If you doubt the scientists, what about the actuaries?


There’s an old adage that if you want to know who will win an election follow the bookmakers’ odds or where the punters are putting their money rather than the polls (particularly when the polls are close). Something similar could be said of climate change. For Mr Abbott and others like him who remain sceptical of the science, they should instead follow the risk assessment of the actuaries as they advise the insurance and reinsurance industry and the investment banks.

The actuaries do not concern themselves directly with the science but with evaluating the risk and the costs that arise from it. As the actuaries put it:

Our role as actuaries is to help optimise decisions. We don’t seek to prove or disprove the estimates made by the experts but we need to understand what they are saying.

Australian actuaries have been at the forefront in taking environmental factors, including climate change, into account, establishing a committee in 1998 to examine environmental and energy issues as they affect their profession. In January 2012 Australian actuaries played a significant role at the ‘Climate Change Summit for Asia’s Insurance Industry’ in Singapore. American actuaries were slower to react (their first climate committee appeared in 2005) but are now developing an Actuaries Climate Change Index and an Actuaries Climate Risk Index, initially for North America, that cover a range of factors, including obvious ones like temperature and precipitation and lesser known factors like soil moisture.

Munich Re, a major reinsurance company, issued details in 2011 [page 11 of link] showing that the number of weather-related catastrophes between 1950 and 2010 was on an upward trend (and weather-related events accounted for about 85 per cent of insurance claims). There was a sequence of bad years between 1986 and 1999, with a peak of 14 catastrophic weather events in 1993. The years 2004, 2005 and 2007 also had an above average number of major weather events. Although it seemed slightly quieter from 2008 to 2010, 2011 became the costliest year on record (but not just from weather events) for the global insurance industry following the earthquake and tsunami in Japan, the Christchurch earthquake and hurricane Irene in the US — total insurance losses for the year of $105 billion out of total economic losses from natural disasters of $380 billion. (To give those figures a context, the Australian government’s total revenue in 2010‒11 was $283 billion.)

A similar upward trend is apparent in plotting natural disasters in Australia.

The cost to the insurers and reinsurers of such events varies, depending where they occur. Some have argued that the increase in insurance pay-outs is attributable mainly to social and demographic changes, such as the growth of coastal cities and rising property values. That can be seen in the Sydney hail storm of 1999 or more recently the hail storm in Brisbane at the end of November: the Sydney event remains one of the most expensive for the insurance industry in Australian history at $1.7 billion, while the current cost of the Brisbane event is slightly over $800 million. (The most expensive event to date was the 2010 Queensland floods at $2.3 billion.) For the actuaries this is not an issue, in the sense that it is a given that must be taken into account, but it does concern them that, in the various climate change scenarios, catastrophic events may occur more often in major urban areas and that cyclones may move further south, bringing them within range of Queensland’s heavily populated and built-up south-east corner.

IAG in Australia is now utilising climate science figures that suggest that a 1°C increase in mean summer temperature will increase the risk of bushfires by 17 to 28 per cent; an increase of 2.2°C will cause a 5 to 10 per cent increase in cyclone wind speeds; that a 25 per cent increase in the volume of rain over short periods will mean that what is currently viewed as a one-in-100 year flood could become a one-in-36 year flood or, at worst, a one-in-17 year event.

The actuaries are also concerned that small changes created by climate change will not cause a proportional increase in damage (and insurance costs) but an exponential increase: for example, a 25 percent increase in a storm’s peak wind gusts from 40‒50 knots to 50‒60 knots does not produce a 25 per cent increase in damage but a 650 per cent increase. (For those who are metrically minded that is an increase from 74‒93km/h to 93‒111km/h.) It means our current housing stock is not well-suited to such an increase in the intensity of storms and that poses major challenges for insurance companies.

Terms like 1-in-100 year and 1-in-200 year will become meaningless as events of that magnitude occur on a more regular basis. In the UK [page 21 of link], it has been estimated that the insurance industry would require additional capital of £1 billion to cover 1-in-200 year flood events if there is a temperature rise of 2°C but £5.5 billion if there is a 6°C rise in temperature (the upper end of IPCC forecasts). To cover costs, it was also estimated that insurance pricing in the UK would need to increase by 16% for a 2°C rise and 47% for a 6°C rise. Those figures illustrate how the actuaries are examining the risk posed by both the high and low range climate change forecasts.

Insurance companies and their actuaries are not concerned merely by the local risks from climate change. The linkages between insurance companies created by reinsurance mechanisms means that they can each be affected by catastrophes anywhere on the globe. For example, the price to insurance companies of reinsurance almost doubled after cyclone Andrew in the US in 1992 (because that one event accounted for about 40 per cent of the then globally available capital for reinsurance) and it was three years before the price began to decline again.

The associated danger is that the cost of insurance becomes too expensive. More and more individuals may not take out insurance to cover their assets. In 2002, $1,500 billion of Australia’s wealth was locked up in homes, commercial buildings, ports and other physical assets. IAG’s Chief Risk Officer has stated:

The insurance industry currently underwrites the risk to the bulk of these assets from weather events but climate change threatens its ability to do so as effectively in the future. Therefore the affect to Australia from climate change is quickly becoming a social, economic and political issue.

The worst case scenario is that insurance companies themselves fail from the increasing insurance ‘losses’ and the rising cost of reinsurance, leaving people and businesses with no market mechanism to protect assets. In economic terms, ‘insurance’ is a means of spreading risk but if premiums become too expensive or insurance companies fail, the government will become the ‘insurer’ of last resort, as the main body able to spread and absorb the risk — but at what cost to taxpayers?

There is already some talk of greater government involvement. Following the 2010 Queensland floods the then Assistant Treasurer Bill Shorten announced the Australian National Disaster Insurance Review. The Review’s final report included recommendations for:

    • the creation of a government agency* to manage national coordination of flood risk management and to operate a system of premium discounts and a flood risk reinsurance facility
    • all home insurance policies to include flood cover
    • a system of premium discounts in order that most purchasers of policies in areas subject to flood risk are eligible for discounts against the full cost of flood insurance
    • a government guarantee for claim payments
(* A similar body had been created by the Howard government after the ‘twin towers’ terrorist attack to provide a government guarantee as regards terrorism insurance.)

The government response to most of the recommendations was, however, that it would ‘consider’ them as part of a broader consideration of disaster insurance changes, following a consultation process in 2012. Apart from action on the definition of what constitutes a ‘flood’, I am not aware of other government steps on this issue. One aspect that appears to have held up government action is that many insurance companies continue to operate on neo-liberal market principles and oppose government involvement:

In July 2011 Lloyd’s made it clear to the Review that government intervention in private insurance markets should be kept to a minimum and warned that the creation of insurance programmes or pools limits the effectiveness of the insurance industry, can be hugely costly for governments and hampers the application of sound actuarial and risk-based principles.

It is almost inevitable that in future years (despite Lloyd’s current approach), there will be more discussion of the government’s role in insurance. If the actuaries’ figures are borne out, the cost of insurance could become prohibitive either for the individual or for the insurance companies, or both. Alternately, governments have to be active now in taking measures to adapt to and mitigate climate change that will help contain future costs.

Actuaries are already speaking of the need for adaptation and mitigation. A simple example is ensuring that buildings in cyclone-prone areas are built to cyclone standards. Here in Australia, the actuaries are using the evidence that recent cyclone damage has been greatest to dwellings that were not built to such standards or, in some cases, where such standards were not enforced during construction. Taking action now may help avoid the high range climate change scenarios and the associated higher costs: not only insurance costs, but the construction costs of more stringent cyclone standards to cope with higher cyclonic wind speeds. The draconian alternative is abandoning some of the towns and cities that are subject to cyclones.

IAG has suggested that insurance companies can drive public awareness programs that identify vulnerable areas, can lobby governments to change or enforce building codes, and, in relation to emissions, can offer lower vehicle insurance premiums for those driving fewer kilometres. Insurance companies are also funding research to more clearly identify the risks they face. IAG is funding research into the development of hail storms over Sydney: warmer waters appear one contributing factor, so the risk is, if oceans warm as predicted, that those events will become more frequent.

Despite the need for adaptation and mitigation, last December we saw Queensland minister Jeff Seeney order the Moreton Bay Regional Council to remove from its regional plan reference to a climate change-derived sea level rise of 0.8 metres by 2100. The Local Government Association of Queensland feared that Seeney may enforce that for all coastal councils in Queensland and was seeking legal advice. The concern is that councils may be legally liable, like tobacco and asbestos companies, if it is shown that they knew of the risk but failed to act.

Seeney claimed he intervened ‘to ensure the residents’ rights to build and develop their properties were maintained and not restricted by their local council’. That relates to issues I discussed last year on TPS regarding the Right’s view of individual freedom and individual self-interest. And it manages to ignore completely the growing concern of the insurance industry and its actuaries.

The actuaries are also discussing the risk related to the market value of companies holding carbon (fossil fuel) assets. The argument goes like this:

    • to limit global temperature rise to 2°C we have a ‘carbon budget’ of 886 gigatonnes of CO2 between 2000 and 2050
    • in the first ten years of the century we have used 321 gigatonnes of that budget, leaving 565 gigatonnes
    • but known global reserves of carbon fuels would produce 2,795 gigatonnes of CO2
    • top listed companies represent around 25 per cent of those reserves
    • so what happens to the companies’ value if only 20 per cent of carbon fuel reserves can be used?
In economic terminology, these would become ‘stranded assets’ — assets that can no longer be used. That has implications for companies and the share markets. Insurance companies are particularly concerned because they rely on investments to help build their funds, so they need to reduce such risk in their investment portfolios. Actuaries who provide advice in those areas are starting to factor such considerations into their advice.

Insurance companies are recognising that a risk from climate change already exists and, whether convinced by the science or not, are asking their actuaries to assess that risk. They are acting on the precautionary principle — expressed this way by a Swedish insurance company:

Climate change has been a hot topic for a long time now. Global warming is probably contributing to many of the changes in our weather. Whatever the reason, the conclusion is that we have to respond to the situation more effectively. [emphasis added]

It’s a shame that we can’t say the same of our government, although it is likely that the government will be the one left to pick up the tab if the insurance companies can no longer meet the cost of weather events arising from climate change. Someone should ask Mr Abbott and Mr Hockey what sort of debt and deficit disaster that will create for future generations.

What do you think?

About Ken Wolff

This week Ken takes a different look at climate change and suggests that Tony Abbott, and other climate science sceptics like him, should instead consider the risk assessment of the actuaries. The government may be taking no notice of climate change but the insurance industry certainly is.

Next week we start a series of articles on financial matters, starting with another piece by Ken, 'Abbott continues to tell porkies', which examines the detail of the so-called budget deficit disaster and asks why Abbott and Hockey did not also consider other tax changes, particularly regarding 'tax expenditures'. It will be followed by 2353 examining the issue of tax reform and why it is so difficult.



We’re all in this together

As human beings we each have a responsibility to care for humanity. Expressing concern for others brings inner strength and deep satisfaction. As social animals, human beings need friendship, but friendship doesn’t come from wealth and power, but from showing compassion and concern for others. [Dalai Lama]

It is common to make a resolution on New Year’s Eve that, if kept, will make us better people in the forthcoming year. It is also a period of reflection, of things we did well, things we could have done better and things that we just should consider — so with your indulgence, and as New Year’s Eve was only a few weeks ago, I would propose that we should all reflect on this quote from the Reverend Tim Costello (Baptist Minister, CEO of World Vision and brother of former Australian Treasurer, Peter), and that we should all aspire to it in 2015.

Ultimately we have got to co-operate for our common destiny.

If you’re reading this site you’ll probably remember that back at the beginning of November, the Memorial Service for past Prime Minister Edward Gough Whitlam was celebrated at the Sydney Town Hall. As you would expect, all the living Prime Ministers attended the service — and the public outside did not greet Prime Ministers Howard, Rudd and Abbott with any enthusiasm. Regardless of our opinions of the three gentlemen in question, it is my contention here that the treatment they received outside the Hall was inappropriate for three past and current leaders of our community. True, once inside, Abbott gave the impression he was there only because he ‘had to be there’, when speaker after speaker was pointing out the legacy left by Whitlam, so he was equally at fault.

Oliver Burkeman, writing in the US version of The Guardian opened a recent opinion piece with the headline ‘We can all get along — and for less than the cost of a Taylor Swift Album’. While Taylor Swift may not be your preferred musical choice (she certainly isn’t mine), the article asks why people ‘hate’ those with a different viewpoint. Burkeman looks at a recent study by the National Academy of Sciences of the United States of America that set out to look at the reasons for intractable disputes:

Political conflict between American Democrats and Republicans and ethnoreligious conflict between Israelis and Palestinians seem intractable, despite the availability of reasonable compromise solutions in both cases. This research demonstrates a fundamental cognitive bias driving such conflict intractability: Adversaries attribute their ingroup’s actions to ingroup love more than outgroup hate and attribute their outgroup’s actions to outgroup hate more than ingroup love. This biased attributional pattern increases beliefs and intentions associated with conflict intractability, including unwillingness to negotiate and unwillingness to vote for compromise solutions. In addition, offering financial incentives for accuracy in evaluating one’s outgroup mitigates this biased attributional pattern and its consequences. Understanding this bias and how to alleviate it can contribute to conflict resolution on a global scale.

In other words, can people be convinced to ‘see the values of their enemies’? Well it turns out that the answer is yes; people can gain an understanding that the motives of their ‘enemies’ are usually the same as their own motives but they come from a different viewpoint. Where the Taylor Swift comparison comes in is that when interviewing Americans about their hatred of the Republicans/Democrats (as applicable), it only took $12 — less than the cost of the aforesaid Taylor Swift album — for the interviewee to be able to describe the motivation behind those from the other side. Yes, the potential to gain $12 may demonstrate a number of human failings rather than an opening of awareness but maybe some of the interviewees actually did begin to question their rationale that the other side is completely wrong.

Burkeman links in his analysis to the writings of Arnold Kling who wrote The Library of Economics and Liberty and suggests:

The following thought occurred to me recently. Suppose we look at writing on issues where people tend to hold strong opinions that fit with their ideology.
Such writing can
(a) attempt to open the minds of people on the opposite side as the author
(b) attempt to open minds of people on the same side as the author
(c) attempt to close minds of people on the same side as the author
So, think about it. Wouldn't you classify most op-eds and blog posts as (c)? Isn't that sort of pathetic? Here are some more thoughts:
1. The default is (c). If you are not consciously trying to do (a) or (b), then you will almost surely do (c).

Burkeman then acknowledges:

Indeed, an awful lot of opinionating, in the media and elsewhere, just takes the hate-based motivations of the other side as given. The real purpose of such writing — and I’ve done plenty of it myself — is rarely to change opponents’ minds. That kind of project would surely benefit from accepting the possibility that those opponents think of themselves as decent, loving people. Instead, it’s to rally the existing supporters of one’s cause, reinforcing their perception of the other side as driven by hate.

This line of reasoning could support the motives and operations of various media ‘personalities’ and politicians both here and overseas.

Abbott became prime minister through unfailing negativity. In opposition:

They focused like a laser beam on any action by the Labor government that could be effectively attacked. It was primarily a negative opposition, with the biggest promises being the undoing of Labor’s legislative and infrastructure agenda. Abbott opposed the NBN, the mining tax, the carbon price, poker machine reform and much more.

However, in government, this process has now come back to bite them badly.

It’s almost universally agreed by economists and policy experts that a carbon price, through a tax or trading scheme, is the most effective and efficient method for reducing emissions. Julia Gillard opened herself to attack over the carbon price because of her promise during the election campaign that there would be no carbon tax under her government. The Coalition leapt on this broken promise and attacked the Gillard government relentlessly.

Gillard didn’t sell the ‘carbon tax’ well. One could argue that NBN, Disabilitycare and a number of other policies were sold equally as badly by the ALP under Rudd and Gillard. The continual infighting made known to the public through leaks didn’t help promote a sense of unity and purpose. Abbott’s relentless attacks on those policies now puts him in a position where he can’t offer the ‘effective and efficient’ method to reduce carbon emissions, neither can he offer the ALP’s technically superior NBN, the more cost effective ‘paid parental leave’ or any form of increased assistance for those with a long term disability. Hate politics has gotten in the way of good policy — and you and I (as well as our descendants) will suffer. Abbott now calls for mature debate surrounding increasing the GST — something that he claimed was ‘off the table’ while in opposition. When Clive Palmer is literally laughing at Abbott and even NewsCorp is reporting the request with some sarcasm, Abbott has a problem. Kaye Lee discusses Abbott’s conundrum on The Australian Independent Media Network by pointing out some of the other revenue-leaking measures Abbott has promised not to touch, despite being unfair to large sectors of the community.

In November, Senator David Leyonhjelm who is an independent, wrote an opinion piece for The Guardian headed:

‘Dear Bill Shorten: you're the opposition leader, not me. It's time to drop your soft bipartisanship.’

Rather than oppose for the sake of opposing, or donning a hi-vis vest and walking into some unsuspecting factory with a media circus in the manner of Abbott while he was in opposition, is Shorten playing a longer game here? If he is less ‘absolute’ now, he will be more able to determine the best practical policy outcomes in the future, assuming the opinion polls are correct. A search of The Guardian or Fairfax Media’s websites will show a list of items where Bill Shorten is actively and publically differentiating his party from Abbott. Some of his speeches have been (in the words of Yes Minister) ‘courageous’ — such as his speech at the Christian Lobby’s convention that he is in favour of blended families and same sex marriage.

Professor Selena Bartlett from QUT has developed a ‘brain vitality index’, which she hopes will become as well known as the BMI used as an indicator of physical health. Bartlett claims

“Often we are not aware of what we are saying to ourselves or the impact this has on our brain health,” she said.

“Your brain is a massive computer. If you get up in the morning thinking ‘I'm sad’, or ‘I'm worthless’, it's like entering a search for 'worthless'.

“Your brain then sets about finding the evidence to support these thoughts and so the whole negative feedback loop becomes part of your brain's hardware.

“Our brains hold onto negative thoughts more than positive thoughts and if we maintain and reiterate endless negative self-narratives it causes stress.”

