, no country should have a trade surplus or a trade deficit. Surpluses and deficits between any two countries should always be balanced by deficits and surpluses between other pairs of countries. For example, while New Zealand currently has trade that is approximately balanced, it has big trade deficits with Europe and substantial trade surpluses with Asia.

The Trans-Pacific Partnership ‘Agreement’, if it comes about, will be a result of competitive argy-bargy between the export interests of the different participating countries. When export competitiveness becomes the goal, concessions and cost-cutting create an environment of low wages and low taxes; high wages and taxes too, like foreign tariffs, are seen as antithetical to export growth. This promotion of exports above all else is mercantilist real-economik thinking. We can all do much better than trying to arm-wrestle foreign countries into taking more of our respective countries’ exports.

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See Also: Selwyn Manning TriTV interview with the late Sir Peter Williams on this issue.

Peter Godfrey and Selwyn Manning deliver their Across The Ditch bulletin. This week: The National-led Government has been exposed as responsible for one of the most bizarre international deals in decades AND controversy back in NZ over whether the All Blacks are good enough to beat the Wallabies in Sydney on Saturday.

• In 2003, publicity around the treatment of live-sheep exports led to a voluntary moratorium.

• In 2007, the Labour Government banned the export of live animals for slaughter.

* in 2008 the National Party won the elections and became Government.

• In 2009, Agriculture Minister David Carter (who is now NZ Parliament’s speaker) began negotiations with Saudi Arabia for a resumption of live-sheep exports.

• In 2010, the National Government extended the ban of live exports.

• February 2013, the Cabinet approved Foreign Minister Murray McCully’s deal to pay $4 million to Hmood Al Khalaf’s business to secure it to run an agri-hub to promote New Zealand agriculture in Saudi Arabia and as a settlement of a long-running dispute over the ban on live-sheep exports.

* Also in 2013 Cabinet approved $6 million be paid to NZ businesses to deliver their services and help set-up the Saudi farm.

And the Government also paid $1.5 million for 900 pregnant ewes to be flown to the Saudi farm, onboard Singapore Airlines! (end of summary)

This chart shows the combined ‘budget surpluses’ of the private sectors (strictly, the combined household and corporate sectors) of all the world’s ‘advanced economies’.

These include New Zealand but not China. The chart shows that for every year since 1991, except 2000, most countries’ private sectors ran budget surpluses; often large surpluses.

These private sector surpluses were accommodated by combined government deficits. Given that the advanced economies represent well over half of the global economy, the foreign sector is relatively insignificant, though we do see finance flowing into the advanced economies from the emerging economies in the decade after the 1998 Asian financial crisis.

The interpretation is that, when financial difficulties have emerged in the advanced economies, as in 2001 and 2008, private households and businesses respond over the next few years by repaying debt, taking on less new debt, and increasing their saving.

These decisions towards more conservative private practice can only be realised, in the aggregate, if the governments of the world incur accommodating deficits.

The economic slowdowns in the advanced economies in these years (eg 1991-92; 2001-02; 2008-10) reflect some degree of resistance by governments to incurring the required Budget deficit accommodations.

Large private surpluses are not supposed to happen; rather the low balances for the year 1998 represent about what most economists believe is typical for the world as a whole, in most years.

The chart’s timing suggest that government Budget deficits represent a solution to, rather than a cause of, private sector austerity.

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