The Piketty divide: Part 1

Thomas Piketty’s Capital in the twenty-first century has taken America by storm. It rose to the top of Amazon’s best-selling list. It brings a scholarly perspective to the issue of rising inequality and of wealth being concentrated in the hands of the few. It has been compared to Marx’s Das Kapital and it has been suggested that it may be as influential. It has also been compared to Milton Friedman and Anna Schwartz’s A Monetary History of the United States in 1963 for the reason that, like that work, it is based on extensive financial data that gives credence to its conclusions — although coming from the opposite side of the political spectrum.

Piketty’s work, of course, is not universally acclaimed. There is a very clear divide between the Right and Left, between progressives and the more radical Left, and between the Anglosphere and the non-Anglo-speaking world.

Piketty, now a professor at the Paris School of Economics, went to MIT in America in 1993 when he was 22 and completed a doctorate on the theory behind tax policies. He returned to France after five years and has remained there since. In 2003 with Emmanuel Saez, another Frenchman, but at Berkley in California, he wrote a paper on inequality in the US between 1913 and 1998. Saez also worked with Piketty on the data for Capital in the twenty-first century.

In France, while the book was recognised as significant, it was not the runaway best seller that it became in America — it was 192nd on the French book publishers’ rankings. One reason is that inequality has long been central to political debate in France, with even the right-leaning Gaullists like Chirac supporting the need to mend the fractures in society. France already has an annual wealth tax on assets. So in that sense, the theme of Piketty’s work was not as novel in France as it appeared in America, dominated as it has been since the 1980s by economic thinking that does not believe that inequality is a problem.

The French Left was critical, considering Piketty did not go far enough: that he failed to discuss cultural and social domination, or violence against and exploitation of the lower classes, or alienation at work, or the role of class struggle.

Why all the fuss?

Piketty has a basic equation developed from tax data across a number of countries going back over two hundred years:

r > g

That is, the rate of return on capital (r) is greater than the rate of growth of income (g). Throughout the nineteenth century and up to World War I, that greater rate of return led to high levels of inequality, with wealth concentrated at the top. In periods of high inequality, the rich can hold capital up to seven times the value of total national annual income (the capital/income ratio).

The rate of growth is influenced by population growth and productivity. Piketty’s data suggest that over the long run, income grows at 1‒1.5% while return on investment grows at 4‒5%. A period of declining inequality, between 1919 and the 1970s, occurred when the rate of growth exceeded the rate of return, fed by population growth, technological progress and government intervention.

As population growth slows (as it is already doing), Piketty suggests that the rate of growth will also slow and we will return to a situation similar to that before WWI. Various economists have already pointed to the slow down in economic growth since 1970, despite technical innovations like the spread of computers and the internet. An article in The Economist showed that annualised growth in the US averaged1.9% between 1947 and 1969, but only 0.8% between 1970 and 2012, creating a 35% gap in growth between where it actually is and where it would have been if the higher level of growth had continued.

One reviewer interpreted Piketty’s approach this way:

If you get slow growth alongside better financial returns, then inherited wealth will, on average, “dominate wealth amassed from a lifetime’s labour by a wide margin” says Piketty. Wealth will concentrate to levels incompatible with democracy, let alone social justice. Capitalism, in short, automatically creates levels of inequality that are unsustainable.

For Piketty, the facts derived from his data indicate that this is the nature of capitalism. The period from WWI to the 1970s was an anomaly and Piketty makes the case that capital in its natural state does not tend to spread out or trickle down but to concentrate in the hands of a few.

The problem is that as wealth becomes concentrated in the hands of the rentiers it can lead to ‘patrimonial capitalism’ (where the economic elite mostly obtain their wealth through inheritance). Some have suggested an inconsistency to the extent that Piketty supports entrepreneurs but is concerned that when they are successful they then become rentiers, and their wealth is passed to the next generation who need undertake little productive activity to maintain that wealth. Piketty argues that if this is left unchecked, wealth continues to accumulate in the hands of the few leading to greater levels of inequality.

Piketty acknowledges that the current situation in the US is different. There, the current increase in inequality has come from the rise of what he calls ‘supersalaries’. Unlike other countries, in the US, 60% of the income of the top 1% comes from ‘labour income’ (the salary packages of the CEOs of large corporations); only in the top 0.1% does income from capital predominate. Although, clearly, within a decade or two this wealth may well turn to inherited wealth based on the accumulated capital.

In an interview where it was put to Piketty that Americans have earned their wealth rather than inherited it, he replied:

This is what the winners of the game like to claim. But for the losers this can be the worst of all worlds: they have a diminishing share of income and wealth, and at the same time they are depicted as undeserving.

A key aspect of Piketty’s work, however, is that it presents a challenge to current mainstream economic thinking.

To understand why the mainstream finds this proposition so annoying, you have to understand that “distribution” — the polite name for inequality — was thought to be a closed subject. Simon Kuznets, the Belarussian émigré who became a major figure in American economics, used the [then] available data to show that, while societies become more unequal in the first stages of industrialisation, inequality subsides as they achieve maturity. This “Kuznets Curve” had been accepted by most parts of the economics profession until Piketty and his collaborators produced the evidence that it is false.

Piketty himself said regarding his approach:

I am trying to put the distributional question and the study of long-run trends back at the heart of economic analysis. In that sense, I am pursuing a tradition which was pioneered by the economists of the 19th century, including David Ricardo and Karl Marx.

So he is also attempting to return economics to the political economics of the best nineteenth century economic thinkers and also return to data as the basis of findings, rather than abstract theories and mathematical formulae.