Bartlett’s research puts a scientific and peer reviewed foundation to the writings of Kling and Burkeman discussed above. She also has a free ‘app’ on the Apple and GooglePlay download ‘stores’ should you wish to ‘measure’ your brain vitality.

At the end of the day, Tim Costello is right: we do have to co-operate to survive. No one person or group of people has all the correct answers. So why is it that there are a number of people prepared to tear down not only the opinions of those who haven’t come to the same conclusion, but tear down the person as well? Burkeman, Kling and Bartlett all demonstrate from different perspectives that negativity is a dangerous weapon. Bartlett also demonstrates that negative opinions are harder to ‘modify’ than positive opinions.

It is frequently said that people go ‘into’ politics because they have a genuine desire to improve the lives and outcomes for their community. Those who meet a politician from ‘the other side’ also frequently express that they seem to be nice people who are genuinely interested. Why then did it become acceptable for political parties and their acolytes to engender hatred of ‘the other side’ for political gain?

At the end of the day, no one gets off the earth alive and we need to be able to understand that others may have differing opinions developed through a similar reasoning pattern as our own. Surely as a society we have the ability to disagree with a person’s ideas or motives — but not hate the person.

What do you think?

About 2353

As the first ‘official’ post for the year (not counting our ‘warm-up’ or the announcement of changes for TPS in 2015 during the week), 2353 has asked whether we can in this new year be more understanding of opposing views, whether people can disagree with an idea without attacking the person holding it. It is an aim that all should strive for in 2015, including our politicians. Then we might have some genuine public discourse on ideas for Australia’s future rather than political name calling. We can only live in hope! Come back next week for: 'If you doubt the scientists, what about the actuaries?' by Ken Wolff



Enjoy a new era at The Political Sword


On Saturday, 13 September 2008 Ad astra wrote: ‘This is the first posting of The Political Sword blog. Its focus is Australian politics. It is intended to give expression to those who have opinions about contemporary political events. In particular it will provide a forum for exposing deception among politicians, bureaucrats and commentators.

‘The people deserve to know the truth about political decisions, how and why they were made, and about those who made them. They are entitled to know if political commentators are truthfully representing the situations they are reporting, and that they make clear what is fact, and what is opinion. They owe it to their readers to validate the facts they report and reveal their source.

‘By challenging politicians and commentators to stick to the truth and to justify their words and actions, it is possible that the quality of political discourse in this country might improve. The Internet provides ordinary citizens with the opportunity to influence political behaviour between elections, rather than only at election time.

‘Politicians, journalists and academics read political blogs - they are bound to be influenced by them, at least to some extent.

‘Al Gore said that political blogs have become a significant new force in political debate and decision making in the US. The same opportunity exists in this country to put politicians and commentators to the verbal political sword
.’

Over six years later, the words apply even more than when they were written. Blogs and social media now do impinge on politicians; sometimes the politicians do hear what the ordinary person says and sometimes they do respond. But their honesty and their transparency has not improved; indeed it seems to have deteriorated, most noticeably since the 2013 election.

When in September 2013, at the same time as Lyn, who provided TPS users with comprehensive links to political material day after day for many years, Ad astra decided to step back from TPS, Janet (jan@j4gypsy), not wanting to see it disappear, moved in and organised a team that has maintained the site ever since. In Ad astra’s words: “Her organisational skill, and the dedication of TPS team members have been outstanding. They have authored, sought other authors, reviewed, edited, and coded countless pieces that have appeared week after week on TPS.”

Over time the nature of our author contributions has evolved. In recent months, the emphasis of most pieces has been on the philosophical aspects of politics, with a focus on economics. The pieces have been learned treatises on the chosen subject, well researched and referenced with many links, fascinating and valuable reading that has evoked reflection and deep thought about the matters that influence politics profoundly. Because these matters are seldom addressed by politicians in their discourse with the public, and are usually neglected by mainstream media journalists, the electorate has been left to flounder in a sea of inconsequential superficiality, devoid of thoughtful consideration of the central issues that influence, and indeed mould our democracy. So important have these pieces been, that it is planned that such contributions shall continue to be the solid base upon which TPS will continue in 2015. You can look forward to more of such pieces from our talented authors.

Casablanca took over from Lyn, and since then has supplied a continual stream of links to important material from the media. Her dedication and perspicacity in selecting relevant items is deeply appreciated. You can look forward to her contributions in 2015.

As we enter a new year and contemplate the 2016 election in about eighteen months, as the substandard performance of the Abbott government continues, and as its leader’s performance declines by the day and his public approval sinks to greater depths, the need has become more and more pressing for incisive commentary on the government, its leader and its ministers, as well as on what the other parties are doing.

TPS Extra

To this end, TPS has added another component to its repertoire: TPS Extra. Older readers will remember how curbside paperboys in another era shouted: ‘Extra, Extra, read all about it’ as they spruiked editions of their newspaper that contained startling news. TPS Extra is TPS’s attempt to bring you the startling — in political commentary. We will not be generating news; there are countless news generators, and we don’t have the resources anyway. What we will be doing is dissecting the contemporary news from many sources, analyzing it, looking for meaning in the events, and interpreting what they might imply. We will provide links to the news sources and will often quote from them. The pieces will therefore be opinion pieces. They will reflect the opinion of the author, and they will invite your opinion.

It is our intention to post such opinion pieces on TPS Extra. There may be several in one week, or none at all, depending on what is happening politically. You will be able to read these by switching from the main site, The Political Sword, to TPS Extra. 'Buttons' have been provided on each site to enable you to switch from one to the other and back again as often as you wish.

Our Webmaster, who goes by the nickname Web Monkey, has skillfully designed the new site and the transit buttons. We are deeply indebted to him for his stylish design.

TPS Extra is now live at http://www.tpsextra.com.au. There are several posts there: four prepared last week to trial the new site, and one added this week that comments on Australia Day . You may wish to read them, comment upon them, and rate them. Commenting and rating are done just as on the main TPS site.

We suggest you make the original TPS site your default, and switch to TPS Extra as the desire takes you.

We trust you will enjoy the variety now offered by The Political Sword in its two forms.

While the main TPS site will continue to focus on more in-depth analysis of political and social issues, we are also making some minor changes in our approach for 2015.

A call to authors

The Political Sword will be accepting shorter pieces from authors for posting. Last year, our posts were usually around 2000 words (give or take 200‒300 words) but this year we will accept shorter pieces, anything from 400 to 1000 words. So if you have been reading our posts thinking you couldn’t write longer pieces like that, now you don’t have to. When we receive shorter pieces, we will attempt to put pieces addressing the same topic together and post them together: so instead of a single article constituting a post, we may have two, three or four articles.

To help you, we now also have a list of themes. This doesn’t mean that they are the only things we will post about but we do hope to address a number of them during the year and your pieces, both short and long, will help.

Our current themes are:

  • education
  • health
  • environment/climate change
  • immigration/asylum seekers
  • economy
  • social equity
  • tax
  • finance
  • work and the labour force in the 21st century
  • welfare
  • Aboriginal and Torres Strait Islander affairs
  • science, research and innovation
In addressing the themes, we will not only be looking for critiques of the current approach taken by the government but alternative approaches that may actually help improve the situation or approaches that you think Labor could take into the next election. Of course, some of the themes can overlap.

And, given our authors’ statement of beliefs (see below), there is also scope to ask them to expand on some of those beliefs and explain how they see our society achieving the ideals they have listed.

About our authors

We are also introducing a new feature: ‘About our authors’, for both TPS and TPS Extra. We all have our beliefs, our vision of the sort of country in which we want to live, and of course our biases. So that you can see where our authors are coming from as they write, a short bio and a longer statement of beliefs will be provided for you to read about each of them, all at the click of your mouse. To read about our authors, click ‘About our authors’ which you will see in the left panel immediately below ‘AA's Top Political Websites’.

During the year, each author will be asked to provide a short ‘bio’ and a statement of beliefs. A short ‘bio’ from each author will be necessary, but the statement of beliefs is optional, although we do think it adds to our readers’ understanding of the author’s position and approach.

As always, your feedback will be welcome as regards both TPS Extra and the approach on TPS.

The TPS Team

Be sure to come back on Sunday evening for our first main post of the year: ‘We’re all in this together’ by 2353.


Proud to be a bigot: a view from the barbie


Everyone knows about George Brandis’s now famous comment:

People do have a right to be bigots, you know. In a free country, people do have rights to say things that other people find offensive or insulting or bigoted.

I have decided to take him at his word and tell Tony Abbott to eff off back to where he came from. He arrived here as a £10 pom and I will willingly refund his £10 (or $20 in real Australian money) if he takes the next boat home — perhaps we can spare him an orange life boat for the journey. Why wasn’t his boat stopped at sea and turned back? Given what he is doing to Oz, he must certainly rank as an ‘undesirable’ immigrant.

Yes, before the conservative critics start pointing out that Julia Gillard was born in Wales, in my bigoted view someone born in Wales (or Scotland or Ireland) ranks considerably higher than a conservative wanna-be toff born in England. If you doubt my ‘wanna-be toff’ comment, why did he re-introduce Knights and Dames into the Order of Australia? We got rid of those stupid, meaningless titles years ago but obviously a pom like Abbott still thinks they are important to Oz — where’s he been for the past 30 years? Perhaps he is hoping that one day one of his successors will offer him a title for all the great work he has done. But I’m not sure where he thinks this ‘great work’ will be done: it’s certainly not here in Oz going by his current performance.

Why do we need a pom running our country? He’ll only ruin it. Sorry, he already is, as James Wight pointed out so well in his piece here on TPS.

Although he may have arrived here as a kid (and I mean that in both senses of the word because in my humble view he is a goat), he doesn’t seem to really understand this country. I don’t know what he was doing when growing up out here but it certainly wasn’t in any way, shape or form giving him a genuine understanding of the Australian way of life. I haven’t seen him at the pub.

He pretends he is one of us but he tries too hard. Who else but Abbott still appears on the beach in budgie smugglers? Anyone who does is up themselves, thinks they are Adonis, or god’s gift to women — in my blatantly bigoted opinion, that fits Abbott to a tee. He walks with an exaggerated swagger — ‘look at me, look at me’, it says, ‘ain’t I the best thing since sliced bread’. He is a ‘big head’ and that is un-Australian. He seems to think he deserves to be a Knight, or perhaps a Lord, who can tell the rest of us what is good for us — as long as it is also good for him and his up-town mates. Sorry (again), he’s already doing that as well.

He bicycles. He jogs. He is a member of the volunteer bush fire brigade, at least when it presents a photo opportunity. He is a member of a surf live-saving club but you wouldn’t think so the way he treats the rest of us. There are plenty of others doing those volunteer jobs who never make it onto the telly and they deserve all the praise and credit they get but when someone turns up for the photo that will appear in tomorrow’s papers, you have to ask yourself: is this bloke for real?

And he sleeps with the police! What sort of bloke sleeps with the police and doesn’t go home to his missus? Yeh, I know that they’re repairing the Lodge but they rented some posh place for him and his family — $3000 a week as I recall: I wouldn’t mind earning $3000 a week, let alone being able to afford pay it as rent. Why didn’t he take that place and have his wife with him? Doesn’t she want to be with him? Perhaps she had enough of seeing him every day during the 2013 election campaign. Yeh, that was different. He didn’t want to sleep with police then. He wanted his missus in every second picture then — and his daughters. Where is she now? Have you seen her recently? — other than in Abbott’s Christmas address, and then she looked very uncomfortable. I don’t doubt that they’re a fairly normal family (as ‘normal’ as any family can be) but, gees, I can’t figure it out.

He thinks women should be at home doing the ironing. Yeh, sometimes I think that wouldn’t be too bad. Would save a lot of money with the child-minding. But we wouldn’t have a home for the cheese and kisses to do the ironing in if she didn’t work. And I don’t need a whingeing pom telling me or the missus what she should be doing. He’s the one who’s making it harder for us to survive without the missus working, and now making it harder even when she is. He’s supporting the top end of town and our wages now aren’t even keeping up with inflation. Does he expect we should thank him for that — pig’s a*se! (or ‘ass’ as the septics would say).

I thought he said he would govern for all Australians but so many are missing out now. What happened to the Oz we knew where we looked after each other; where we did try to give everyone a fair go; when the government helped people who were down on their luck; when the government actually supported our local industry. Now if a factory decides to go to India or Vietnam, or some other cheap place, all the men and women under 30 who lose their jobs won’t get a cent for six months. Don’t tell me that’s fair! Yeh, there might be a few bludgers avoiding work but that’s no reason to take it out on everybody else who genuinely needs a hand. It’s more likely to make it harder to get a job.

He promised that abolishing the carbon ‘tax’ would help us with our cost of living and that it was his major achievement for women. I’m sure every woman in the land has thanked him for that! Yeh, there was a bit of a reduction this year but it’s a one-off. It will disappear in no time because electricity prices are still going up. And isn’t he worried about the kids? What sort of planet are we leaving them unless we do something about climate change? He can talk about it all he likes but he isn’t doing anything! He’s off in la-la-land, off with the fairies at the bottom of the garden and there’s no such thing as climate change in that garden.

He also promised ‘no surprises’ and it really was no surprise when there were surprises. Why can’t politicians ever tell the truth? We all know now that whenever a conservative government is elected, it will immediately drop most of its promises (that they made to us to get elected in the first place) and blame the previous Labor government for leaving a financial mess. It’s become a game and is so predictable: yet, as voters, we go into elections with the hope that, this time, they might actually keep their promises. They don’t have to look very far to realise why we don’t trust them anymore.

Abbott reckons he hasn’t broken any promises. He says we weren’t listening carefully enough to what he said. You can’t understand a pom at the best of times let alone when one like Abbott is twisting words to suit himself. How are we supposed to know what he means when half-the-time he doesn’t seem to know himself? And he takes so long to get a sentence out that we’ve given up listening before he’s finished.

Then he tried to big-note himself on the world stage. What a joke! He said he wanted to ‘shirtfront’ Putin. I bet that had the Russians quaking in their boots: more likely rushing to their dictionaries to find out what the hell he meant. Somewhat loses its effect, don’t you think, if the other bloke has to look up a dictionary to find out what you mean before you thump him.

Like Howard before him, he reckons that any job is better than no job. He would say that, wouldn’t he, when he’s never done a day’s labour in his life. He wouldn’t even have a parliament house to swan about in if it wasn’t for hundreds of labourers who built the place! But look at how he treats working people. He seems to think he’s lord of the manor and we are just his serfs — well, serfs for him and his mates. They think they own us and we should be happy that they’re providing work for us, even if some of them (and I won’t mention names) think we should be working for $2 a day.

Abbott wants to bring back Workchoices — under a new name of course because his mob ‘buried’ Workchoices years ago. They might have taken it off life-support but it didn’t die. He wants more individual work contracts — no awards and conditions just what the lord of the manor is willing to give you. It’s a bit hard to fight back on your own but that’s Abbott’s pommy world. And you’ll be arrested for poaching, for trying to get a feed for your kids. I can foresee it all.

The rest of his mob may not be poms but they’re just as bad. Foghorn Leghorn and Schwarzenegger having cigars when they handed down their budget that attacked working people and the poor. It reminds me of an old Irish song, ‘The rocks of Bawn’ and the lyric:

Come all you loyal comrades wherever you may be
And don’t hire with any master ‘til you know what your work will be
For you must rise up early from the clear daylight of dawn
And I know you’ll never be able to plough the rocks of Bawn

A curse attend you Sweeney for you have me nearly robbed
A-sitting by your fireside with your dudeen in your gob

(A ‘dudeen’ is an old Irish clay pipe.)

It all fits doesn’t it? And shows that the poms like Abbott haven’t really changed. They kept the Irish down. They kept the Irish in Australia down in the early years. And they keep the workers down. They want us to do the impossible, like ‘plough the rocks of Bawn’, while they sit there smoking their cigars. And you wonder why I’m bigoted!

I can finish with some fine English words that a wanna-be toff like pommy Abbott might understand: ‘You and your toffs, just naff off back to Eton’.

What do you think?

TPS presents this piece as a warm-up for the year ahead, just to get us back into a politcial frame of mind and boost the political spirits.

Our first serious post for the year will appear next Sunday. But watch out later in the week for a special post about some changes for TPS in 2015.



And that was . . . 2014


Welcome to 2015. Happy New Year from The TPS Team.

Traditionally The Political Sword tends to avoid too much politics and media bashing in January as in reality Australians are more interested in the beach, cricket, being with friends and complaining about how hot/cold/unusual the weather is. While it would be easy to write a piece about the less than impressive record of the Abbott Government, there are other sites already expending much effort on this — some examples are here and here — and in any event Ad Astra foretold the reality in 2012 but boasting of TPS’s past achievements in the first post of the year is not a good look! However we digress.

It’s often said that a week is a long time in politics. While the daily news cycle gets faster and less detailed, let’s look back at 2014 and see if there really was that much change in Australian politics during the year.

The newly minted Abbott Government came to power late in 2013 in part by pointing out that the leader of the other side of politics was either a liar or so controlling his supporters had to sack him. The federal government opened 2014 having to put out a minor bushfire over who was really running the country, the elected politicians or the Prime Minister’s Chief of Staff, Peta Credlin.

Senator Abetz told a Senate estimates hearing last week: "At the end of the day it was decided by the Prime Minister as to who would be appointed to my ministerial staff and to the staff of my ministerial colleagues,"

As revealed by Fairfax, Ms Credlin has insisted that all 420 government staff appointments right down to junior electorate officers are approved by the panel.

The ‘axing’ of the ‘carbon tax’ was a work in progress early in 2014. Despite promising that the repeal of the carbon pricing scheme would be one of the first actions of the Abbott Government, reality hit when it didn’t pass the Senate. Abbott had to wait until the Senate changed to get a ‘watered down’ repeal of the necessary acts of parliament through with the assistance of Clive Palmer’s Palmer United Party. Various utilities are now passing back the ‘savings’ that were made by the repeal of the ‘carbon tax’. When Ipswich City Council in Queensland recently announced that a refund to ratepayers would be paid just in time for Christmas and average $14.04, the response was rather underwhelming according to the Queensland Times:

Carla Kompenhans posted: "$14; early Christmas present? Are you serious? I don't know anyone who would be excited about that.

"What part of Christmas will that cover exactly?"

In 2014, Australia was the ‘Chair’ of the G20 Group of Nations; consequently the Finance Ministers’ meeting was held in Cairns and the Heads of State meeting held in Brisbane during the latter part of 2014. The leadership of the Australian government (Prime Minister Abbott) was also keen to keep climate change off the agenda at the G20 meetings — much to the concern of the Europeans. With China and the USA announcing an agreement to actively reduce carbon emissions by up to 28% below 2005 levels on the Wednesday prior to the G20 Heads of State meeting, the subject was never going to go away. Widely reported was Obama’s speech to University of Queensland students in suburban ‘Brisvegas’ where he discussed his, China’s and the United Nations concerns about climate change and carbon emissions.

He then described the impact of climate change on Australia:

Here, a climate that increases in temperature will mean more extreme and frequent storms, more flooding, rising seas that submerge Pacific islands. Here in Australia, it means longer droughts, more wildfires. The incredible natural glory of the Great Barrier Reef is threatened. Worldwide, this past summer was the hottest on record. No nation is immune, and every nation has a responsibility to do its part.

Obama also called on the country to reduce its greenhouse gas emissions:

And you’ll recall at the beginning, I said the United States and Australia have a lot in common. Well, one of the things we have in common is we produce a lot of carbon. Part of it’s this legacy of wide-open spaces and the frontier mentality, and this incredible abundance of resources. And so, historically, we have not been the most energy-efficient of nations, which means we’ve got to step up.

Abbott’s response, as reported on the Mashable website, was less compelling.

In contrast, Abbott told reporters that the U.S. and China have a far greater responsibility to address climate change than Australia does. “China emits some 24% of global carbon dioxide,” Abbott told reporters in Canberra on Nov. 14. “The U.S. emits some 15% of global carbon dioxide. By contrast, Australia’s about 1%. So, I think it’s important that they do get cracking when it comes to this.”

Despite Abbott’s wishes, the final communiqué from the Brisbane G20 included some action on climate change. Turkey is the ‘Chair’ of the G20 in 2015 and has stated support for a number of climate measures in the past.

No recollection on political events within Australia in 2014 would be complete without a reflection on the life of Edward Gough Whitlam. It is claimed that Gough Whitlam made the ALP electable again. Geoffrey Robinson writing on The Conversation website suggested that the claim Whitlam was solely responsible for making Labor electable may be overblown:

The truth is more complex and interesting. Whitlam was a man for his time: his achievements were representative of new and old social movements, including the emerging progressive intelligentsia, feminists, non-Anglo migrants and the working class.

Robinson also observes

Like Keating or Julia Gillard, Whitlam has functioned as what cultural theorists call a “floating signifier” — a symbol whose power and significance is necessarily distantly connected to historical events. “It’s Time”, “the sweetest victory of all” and the “misogyny speech” exist in a world of symbols but are none the less real for this.

While there doesn’t seem to be a 1972 campaign advertisement for the Liberal Party online (if you find one, please post the link below the line), the performance of then Prime Minister McMahon on Mike Willesee’s A Current Affair is a stark contrast to the Labor Party’s ‘It’s Timeelection campaign and probably explains in part why the Liberal Party was not re-elected.

Fast forward to November 2014, and the Victorian state election. The Liberal/National coalition was removed from office after one term by the ALP, led by Daniel Andrews, who came from behind to win the fancy office in Spring Street. The common opinion at the previous election was that the ALP (then led by John Brumby) would retain Government with a reduced margin with the polls for the then state Liberal leader (Ted Ballieu) rising and falling in line with the corresponding falls and rises of Gillard’s ALP government in Canberra. Ballieu had won then but didn’t even last out the four year term as premier, being replaced by Denis Napthine soon after Rudd replaced Gillard. While Newman is still premier of Queensland, there seems to be a concern within the ranks of the LNP that Newman may also lose his seat and the LNP lose Government early in 2015 when the next Queensland election is due. The Abbott government is significantly less popular than the ALP or in fact themselves when elected some 18 months ago:

In opposition, Abbott liked to say that Julia Gillard was the most incompetent and untrustworthy prime minister in Australia's history.

The voters now have decided that they have found one that's more incompetent and just as untrustworthy.

"Only half of people polled said that Abbott is competent," says the Fairfax pollster, Jess Elgood of Ipsos.

"That's lower than for any prime minister we have figures for," a data set starting with Paul Keating in 1995.

Compared to Abbott's 50 per cent, the comparable figure for Gillard four months before she was deposed was 53 per cent.

Not a lot did change in the world of Australian politics in 2014. At the start and end of the year, we have the Prime Minister’s Chief of Staff being the news rather than managing the PM’s office. At the end of 2014, there are claims of disagreements with Foreign Minister Bishop and of ruling the government with an ‘iron fist’.

The media is still leading discussion on climate change and how to manage it (with price signals — such as a ‘carbon tax’ being mentioned as an effective mechanism), and that Abbott either is changing or should change his view that ‘climate change is crap’.

Governments in various jurisdictions around the country are still not doing well in polling after they have been accused of lying or not being able to organise themselves — with Victoria changing government; Queensland’s Premier implying he will lose the significant majority won at the 2012 event at the next election; and the Federal Government some 10% behind the opposition after 18 months. Australians are still complaining about the ‘carbon tax’ — this time the small refunds that are gradually making their way onto invoices from its repeal; and the country has lost another ‘person of renown’ in the guise of Gough Whitlam.

Let’s hope that 2015 is another year of civilised discourse on The Political Sword and that the genuine nature of the discussions here spreads to other blog sites, the media and our civilisation in general. Prime Minister Hawke achieved more results through building a consensus than Prime Minister Whitlam did by trying to crash through. Please keep your hatred for the mozzie that bit you at the BBQ last week — we on this site and on this earth genuinely don’t need it.

A bit of housekeeping to conclude this piece. The TPS Team will be reducing our output for January. The ability to comment ‘below the line’ will be open all month and we invite relevant comment as usual. There will be some new commentary posted during January on an irregular schedule (so keep looking). We will return to our weekly (or better) schedule on 1 February 2015. Be aware it’s not all sitting by the pool in the banana lounge for The TPS Team, there is usually one of us sitting near the computer with our finger poised over the ‘delete’ button for those that haven’t yet lost the hatred.

Happy New Year and may all you wish for come to pass. We look forward to your continuing support and comments in 2015.

The TPS Team



A year on TPS: 2014


As we come to the end of another year, please forgive a little self-indulgence as the TPS Team discusses what TPS has achieved in the past 12 months.

It was a year in which we saw Abbott and his cronies trying to destroy the country and make us a paradise for the neo-liberals, the neo-cons and the economists that support them — and, of course, big business. We saw the worst budget in living memory and have, so far, only been saved from its full ramifications by the senate. We saw Clive Palmer appear with Al Gore to talk about the importance of climate change but, at the same time, cave in to support the repeal of the carbon price. We have seen Abbott, more through luck than design, deflect the budget issue and ‘bask’ in the glory of the world stage, taking on the Russian bear and alienating our closest Asian neighbour. He has ‘stopped the boats’ but also stopped government transparency in the process. He is undertaking more privatisation of government services and encouraging the states to do the same. Without openly saying so, he is pursuing a neo-liberal and economic rationalist agenda backed to the hilt by the IPA (and, as others have noted, he is, to a significant extent, following its ‘hit list’).

Talk Turkey has made the point numerous times about the need to keep up the fight against this government and what it is doing.

We believe TPS has been doing that but not always directly. We are not a news site, and with only a few people volunteering their time behind the scenes we could never be, so we do not react to every government announcement, no matter how bad. TPS sometimes takes a longer view, looking at socio-political issues and the political and economic philosophies that underpin this government, as Ad Astra also did at times.

We published 43 pieces during 2014 over 46 weeks: those 43 pieces actually encompassed 48 postings as we had four multi-part pieces and we also posted mid-week on a couple of occasions. We had six ‘guest’ writers during the year, now counting Ad Astra as a guest since he retired from full-time blogging, but 2353 and Ken provided the bulk of our pieces — 35 between them. We haven’t bothered counting the words but, given that most pieces are between 1500 and 2500 words in length, it would be getting towards 100,000 words. Plus all the words our friends have posted in their comments.

We didn’t ignore Abbott in our quest for wider truths and have launched attacks, both directly and with satire. We first asked whether Abbott remembered the twentieth century in his rush to take us back to some halcyon previous age; we wondered whether he was ever meant to be PM as he originally won his position as opposition leader by only one vote; we suggested he was a ‘con artist’ and questioned his Humpty Dumpty words; and James Wight exposed the extent of destruction wrought on our society in just one year. We presented ‘Tiny-er-er O’penmouth’ who morphed into ‘Tiny Napoleon O’penmouth’.

The LNP and the government more broadly were also in the spotlight in David Horton’s piece on LNP electioneering, Ad Astra’s piece on what underlay the budget, the government’s seeming blindness to major issues raised at the World Economic Forum at the start of the year, its links with the IPA, and the way it snuck through changes in its approach to climate policy during the 2013 Christmas/New Year break.

Political ethics were questioned by 2353 in several posts: he questioned the morality of using refugees for political advantage; the ethics of those who legislate hardship for many in the community but accept expensive gifts and high paid jobs requiring little work; their use of slogans and sound bites rather than taking the time actually to address issues; and asked why we allow politicians to regulate donations to their own parties when we have witnessed that self-regulation doesn’t work for industry. Twice 2353 specifically questioned the link between religious and political values asking how politicians could claim to be religious when implementing policies that clearly breach their religious morality. As Ad Astra commented, it is a brave man who addresses the religious link to politics.

As we have moved from being a ‘society’ to being an ‘economy’, we couldn’t ignore the underlying economic approach of the government and the rising inequality it gives rise to. Piketty’s work on inequality was discussed and was preceded by a piece showing how rising inequality matched the rise of the economic rationalist approach. Finally, Ken suggested that inequality wasn’t an economic question at all but the result of witchcraft (presented as some dark humour to end the year.)

It was also suggested that economic rationalism, after 40 years, may be on the wane: pieces like 2353’s on modern monetary theory and Kay Rollison’s on ‘middle out’ economics reinforced that there are new economic approaches emerging that may, indeed, lead to the demise of economic rationalism.

Kay’s piece was also presented as an alternative approach for Labor. It was one of five pieces that addressed new approaches for Labor, including the speech Ken would like to hear and Ad Astra’s letter that actually was sent to Bill Shorten.

Associated with economics, were pieces on governments’ approach to infrastructure and privatisation.

Ken presented a piece on our understanding of ‘freedom’ which, at first, may have appeared something from left-field, but it was a prelude to his discussion of the lack of freedom in the free market and the loss of social responsibility as the neo-liberal concept of freedom, embracing individual self-interest, took over political thinking.

We also briefly discussed Aboriginal affairs, the role of unions and the role of experts.

We prophesised the future with David Horton’s piece correctly suggesting that conservative governments resort to war in their quest for popularity; Ken’s piece on Abbott’s efforts to take us back in time foreseeing that coal would become more, not less, important in Abbott’s world; and 2353, in ‘The thought thief’, providing a fair reflection of what did eventuate from Pyne’s review of the national curriculum.

The one area we have been lacking this year is putting the media to the sword, other than for Jan’s two-part piece. Perhaps that is because some segments of the media now seem to be doing a better job: Abbott’s broken promises and the down-side of the budget were more widely reported (but still not so much in News Ltd papers). It has been our commenters who have continued to point out the flaws in the media’s approach, including the ABC’s attempts at so-called ‘balance’.

And throughout the year, Casablanca has continued to provide us with numerous links relevant to each post, as well as other news of the day.

We trust we have continued Ad Astra’s tradition by putting the sword to Abbott as prime minister, the government and its policies more generally, its political ethics, its political and economic philosophy, and the approach of the economic rationalists and neo-liberals that support it.

Take the time during the break to revisit some of the pieces that were posted during the year and see what you think now that the year is coming to an end and you can see how the different posts tie together. If you have topics you would like us to address in 2015 please let us know, either in a comment or in a message to the Team (the Contact tab above).

This thread will stay open until 4 January, when another piece will be posted with an extended thread, so please post any new comments and insights you may have. And, as we asked last year, please also feel free to post any video, music video or photo that takes your fancy and that you may wish to share, with a short story as to why you selected it.

Wishing all our lurkers and commenters a happy festive season and looking forward to you being back with us in 2015.

The TPS Team



Time to resurrect witchcraft


Back in 1971 I wrote my honours thesis for social anthropology at Sydney University. Its theme was a link between witchcraft/sorcery beliefs and egalitarianism in native and peasant communities around the world. Given discussion earlier this year about inequality, I believe it has a relevance.

Its principle argument went something like this:

The basic concept of egalitarianism is that everyone is equal and has an equal share of abilities and resources. Of course, in reality, this is never quite true. And in those native and peasant communities, witchcraft was a common approach to explain the differences.

It worked in a number of ways. Those who rose above the norm and those who fell below it were prone to witchcraft, either being attacked by it or accused of it. (Please note that when I say witchcraft, I include sorcery — there was a difference in the anthropological literature of the time that wasn’t relevant to my thesis nor to this discussion. Also, I use the term ‘witch’ to include both males and females.)

Those who rose above the norm could include those who were ‘conspicuously fortunate’, those who had outstanding innate talent (such as a Bradman or a Mozart), and even the ‘big men’ of the village.

For those with talent, it helped explain why they were so good but it also helped keep them within the bounds of the community. While it may only be thought that their talent was a result of witchcraft, if they did not use that talent in acceptable ways, or if they boasted of their talent, it could become a public accusation, leading to public sanction.

Similarly ‘big men’ were recognised as being important for the community, particularly in its dealings with other communities, but they had to maintain the welfare and best interests of their own community or they would also be publicly accused of being witches.

Being ‘conspicuously fortunate’ is clearly an egalitarian crime. The threat of being accused of being a witch helped ensure that those people spread their wealth in socially acceptable ways — catering for large ceremonies, for example.

Those at the bottom (below the social norm) were rarely attacked by witchcraft but prone to being identified as witches, the ones paid to provide the potions or spells. This often related to an illness occurring after an argument between two people (and the argument most often related to one person having more than the other). Both sides of the issue would then have to be addressed, the argument (and which party paid the witch), and the role of the witch.

Some of this demonisation of those at the bottom, those falling below the social norms, can be seen in the European and North American witch trials. Elderly widows struggling to survive on their own and young women perceived as promiscuous were among those more commonly accused.

I saw this operating like three concentric circles reflecting the values of the community. The majority of people fell within the central circle. Then those who were different, the probable witches, operated within the second circle. As long as they remained within that second circle they could be tolerated in a somewhat ambivalent way, but if they moved beyond that second circle they had moved too far beyond the bounds of egalitarianism and would face sanction, exile, or even execution.

I read a simple example of this in a story by Camara Laye about an African childhood. A boy was with his uncle, the village headman, and as they worked their way along a field they were moving ahead of the other men. Then the uncle slowed down and the boy pointed out that the others were catching up. His uncle told him it was not good to get too far ahead. In my terms, he was reaching a boundary where greater success (his speed working the field) would be seen as extreme and probably the result of witchcraft.

Witchcraft in this way acts as a sanction to acceptable behaviour. One tries to stay within the egalitarian norms, even if those norms are somewhat extended within the second circle, so as to avoid witchcraft.

So there you have it in a nutshell. What does this mean for our society?

We no longer believe in witchcraft but perhaps we should.

The majority of us sit comfortably in the middle (within the central circle), follow social norms, at least within acceptable bounds, and are free from accusations of witchcraft. We understand disease much better and no longer need witchcraft or other supernatural sources to explain it. Although it is interesting that arguments or disagreements and the associated stress can lead to illness — perhaps we still need witchcraft to explain that and should focus more on the argument as the root cause of the illness so that the argument is dealt with before a cure is found.

We are much better off in terms of our material possessions but still find blatant displays of wealth unacceptable. When someone builds a house twice as big as those around it, or suddenly appears in a Porsche when everyone else has a Holden or a Toyota, we no longer accuse them of witchcraft but we may think they are crooks, or dealing drugs, or something similar.

We elevate and praise our successful artists and sports people but only so long as they don’t abuse their position or become ‘big heads’. When that happens they become dangerous to our social stability and an element of witchcraft comes back into play. They are seen not to have played by the rules and need to be brought down or cast out.

We accept that we need leaders and powerful people to protect us but are equivocal about their power. We have a democracy which is supposed to control that power but sometimes we wonder whether it does. Of course, we are outraged when we find the powerful misusing their power to increase their own wealth but, after a brief time, nothing really changes and we await the next occurrence.

Our society has its share of people who drop below the norm and they are often perceived as a threat. I think sometimes it is because it is a reminder that there but for a bit of luck goes any one of us. We are not always comfortable knowing they are there but generally we wish to help them back within the inner circle. Many, however, in their day-to-day activities, will avoid them if they can.

The poor and outcast may no longer be witches but they are demonised by the rich, the LNP government and the economic rationalists: they are too lazy to be helped. We are told they use the services and taxes of the core circle and reduce the services available for the rest of us within that circle. They are told by the rich and powerful that they can never get back into that inner circle except by their own efforts, that they are undeserving of help, but that approach is not fully in accord with the egalitarian values of the central circle, so the rich and powerful are treading dangerous ground.

And we have ‘the one per cent’ sitting at the top with all their wealth. How did they get there? Where I grew up, the common view was that almost all who were fabulously rich must have done something wrong, not necessarily illegal but certainly breaching the norms — a few deals that sailed close to the edge of legality, or a few mates abandoned or ‘knifed’ along the way, a bit of insider knowledge, tax avoidance (or should I say tax minimisation so as not to be sued) and so on. Of course, only the rich have this special knowledge and the resources to implement it.

As a society we seem to struggle to find good explanations for these situations, and perhaps find some of them puzzling, even troubling, but witchcraft explains them all.