The Left is not entirely happy with Piketty’s analysis, for example:

… Piketty’s almost exclusive metrics are inequality of income and wealth. They are important to be sure. Let us remember, though, that despite less inequality, most of the period 1913-1950 was hellish for the masses in the capitalist world. They died by the millions in the first world war, made little economic progress in the 1920s, suffered the hunger of the Great Depression in the 1930s, and died by millions more in the second world war. On the other hand, while inequality was high in the late nineteenth century and up to 1913, the working class did make advances, by militant struggle largely under the socialist banner, in obtaining fruits of industrial progress.

John Kenneth Galbraith, a progressive economist, while accepting the value of Piketty’s work has some criticisms.

Firstly, he rejects that the tax records on which Piketty relies are the only way to gather long term records — Piketty’s most complete records are French estate tax records dating back to shortly after the French revolution in 1789. Galbraith has used US payroll records back to 1920 to come to similar conclusions about growing inequality in America.

Galbraith also has difficulties with Piketty’s use of the term ‘capital’. He suggests that Piketty conflates physical capital equipment with all forms of money-valued wealth, including land and housing, whether that wealth is in productive use or not. Piketty’s measure of capital, therefore, is not physical but financial: ‘The problem is that while physical and price changes are obviously different, Piketty treats them as if they were aspects of the same thing.’ Galbraith suggests that (apart from World War II when the UK and Europe did suffer significant physical destruction) it was changes in the market value of wealth that reduced inequality between 1914 and 1950. He writes: ‘A simple mind might say that it’s market value rather than physical quantity that is changing and that market value is driven by financialization and exaggerated by bubbles, rising where they are permitted and falling when they pop.’

Galbraith also wrote:

The evolution of inequality is not a natural process. The massive equalization in the United States between 1941 and 1945 was due to mobilization conducted under strict price controls alongside confiscatory top tax rates. The purpose was to double output without creating wartime millionaires. Conversely the purpose of supply-side economics after 1980 was (mainly) to enrich the rich. In both cases, policy largely achieved the effect intended.

That gives rise to another issue embedded in Piketty’s work: the role of policy and politics.

As John Cassidy wrote in The New Yorker in reviewing Piketty’s work:

The Great Depression wiped out a lot of dynastic wealth, and it also led to a policy revolution. During the nineteen-thirties and forties, Piketty reminds us, Roosevelt raised the top rate of income tax to more than ninety per cent and the tax on large estates to more than seventy per cent. The federal government set minimum wages in many industries, and it encouraged the growth of trade unions. In the decades after the war, it spent heavily on infrastructure, such as interstate highways, which boosted GDP growth. … Inequality started to rise again only when Margaret Thatcher and Ronald Reagan led a conservative counter-revolution that slashed tax rates on the rich, decimated unions, and sought to restrain the growth of government expenditures. Politics and income distribution are two sides of the same coin. [emphasis added]

Piketty himself acknowledges this:

A quick glance at the curves describing income and wealth inequality or the capital/income ratio is enough to show that politics is ubiquitous and that economic and political changes are inextricably intertwined and must be studied together.

US inequality is now close to the levels of income concentration that prevailed in Europe around 1900-10. History suggests that this kind of inequality is not only useless for growth, it can also lead to a capture of the political process by a tiny high-income and high-wealth elite. This directly threatens our democratic institutions and values. [emphasis added]

The point that the progressives and Piketty make is that government policy plays a major role in economics generally, and in controlling inequality in particular. If government does not fulfil that role, then, as Piketty suggests, it leaves the way open for the economic elite to also capture the political process.

The major criticism of Piketty is for his policy conclusions: he recommends higher marginal tax rates for high incomes and a global wealth tax, although conceding that his recommendations may be utopian. His more vocal critics have picked this up and derided his policy proposals. Even supporters have suggested alternative approaches: Galbraith suggests that a large rise in the minimum wage in America would have the effect of reducing the amount available for the accumulation of wealth at the top levels; others have suggested more government regulation can have the same effect.

What do you think, so far?

Who’s right?

Back in April, Senator Brandis wrote an article (reported on the ABC) in which he claimed that although he believed humans were causing global warming he was ‘really shocked by the sheer authoritarianism of those who would have excluded from the debate the point of view of people who were climate change deniers’. He went on to say that people who think the science is settled are ‘ignorant and medieval’.

Adam Bandt for the Greens responded:

“If someone said ‘two plus two equals five’, would you insist on giving them as much airtime in the media as someone who said ‘two plus two equals four’.

The science community is now essentially speaking with one voice. To say someone without science training can somehow simply on a free speech basis say that they’re all wrong is a very feudal way of thinking.”

These statements raise concerns regarding climate change and free speech. But there is another issue embedded in them which is the one I want to explore: the role of experts in shaping government policy.

Human society has always used experts, even if early on they were identified by experience, status or age. In our modern society technical and scientific expertise has grown exponentially as we have become more dependent on science and the technology arising from it. That has also been reflected in the legislation going through our parliament. The first parliament in 1901 passed 17 acts in total, including matters of post and telegraph services, and distillation, the only two which may have required some expert advice. Between 2008 and 2012 an average of 220 acts per year was passed including on such matters as offshore petroleum, greenhouse gas storage, nuclear terrorism, road safety and higher education, each of which, among many others, would have required expert input.

While expert input may seem essential for some issues, governments, unfortunately, also use experts to avoid responsibility for their decisions. They establish an ‘expert’ committee and then claim their decision is based on the committee’s advice or evidence, thereby implying they essentially had ‘no choice’ in their final decision.

That leads to the crux of the problem: that the use of experts is inherently undemocratic as the expert becomes an ‘authority’ presenting decisions of public policy, whereas democracy is meant to be based on keeping ‘authority’ in check.