The conspicuous displays of wealth are obviously the result of witchcraft. An ordinary person in the inner circle cannot get their Porsche any other way. They don’t need to be crooks, just witches. When they know that such conspicuous displays can lead to accusations of witchcraft, they will be less likely to step so far out of line.

The same goes for our successful artists and sports people. They will behave in more acceptable ways if they know that they are always on the verge of a witchcraft accusation because of their ‘unnatural’ talent.

Our leaders may need their witchcraft to counter the witchcraft of other leaders but if they know that we know they are witches then they may be more careful how they use that power. They will know they need to support the central circle or face public accusation and the sanctions that follow.

If those who drop below the norm are thought more likely to be witches, perhaps we will work harder to bring them back into the central circle and so tame their witchcraft. And we will work to keep them in the inner circle because if they drop back again, anything could happen — we might all be turned into sheep (if the rich and powerful have not already turned us into sheep).

Alternately, we may draw on their magic to bring the rich and the powerful into line. While they are there, they are also a threat to those at the top — a reminder that the second circle belongs not just to the rich and powerful but the poor and outcast, that they are in reality in the same situation, operating outside the core values of the society. The poor and outcast have their own spells to attack the rich and powerful and it is a potential battleground for witchcraft.

Finally, how did the super-rich gain all that wealth? Bugger economics! — it was witchcraft pure and simple. They have the secret knowledge that they share only within their cabal.

It follows that they demonise and accuse those at the bottom, the others occupying those outer circles, of witchcraft because they are so conscious of it and fear being accused themselves. The rich and powerful (and the LNP) persecute these other witches to divert attention from their own witchcraft.

I say it is time to bring back witchcraft. It will support our egalitarianism and help us explain so much. We would not need economic arguments to explain inequality, just witchcraft.

We can bring back the witch trials and place ‘the one percent’ before the Witchfinder General. Then let them try to explain that they did not achieve their wealth by witchcraft. We can ask the banks and global corporations to show that, in making their super profits, they have not beguiled us with witchcraft. We can demand that the current prime minister justify his accusations of witchcraft against a certain red-haired former prime minister and, if he can’t, it follows that he, himself, was using witchcraft.

There may be many executions to follow. I think, however, that I could be tempted to become a tricoteuse at the bonfires.

What do you think?



The perils of Self Regulation


A month or so ago, The Political Sword posed the question ‘What have the unions ever done for us?’ The piece closed with a question:

. . .if there was nothing for the political right and employers to fear from the unions, why are the same groups still trying to neuter the unions’ ability to campaign and protect the perceived interests of their members in 2014 while ‘unions of employers’ are encouraged?

There are multiple answers to this question, some of which probably have some evidence behind them. One is that the union movement generally supports the Australian Labor Party — although some unions don’t, such as Together, which is primarily the Queensland public servants’ union. Naturally the support of the ALP would lead to a financial contribution: the conventional wisdom is that if the funding from unions for the ALP is diminished, the political organisation is less capable of fighting an election.

This line of reasoning has some validity but begs the question: where do the Liberal and National Parties get their funding from? Legislation in most jurisdictions within Australia put a cap on the amount of money that can be given directly to any political party without the need for disclosure. The values vary and for the purposes of this discussion aren’t important.

So you have legislation passed by politicians that regulates the donations they are allowed to accept during the course of their political careers. In effect, we are allowing politicians to self-regulate the value of cash and in-kind support garnered from the community and while some of the donations are probably altruistic, we don’t know that. Self-regulation usually doesn’t end up well. To eliminate the claims of ‘[the other side] would do that’, ‘jobs for the boys’; ‘political favours’ and so on, lets look at some non-political examples of failed self-regulation that have affected us all.

The Global Financial Crisis occurred during the late 2000s. The US Securities and Exchange Commission (SEC) imposed a $550million fine and a requirement to amend its business practices on Goldman Sachs in 2010 to settle —

SEC charges that Goldman misled investors in a subprime mortgage product just as the U.S. housing market was starting to collapse.

For more information please go to the link above. The short version of the press release, however, is that Goldman Sachs (and others) packaged up sub-prime (having less than ideal security backing) domestic mortgages that did have insurance in the case of default, claimed the resultant securities were completely backed by adequate security and sold the ‘investments’ to others. There was a loss of confidence in the stock market towards the end of 2007 causing the employment rates and demand for houses in parts of the USA to fall. That also reduced the value of houses and the underlying mortgage security, while those that lost their jobs couldn’t afford to reduce the value owing on the now depressed security value of the mortgage. So the home owners began to default on their mortgages and the mortgage security holder then attempted to claim the shortfall on the mortgage insurer. The mortgages were insured but the insurers couldn’t fund the demand on their policies and were close to bankruptcy until the US Government intervened.

The problem here was self-regulation. In the 1990’s, the Reagan Presidency had reduced the supervision of financial institutions in the USA. Staff of these institutions were ‘incentivised’ with large commissions if they made more money for the financial institution — leading them to take risks. The Reserve Bank of Australia’s response to the 2014 Financial System Enquiry discusses the GFC and claims:

The global financial crisis revealed a number of shortcomings in policies and practices at financial institutions and at regulatory and supervisory agencies, particularly in north Atlantic countries. These shortcomings included: … insufficient financial institution holdings of high quality capital and inadequate management of liquidity risk; inadequacies in basic microprudential supervision, corporate governance and risk management practices; an under-appreciation of the scale and complexity of operations at large trading banks and other financial institutions — particularly those with activities in multiple jurisdictions — and the difficulty in resolving them when they failed; inadequate oversight of over-the-counter (OTC) derivatives markets; and insufficient visibility of the extent of interconnectedness among financial institutions, including between the regulated and shadow banking sectors, and across borders.

The report then discusses the domestic and international efforts to determine the issues as well as rectify them. Amongst the responses were increased prudential requirements, better regulation and better assessment of financial risk — in short, partial re-regulation of the financial markets.

Australia did suffer some fallout from the failure of self-regulation in the financial industry during the Global Financial Crisis, as the Halifax Bank of Scotland (HBOS) owned Bankwest at the time. The University of New South Wales discusses the failure of prudential requirements and the subsequent fallout across the banking sector, the practices of Bankwest under HBOS, and the subsequent problems the Commonwealth Bank inherited when it purchased Bankwest subsequent to the GFC. Yet business finance brokers such as Mooney, Kiddle and Partners, are still questioning the need for regulation in financial markets, arguing the case that the small and medium business lending sector is being affected by unnecessary regulation.

Early this year, someone in the office of Assistant Health Minister Fiona Nash, ordered a website that promoted healthy eating, through giving packaged food a ‘star rating’ between 1 and 5, to be pulled down soon after it ‘went live’. The subsequent investigation discovered that the minister and her chief of staff were implicated in the action. Additionally, the chief of staff was married to the sole director of a firm representing a number of packaged (or ‘junk’) food manufacturers and he had worked for a multi-national packaged food manufacturer prior to his move to the public service. The Australian Consumers Association compared the ‘stars’ that would be awarded to cheese sticks, peanut butter and cracker biscuits and found that the products of one of the multi-national packaged food companies (that had been attempting to discredit the system) did not compare well. The New South Wales Cancer Council has described a number of the methods that are used to circumvent the existing self-regulation of food advertising. The Conversation carried a report in August 2013 entitled ‘Forget children, self-regulating ads only help the food industry’. In the report, Sandra Jones, a Professor and Director of the Centre for Health Initiatives at University of Wollongong writes:

Following advocacy by parent groups and NGOs (non-governmental organisations) regarding the extensive use of premiums to sell fast food to Australian children, the mandatory Children’s Television Standards were revised in 2009 to clarify that an advertisement:

must not make reference to the premium in a way that is more than merely incidental to the reference to the advertised product or service.

A review of food and beverage advertisements in five Australian cities over a two-month period in 2010 identified 619 breaches of the standards, including 120 breaches of this specific clause, and 332 breaches of the industry’s voluntary regulations.

Even ACMA (the body that attempts to regulate commercial media) has concerns about how the packaged food industry self-regulates advertising on television. Regular watchers of ABCTV’s MediaWatch would be aware of its frequent concern of the lack of real regulatory power that ACMA can wield.

No doubt parents find the pestering from their children wanting the latest ‘incentive’ to purchase a particular packaged food product annoying. They do always have the right to say no. The industry demonstrates time and time again, however, that this sort of marketing does work, despite the claims of responsible self-regulation which is supposed to prevent it. Unfortunately the disregard for self-regulation and continual marketing of what is really food that is not healthy creates a number of problems later in life. On 13 October 2014, ABCTV’s ‘Four Corners’ reported on the results of a community health program managed by the council for the City of Ararat in regional Victoria, called ‘Ararat Active City’. The program came about primarily due to the Channel 10 ‘reality’ show ‘The Biggest Loser’ making the claim that the town was the most obese town in Australia — and making a living by selling advertising surrounded by people suffering while attempting to lose weight. A lot of the stories of the participants from both the The Biggest Loser and Four Corners discussed their poor eating habits — from childhood.

Earlier this year Barry O’Farrell resigned as Premier of New South Wales when it was revealed at an ICAC enquiry that he accepted a gift of a bottle of Penfolds Grange from someone with connections to a firm that was attempting to win a Government contract. While the punishment may be excessive for the ‘crime’, why would the ‘thank you’ note have been available three years later unless there was some expectation that the gift would result in favourable treatment? Not that Barry O’Farrell was the only politician caught up in the ICAC enquiry: Eddie Obeid in New South Wales and a few Queensland politicians were also ‘mentioned in dispatches’ — although O’Farrell seems to have lost the most. Politicians make the rules around donations to political causes then appear to fragrantly breach them.

Rob Oakeshott, former NSW and Federal Member of Parliament, writing in The Saturday Paper is promoting a Royal Commission investigating political donations. He claims:

The real threat is within government itself. It is the increasing corruption of our public decision-making by influence gained through record levels of private donations. The only colour Australia needs to fear is the colour of money in its democracy. Chequebook decision-making is the silent killer of necessary reform.

Oakeshott suggests that the commission would need a period of years to properly investigate the structures used by political parties to funnel donations and writes:

We need a royal commission because the only other option is to trust “the system” to self-regulate. By leaving this long-overdue clean-up of the “corruption by donation” of Australian policy to the worst offenders — political party leadership and their respective head offices — we’ll simply fall for the same pea and thimble tricks that have added to the complexity of the current electoral laws. We’ll end up with a convoluted, short-term bag-of-trickery reform.

The claim is made that the two major political parties spend around $100 million per election and, as Oakeshott has been both in the ‘two party’ system and outside it as an independent, he probably has some evidence to support his claim. Any way you look at it, the donors of significant parts of the $100 million would probably expect some ‘return on the capital expenditure’ as demonstrated by the sudden reappearance of a thank you note some three years after it was written.

Despite the claims, it seems that self-regulation only benefits those who are supposed to be regulating themselves. Rob Oakeshott has an on-line petition to sign — available here should you choose to do so — that requests the Governor-General commence a Royal Commission into political donations and how to introduce some rigour into the system to ensure that politicians serve all those who elect them, rather than unknown vested interests.

If self-regulation is a demonstrated failure in the financial markets and advertising of unhealthy food to our children, why do we believe that politicians have greater altruistic values?

What do you think?



Not quite behind the throne


The IPA (Institute of Public Affairs) has had many words written about it, including that it may be the power behind the throne in the Abbott government. The problem is that ‘behind the throne’ usually means a shadowy or lesser known presence but the IPA is making itself anything but that, which may well lead to its undoing.

While the IPA certainly seems to be influencing the current government, one debating point is whether that is a genuine direct and active influence or merely a confluence of ideologies? Either way, it allows the government to support the IPA’s position on many issues and the IPA to claim it is influencing the public agenda.

Abbott in 2013, prior to the election, spoke at the IPA’s 70th anniversary (video here and transcript here) and in relation to its ‘wish list’ of 75 policies for an incoming LNP government openly endorsed ten of them and said: ‘that is a big “yes” to many of the 75 specific policies you urged upon me’.

Others have shown that Abbott, while definitely accepting some of the proposals, has been a little more pragmatic in adopting others or has been slow to take them too far. As with his decision not to proceed with the repeal of section 18c of the Racial Discrimination Act, Abbott may agree in principle with the IPA’s position but he is still a politician and will sometimes bow to political pressure, including public reaction, or to an inevitable political reality, such as not having control of the senate.

It is no coincidence that the IPA and Liberal Party policy are similar because Liberal members of parliament are involved in its activities and its current chairman is Rod Kemp, a former Liberal minister in the Howard government (who had already been a director of the IPA before becoming a Liberal member of parliament). Liberal power broker Michael Kroger is also on the board and one other member is also a former Liberal candidate — the other members of the board are business people. It claims to be a research organisation but there are no academics on its board, although it does have an academic Research Committee. Its approach to research, however, is anything but ‘academic’. Its Executive Director, John Roskam, says:

I’m sceptical about peer review in as much as you’re reviewed by your mates. Good analysis will stand up to scrutiny whether it’s peer reviewed or not.

The rejection of ‘peer review’ is interesting because, although designed to bring rigour to research, peer review has elements of a free market approach. It is competitive in the sense that other academics exercise their self-interest in finding flaws, if they can, in another’s work, thereby promoting their own work and their ability to ‘sell’ their own skills and knowledge. (It is sometimes when these elements dominate that the science can suffer.) If that does not follow market principles, then I’m not sure what does, but the IPA rejects it. We can only question why.

The IPA also refuses to divulge the funding for its research whereas mainstream research may be considered ‘suspect’ if funded by organisations that have a vested interest in the outcome of the research. Roskam again:

… he denies the IPA tailors its findings to the demands of the paying client. On the contrary, he says, clients come to the IPA because their concerns are consistent with IPA principles.

The IPA was founded in 1943, by big business, in response to what was seen as the threat of government interventionist social policies (also perceived as ‘socialist’ policies, remembering that Labor was in government at the time). Sir George Coles, founder of the Coles group, was its first chairman and it has been pointed out that all of its members in the early years lived in Toorak, an elite address in Melbourne.

It is also no coincidence that the Liberal Party was founded the following year: the IPA was involved and is reputed to have influenced (even provided) Menzies’ original policies. Early on it was a more conservative organisation but since the 1980s has become neo-liberal.

Although claiming to be a research organisation, its main aim appears more about getting its views before the public: in 2012‒13 financial year it claimed 878 mentions in print and online; 164 articles by its ‘researchers’ in the national media; 540 radio appearances and mentions; and 210 television appearances and mentions. I am not sure exactly what it means by ‘mentions’ — does it include critical mentions? — but it certainly appears a way of inflating the figures. Thus it claims media success in pushing its agenda. It may not be a bad thing that the IPA is now so openly pursuing its approach because, at least, it opens its arguments to wider scrutiny, rather than simply being a shadowy and secretive presence behind the throne.

Like the old union ambit claims (I’m sure it will enjoy that comparison), the IPA may not get all it wants but creates the debate and climate for the type of reform it wants. As its director for development and communications explained:

If we’re not out there arguing for the Australian Human Rights Commission to be abolished … no one is going to advance the idea of radically reforming it.

Even its approach that the ABC should be abolished as a government funded media service contributes to the ABC inviting its spokespeople to appear in the name of ‘balance’. (Although, interestingly, the IPA also wants the repeal of laws that mandate ‘balance’ in the media.) So, by pursuing a more radical agenda, it actually achieves lesser changes towards its ultimate aim.

The IPA agenda is not simply a set of policy prescriptions but a plan to reshape Australia in the neo-liberal image. Even the title of the article where its 75 policy ideas were presented clearly sets out that intent: ‘Be like Gough: 75 radical ideas to transform Australia’ [emphasis added]. The article correctly suggests that political culture moves left or right when left or right governments are elected, but claims that left governments are more successful in moving to the left than right governments are in moving the political culture and society back to the right. The article suggests that Abbott, to be successful with a free market reform agenda, must act like Whitlam and do it quickly: ‘If he hasn’t changed Australia in his first year as prime minister, he probably never will’. (As Abbott has now been in government for over a year, perhaps we can take limited comfort from that assessment.)

The IPA claims all this in the name of ‘freedom’ and perhaps garners some wider support for its positions because of that. (It had 3,383 members at 30 June 2013 and plans to have five thousand by the end of 2015.) We all support ‘freedom’ but, as with any offer too good to be true, one needs to read the fine print and find out what is actually meant.

I think more pertinent than Abbott’s speech at the IPA anniversary was a speech by Rupert Murdoch at that same event. Here are a few interesting excerpts revealing the big business and IPA defence of the free market and how they would like to shape the debate:

… we must argue the morality of free markets and the immorality of markets that are not free. The cold, commercial word ‘market’ disguises its human character — a market is a collection of our aspirations, exertions, choices and desires.

We have not persuaded people that the market does better because it is more moral — or that socialism fails because it is largely immoral in its denial of fundamental freedoms. To the contrary, too many people think that the market succeeds because it is based on a vice — greed. And that socialism is better because it is based on a virtue — sharing.

The market succeeds because it gives people incentives to put their own wants and needs aside to address the wants and needs of others. To succeed, you have to produce something that other people are willing to pay for.

[The market is] about fairness and opportunity. He [Arthur Brooks, leader of an American free market think tank] defines fairness as the universal opportunity to enjoy earned success. That means enjoying the fruits of our success.

What’s fair or compassionate, for example, about using taxpayer dollars to bail out Wall Street bankers?

What’s fair about taking money from people who have earned it and giving it to people who didn’t?

People begin to resent the rich only when they conclude that the system is rigged. To put it another way, if we wish to persuade people that income inequality is not the right way to measure the fairness of our society, we have to work to make sure that social mobility is real — especially for people at the bottommost levels of society. By that measure, we have much left to do.

Unsurprisingly, Murdoch’s approach to ‘fairness’ was picked up by the treasurer, Joe Hockey, in a speech he made to the Sydney Institute in June of this year:

In other words the average working Australian, be they a cleaner, a plumber or a teacher, is working over one month full time each year just to pay for the welfare of another Australian. Is this fair?

Whilst income tax is by far our largest form of revenue, just ten percent of the population pays nearly two thirds of all income tax. In fact, just two percent of taxpayers pay more than a quarter of all income tax. Maybe these taxpayers would argue that the tax system is already unfair.

The majority of Australians do not understand (rightfully, in my opinion) why some level of redistribution of income is ‘unfair’: the arguments that do exist are more about the extent of redistribution. Also, Murdoch’s claim that ‘income inequality’ is not the right way to measure fairness does not stand up to scrutiny. Murdoch suggests that social mobility is the answer but Piketty showed that the increasing wealth of those at the top is creating a clear lack of mobility, not just for those at the bottom (whom Murdoch mentioned), but those in the middle and upper middle income levels, who now have only miniscule opportunity to rise to the levels of wealth of those at the top (like Murdoch). Murdoch also ignores (as Piketty does not) that his children will inherit all that wealth and will not have ‘earned’ it — ‘earning’ success and wealth is meant to be central to the free market approach. If they believe that earned wealth is a key to the ‘fairness’ of the free market, why don’t they support inheritance taxes?

When Murdoch uses the words ‘greed’ in relation to the markets and ‘sharing’ in relation to socialism, although critical of that view, he actually raises a basic difference. The market is based on the philosophy of the self-interested individual and what is ‘greed’ but an expression of self-interest? Sharing is based on social responsibility and the common good. If, as Murdoch says, people do have this view, it is not some vague unwarranted feeling but a genuine value judgement based on the underlying principles. (Also noting that when Murdoch and the IPA use the word ‘socialism’, they do not mean Soviet-style socialism but almost any progressive view that suggests governments have a role to play in ensuring fairness.)

While Murdoch claims that the market represents human aspirations, my piece on the free market showed the extent to which the economic theory of the market is not based on reality at all: it is a framework supporting the property-owning classes, particularly the property-owning elites. If I lose my property I have no place in the market, no opportunity to improve my situation. I think the ultimate loss of property is someone with a severe disability who has lost their capacity to sell even their labour. What would happen to such people in a pure free market? They would be like the beggars of the past, living on the streets and probably starving.

That takes us to the different views of freedom of the left and the right as discussed in ‘Whose freedom?’. Because the right and the free-market advocates do not accept lack of means or lack of capacity as a limitation on freedom, they do not see why government needs to intervene. It is only the left or progressive view of freedom, that it should include improving the capacity of individuals to exercise their freedom, that deals with situations like the severely disabled person’s freedom in a market society.

The example of the disabled person also shows that there is still a distinction between the ‘market’ and ‘society’, a distinction that is blurred or ignored in the IPA and Murdoch view of the world. Australian society generally takes the view that the disabled person, or the unemployed person forced out of the market (often through no fault of their own), should be given some support. That is done in the social realm, not by the market (although in many ways it supports the market), but because that social approach draws funding (through taxes) from market activities, groups like the IPA, and its business supporters, believe such funding should be severely limited — or non-existent in their perfect world! You can see where the Abbott government draws its inspiration from in its approach to welfare but, as it discovered post-budget, it is not a view widely held by Australians.

Murdoch also mentioned that there was a difference between being ‘pro-market’ and ‘pro-business’, a difference the IPA does not yet seem to have grasped. It has in its 75 ideas the development of northern Australia which, it states, the government should support by creating a special economic zone that provides government incentives and concessions. If the IPA actually believes in the free market then the north would be developed without government assistance because it would be in the self-interest of the free market players to do so. If it requires government assistance, then that is actually, in Murdoch’s words, a ‘pro-business’ stand requiring government interference in the market. Some have unkindly suggested that this approach is simply supporting Gina Rinehart’s vision of the north that includes lower taxes for her mining operations. As a fictional political character used to say many years ago: ‘You may well think that but I could not possibly comment’.

There are reports, however, that some major corporations did withdraw funding support for the IPA over its earlier stance on Aboriginal affairs and more recently over its support of climate change deniers. If those reports are true (and apparently they cannot each be confirmed), it would suggest that some big businesses have more sense, and more understanding of issues beyond the market, but which influence the market, than the current IPA.

The IPA philosophy runs counter to the Australian concept of ‘a fair go’, as Hockey discovered to his discomfort when he echoed Murdoch’s words. As suggested by my other pieces, the IPA misrepresents ‘freedom’ by supporting a very limited concept of the word. It also misrepresents its supposed free market philosophy by supporting specific business proposals that require government intervention (in contravention of the free market philosophy). It thinks that ‘the market’ is society. Its research is questionable, as is its political judgement, as evidenced by its approach to climate change.

The IPA may be behind Abbott’s throne but it is making its presence known, even boasting of its role, which may not be in its or Abbott’s best interests. It has arguments built on sand that are not in accord with the values of the majority of Australians. The more it comes out from behind the throne, as it is doing, the more Australians will understand what it, and the Abbott government, truly stand for.

What do you think?



Can the World be a Better Place?


‘Pay it forward’ is a concept where the beneficiary of a good deed repays the ‘debt’ by assisting others, who need some help and support into the future, rather than the initial benefactor. Wikipedia credits the terminology to a book written in 1916 by Lily Hardy Hammond entitled In the Garden of Delight.

On 10 October the Nobel Prize Committee announced the winners of the 2014 Nobel Peace Prize. They were Malala Yousafzai, a 17 year old Pakistani lady who promotes the rights of children to have an education and, as a result of her activism, was shot in the head two years ago by the Taliban while attending school in Pakistan’s Swat Valley, and Kailash Satyarthi, a 60 year old Indian gentleman who has campaigned for years against child slavery and child trafficking.

The Guardian reported that the two prize winners contacted each other soon after the announcement was made and decided to invite their respective prime ministers to the joint award ceremony in Oslo on 10 December 2014. There is a long history of dispute and mistrust between the two countries and it will be interesting to see if both prime ministers attend.

The Nobel Prize Committee stated in its press release:

The Nobel Committee regards it as an important point for a Hindu and a Muslim, an Indian and a Pakistani, to join in a common struggle for education and against extremism. Many other individuals and institutions in the international community have also contributed. It has been calculated that there are 168 million child labourers around the world today. In 2000 the figure was 78 million higher. The world has come closer to the goal of eliminating child labour.

Effectively what has happened here is that two people from different nations and religions have been awarded what is considered the ultimate prize for work to better the human race.

While some may argue that the Nobel Prize committees don’t always get it right, more often than not, they do. Usually the people or organisations that have been awarded a Nobel Prize have excelled in advancing the human condition in some way. In 2014, the committee acknowledged that the joint winners of the Nobel Peace Prize showed that different religions and different nationalities (India and Pakistan) can work together to achieve a common aim, despite the long history of distrust between those two countries at a national level. It is a powerful message.

Alfred Nobel made his fortune by invention. He successfully applied for 355 patents — including dynamite (which Alfred invented after his brother Emil was killed in an explosion). In 1888, another of his brothers, Ludvig, died and a French newspaper accidently published Alfred’s obituary, criticising the invention of dynamite. Nobel then rewrote his Will to:

… set aside a bulk of his estate to establish the Nobel Prizes to honour men and women for outstanding achievements in physics, chemistry, medicine and literature, and for working toward peace.

He died in 1895, and after his estate was settled, 31,255,000 kroner (around US$250 million in 2008 terms) was left for the establishment of prizes. Yousafzai and Satyarthi will share a cash award of around $1million from Nobel’s estate as well as the well deserved honour and glory.

Nobel hasn’t been the only person to ‘pay it forward’. Microsoft hasn’t had a reputation of being the most ethical of companies on the planet with a number of ‘anti-competitive behaviour’ judgments against it in various jurisdictions. The Bill & Melinda Gates Foundation is headed by Bill Gates, one of the founders of Microsoft. According to its website, the Foundation has US$40billion in assets, has made US$30.1 billion in grants since inception, of which US$3.4 billion was granted in 2012 and US$3.6 billion was granted in 2013.

The Foundation’s website claims:

Our foundation is teaming up with partners around the world to take on some tough challenges: extreme poverty and poor health in developing countries, and the failures of America’s education system. We focus on only a few issues because we think that’s the best way to have great impact, and we focus on these issues in particular because we think they are the biggest barriers that prevent people from making the most of their lives.

While the program is based in the USA, there have been a number of grants to universities, hospital research organisations and even website design companies in Australia to further the aims of the Foundation.

Unfortunately for every Alfred Nobel or Bill and Melinda Gates, there are others like the Koch brothers in the USA and Rupert Murdoch.

There are a number of groups both here and in the USA that claim to be ‘grass roots’ organisations that are concerned about the government’s influence in every day lives. In the USA:

There’s just one element missing from these snapshots of America’s ostensibly spontaneous and leaderless populist uprising: the sugar daddies who are bankrolling it, and have been doing so since well before the “death panel” warm-up acts of last summer. Three heavy hitters rule. You’ve heard of one of them, Rupert Murdoch. The other two, the brothers David and Charles Koch, are even richer, with a combined wealth exceeded only by that of Bill Gates and Warren Buffett among Americans. But even those carrying the Kochs’ banner may not know who these brothers are.

In August 2010, The New Yorker magazine published a long article demonstrating a link between Koch Industries and ‘grass roots’ organisations such as ‘Americans for Prosperity’. Koch Industries is a company owned by David and Charles Koch that manufactures Lycra and other ‘household brand names’ and has significant interests in the oil and energy industry. The article claims:

During the 2000 election campaign, Koch Industries spent some nine hundred thousand dollars to support the candidacies of George W. Bush and other Republicans. During the Bush years, Koch Industries and other fossil-fuel companies enjoyed remarkable prosperity. The 2005 energy bill, which Hillary Clinton dubbed the Dick Cheney Lobbyist Energy Bill, offered enormous subsidies and tax breaks for energy companies. The Kochs have cast themselves as deficit hawks, but, according to a study by Media Matters, their companies have benefitted from nearly a hundred million dollars in government contracts since 2000.

Remember the ‘Global Financial Crisis’ of 2008? Australia’s reaction was a series of measures to stimulate the economy — namely the $900 cheques to families, the home insulation scheme and the ‘Building the Education Revolution’ where infrastructure was provided at thousands of schools across the country. On a macroeconomic level, the program was successful as Australia is one of the few countries in the world that can truthfully claim continual economic growth for a period that exceeds 20 years. The New Yorker reports, however, that in America:

Soon after Obama assumed office [in 2008], Americans for Prosperity launched “Porkulus” rallies against Obama’s stimulus-spending measures. Then the Mercatus Center released a report claiming that stimulus funds had been directed disproportionately toward Democratic districts; eventually, the author was forced to correct the report, but not before Rush Limbaugh, citing the paper, had labelled Obama’s program “a slush fund,” and Fox News and other conservative outlets had echoed the sentiment. (Phil Kerpen, the vice-president for policy at Americans for Prosperity, is a contributor to the Fox News Web site. Another officer at Americans for Prosperity, Walter Williams, often guest-hosts for Limbaugh.)

The New York Times reported Jane Mayer’s article in The New Yorker and correctly pointed out that David Koch had donated millions of dollars to the arts, cultural facilities and medical research in the USA. It also mentions:

As Mayer details, Koch-supported lobbyists, foundations and political operatives are at the center of climate-science denial — a cause that forestalls threats to Koch Industries’ vast fossil fuel business. While Koch foundations donate to cancer hospitals like Memorial Sloan-Kettering in New York, Koch Industries has been lobbying to stop the Environmental Protection Agency from classifying another product important to its bottom line, formaldehyde, as a “known carcinogen” in humans (which it is).

There seems to be a divide here between progressive and conservative. While not praising the businesses of Alfred Nobel or Bill Gates, both of whom were rightly criticised at times for their business practices, there seems to have been some element of ‘paying it forward’ through the establishment of a financial environment to celebrate and improve the human condition. Others such as the Koch brothers seem to devise methods to promote their own business interests while attempting to remain unseen. Australian Senator Cori Bernardi is proud of his links to the US ‘Tea Party’ which receives considerable funding from the Kochs according to Jane Meyer. Bernardi was sacked from the ‘front bench’ during the time Malcolm Turnbull was opposition leader and resigned from a junior ministry in the Abbott government for the promotion of views that were too conservative even for the Liberal Party. Ironically, one of the people promoted as a result of Bernardi leaving the ministry was Arthur Sininidos who became assistant treasurer — then ‘stood aside’ when questions were asked about his business ethics.

The Abbott government’s denial of climate change, dismissal of the human rights of the unemployed and refugees, and the claim to be managing a ‘debt crisis’ are straight from the ‘playbook’ of the US conservatives as detailed by Jane Meyer in The New Yorker magazine.

Australia also has a history of people who have ‘made good’ ‘paying it forward’. Two examples are Graham Wood and Clive Berghofer who both actively support causes they believe in.

Wood co-founded Wotif, a last minute accommodation booking website in 2000. It now operates internationally and is based in Brisbane, Australia. In a 2006 interview, Wood described how he became wealthy — coming up with the original idea and realising he had nothing to lose. Wood has given significant funds to University of Queensland, the Australian Greens, assisted in the bankrolling of two news websites (The Global Mail and The Guardian Australia) and with Jan Cameron (the founder of the Kathmandu clothing firm) purchased a timber mill in Tasmania to effectively shut it down and preserve the old growth forest.

Clive Berghofer comes from Toowoomba in Queensland and made considerable money through property development. He was Mayor of Toowoomba for ten years and for some of that time also a National Party state member of parliament prior to the law being changed so that people could not serve on two levels of government concurrently. As evidence that conservative political leanings do not automatically disqualify people from attempting to improve the human condition, Berghofer’s website claims he has made numerous donations to medical research as well as sporting and educational bodies. Berghofer is on record as donating $60 million to the Queensland Institute of Medical Research as well as significant funds to Careflight.

As Nobel Prize winners, both Yousafzai and Satyarthi have earned the right and deserve to be known as ‘The Honourable’. Demonstrably, both of them will make good use of the fame and fortune that comes from being judged the world’s best peacemakers according to the Nobel Prize Committee for 2014. You could argue that the Gates family, Warren Buffett, Graham Wood and Clive Berghofer are also ‘paying it forward’ by supporting causes that will improve the human condition. It’s a shame that conservatives such as the Koch brothers and Bernardi seem only to seek improvement to their own condition.

What do you think?



Lords and ladies: a second morality tale

The Spruiker

Lords and Ladies, before we begin, may I humbly beg your indulgence to refresh your memory of the first morality tale, of the matches rustling in ragged coat pockets, of the fires and rising waters, of the tree monks and the paper castle.

Done? Excellent! Now we may proceed.

Lords and Ladies, since last I regaled you with tales of Tiny-er-er O’penmouth’s jesterly activities, he has been created a new man. Gone is the ‘er, er’ to be replaced by ‘pause, pause’, in his sentences and his thinking. Gone is the jester flapping inanely from great hall to field and forge. Now is come Tiny Napoleon O’penmouth, standing astride the history of kingdoms, soon to be master of all he surveys — even beyond what he can survey.

The Lords and Ladies of his kingdom succumbed to (or perhaps simply gave up on) his jests and gave him charge of their knights and yeomen: at least it saved them that irksome task — no longer checking that each breast plate was cleaned and shined or making peasants clear the roads of the droppings of the knights’ horses — and relieved them of the boredom of his jests. This new power has enthralled him, wrapped itself coquettishly in his mind, and he believes he is Napoleon — although, as Napoleon has not yet been born, perhaps he is the exemplar for the future. Now he thinks that distant Lords and Ladies should heed his every magnificent, even insignificant, word (even if it still takes him some time to get the word out), and should bow to his commands: although, like you, my Lords and Ladies, most continue to think of him as merely a court jester and not a good one at that. But beware!

The tale of Tiny Napoleon O’penmouth

When the Lords and Ladies of his kingdom granted Tiny Napoleon O’penmouth his newfound power, he immediately called out the knights and yeomen in defence of the borders of the kingdom. The Lords and Ladies looked on with benign amusement. There was no threat, they knew, but if it kept the jester amused and away from their own courts it achieved their intent and what harm could there be.

The knights and yeomen ringed the kingdom standing beside the orange boats — those which Tiny Napoleon O’penmouth had managed to retain, and he had also had the wheelwrights attach wheels to some of them. But who was he defending this kingdom from? No one was sure. But Tiny Napoleon O’penmouth decided that the borders must be protected from anyone trying to cross. ‘I’m not shutting the borders (pause) closing the borders’, he said, ‘just not (pause, pause) letting anyone in.’ Purely for the jest, he occasionally ordered the guards to allow some people to cross, then to round them up, pack them in the orange boats and push them back again or set them into the sea. He was having so much fun, he hoped the Lords and Ladies were taking notice of this splendid, ingenious jest.

They were and they didn’t like it. Tiny Napoleon O’penmouth was also stopping serfs whom the Lords and Ladies wanted to work in their castles and in their fields. Quite abashed he was summoned to the castle gates and four leviathan guards carried him, very un-genteelly, to the castle’s great hall where sat the Lords of the kingdom. (He had thought of arriving in one of his new orange boats with wheels but, luckily for him, they were all in use ferrying serfs and their families back across the border).

‘We need more serfs in our fields and at the forges, not fewer,’ the Lords told him.

Silence. And an open mouth. Tiny Napoleon O’penmouth could not think of a word to say, only numbers.

‘457’ he blurted.

The Lords silently glared at him.

‘400, 500, 700,’ Tiny Napoleon O’penmouth added into that silence.

All eyes were fixed on him and he could feel the chill of the dank castle dungeons creeping over him or perhaps the real hand of a guard grasping his shoulder in joyful anticipation of dragging another poor soul into the darkness below. ‘I can let in 700 (pause) or more. Or less,’ he added sensing no reaction. ‘We can call them (pause, pause) 457s.’ At least, he thought, that made sense of the numbers.

‘Call them what you will. Just let them in.’ The Lords’ final command.

Tiny Napoleon O’penmouth was dismissed. He had escaped the dungeons and felt well pleased with himself. Numbers had worked out fine instead of words. He would let some in — and send some back if the mood took him. After all, he now had that power. Power was a grand feeling, better even than being a jester. He could come to like this. The chagrin he felt, however, at the Lords’ final command prompted a vague impression that something was missing but in the pause between his thoughts he also missed the connection.