The ultimate outcome can be the rise of a ‘technocracy’ — government by technocrats, or experts. Underlying the technocrat approach is the belief that expertise and knowledge will lead to the best rational decision, one that cannot really be questioned because non-experts, including politicians, are not qualified to judge what the experts are saying.

In the 1990s there were fears that the European Union (EU) was going that way largely due to the regulations being made by the European Commission. While the regulations may have been based on the best technical and scientific advice, they were often met by resistance in some nations of the EU, both by politicians and the public. This meant the advice became politicised, but that helped slow the descent towards a technocracy. Despite that, there is a history of experts determining policy in a number of northern European nations, in particular Germany.

A problem for politicians, especially as regards scientific advice, is that scientific results can contain a number of uncertainties. Although this is part of normal scientific enquiry, and promotes further research and refining of theories and models (such as in the current climate change science), it does not necessarily provide a solid basis for decision making. Put simply, politicians often need to act before the science is conclusive.

There is also growing distrust of experts among the populace, for a number of reasons: the political use of experts to justify disputed decisions; the problems that have arisen from following experts previously (that is, the introduction of technology that has initially enhanced our lives but subsequently led to environmental or social problems); fears of the potential rise of a technocracy and the loss of democratic power, and a more educated and informed populace that is better able to question.

On the other hand, the public is reliant on science for risks we face that our normal senses cannot perceive, such as radiation or the detection of the ozone hole in the 1980s. You might say it is a ‘love/hate’ relationship we have with the experts.

Of course, governments and politicians rely on other ‘experts’ outside the technical and scientific areas, such as in economics and education. Neither of these can be called sciences in the sense that it is rare that they can reach irrefutable conclusions, such as two oxygen atoms and a carbon atom making up carbon dioxide. Economics claims to be a science but given its predictive history (an ability of solid science) it can hardly claim that title. We have only to look at economic forecasts and how often they have to be changed, or how often they do not foresee the next recession (when did they ever foresee one?). Why would the public put their faith in such experts?

The other claim the public often rejects is that these ‘experts’ are the sole repository of expertise in their field. Individuals can also be experts, particularly as regards local knowledge. A classic case occurred in England after the Chernobyl meltdown in 1986. Radiation was detected in Cumbrian sheep fields but the scientists said that this would quickly be ‘immobilised’ in the soil and pose no significant danger. They were wrong on three counts:

1. their advice related primarily to alkaline clay soils but the Cumbrian area was acidic peat;
2. they failed to consider that the radiation could enter the human food chain from sheep grazing on the local grasses; and
3. the farmers also had detailed knowledge of local changes over a number of years and eventually the scientists were forced to concede (and accept the local knowledge) that the radiation came not from Chernobyl but the nearby Sellarfield nuclear reprocessing facility.

This raises another issue, that when expert advice enters the public arena it can be judged not by what it says but by a number of other criteria, including whether or not it concurs with local knowledge which, as shown in Cumbria, can also be a valid source of expertise.

So the question becomes if we can’t live with them and we can’t live without them, what do we do?

One approach is education and awareness, making the public more aware of research and its findings. This requires experts participating in public fora, airing their research in the media and engaging in public debate. The Australian National University (ANU) has a specific policy on this and states that it will support its academics in public debate if the policy is adhered to. The preamble states that:

Academics have an obligation to present their expertise outside the strictly academic context: they are expected to inform public debate from the perspective their scholarly expertise brings to an issue.

But the policy notes:

In public debate, such as opinion pieces or columns in the media, it is generally not possible to provide a detailed scholarly justification of the position adopted, nor to present every possible perspective on an issue: but it is expected that the position adopted should be defensible and that justification for it should be available or able to be given at a level which would be of acceptable standard in the field of scholarship.

The latter statement suggests one difficulty for experts involved in public issues. They cannot necessarily explain all the intricacies, uncertainties or assumptions that underlie their position. Overseas research suggests that academics draw a line between internal discussion (within their discipline) and public discussion of their discipline, feeling, particularly in scientific areas, that the public has limited competence in dealing with their detailed findings.

The ‘public competence’ may actually be a public questioning because many aspects of expertise are contested and it can take time for experts to reach a consensus. In such situations, the scientific or other expertise is not really adding to public understanding but perhaps only confusing it, and it does not provide certainty to the public nor provide the level of guidance necessary for decision making by public officials and politicians.

While governments claim to seek ‘evidence-based’ policy, in my 30 years as a public servant this was just as often ‘policy-based evidence’ — that is finding the evidence that will support the position the government intends to take. That was an approach I had to adopt on a number of occasions (for governments of both persuasions). So divergences in expert opinion can also mean their advice is used to justify pre-existing positions, just by picking which expert agrees.

There are also calls by some for greater public participation in technical and scientific debates and, particularly, in framing the policy arising from such debates. This is relatively new, in the sense that the dominant form of participation has usually been after the policy is decided, in implementing the policy or taking actions arising from it, such as reducing household energy usage as one step to assist in limiting greenhouse gas emissions.

If there is greater involvement, how does the public judge what the experts are saying?

Such judgments will inevitably be coloured by local experience: for example, support for climate action in Australia was at its highest during the drought from 2002 to 2006, a time when it could be said that local experience seemed in accord with what the experts were saying. But as we have seen, that local experience varies over time and with it the judgments the public makes. Local knowledge also does not help in understanding issues that may be relevant on a much wider scale — which is one reason global warming is a difficult concept to grasp when there are no immediate signs of it in one’s own locality.

Politicians face the same problems. A research paper prepared by the Parliamentary Library in October 2013 addresses how lay persons, including politicians, judge technical and scientific knowledge. One means is ‘social expertise’, our general understanding of our own society and the role of the various players in it: it allows us to make judgments about who we agree with rather than scientific judgments on what ought to be believed. In making such judgments the paper goes on to suggest the following questions should be answered:

  • Can I make sense of the arguments?
  • Which expert seems the more credible?
  • Who has the numbers on their side?
  • Are there any relevant interests or biases?
  • What are the experts’ track records?
The paper concedes that even answering these questions can still be problematic but suggests that using them together can improve their strength and reliability. They are questions that can be used by politicians when assessing expert opinion coming before parliamentary committees.

If our politicians actually used this approach there would be no question in Australia regarding anthropogenic global warming.

Even with the best advice and with understanding of the expert knowledge, or at least judgments about it, the decisions to be made often require much broader considerations. There are value or moral judgments to be made in deciding policy. Even if the experts are all pointing in the same direction, will a policy arising from that advice be right, fair and just? Economic and social implications also come into the argument, which is where Abbott won the debate on climate change when in opposition.

Additionally, even when expert advice is accepted that does not mean there is agreement on what should be done. There is often much more debate about what measures should be taken and that depends on many other issues and power relationships.

The politicisation of expert advice, while creating some problems, is as it should be, for without that we would become a technocracy. The outcomes and policies arising from expert advice still need to be debated publicly in the political sphere.

Finding the expert who is right becomes not just a matter of the research they have undertaken, but of their standing and acceptability — both socially and politically; of whether following their advice will produce fair and just outcomes; and of how their advice plays out politically between competing interests. So, no matter how technically or scientifically good the advice, it is likely that differences will remain, not so much regarding the expertise, but in terms of who to believe and what to do about it.

What do you think?

The speech I would like to hear

Last year on TPS I posted a blog ‘What happened to leadership and conviction?’ and bemoaned the fact that modern politicians are so poll-driven, rather than seeking to drive the polls by driving the policy debate. This year in a number of posts, ‘Whither the Left’, ‘Bringing Gross National Happiness into play’ and ‘The wonderful world of the economic rationalists’, I have also raised alternative approaches for Labor. (This piece can also be considered as Part 4 of ‘Whither the Left’.)

I thought rather than simply be critical, or make suggestions from the sidelines, I should put my words where my mouth is and actually come up with a speech I would like to hear.

Here is the speech I would like to hear from Labor as a step towards government. I am not a speechwriter, but this provides the gist of what I think should be said.

It is basically a political speech that could be used by Labor, generally taking the more moderate, more pragmatic approach to the issues raised in the earlier articles. It does not go into policy detail (that will have to come later) but can be seen as the philosophical introduction to the actual policies. It aims, as I have suggested previously, at changing the tenor of the economic debate.

Leading the way

Good evening to all of you, the members of this great nation, Australia.

We are each a member of a single nation, and like members of any organisation, we share its good times, we share its hard times, and pull together through thick and thin.

We have a great nation. It can and should be better.

We founded Australia as a nation in 1901 based on a great democratic tradition that brought ordinary people into the political process, even into the Parliament itself.

We did not have elites born to rule us and we did not need them. We described ourselves as the ‘land of the fair go’ and believed every one should have the opportunity to live the life they chose.

Most importantly, we believed everyone was equal. Anyone could aspire to be a Member of Parliament, or even Prime Minister.

Anyone could aspire to the vocation they wanted, based only on merit, not their background.

Everyone could aspire to create a better world for their children.

Where we were born, or to whom we were born was not meant to be a consideration.

At different times, not everyone was included in the vision but over time our vision of Australia became more inclusive. Our forebears knew then, as we know now, that our nation can always move forward, always be better than it is.

Now is one of those times when we need to take another step forward to aspire to an Australia that is greater, fairer, and more caring of its people.

It is time to address some of our current weaknesses and move forward. Not ignore them — as the current government is doing — and drift backwards, losing the gains our grandparents made, abandoning the aspirations of the nation.

There is more than enough evidence that there are still areas of weakness in our social and economic institutions.

Our economy is losing low-skilled jobs, so education and training, and re-training, are becoming more important, not less important.

Our population is ageing, so more needs to be done to encourage active ageing, allowing people to continue to contribute to our society, whether that is in employment or volunteering. The only answer the current government has is to increase the pension age.

We are losing manufacturing industries and more needs to be done to encourage the industries and jobs of the future. The Coalition government simply watched it happen. At the last election, it promised a million new jobs knowing full well that was no more than normal growth as it had been for the previous decade — it was a promise to do nothing, which is exactly what the government did.

And despite our nation increasing its wealth for a generation, inequality in our communities has increased. That needs to be addressed, not ignored, as this government would have you believe.

I know some will react by saying nothing can be done unless we have a strong economy.

That is self-evident.

But what is the point of a strong economy:

— if school children are being left behind because their schools do not have sufficient resources

— if people are dying because our hospitals are overcrowded and under-resourced,

— if people are working but still earning barely enough to survive,

— if our nation is in flames from the effects of climate change.

Every year we delay addressing these things, is another year that will add to the cost of rectifying them in the future. Another year that will actually weaken our economy.

Our future economy will not be strong if we do not have enough tradespeople and graduates coming out of our TAFE colleges and universities.

Our future economy will not be strong if people are sick for longer because we failed to provide adequate health services.

Our future economy will not be strong if we are spending more and more on the ravages of bushfires, of more frequent droughts, of rising sea levels, because we did nothing now.

A strong economy also needs quality infrastructure. The Coalition will cry ‘debt’, just like the boy who cried wolf. But it is the same type of debt that you go into when buying a home. You finish up with an asset that is worth more, that can be passed to your children. It is the same for the nation. If we have to borrow to provide essential infrastructure, it is for the benefit of the nation as a whole and enhances our nation both for us and for future generations. Quality infrastructure boosts national productivity and national wealth, and that flows into higher government revenue to improve education and health and all the other services we need.