Not long afterwards, as fate would have it, a wagon load of serfs overturned in a distant kingdom — it was ten days ride away. Tiny Napoleon O’penmouth called the knights together.

‘I need you to ride to that far kingdom and bring the wagon home.’

‘Is it our wagon?” a knight dared question.

Tiny Napoleon O’penmouth hesitated. ‘It (pause, pause) it had our 457s in it’ Tiny told him. The knight gazed quizzically— what was a 457? — but asked nothing more. ‘And you’d better (pause) better bring the 457s here as well — at least, any who are (pause) still fit to work.’ The knights rode off not at all sure what they were meant to do but as valiant knights they did as they were bid.

A short time later, news came that the peasants in that distant kingdom were revolting. Tiny thought there was a joke about that but couldn’t quite bring it to mind.

Then, in a stroke of genius (at least Tiny Napoleon O’penmouth thought it was a stroke of genius), he decided that the wagon must have been overturned by the revolting peasants. (What was that joke?)

In his green great hall, with his jesters, clowns and goblins behind him and with a few summoned peasants in front, Tiny Napoleon O’penmouth unleashed page one of his exalted vision:

‘Those serfs in that far kingdom have forgotten their place. They think they can sup at the same table as the Lords and Ladies. They think they need no longer work for the Lords and Ladies. They are making the kingdom unsafe for the Lords and Ladies. They are interfering in other kingdoms and stirring serfs there to think as they do. They deserve the condemnation of all kingdoms. They deserve the condemnation of all other serfs for threatening your way of life.’

That wasn’t what the peasants thought at all. How could they work when fires ravaged the landscape, when waters rose and no longer receded? When the land turned to mud, they could barely grow enough food and the Lords and Ladies demanded what little there was. And in that kingdom, the peasants had finally taken the matches from their pockets and lighted the fire of revolution.

The knights returned from that far kingdom empty-handed: no wagon and no fit serfs to work for the Lords and Ladies but that no longer concerned Tiny Napoleon O’penmouth. He had discovered the rapture of his power, able to send the knights off to wherever he chose and, to his astonishment, many of the serfs even cheered them as they rode out and when they rode in again. This was all starting to add up in Tiny Napoleon O’penmouth’s mind, even if the additions were interrupted by pauses. He couldn’t quite see it yet but the numbers were fatefully drawing together. Perhaps it required just a shorter pause between his thoughts.

The peasants’ revolt spread. New kingdoms were being infected by it as the waters continued to rise, as the fires continued to burn. Tiny Napoleon O’penmouth sent twelve knights and their retinue to join knights from other kingdoms: the Lords and Ladies of many kingdoms were by then becoming alarmed and sending their own knights to quell those rebellions before more castles burned, before more fields were left untended, before revolt spread to their own kingdoms. ‘You are defending our own kingdom,’ Tiny told the knights before they rode off. ‘No we’re not,’ someone shouted from the attendant crowd, but Tiny didn’t see who and ignored it for then, although noting it for the future: he could not have people doubting his splendiferous schemes or there would indeed be local rebellion.

Matching a shorter pause in his thoughts, the numbers came together in a second wave of genius and Tiny Napoleon O’penmouth had his epiphany. Now he understood how he could control the serfs and peasants of his own kingdom, how to quiet the dissenting voices. The Lords and Ladies would be grateful beyond measure: but did that matter now? They had not given him control over the peasants but he knew then how he would have it.

He returned to his great hall and, with the jesters, clowns and goblins again gathered behind him and a select few peasants in front (again), announced his next transcendent vision.

‘The peasants are revolting. (He wished he could remember that joke.) You might think it is only in the far kingdoms (pause) where I have sent our knights. But they threaten us. They threaten you. They are not content (pause, pause) attacking only the Lords and Ladies. They will kill any peasant (pause) who does not agree with them and kill them most horribly. They wish to create (pause, pause) a world (pause) a world where they are in control and you will still be serfs (pause, pause) but serfs not as well cared for as the Lords and Ladies tend you.’

Despite a lone cry of ‘crap’, the majority was listening then. They were mostly attentive and motionless awaiting Tiny Napoleon O’penmouth’s next word. No laughter, no raucous bellowing back at him. They know I am no longer only a lowly jester, he thought. They are afraid and that is good. He continued (after a pause, of course):

‘Already there are those among us who support those revolting peasants. Those who will seek to kill you and burn your fields (pause).’

‘The fields are already burning’, a peasant called across the hall, but only the same single soul who had earlier yelled ‘crap’. Tiny felt confident, however, that now such voices would disappear beneath the maelstrom of fear he was fashioning, so he ploughed on, digging more deeply the furrows of foreboding.

‘They threaten your way of life. You will have to flee for your lives unless you allow the knights and yeomen to patrol within our own kingdom, to go into houses and drag out those who would harm you, to follow them to their secret meeting places, to watch their every movement — where they go, whom they visit.’

He grew assured that now the Lords and Ladies would let him close the borders. But that question, ‘did it matter?’, re-echoed in his thoughts.

Previously, as no more than a common jester, he had thought that sometimes ‘shit happens’ but then he confidently understood he could make it happen. Even if not a single peasant in his kingdom (it wasn’t actually ‘his’ — yet!) was threatening revolt, it was a mendacious and all-powerful justification to round up those terrible tree monks (or those who looked like tree monks) who insisted that something substantial was amiss when the rising waters did not recede, when the fires kept returning. Yes, he could well do without them making the peasants restless and giving them something else to fear.

Tiny Napoleon O’penmouth continued to disregard those rising waters and recurring fires. The knights and yeomen could not stop them, so what was the point of concerning himself.

Yes, now he had the plan. Eventually even the Lords and Ladies would not be immune. The knights and yeoman would enter the castle on pretext of searching out revolting peasants who had found their way in as blacksmiths, cordwainers, coopers and fletchers, and find the Lords and Ladies who protected them or who heeded the preaching of the tree monks (whether they did or not would no longer be of consequence). He could be rid of them too. He would no longer need his paper castle. He would have the real castle!

‘Soon I will be Emperor’, he dared tell himself. ‘No more Lords and Ladies — just me. My power is majestic and makes me a glorious and illustrious personage, worthier, nobler yet, than the Lords and Ladies. I will be Emperor!’



What do you think of Tiny Napoleon O’penmouth?

Darkening times


The Australian Parliament recently passed legislation giving ‘law enforcement’ agencies considerably greater powers that are claimed to be necessary to combat the ‘Islamic State’ terrorism threat. Prime Minister Abbott also addressed the United Nations General Assembly late in September on the threat to humanity posed by the rise of the group and pledged Australia’s assistance in a united effort to control the threat. Mark Kenny, reporting for Fairfax, reported Abbott’s speech, on how Australia would shoulder its proportion of the burden in these ‘darkening times’, as being ‘workman like’ and ‘pedestrian’. This could be considered to be high praise for the organisational and communication abilities of a prime minister who flew to London to talk to his UK counterpart on the phone, who mangled a set piece in a foreign language and invented a new name for a country while standing beside its prime minister.

John Birmingham, writing on The Brisbane Times website suggests the sudden and urgent need to pass legislation and deploy security forces is primarily ‘theatre’. Civil libertarian Bret Walker SC is reported in The Saturday Paper as suggesting:

Indeed, by accepting the suggestion that terrorists are something other than ordinary murderers, we have “bought their propaganda” and given them the “glamour of being extraordinary”

While not minimising the inhumanity that the ‘Islamic State’ is reported to be capable of, could this action be seen to be an attempt to wrap Australia in khaki to distract us from other ‘elephants in the room’ — such as climate change perhaps?

The US Government’s Environmental Protection Agency (EPA) has a webpage that lists answers to a number of frequently asked questions in relation to climate change. It does acknowledge that temperatures on earth vary over time but points out the current rise is faster and more pronounced that what has occurred naturally in the past. It also suggests that the consensus of expert opinion is that human activities are actively contributing to the problem. The response to the question on potential effects of the global average temperature rising by 2° Fahrenheit gives some graphic examples, for the USA, on the extent of change to civilisation as we know it.

Changing the average global temperature by even a degree or two can lead to serious consequences around the globe. For about every 2°F of warming, we can expect to see:

  • 5 ‒15% reductions in the yields of crops as currently grown
  • 3 ‒10% increases in the amount of rain falling during the heaviest precipitation events, which can increase flooding risks
  • 5 ‒10% decreases in stream flow in some river basins, including the Arkansas and the Rio Grande
  • 200% ‒ 400% increases in the area burned by wildfire in parts of the western United States
As these effects are predicated on an average rise in global temperature, it stands to reason that similar changes would be experienced worldwide.

The day before Abbott addressed the United Nations, he chose not to attend an international conference on climate change — also held in New York. Abbott did, however, find the time while in New York to dine with Rupert Murdoch.

The conference was ‘sponsored’ by the United Nations and the attendees included David Cameron (prime minister of the United Kingdom and the PM that Abbott flew to London to ring) and Barack Obama (president of the United States). To be fair, Foreign Minister Bishop did attend the conference and the leaders of China and India also chose to send an apology.

European Union commissioner for climate action, Connie Hegedaard, commented:

I do not know what the reasons would be behind it, but, of course, the world will interpret who is showing up and who will not be showing up.

So that's for your Prime Minister and your government to decide, what kind of profile they want in this.

One of the outcomes of the conference was there seems to be a consensus that the use of coal for various industrial processes has a limited future. The Australian Government and the International Energy Agency disagree, stating that growth will come from newly industrialised countries such as China and India. In fact:

the Pulitzer Prize-winning climate change news website Inside Climate News published a story about the "Canada-Australia axis of carbon". It suggested that not only were the two nations not willing to pull their weight, but that they were seeking to derail the binding agreement on emissions reductions at next year's talks in Paris that many view as the world's last best hope to prevent catastrophic climate change.

"Neither the prime ministers of Canada nor Australia will speak at the summit, and the subordinates they have sent will not be offering the kind of ‘bold’ new steps that UN Secretary-General Ban Ki-moon is seeking on the way to a treaty in Paris late next year," it reported.

China, the largest consumer of coal in the world has announced that it will use 50 million tonnes less coal annually in the near future. China also is increasing the use of wind power technology in the next few years, to twice the capacity of the entire European Union.

The name Rockefeller has been associated with wealth, power and influence for decades. The ‘founder’ of the dynasty made a lot of his money in pumping oil out of the ground, processing it and selling the products. The Rockefeller family still has significant financial clout, with billions invested in industry. On the eve of the UN’s climate change conference the head of the family trust announced that it would be selling its USD56 billion of fossil fuel assets and reinvesting it into ‘clean energy’. The Rockefeller Trust is a member of a group known as ‘Global Divest-Invest Coalition’. Other members include Stanford University who have announced its USD21 billion endowments will no longer be invested in coal assets.

The Australian Government commissioned a report this year into the renewable energy industry and its funding. In a classic example of not asking the question until you know the answer, the panel was led by Dick Warbuton who is reputably no friend of renewable energy. Abbott has also claimed in the past that renewables don’t work because there is no potential for 24 hours a day, seven days a week generation of electricity. A report in Crikey from early this year discusses Dick Warbuton’s contribution as well as Abbott’s claims. The Crikey article also discusses the switch within Germany and South Australia to using considerable quantities of renewable power, refuting the argument that renewable power cannot be used as ‘baseload’ (generating the consistent demand for power day or night) as well as the experience in Germany where coal fired power stations are being mothballed as uneconomic soon after commissioning.

Spain has a reputation for bad waiters, economic problems and bull fighting. It also has a number of power plants that use renewable energy. At least one of the plants near Seville can generate power from sunlight 24 hours a day as it stores some of the heat generated by the mirrors as molten salt — which is then returned to the system when the sun isn’t shining to generate steam and turn the power turbines. Another Spanish solar plant has been immortalised by James May (of Topgear fame) in this YouTube clip.

There are a number of large solar power generators located in the USA, some of which also store heat to allow generation when the sun isn’t shining. One of the largest, located at Ivanpah in California’s Mojave Desert covers 1600 hectares and will eliminate 13.5 million tonnes of carbon dioxide from the atmosphere over the estimated 30 year lifespan of the facility.

If, despite the large area of desert and abundant sunlight across Australia, there really are problems with generating baseload solar power in Australia, as claimed by Abbott and others with what seem to be vested interests in the status quo, there is also promising technology generating power from the waves on the seashore. The waves never stop. The big issue would be the engineering to ensure that the infrastructure is not sucked out to sea or washed up on the beach. This engineering problem has been looked at by a number of different researchers. One firm that is trying to commercialise its solution is Australian: Carnegie Wave Energy, based in Fremantle. It has demonstration energy production plants in operation in Perth, Western Australia, and in Ireland. An added bonus is that they can operate a desalination plant, that doesn’t contribute to greenhouse gas emissions, using parts of the same infrastructure. While the Federal Government has provided a grant for the proving of the concept, the funding was provided in May 2012 — and, in any event, the WA government provided a larger sum.

Worldometers is a free resource on the internet that has contributions from a number of experts that calculates various statistics including the volume of greenhouse gases emitted, the end of oil and the end of coal. As the numbers are constantly changing it is pointless listing their estimates here — however, the number is less than 40 years in the case of oil.

Abbott went to New York to address the United Nations General Assembly on a significant threat to our way of life. While the ‘Islamic State’ could conceivably be a threat to us, the end of fossil fuels and irreversible change to the environment is certainly a threat, caused by the continual pumping of carbon dioxide and other harmful chemicals into the air. Even if the Australian Government is correct that, as a nation, we are responsible for only 1.5% of the world’s total, Australia has the resources, technical capacity and ability to generate considerable quantities of power from either large solar plants or harnessing the energy of waves to again ‘lift above our weight’ and assist others. Currently we don’t — and our current leadership doesn’t seem to be inclined to acknowledge the problem.

Australia’s prime minister misrepresented an emissions trading scheme as a tax and didn’t have the courage to attend a climate change conference in New York the day prior to his address to the United Nations General Assembly (while finding the time to dine with Murdoch). His review of alternative energy solutions is led by a person who has a long history of denial of climate change. He has removed an emissions trading scheme that was showing positive benefits to both the environment and the economy, all the time claiming that issues such as renewable energy have too many insurmountable problems to be considered as permanent solutions to energy supply. Clearly he is wrong but the recent actions by Abbott and his ministers would suggest that only some of the real problems facing humanity are important. The worst possible result of addressing climate change is that fossil fuels last considerably longer — which isn’t a bad alternative anyway.

While no one here is attempting to justify the actions of a small group that seemingly wish to inflict their fundamentalist views on others, which is worse, the ones that address an environmental problem that will affect everyone by doing nothing or the ones that address centuries of political unrest using an incorrect interpretation of a religious text?

Twenty-four hour a day, seven day a week generation of power can be achieved by use of solar, wind or wave power as well as coal and gas. The entire east coast of Australia is on the same electricity grid. Clearly technical or logistical issues aren’t the issue — what is?

What do you think?



Whose responsibility?


Man is by nature a social animal; an individual who is unsocial naturally and not accidentally is either beneath our notice or more than human. Society is something that precedes the individual. Anyone who either cannot lead the common life or is so self-sufficient as not to need to, and therefore does not partake of society, is either a beast or a god.

That was said almost 2,500 years ago by Aristotle. Religion continued the emphasis on social responsibility over the following millennia. Christianity has the parable of the good Samaritan and the Golden Rule, from Jesus saying ‘So whatever you wish that others would do to you, do also to them, for this is the law and the prophets’ (that is the wording in the modern English Standard Bible). Islam also emphasises community and, in fact, the foundations of Islam were based on reforming society; it also emphasises public, or communal, worship; and it has a strong emphasis on the social responsibility to stop your ‘brothers’ from doing wrong.

In the Western tradition, that began changing in the 1700s with the philosophy of Hobbes and Locke placing more emphasis on the self-interested individual, although Locke, unlike Hobbes, still believed humans were social animals but drew a clear line between civil society and the state — society creates order and grants the state legitimacy, and the state provides impartial justice and the impartial protection of property. Locke is considered the father of ‘liberalism’.

While Hobbes argued that humans in a ‘state of nature’ were constantly at war and life was ‘nasty, brutish and short’, Locke saw that ‘state of nature’ as peaceful because individuals had a duty to respect the rights of others. This was a ‘natural’ moral duty.

More recent writers, like Hayek and particularly Ayn Rand, took individual self-interest further. Ayn Rand went so far as to suggest that the individual has no ‘natural’ duties to society, summarised as follows:

We only have one life and the good is to live it. Learn to pursue your own happiness by discovering the life-promoting values it requires. Think rationally and don’t bow to authority. Join with other people when you have real values in common and go your separate way when you don’t. Don’t try to be your brother’s keeper or to force him to be yours. Live independently.

To me, it seems that these more recent approaches have come to dominate our social and economic thinking, with greater emphasis on individual rights and less on the social ‘duty’ to respect the rights of others.

The modern neo-liberal economists certainly see little or no role for government. In their perfect world the individual is free to pursue their own ends in accord with the John Stuart Mill maxim that ‘The only freedom which deserves the name is that of pursuing our own good in our own way’. But they tend to ignore the proviso in Mill’s statement: ‘so long as we do not attempt to deprive others of theirs, or impede their efforts to attain it.’

In reality, Mill’s maxim balances individual and social responsibility by stating that an individual’s freedom cannot come at the expense of others’ freedom (Locke’s natural moral duty to respect the rights of others). When we start taking account of ‘others’ in exercising our freedom and making our personal decisions and choices, we are exercising social responsibility. But there are also social responsibilities that are, or should be, communal. In our modern societies those responsibilities are often taken by government in the interests of the community as a whole.