A strong economy requires the merging of the work of our scientists and researchers with that of enterprises and entrepreneurs to improve products, create new products, and new processes for producing them. That will not happen if, like the current government, we continually reduce funding for research.

It will require us to identify and improve the services we can provide to other nations, just as we already provide educational and engineering services.

A strong economy requires skilling our workforce and having managers working smarter. It requires high quality students coming into the workforce, bringing new skills and new ideas. It requires all parties listening and sharing and working together, at the enterprise level, the industry level and nationally. And in these times, internationally.

It requires people being supported in their work and feeling a sense of achievement in what they do. From the highest to the lowest paid, every role is essential — a CEO relies on a cleaner as much as an airline pilot relies on an aircraft maintenance worker.

It requires that those who are not working have other ways of maintaining their self-esteem. Without that they will not become productive workers when the opportunity arises, or effective volunteers if they are already retirees. Each requires that sense of belonging and of being able to contribute to our society.

What the other side won’t tell you is that the economy is about people. An economy is not something that exists in a vacuum. It is the product of the effort of the people.

There is no economy without you and for that reason you should feel part of the economy.

And people deserve to benefit from their part in maintaining our economy. They need to feel they are receiving a fair share of the national wealth they have helped create.

A strong economy should provide for the people. They should feel included and secure. They should know that government will help in those times when they need help; that the government will help when transitions are taking place in our economy and in our lives as a community.

A strong economy should create wellbeing for all of our people. People should feel happy and satisfied, not just in their work but in their lives. That is the ultimate aim of a successful economy. And that cannot be measured just in dollars and cents.

At present Gross Domestic Product (GDP) is the main measure of our economy but it simply adds together the value of all the products and services we provide.

For example, a house that is destroyed in a bushfire adds twice to the GDP: once when it was first built, and again when it is rebuilt after the fire. But GDP takes no notice of the loss of that house, nor the devastating impact that loss had on the family that occupied it.

GDP also takes no account of damage to the environment — although the costs of rectifying that damage will be considerable. It takes no account of the depletion of our natural resources. Yes, some of that is necessary for our economy but we also need to be mindful of future generations and what resources we will be leaving for them. We must find the right balance between the economy and our environment, and to do that we need to look at our economy differently.

It is time we included other measures of our economic progress, because, in reality, GDP only measures our economic activity — GDP would count the money spent rectifying environmental damage as a plus, something that adds to GDP. That seems a strange way to measure the strength and sustainability of our economy!

There are already new measures available and being developed. Some focus on wellbeing. Some take account of the costs of achieving GDP growth.

My government will examine these and see which we can use in Australia, which will genuinely measure our progress as a people and as a nation.

To make the economy work at its best we need a strong people bound together. People are not bound together by a philosophy that encourages greed or promotes every man and woman for themselves. We must maintain our traditional ethos of the fair go and of helping a mate.

I believe Australians are bound together by our sense of fairness, by our sense of equality. We need to build on that.

As a government we will also be honest with you and explain what we intend doing and more importantly, why we are doing it. It is true that sometimes government decisions can cause difficulties for some, although of benefit to the nation as a whole. If we all understand why such a decision has to be made, then both the government and the people can ensure that our sense of fairness comes into play to support those who lose out until the wider benefits become apparent.

We will bring a different focus to the role of government:

We will focus on food security, not just agriculture as an industry. That will include underpinning the food security of other nations through our agricultural exports.

We will focus on our social strength, not just social security as a means of making welfare payments. We will strengthen the role of communities and people in supporting their neighbours.

We will focus on wellbeing, not just health. We will include active ageing and the vitality of our communities.

We will focus on the best use of our workforce, not just employment. That means skilling our people, but also encouraging innovative management approaches and innovative businesses, both small and large.

We will focus on environmental sustainability in which climate change is a critical but not the sole part. We will include what needs to be done to maintain our river basins and ground water so that communities and enterprises will also have access in the future.

We will focus on the breadth of our economy not just individual industry policies and ensure an approach that adds to our future strength.

We will focus on energy security. That will mean looking across all our energy sources, not individual sources and their associated industries in isolation.

But our main focus will be you, the members of our Australian nation. All of our decisions, including our economic decisions, will be made against the underlying principle of what can best improve the wellbeing of our people.

We have reached this point because of the inaction and wasted opportunities of previous Coalition governments who believed in so-called ‘trickle down’ economics: the belief that greater national wealth would benefit all — but that has not always been the case. They provided tax cuts instead of providing infrastructure for our future, for our children and our grandchildren. Yes, we all like tax cuts but if they cost us better schools and hospitals, if they cost us the NDIS and a future-proof fibre network, are they worth it? It only makes it more difficult for our future generations to maintain a strong economy and a strong society.

We must always remember that the decisions we make now are not just for ourselves but for our children, our children’s children and their children. We want them to enjoy life in Australia as we have done and not pass to them something in which they find only sacrifice to save the nation. If we do not take the first steps now that is what they will face.

We may not have time to complete the job but at least we will be able to say to future generations, we started the job, we did our best, and we have strengthened our nation enough for you to build on and continue making it a great nation, a nation always moving forwards, that can hold its head up in all the councils of the world.

We can achieve this. Labor will lead the way.

We will … [then follows the policy detail.]

What else can you add to the speech?

What else should a left-of-centre party (Labor) be saying to win votes?

What can be borrowed from the radical Left?

What do you think?