In rejecting a social element in economics, economists refer to the ‘tragedy of the commons’ to justify that individual ownership, that is private property, is superior to common, or social, ownership. Although the idea has a longer history, the phrase came from a paper by Garrett Hardin in 1968. It was suggested that, when people grazed their herds on a ‘common’, a self-interested individual could improve his situation by adding one animal to his herd. The individual would gain the benefit. But if each individual adds one animal, or two, the common is quickly degraded. While the individuals retain the benefit of having an extra animal, the ‘cost’ (the degradation) is shared, leaving them with a self-interested benefit — before the failure of the system. Following this argument, and its corollary that Adam Smith’s benevolent ‘invisible hand’ of individual self-interest does not work for the commons, economists suggest that private property and the individual’s responsibility for that property remedies the situation.

That approach is based, however, on a misunderstanding of how commons worked. They were not ‘open access’ as the theory implies. Throughout the world where people shared resources, there were usually social and cultural rules that controlled that sharing. In Iceland, for example, the common resource of the fisheries was traditionally controlled by kinship rules that allocated spaces on the beach that were necessary for launching fishing boats. In some communities in India, the allocation of the common resource of water for farming was determined by community meetings. People accepted these approaches as essential for the well-being of their communities, or, in other words, were accepting social responsibility.

Hardin put the ‘tragedy of the commons’ in the context of population pressure and I accept that population pressure is a factor but not necessarily in the way Hardin interprets it. It is sometimes population pressure that will force people to leave a community, and enter the market economy, because the social rules prevent them having full access to the ‘common’. It is often on their return (even merely for a visit), with new ideas of individual responsibility, self-interest, and private property, that the decline of social obligations for the maintenance of the common accelerate.

It was the breakdown of social responsibility, of local rules and obligations that changed the use of the commons, and that itself arose from the introduction and growth of the market with its emphasis on individual self-interest. That can be seen in recent history in developing countries. As some people abandon the local rules to participate in the market, the ‘cost’ (in economic terms) of maintaining social obligations rises and no longer provides the greatest benefit, hastening the break-down of social responsibility. Rules of reciprocity, which were common in many societies and reinforced social obligations, also came under pressure from the influence of the market and the concept of private property.

In our own society, the health system provides an example of the roles of individual and social responsibility. A healthy population is, among other things, in the economic interests of a community or society, providing a healthy labour force and reduced costs in caring for the sick — ‘cost’ in this context includes time spent caring for the ill, which may mean two people withdraw from the labour force, the carer and the cared for. While an individual’s choices can affect their health (smoking, over-eating, not exercising) and, therefore, there is a case for individual responsibility, there are many other environmental and genetic factors that contribute to disease over which the self-interested individual has no control. Social responsibility is taken on by government to the extent that it attempts to control those external factors by, for example, pollution controls, food and drug safety, disease surveillance, occupational health and safety and even urban planning that allows for healthy environments, including access to exercise amenities (parks, walking tracks and so on). The neo-liberals would not agree with some of these. They are more likely to stress that the value an individual puts on their health is reflected in the price they are willing to pay — hence the growth of private fee-paying gymnasiums, let alone private health care.

Stressing the rights of the individual over the health of the community can have serious implications. In the case of major illness, we generally accept that individuals, even neighbourhoods or whole communities, may need to be quarantined — as in the current Ebola outbreak in Africa, or an outbreak of bubonic plague in Sydney in 1900 when many blocks in and surrounding the current CBD were quarantined, then cleaned, and people moved into camps. This is a clear case of social responsibility over-riding individual rights but I’m not sure how the neo-liberals would deal with it philosophically. There is also a tension between individual and social responsibility even with minor illness. If I have a cold or influenza, should I exercise my right to earn a living and go to work, or should I stay at home and not spread the illness to others? If I spread my illness, am I impacting the right of others to earn their living? It can be argued that paid ‘sick days’ for employees is a socially responsible way of dealing with this.

You would think that providing health care would be a ‘public good’ to be provided by government as a social responsibility but that is not necessarily so when one reads the economic definition of a ‘public good’. The economists usually consider that the market has responsibility for the efficient allocation of resources and governments the responsibility for public goods — this is the economic separation of responsibilities.

Economists define ‘public goods’ negatively, in the sense that they are basically goods the market cannot provide at a profit — no concept at all that there may be a social responsibility or a social benefit in government providing certain goods and services irrespective of the market.

For an economist, a public good must be ‘non-excludable’ and ‘non-rivalrous’. The first means that it is not possible, or not cost efficient, to exclude people from benefitting by the provision of the good. Fireworks displays are a simple example: I could set up a fire works display and attempt to charge people to attend but people could easily watch from a short distance away (possibly even from their own nearby homes) unless I set up a large exclusion area, and that may not be feasible or may be too costly.

The second, ‘non rivalrous’, means that the consumption of the good by one person does not preclude it also being used by another. If I watch the fireworks that does not stop other people from watching, or my use of a park does not stop others from using it.

I have seen sewerage systems listed as ‘public goods’ but it would theoretically be possible to have a system where people could be excluded by disconnecting them, as can happen with electricity, but that could have wider health implications that could not be restricted to the individual concerned (the very reason sewers were first constructed). So there is a socially responsible health aspect, not ‘non-excludability’, in ensuring that all people remain connected to the sewerage system but that social responsibility is missing from the economists’ definition.

The market is not in interested in ‘public goods’, as defined above, because ‘non excludability’ creates the ‘free rider’ effect: that is someone can benefit without paying — the person watching the fireworks from their own window. The market places more emphasis on ‘non-excludable’ than ‘non rivalrous’, so suppliers in the market will happily create a price for non-rivalrous goods but won’t become involved in non-excludable goods: in this context, sporting events and cinemas can be considered non-rivalrous (many people can use the product at the same time) but they are excludable (one person or 80,000 can be allowed into a sporting event — it just depends on making a profit).

Despite that, the neo-liberal approach has seen more and more goods and services moved from the public to the private domain blurring the separation of economic responsibilities. That also moves decision-making rights regarding the good or service from one agent to another and involves, or should, a shift of the associated responsibility. So if former public services are now provided by the market, should the firms in the market also bear the social responsibility that goes with them? The neo-liberal economists claim that minimal social responsibilities should be borne by the market, using Adam Smith’s ‘invisible hand’ to justify that self-interest has social benefits.

Corporate social responsibility is a significant issue. It rose to prominence in the 1960s and ‘70s but had almost disappeared by the late 1990s. It is making a comeback but the predominant economic philosophy remains that the duty of a CEO and a board is to maximise returns to the owners of a firm (the shareholders). It is argued that ‘social responsibility’ conflicts with the ‘duty’ to maximise returns, and also cannot readily be measured so there is little point in insisting that it should be part of a firm’s obligations. There is, however, an alternative argument that being a ‘good corporate citizen’ is in the long term interest of a company and the value it is able to return to its shareholders. Unless a company is intent on maximising earnings and profit in the short term and then folding (as some obviously do), a company able to sustain its earnings into the future does require some acceptance of social responsibility and good corporate citizenship. It is when they realise that their ‘image’ is important for sales, that these issues may rise to the fore.

For current ‘commons’ like the Earth’s atmosphere and oceans, economists argue that a degree of ownership is required to stop degradation, such as trading systems for reducing CO2 emissions, or tradeable quotas for fishermen, not that the problem can or should be remedied by government regulation. But if government in a democracy is representing the ‘will of the people’, then it may have a social responsibility to maintain the ‘commons’ for the people irrespective of the market. The UN is close to that view in relation to CO2 and climate change — but not the current Australian government.

What have companies been doing for over two centuries but ‘free riding’ on the rest of us by pouring their waste into the commons of the atmosphere, oceans and rivers. It is because the market has robbed the people of their control of the commons that private agents can exploit it; and also because many firms, following the neo-liberal economic agenda, don’t accept they have a social responsibility, neither generally nor in relation to the commons.

The neo-liberals ignore that people do not always act in their own self-interest. Social relationships and cultural values (social inclusivity) can mould decisions — these also shape our social responsibility. We support our neighbours in times of trouble, during floods and fires; ordinary people will run into a burning building to save someone they don’t know; people stop at road accidents to help if they can; people will care for a lost child until a parent turns up; and so on and so on. Despite what the neo-liberals think, social responsibility still exists in the hearts of the people and we are still a social animal — as infants we learn to be human in a social context, through the ‘others’ that surround us.

We should be demanding greater social responsibility, not just the promotion of individual self-interest, from companies and from government. Will we ever get social responsibility from our current government? Of course not, as it is too easy to see on which side of the fence it falls in this debate.

What do you think?



What have the unions ever done for us?


Monty Python’s Life of Brian was recently shown on free to air TV. For those that haven’t seen it, the story revolves around Brian, who lives in Palestine during the Roman occupation and somehow is involved with a group of people that want to overthrow the Roman occupation. The movie ends with Brian and others on crosses singing ‘Always look on the bright side of life’. Some Christian churches protested when the movie came out that it was a parody of the life of Jesus. The line from the movie ‘He’s not the messiah, he’s just a very naughty boy’ probably didn’t help!

The point of ‘Life of Brian’ for our purposes, however, isn’t a determination of the wisdom of the parody argument: it is a well known scene in the movie where there is a meeting of those who are trying to overthrow the Roman occupation. In the scene, ‘Reg’ is decrying the Romans by asking what have the Romans ever done for us?



So with apologies to ‘Reg’ (and the Monty Pythons in general), how about we change the question slightly to ask, ‘What have the unions ever done for us?’ given the generally declining number of union members in Australia.

The New Yorker magazine recently published an article entitled ‘Dignity’ that describes the fight by people who work for McDonalds and other fast food restaurants to get a living wage of $15 an hour. There are stories of intimidation and loss of shifts affecting those who are mobilising (most fast food workers are apparently casual); and resistance from the franchise owners and the corporate headquarters of some fast food retailers to a movement to increase the minimum wage in the fast food and other low paid industries across America. Traditionally, these employees are immigrants and not members of a union. Union membership is actively discouraged by a number of the employers — although the article does give examples of other businesses in the fast food industry that do pay considerably more per hour, produce better food and still make a profit.

The Australian Bureau of Statistics tells us in a paper released on 14 June 2014 that:

The survey also shows that 17 per cent, or 1.7 million employees were trade union members in the main job, this being the lowest proportion in the history of the series. That proportion follows a general decline in trade union membership over several years.

It goes on to say:

Of employees without paid leave entitlements in their main job, 6 per cent were trade union members, compared to 22 per cent for employees with paid leave entitlements. Trade union membership was higher in the public sector, with 42 per cent of all employees being members, compared with 12 per cent in the private sector.

So there seems to be a correlation between union membership and paid leave. Wikipedia lists the annual leave entitlements in a number of countries around the world. It is interesting to contrast countries with a history of union membership versus individual bargaining — such as Australia (20 days per annum), the UK (28 days per annum – including ‘bank holidays’) and France (25 days per annum) versus the USA (0 days per annum). There isn’t a direct correlation between any of these example countries: the relevance being that in the USA, there is no legislated minimum — it is up to the employer and employee to agree to paid annual leave.

In Australia there are 10 National Employment Standards. They include the right of paid annual leave for permanent employees (including part time workers). The ACTU’s Australian Unions website will tell you that the Union movement negotiated paid annual leave for the printing industry in 1936 and other industries subsequent to then. Full-time employee annual leave entitlement has risen from two weeks to four weeks in the past 50 years.

Traditionally people retire from active work at some point and rely on savings or contributions from others to help them live. Most Australians who are employed have one or more ‘Super’ accounts that hopefully will provide a reasonable income in retirement. In Australia, employer contributions to superannuation accounts are mandated (although the Abbott government recently determined that the next employer increase should not be made). There is also the availability of a payment from the government for those who have retired provided they can demonstrate they meet certain age or financial requirements (the ‘old age’ pension).

In the USA, superannuation (known as ‘pensions’) is a part of the ‘benefits’ package but, as The New Yorker article linked above points out, a considerable number of the low paid fast food and similar industry staff are not in receipt of any benefits over and above their wage. The USA does provide ‘Social Security’ but the USA Social Security system pays a benefit on retirement based on your income. So someone who works 30 hours a week for $8.50 an hour may only get $500 per month — depending on age and age of retirement. Remember they don’t necessarily have ‘super’ or ‘pension plan’ to fall back on. In contrast a full Australian Age Pension (in this exercise we are assuming that the person has no real savings or assets) is entitled to $854.30 per fortnight plus health care card and other concessions.

Some would say there is a ‘glass ceiling’ for women in corporate Australia. That is a discussion for another time: the issue here, however, is that up until 1969, women were paid up to 25% less for doing the exact same work as men. While there is still a gender gap in the average wage of Australians, two people doing the same work for the same company in Australia should be getting the same pay, regardless of gender. The Australian system is not perfect but it is better than the USA where its Senate in September 2014 (yes — this year) voted down a bill to legislate gender equality in wages paid.

While ‘Life of Brian’ is not an accurate portrayal of life in Palestine around two thousand years ago, there is a list of worthwhile achievements (roads, sanitation, wine etc) that were delivered by the Romans when they invaded the country. The humour behind the skit is that, after a while, these things are taken for granted and the consensus of opinion is that everywhere is the same.

The comparisons made here are only a few of the benefits of living and working in Australia. Don’t forget that the ‘centre left’ ALP and the ‘right’ LNP went to the last federal election trying to out-do each other on Paid Parental Leave (a worthy idea but the execution seems to be lacking at present). The Australian Unions website claims some of the credit for the implementation of the clearly superior annual leave, social security and ‘equal pay for equal work’ benefits enjoyed by Australians over and above those in United States — the ‘land of freedom and opportunity’. The Australian Unions website also lists a number of other achievements that were driven by the union movement, such as sick leave, long service leave and health and safety monitoring.

Not everywhere is the same. Australia has had equal pay for equal work for close to 50 years — the USA still doesn’t. Australians retiring in the future will have some form of savings that bolster (or, if they are fortunate, replace) their mandated pension entitlement: Americans won’t unless their employer decides to do it. Australia has a living minimum wage in comparison to the USA.

The ‘Dignity’ article in The New Yorker magazine demonstrates that collectivisation is still a valid tool to gain real improvement to workers’ rights and wages and, while Australians are leaving unions, it seems their employers are retaining their membership of organisations that promote the rights of business over their employees (as they are entitled to do). The problem is when employees can only find casual work (which eliminates the right to pay while on holidays for a start), they have less ability to protest when stripped of their penalty rates for working ‘unusual’ hours, when workplace health and safety measures are deliberately ignored or when compensation payments for forced redundancies are limited or eliminated by regulation (and if the employee is under 30, they may, if the current Government’s wishes are implemented, then have to wait up to six months to be eligible for unemployment assistance).

The union movement has demonstrably been a part of creating the environment that Australians enjoy. The Howard government met its downfall when it tried to take away workers’ rights, that those in other countries still don’t have — and the union movement contributed significantly to that shift in the Australian public’s attitude. While the union movement is not perfect, neither are similar organisations that protect the interests of business (Kathy Jackson and Arthur Sinodinos are examples here — one from each ‘side’). The other way to look at it is this: if there was nothing for the political right and employers to fear from the unions, why are the same groups still trying to neuter the unions’ ability to campaign and protect the perceived interests of their members in 2014 while ‘unions of employers’ are encouraged?

What do you think?



Where have all the public services gone?


Where have all the services gone?
Gone to corporates every one.
When will they ever learn?
When will they ever learn?

A year or two back, where I live, the local water provider received approval to increase the price of water. It had been involved in major infrastructure spending to enhance the local water supply, so some increase in price seemed justified, but hidden in the details was a line that part of the price increase was to offset ‘losses’ incurred during the drought some years earlier. A water company makes ‘losses’ during a drought! — wtf!.

Obviously it sold less water during the drought: it had less water to sell and the government had imposed water restrictions to conserve what water we had. What is the alternative? — that it continues selling water as if there is no tomorrow to keep up its profit and we run out well before the drought ends. For the life of me, I can’t see the logic in that. The body I am talking about is still fully owned by the government and pays an annual dividend to government but like many public utilities these days it has been ‘corporatised’. (Corporatisation is often used as a prelude to full privatisation but the evidence suggests that many government-owned bodies that have been corporatised are just as efficient, and profit-making, as any private company and have a history of paying healthy dividends to their government.)

Unlike America, which has a history of privately owned services, Australia has a tradition of government provided public services including, not just health and education, but transport, utilities (energy and water), even financial services (the original Commonwealth Bank). In recent decades our governments have been backing away at a rate of knots from the provision of such services in the name of ‘the market’ but does it make sense?

In the case of the water provider, if it had still been a purely public utility (that is providing a public service) losses during a drought would be a non-issue because it is in the public interest to sell less water and preserve what is left as far as possible. Why should a water supply be put in the hands of a private (or commercially-oriented) supplier when it is an essential service for the community as a whole? No community will survive long without water but it is now a commodity on which to make a ‘profit’.

Transport services provide the classic difference between private and public provision.

A private provider will operate, or continue to operate, those services and routes that it deems profitable. Occasionally it will run less profitable services but only to maintain the goodwill of its customers.

By contrast, a publicly run transport service is there to do just that, provide a necessary public service whether or not it is profitable. Prices that contribute to meeting running costs are justified and a public provider is more likely to offset loss-making services by the surpluses reaped during peak hour services (cross subsidisation). One issue is which costs should be taken into account in fixing prices? I recall from the 1970s, in the days when complaints about the NSW rail network running at a loss were being made, that there was a small article buried on about page 12 of the Daily Telegraph that during that year the railways actually made a profit on ‘operating costs’ — the ‘loss’ arose from the fact that loans were still being repaid, some to British banks dating back to the 1800s when the NSW railways were being established.

In an effort to offset the ‘losses’ many rail services were cut and lines closed. Regional services in particular were hard hit. That didn’t mean there were no people in those areas who needed the rail service, just not enough to ‘justify’ its continued operation. People became more reliant on cars. Some farmers lost freight services and had to turn to heavy road transport companies (that relied on making a profit, not providing a service). Of course, this pushed higher costs onto local councils to maintain the regional road network, which no doubt meant an increase in rates. So the loss of a service does not come cheap!

In a modern society, electricity is almost as essential as water and is being made more so by the many services now being provided on-line. The ATO no longer routinely distributes printed tax return forms (you have specifically to request one) and is encouraging people to do their return on-line but without electricity that would be impossible. So we now need electricity not only for energy needs — heating, cooking, light — but to participate in our society and use government services.