Bikies, Bullying and Bigotry

It takes a certain amount of self-belief and trust in yourself to get to the top of any profession. Some knowledge also helps. However some people who rise to the top of various professions seem to be able to retain a sense of humbleness and a keen interest in their fellow humans — others don’t. In recent years we have seen almost every ALP government in Australia consigned to the dustbin of history, to be replaced with various forms of conservative government. While ALP governments are not perfect and there has been extensive discussion here and elsewhere as to how the ALP can revitalise so they can re-attract the voters that have ‘swallowed’ the conservatives ‘you can trust us’ campaign, let’s look at the mindset of two conservative Governments in Australia and their treatment of members of their own community.

Did you hear the one about the seven friends that went to a bar? They were arrested. No — it’s not a failed attempt at humour — it is an actual event that happened on November 1st 2013 at Yandina (which is located near the Sunshine Coast in Queensland). The reason they were arrested was that they are alleged to have connections with an ‘outlaw’ motorcycle club.

Under Queensland’s Vicious Lawless Association Disestablishment Act (2013) — also known as the VLAD Laws — it is illegal for three or more members of an organisation declared illegal under the VLAD Laws to be in the one location at the same time. Originally, five of those having a drink were arrested, later two additional people were prosecuted as ‘police said they found criminal motorcycle gang “paraphernalia” at the homes of the two men’, who are alleged to be members of the Rebels Motorcycle Club.

All of the Yandina Seven — as the media has named them — have subsequently spent up to three months in ‘solitary confinement’ in Queensland prisons where they were effectively locked up for 22 hours a day. Their trials are currently scheduled for November 2014. Regardless of the ‘detection’ of ‘motorcycle gang paraphernalia’, most of the seven arrested were related and while it is possible that they were discussing how to perform illegal activity — they could have also been discussing the upcoming first birthday of the child of one of the men involved. The VLAD laws do not require the police to prove that people were planning covert or illegal activity prior to arrest and imprisonment.

According to the explanatory notes for the VLAD legislation:

The primary objective of the Vicious Lawless Association Disestablishment Bill 2013 is to:

disestablish associations that encourage, foster or support persons who commit serious offences; and

increase public safety and security by the disestablishment of the associations; and

deny to persons who commit serious offences the assistance and support gained from association with other persons who participate in the affairs of the associations.

The structure and operation of these criminal associations poses particular challenges to law enforcement and the criminal justice system. The association often provides members with the impetus, support and infrastructure to further their criminal activities and their violent behavior.

While the stated intent of the VLAD Laws is to ‘disestablish associations that encourage, foster or support persons who commit serious offences’ is a crime against the English language in itself, there is some evidence that the law is being used to cover a multitude of ‘sins’. This account of the Queensland police arresting someone who was using a former motorcycle clubhouse for another business is disturbing. Will they be arresting the New South Wales State of Origin team if they beat Queensland this year so that the threat to Queensland life can be ‘disestablished’?

Even the Courier Mail is reporting that Newman is being accused of bullying the judiciary, over bailing people rather than imprisoning those accused of offences under the VLAD Laws. The alternative to bail is ‘solitary confinement’ — the fate of the Yandina Seven.

It is now history that Campbell Newman resigned as Brisbane’s Lord Mayor shortly prior to the last Local Government elections ensuring the chosen replacement Graham Quirk did not have to face a by-election to assume the role of Lord Mayor. Newman became the ‘Party Leader’ of the LNP without a seat in the State Parliament and subsequently won the 2012 Queensland election with a massive majority.

Within 100 days of the state election, Independent Australia was comparing Newman to famed Queensland Premier Bjelke-Petersen, who was never cleared of corruption charges. While it could be claimed that Independent Australia was no friend of conservative political parties, The Australian, clearly had similar concerns with Newman’s maiden speech in Parliament.

Queensland’s Attorney-General is lawyer Jarrod Bleijie who at the age of 32 has been a member of Parliament since 2009. He is responsible for the maintenance of law and order in Queensland — including introducing the VLAD Laws and appointing judges in Queensland. Since the 2012 election, one female and 17 male judges have been appointed in Queensland. Bleijie seems to think that confidential conversations between he and the judiciary are suitable for media release — with support from Newman. Justice McMurdo has a greater sense of proprietary it seems.

The Sunshine Coast Daily looks at the over-regulation of the VLAD Laws, suggesting

Many would argue the strangest new set of laws belongs to Kawana MP and Attorney-General, Jarrod Bleijie, who introduced the Vicious Lawless Association Disestablishment Bill 2013 or VLAD law to clamp down on rogue bikies

and expands the issue by looking at the Federal Attorney-General’s comment that bigotry is acceptable. The paper points out it may be ‘appropriate’ to denigrate fair skin aboriginals as Andrew Bolt did, but it is illegal to let a helium balloon go on the Sunshine Coast or, rather than talking to your neighbour, you can send a formal notice to remove the tree branch that overhangs your fence.

On a serious note, the Federal Attorney-General did claim Australians have the right to be bigots. While the Federal Government’s first law officer may believe that bigotry is acceptable, others don’t, including The Age and Amy Stockwell who writes for Mamamia, a website that describes its purpose as ‘absolutely everything is up for discussion: from pop culture to politics, body image to motherhood, feminism to fashion’, explains:

Importantly, the judge found Bolt had no defence under section 18D because the articles were not written in good faith and “contained errors of fact, distortions of truth and inflammatory and provocative language”.

On hearing the decision, Andrew Bolt immediately declared it “a terrible day for free speech in this country”. Bolt’s supporters tended to agree.

In August 2012, Tony Abbott made a pre-election address to the conservative think-tank, the Institute of Public Affairs, and committed to repealing the provisions of the Racial Discrimination Act that allowed Bolt to be sued.

It seems that this is one promise Tony Abbott intends to keep.

In the 1970s, a Detroit radio announcer, Tom Clay, explored what bullying and bigotry has achieved in the middle of the 20th Century.

The point demonstrated by Tom Clay is that bullying, bigotry and hatred are learned behaviours. In a country where politicians seem to find a benefit in being ‘practising Christians’ and Abbott wears his Catholicism as a badge of honour, bullying of select groups in the community and the promotion of bigotry seems to be a permitted activity. So much for the ‘do unto others as you would have them do unto you’ tenet in the Bible, the source moral textbook for all the different ‘brands’ of Christianity from the Catholics through to the ‘born again’.

Some Catholic Clergy have a phrase for those who religiously attend church (pun intended) on a Sunday and then practice completely different beliefs for the remaining 167 hours a week — they are ‘one hour a week Catholics’ (the typical length of a Catholic Sunday Mass). Abbott claims to be a practicing Catholic, Newman claims to have faith and while he isn’t, his immediate family are practising Catholics — yet both of them lead governments that are attempting to return their communities to a time where bullying, bigotry and hatred are acceptable learned behaviours.

Is this a case of politics alters the moral compass of these people or that they will say and do whatever is necessary to gain a few more votes?

What do you think?

Letter to Bill Shorten - part 2

Here is the second part of a letter to Opposition Leader Bill Shorten, written by an ardent Labor supporter, Ad Astra. 

The Hon Bill Shorten, MP Leader of the Federal Opposition 
Dear Mr Shorten

Health and disability 

Labor has a proud record in health care, one acknowledged by the electorate. It introduced Medicare, which LNP governments so far have been too timid to dismantle, so popular has it been, although the Commission of Audit would have it emasculated. Last term it introduced its groundbreaking and highly applauded Disability Care, which the Commission of Audit would slow down, leaving the disabled waiting yet again. 

Australia has one of the best health care systems in the world. Its maintenance and improvement is Labor’s task. The LNP’s focus is on the sustainability of funding for health and disability care, a laudable enough objective, but we know ‘sustainability’ will be used as a lever for cuts to services, as the Commission of Audit so vividly exemplifies. 

Labor should be formulating how it would sustain funding, rather than harping on LNP cuts. It should be leading the way, but so far we have seen almost no proactive leadership on health from Labor since the election. 

Aged care, dementia care, disability care and hospital care are becoming major areas of concern. The need for, and the cost of supportive services will rise inexorably. Labor must stress the importance of basing our health care system on first-rate primary care that offers emergency care, preventive care and chronic illness management via the nation’s well-trained general practitioners. This nation must prepare for these areas of escalating cost now, but not through counter-productive penalties such as a co-payment on bulk-billed services. 

Recommendation: That Labor seizes the initiative on health, aged and disability care, and not only widely promulgates its plans for enhancement, but also its detailed plans for sustaining funding in the decades ahead. It must take the lead in this, its traditional area. 


Here is another area where Labor has a fine record, which is consistently acknowledged by the electorate. Its Gonski initiative was widely applauded, so much so that the LNP was forced to endorse it pre-election, only to seek to dilute it post-election to suit its ideological position, and delay it, purportedly for budgetary reasons. Labor has always insisted on enabling education for all who might be capable of benefitting from it, be it at in the pre-school, school, tertiary or trade sectors. The LNP sees education as being for those who can pay for it, for the ‘better class of kiddies’ who deserve it most. The Commission of Audit would have the Gonski reforms disabled or even abandoned, and education handed to the states. Labor must counter this, knowing that education for all enhances the individual, increases productivity, and lifts the nation up. 

This nation simply cannot afford to fall behind its Asian neighbours. 

Recommendation: That Labor re-asserts its preeminence in education, insists on the full implementation of the Gonski recommendations, and fashions a funding schedule that will enable this, even if that requires additional levies or taxes. 

Taxation and transfer payments 

Labor has traditionally been sympathetic to the needs of the elderly, the retired, the disabled and the less well-off. It has supported and increased pension payments and other benefits. The cost is projected to rise inexorably. Labor must develop a plan to sustain these benefits where they are justified. That will not be easy. It will almost certainly require stricter means testing so that those who most need support receive it, and those who don’t, do not. Moreover, increased taxes are certain to be needed. Instead of pretending that Labor can manage to support transfer payments without tax increases, it should advocate increasing direct and indirect taxes. It should not play a political game by opposing discussion of GST changes. Whilst acknowledging that the GST is a regressive tax, which most hurts the less well off, it cannot be beyond the wit of Labor to propose changes that do not hurt the poor. For example, a GST on food, education and health care could be offset by a graduated discount system for those below certain income levels. 

Balanced economists identify PM Howard’s use of the deluge of revenue during the mining boom to buy votes through middle class welfare and tax cuts as a major cause of our current difficulties. Labor should make this clear whilst acknowledging its own contribution to the escalation of welfare. It should acknowledge that structural defects in the federal budget simply must be remedied. 

Labor ought to be echoing Joe Hockey’s mantra that the age of entitlement is over, but focus its attention on corporate welfare, welfare for those who do not need it, and other tax refuges of the wealthy, specifically negative gearing. Instead of shrinking from addressing this thorny issue, it ought to have the courage to insist its enormous cost to the budget be exposed, and that steps be taken to phase it out gradually. Superannuation needs graded boosting to 15% so that the less well-off become less reliant on the aged pension. Superannuation tax concessions that unreasonably favour the wealthy should be reduced and gradually phased out. Increasing the pensionable age, and taking steps to take into account the value of the family home and other assets in allocating a pension, must be considered. Let’s not play political games with tax issues, even if the LNP does. They are too crucial to be the subject of point-scoring skirmishes.

Recommendation: That Labor takes the lead in addressing the structural defects in the nation’s tax and transfer system, and insists on open debate to find lasting solutions.


Labor ought not allow Tony Abbott to brazenly steal the mantle of ‘the infrastructure PM’. Labor has always given due prominence to infrastructure, and should ensure that its strong record and its future commitment to infrastructure is widely publicised. Anthony Albanese has been a vocal advocate for the infrastructure this nation needs. Labor should avoid the pointless ‘road versus rail’ debate that the LNP seems to enjoy. 

Recommendation: That Labor re-asserts its preeminence in infrastructure development and wrests the initiative from the Coalition and its ‘infrastructure’ prime minister.

Public debate 

The electorate’s perception of politicians is governed mainly by their public utterances inside and outside of parliament. 

Question Time, even for those who do not have the time to watch it directly, is publicised on every TV and radio outlet. Perhaps more than anything else, QT has weighed down politicians with the unseemly cloak of adversarial discord, abuse, anger, shouting, lies and deception. Politicians are seen simply as ugly point-scoring street fighters. Yet politicians ought to be admired and respected. The fact that they rate with used car salesmen and journalists as the least respected professionals shows how lowly they have sunk in the public’s estimation. This demeans our democracy. 

Labor should take the lead in elevating public discourse. In QT, instead of always seeking to score points that will be seen on the 6 o’clock news, why not ask questions of profound importance to our nation, and ask them in a sincere yet inquisitive fashion, free of angry rhetoric, nasty innuendo and finger pointing. If Labor must embarrass the government, ask penetrating questions that probe weaknesses in policy, dishonesty, lack of clarity, inefficiency, and malign intent, and do so benignly with everyday words uncontaminated with venom and anger. In my view, that would have a more shocking effect on the government and a more enthusiastic acceptance by the electorate. It would contrast with the angry outbursts and the sarcastic words we see from LNP politicians almost every day. 

Labor spokespersons should talk as statesmen do. They ought to move the standard of discourse from gutter talk to the uplifting language of the statesman and the diplomat. It can’t be that hard. 

This is not to say that exuberance, enthusiasm and passion should not suffuse Labor talk. These attributes are essential, but they can be conveyed without venom, nastiness, sarcasm, rudeness and disrespect.

Recommendation: That Labor reviews all the avenues it has for making public utterances, and refashions them in a way that will garner public respect. This is urgent.


Getting Labor’s messages across will not be easy. It will require skillful ‘marketing’ if I may use that awkward word, of the Labor ‘brand’, another uncomfortable expression. The LNP has been quite brilliant at marketing its brand and framing the political debate. It has used weasel words, words devoid of substance but with a glossy exterior, just as weasels suck eggs dry, leaving only the shiny shell. What Labor needs to do is expose the substance of its progressive policies, and dress it in attractive garb with words that are understandable, appealing and memorable. It can’t be that hard, yet Labor has regularly failed to do this. The result has been that good policies have been misunderstood, or not understood at all, have been poorly ‘sold’, have been countered with ease by Labor’s opponents, and have too often been rejected by the electorate. 

Labor simply must do better. There must be advisers out there who could help Labor fashion its messages, its purposes and its plans in a way that would match Coalition slogans such as: ‘stop the boats’, ‘axe the tax’, ‘we must live within our means’, ‘budget emergency’, and ‘we must all do the heavy lifting’, that have served the LNP so well. 

Words count. Persuasive words garner support. They don’t have to be erudite, only plausible. Framing the debate in a way that advantages Labor is essential.  Labor’s advisors need to study the works of George Lakoff, linguist and cognitive scientist, particularly Moral Politics: How Liberals and Conservatives ThinkThe Political Mind: A Cognitive Scientist's Guide to Your Brain and Its Politics; and Don't Think of an Elephant!: Know Your Values and Frame the Debate -The Essential Guide for Progressives. The insights these works provide ought to be applied to every aspect of Labor’s policy, but perhaps most of all to the economy, which is so central to the electorate’s thinking. 

Recommendation: That Labor takes the initiative in framing the debate on all policy issues.

A final comment 

I could write on and on, covering other policy areas, but this letter is already long enough. 

Suffice it is to say that in the view of this Labor supporter, and I suspect many, many others, Labor needs to make profound changes to its organisation, its governance, its membership base, its financial support, and the way it presents its policies and plans to the public. People like me support Labor because it is built on an ideological foundation stone of fairness, equal opportunity, equity, concern for the less well off and the disadvantaged, full employment, sustainable economic prosperity, and concern for the environment and the pursuit of its sustainability, and because its policies seek to make possible those worthy aims. These progressive ideals contrast starkly with many conservative ideals, which seem to favour the wealthy, disadvantage the poor and the weak, and foster a ‘survival of the fittest’ mindset, with those at the bottom of the pile receiving only the crumbs from the rich man’s table, a phenomenon glorified by the discredited theory of ‘trickle-down’ economics. 

You are the appointed leader. Although the wider membership preferred Anthony Albanese, seeing him as a dyed-in-the-wool Labor man who performs so well in parliamentary debates and public speeches, your colleagues preferred you. So it has fallen to you to resuscitate Labor. You can be assured that this is what Labor supporters desperately want. They will support you as you restore Labor to its proper place in the political spectrum. 

Your task is difficult. You need all the encouragement and help you can get, and you need it from all Labor supporters. The purpose of this letter is to offer that support, and to offer some observations and advice from one who cares deeply about what progressive parties stand for. In Australia, Labor is such a party. The conservatives do not share Labor values. Although the Greens share many Labor values, they are too radical, too uncompromising, and too inflexible in their policies and politics. 

For me, it is Labor. 

Over to you! We have great expectations; we trust you are equal to the task. Help us help you to achieve Labor’s great potential as a force for good in this nation.

Yours sincerely