Despite that, some electricity services are now privatised and the rest operating on a commercial basis. In other words, a profit is being made from goods and services which I have no choice but to use.

In my view, much of the privatisation of public services came about because governments had avoided long term planning for the assets. Water, transport, electricity, health and education services require major infrastructure. There is obviously a capital cost in establishing that infrastructure and also in its ongoing maintenance, but there comes a point in time when the infrastructure needs replacement or major upgrading.

The time when much privatisation took place seems to have been that point where governments faced the replacement or upgrading costs. Instead of having planned for it over the life of the infrastructure, governments had not put money aside, always expecting they could meet it out of general revenue at the time — until they realised they couldn’t. (Although, ironically, they often poured money into the enterprises to prepare them for privatisation.) Of course, they could borrow but they were already running up debt and in the face of the political pressure to reduce debt, felt constrained. Privatisation was supposedly a double win for governments to the extent that they made money from the sale and off-loaded the expense of upgrades and replacement. John Quiggin has shown, however, that, in most cases, there wasn’t a significant financial gain to the governments over the medium term as compared to keeping the service in government hands. Whatever the financial outcome, they reduced public services.

The problem with much of this privatisation is that it is occurring in what the economists call ‘natural monopolies’, where it is more efficient to have a single supplier of a good or service to the many, rather than many providers each supplying to the few: for example, it is wasteful to have three different water companies each constructing pipelines past every house to provide ‘their’ water. The neo-liberal economists supporting privatisation have overcome this by ‘disaggregation’. Just see how they have split electricity and rail: electricity is split into generation, distribution and retail; and rail has been split into the rail networks (the tracks) and the actual services (trains). This allows them to privatise parts, if not all, of the system.

In relation to electricity, John Quiggin points out that this approach means economies of scale and economies of scope are lost. There is evidence that the so-called competitive electricity market, with many retailers now competing for customers, has led to a large increase in non-productive staff — involved in management, human resources, administration and marketing, not in electricity production or distribution. Whereas a single state-owned provider needed only one set of administrative staff (and no marketing staff), now each separate company needs a set. Previously the state-owned body operated the generation, distribution and sale of electricity (some even had their own coal mines). Electricity prices are extremely volatile, partly because electricity cannot be stored, and can vary from a few dollars to a few thousand dollars per megawatt/hour depending on the time of day. When a single entity handled the whole supply chain, that volatility was more easily absorbed. Now it is in the interests of the generators to keep supply as low as possible (that is, the minimum necessary to meet anticipated demand) so as to maintain the highest price but that becomes a cost to the retailers (and hence consumers).

The reason often quoted to support privatisation is that competition will ensure the lowest prices and more efficient and better services meeting customer needs. Consider, however, the privatisation of ports and airports that has taken place. There are not six port facilities to choose between in Brisbane or Port Kembla, or four or five airports, capable of handling commercial jet flights, to choose from in the capital cities, so there is no competition — they are monopolies. In such situations the government has to retain a regulatory responsibility just as it does for any monopoly that exists in the market: even economists acknowledge that regulatory responsibility exists in regard to monopolies so that the monopoly power is not used to set prices at what the market ‘will bear’, rather than the price being controlled by competition. If the government still needs to regulate, why privatise in the first place?

One argument, often put without question and without supporting evidence, is that private enterprises are more efficient than government enterprises. Economic theory apparently suggests that this should be so but factual evidence often suggests otherwise. Productivity in the electricity industry has not increased as fast as across the economy overall, partly a result of the increase in non-productive staff (discussed earlier). There are many examples of so-called efficiencies and productivity gains coming primarily through lower wages and lesser non-wage conditions. This is effectively a ‘gain’ to the private provider but a ‘loss’ to the worker — and, if we follow ‘middle out’ economics, a loss to the economy. Losses to the economy are magnified when the new private owner is an overseas company, as is often the case, and most of the profit leaves the country. These are ‘social costs’.

Other ‘costs’ occur when private operators incur debt, either to make the purchase in the first place or to provide infrastructure improvements after they own it. The cost occurs here because governments can raise money by issuing government bonds at a lower rate than companies can obtain finance through financial institutions or equity (shares). These higher costs are inevitably passed on to the consumer.

When efficiency is measured in dollar terms, we can end up with examples like this. In the USA in the 1980s and ‘90s, medical waste was disposed of by private companies. Normally this should be done by high temperature incineration but the private companies decided it was more efficient (cheaper) to dump it at sea. When dangerous material started washing up on California and New Jersey beaches, the public became aware of what was happening and, of course, there was an outcry, forcing the governments to intervene and legislate tighter controls.

In Europe the arguments for privatisation seem to have changed slightly. While ‘efficiency’ remains central, two new arguments have been added: ‘strengthening financial markets’ and ‘reduction of public debt’. Reduction of debt was always on the edge of this debate, at least so far as governments were concerned, but, following the GFC, it appears it is now becoming more central in economic arguments. And I think there is hypocrisy in economists suggesting governments should act to ‘strengthen financial markets’ — isn’t that interference in the market?

Basically, privatisation means the government has less ability to direct the provision of services for the public benefit, which essentially means, in the case of many of these type of services, ensuring reliability and quality. Under public ownership many electricity systems included built-in redundancies to ensure safety and reliability of supply. In market terms this is a ‘waste’ of resources but ‘redundancy’ is a critical issue for safety and reliability: almost every commercial aircraft in the world has duplication of many systems (redundancy) because safety is critical, even for commercial success. For areas where safety is less critical, the market will certainly see redundancies as pointless but, in services like water and electricity, it is reliability that is the critical issue and some redundancy may be necessary to ensure that. There is evidence that the privatisation and corporatisation of electricity supplies has led to less reliable supply. If the emphasis is on the efficient allocation of resources to achieve profits, then reliability may move down the list of priorities. Maintenance, also necessary for reliability, is one of the first aspects to be downgraded as it is ‘efficient’ to maintain only to the minimal level necessary to deliver the service. For example, in SA in 2001:

There were 500 outages in January 2001 alone. Unions claimed that the 900 workers employed to check and repair powerlines in 1991 had been reduced to about 300, whilst maintenance crews were reduced from 270 to 90.

The problem with the shift of many services to a commercial or profit-making basis is that public benefit is overlooked and government loses some control over its policies, just as in the example of making up for the ‘loss’ of water sales during a drought. Similarly, we were previously being encouraged to reduce our energy consumption in a bid to reduce greenhouse gases. If electricity consumption is reduced two things happen: some of the infrastructure may become redundant and a loss is incurred by the generators, meaning companies will increase the price of energy to make up for the loss both in consumption and from ‘wasted’ assets. But even in economic terms that is a ‘price signal’ that may counter the policy intent of reducing consumption because people may well say what is the point of reducing consumption if every time we use less, the company puts the price up to cover the ‘loss’. People may still reduce consumption based on the higher ‘price signal’ but no longer as much as they would if they felt there was a ‘moral obligation’ or a ‘community benefit’ (when they know everybody else is acting in the same way) in doing so. If these were public assets, governments should, in accord with both policy intent and public benefit, allow people to benefit (lower bills) from the effort they make to reduce consumption, which would send a positive ‘price signal’ that reducing consumption is good. When it is privatised there are conflicting messages: a government policy saying use less but the private provider saying consume more or, at the least, not rewarding people for using less.

A significant change that can occur was expressed in relation to health care in an editorial in the New England Journal of Medicine in August 1999:

Our main objection to investor-owned health care is not that it wastes taxpayers’ money, nor even that it causes modest decrements in quality. The most serious problem with such care is that it embodies a new value system that severs the communal roots and Samaritan traditions of hospitals, makes doctors and nurses the instruments of investors, and views patients as commodities.

To my mind, that is the main danger of privatisation, not economic arguments but what it is doing to our society. The neo-liberal economists argue that the only responsibility of the CEO and board of a company is to maximise returns for shareholders. That may work providing consumer goods in the market, when people have a clear choice whether or not to buy, but when it comes to water, electricity, health and education, in which people have no real choice, surely there must be a public interest criterion. The neo-liberal economic approach says no.

Governments need to step back from this privatisation fiasco that places financial markets and shareholder interests above the public interest, particularly in relation to the ‘natural monopolies’. It was once seen that such natural monopolies were the ‘natural’ province of government but no longer. Governments have bowed to the market and the neo-liberal economists promoting it, to the detriment of society, not to its benefit.

It is not too late to turn back. Although in many cases it would mean governments having to buy back what they previously owned, that is what has happened in some countries as the failures of privatisation became apparent. The UK government had to re-take the rail track network when private owners were not maintaining it as well as they should (a brief history here). The NZ government also had to buy back its rail network. In NSW, an attempt at privatising the Port Macquarie Base Hospital was a disaster and the government had to bring it back under the public umbrella. They are but the tip of the iceberg.

You would think that with so many failures, and with the supposed benefits of privatisation not eventuating, that governments would have learned by now but the words of King and Pitchford in 1998 still apply today:

… governments at both the state and federal level in Australia appear to pay little attention to the reality of privatisation, preferring to follow their own rhetoric.

What do you think?



We are all victims of short term expediency


In Australia, politicians are elected for either three or four year terms. The conventional wisdom is that the first year of their term is working out what they want to change — usually masquerading as ‘fixing up the mess’ left to them by their predecessors. The second year (and third where applicable) is when they implement what they consider to be their ‘mandate’ and the last year is when they try to convince a majority of the voting population that they are better than the other side. While there are various claims that they are making plans for the future, usually the plan is do nothing and hope they won’t have to make the unpopular decision at some time in the future when the need for the policy or infrastructure is urgent due to their previous lack of planning.

In contrast, when you go and get a home loan the usual commitment is somewhere between 25 and 30 years — although the property industry tells us that, on average, loans are refinanced or properties traded on another one within ten years.

Politicians of all persuasions claim they plan for the future. The last ALP Government in Queensland developed a plan for the state in 2020 — known as ‘Towards Q2’. According to the publicity booklet:

Our plan has been framed around five ambitions for our entire state, covering our economy, environment and lifestyle, education and skills, health and community.

The rationale for the forward planning included being better prepared for events such as the millennium drought, that threatened the water supply of a number of communities across Queensland in the early and mid 2000’s, and the subsequent flooding in 2011 and 2012. When Campbell Newman’s LNP Government came to power in 2012, it scrapped the ‘Towards Q2’ document but then created their own ‘Queensland Plan’, which is supposed to guide development, infrastructure and policy in the state until 2030. After the cost of co-ordinating ‘focus groups’ across the state — invariably attended by government ministers and senior public servants — internet sites for comments and other methods of consultation, the ‘Queensland Plan’ developed some foundations:

These foundations are: Education, Community, Regions, Economy, Health and wellbeing, Environment, People, Infrastructure and Governance.

The Queensland Government has recently issued a response to the ‘Queensland Plan’ — responding to a proposal it was instrumental in creating! If you can see large differences between the ‘Towards Q2’ ambitions and the ‘Queensland Plan’ foundations, please leave a comment below the line and educate us all!

In New South Wales, building the North West Rail Link to Castle Hill and beyond is underway. This train line, which was first announced in 1998, was originally to be a branch line from the current system at Epping to service a rapidly growing area of Sydney with inadequate road transport. (Even though buses can run express, they are still on the same roads as the private vehicles.) Wikipedia gives a history of the announcements and political games that have been played out to get to where we are now: and as you would expect, the ‘glossy’ website for the project sings the benefits of the scheme for all.

What the website doesn’t tell you is that the tunnels they are building for the North West Rail Link are too small to fit the existing Sydney double deck electric trains! Effectively it will be a separate network, which may one day go through a second Harbour crossing and continue to Blacktown.

If that’s not enough, while ‘Transport for NSW’ operates the existing rail network, Melbourne’s private train operator Metro will operate the north-west service under a contract — so the chances of co-ordination between the two distinct networks are likely to be pretty remote.

But wait, there’s more. The existing Epping to Chatswood train line is to be converted to take the North West Rail Link to Chatswood! So you have Sydney’s newest rail line being changed so the existing trains won’t fit, taking passengers from the north west of the urban area every four minutes in peak hour to a station requiring passengers to change to trains using the existing double decker carriages and then going across the Harbour Bridge on tracks that are already almost at capacity. Does this exercise in stupidity have anything to do with the ALP originally announcing the plan and the Liberal Government starting construction many years later?

The federal government is not exempt from the theory that we are all victims of expediency. Kingsford Smith Airport in Sydney’s east is Australia’s busiest airport. The Australian government sold it off in 2002 to Sydney Airports Corporation Limited (at the time a subsidiary of Macquarie Bank).

It has been recognised since the 1940’s that the demands on the current airport would outgrow the ability to deliver, as the existing airport is land locked. Over the years there have been a number of studies and promises that would deliver a second airport for the Sydney region — somewhere between Newcastle and Canberra. Wikipedia’s page describing the saga is worth a read for details. When the Howard Government sold off Kingsford Smith Airport, it agreed to a clause in the contract that the operator would have right of first refusal to build a second airport in the Sydney basin. Ben Sandiland’s excellent ‘Plane Talking’ blog on transport issues (predominantly aviation) has discussed this issue on a number of occasions — one of them is linked here. Note the spokesman for the Sydney Airport Corporation is the same Max Moore-Wilton who was Prime Minister Howard’s Secretary of the Department of Prime Minister and Cabinet.

The Abbott government announced on 15 April 2014 that Badgerys Creek would be the site of Sydney’s western airport. The commencement of the negotiation period with Sydney Airport Corporation was announced on 18 August 2014.

Ironically, the same New South Wales government that is crippling the potential of the North West Rail Link to operate in conjunction with the rest of the Sydney Trains system is funding the construction of the South West Rail Link, which does connect to the existing system at Glenfield and will pass very close to the Badgerys Creek site — using the same double deck trains that service Kingsford Smith Airport but apparently are not good enough to service the north west of Sydney.

Deputy Prime Minister Warren Truss made the announcements regarding Badgerys Creek Airport. He is the member for Wide Bay, based on Bundaberg in Queensland. He should be aware that Australia’s newest airport is located 15km west of Toowoomba — known as Brisbane West Wellcamp Airport. This privately built four-engine-jet-capable airport is privately funded by the Wagner family (who have a history in quarrying and construction businesses) and commenced construction in 2013. Qantaslink will operate a service (with Dash 8 aircraft) from Wellcamp to Sydney from November 2014. Badgerys Creek in contrast will commence construction in 2016 and not be ‘fully operational’ for a decade. While there will inevitably be greater design requirements for a capital city airport, such as Badgerys Creek, than there would be for what is effectively a regional airport such as Wellcamp, why is there such a difference in the construction times? The airports are built to the same standards.

So, if there is little difference between the ‘Towards Q2’ and ‘Queensland Plan’; if Sydney’s north west looks like having an ineffective train service which will also emasculate the rail system across Sydney; if Sydney’s second airport is still a decade away despite ‘planning’ being undertaken for over half a century (and the locals can build one in Toowoomba in under two years); are we being well served by our politicians’ ability to plan for our future?

Devising a plan or strategy for a significant period into the future is not an exact science. There will be dramatic events that affect every plan; from personal illness to global financial meltdowns. To suggest for a minute that politicians can ‘do planning’ any better than anyone else and therefore should be exempt from the expectation that plans will change is ludicrous. However, above we have three examples of planning by politicians that fail to build on previous work; rather they seem to be deliberately white-anting previous planning processes, all of which had significant time, effort and cost expended on them.

In a world where governments are telling us they have to make hard economic decisions, sack tens of thousands of staff, cut back on ‘non-essential’ services and live within their means, why do we accept that significant plans are thrown out when ‘the other side’ gets into power?

While there is an ideological difference between the ALP and LNP in Queensland, rather than scrap the ‘Towards Q2’ consultation and process (with its significant public and private consultation), wouldn’t it have been a better idea to suggest that the existing planning cycle be extended?

Building new railway tunnels too small to fit existing rolling stock is similar in action and intent to the various states having different rail gauges in the 1800s through to today. Any economic and practical analysis of the experiences caused by the ‘break of gauge’ issues throughout the 19th and 20th centuries would tell a rational observer that, even if there is a real issue with the operation of Sydney’s train fleet due to the double deck design, creating a separate system and converting parts of the current system won’t fix anything in the short or long term.

Both sides of politics have ignored the problem of the western Sydney airport for too long. The Howard government stymied the development by giving the first right of refusal to the purchaser of the existing airport, who clearly is not in favour of building a ‘greenfield’ site over maximising return on the existing site. The ALP government commissioned another study into the location (coincidentally a number of ALP-held federal seats were in western Sydney) and Abbott’s government announced it will take a decade to build — and, by the way, he won’t fund a rail connection, the most efficient method of accessing the western Sydney site from the east.

All of these decisions indicate short term expediency wins every time. Regardless of the colour of the politicians in power at the time, those who participate in the public input sessions (be they ‘town hall’ style meetings or ‘internet surveys’), collate the documents and discuss the pros and cons of various options with the politicians, almost invariably do so with dedication and commitment to making a better Australia.

That the advice is not followed for any better reason than that’s what the other side did is criminal. That’s why we are all victims of short term expediency.

What do you think?



Is the free market free?


On 2 September when the Senate passed the repeal of the mining tax, the legislation included a considerable slowing of the process to increase superannuation for workers. Senator Lazarus for PUP, and Finance Minister Mathias Cormann, both emphasised that this gave individuals more money in their own pocket. Cormann went so far as to suggest people could now decide what to do with their extra money:

"This is not an adverse, unexpected change as it will leave Australian workers with more of their own money pre-retirement which they can spend on paying down their mortgage, spend on other matters or save for their retirement through superannuation as they see fit," Finance Minister Mathias Cormann told the Senate.

That is a classic liberal, or now neo-liberal, approach to economics: that people should be entirely ‘free’ to decide how they use their money with no government interference. Carried to its logical extreme, there would be no government involvement in health or education services, leaving that to private providers in the market and allowing people to decide how much of their own money they wish to spend on health and education. If you want higher quality health and education services, then you have to choose to pay more for them, or pay less and probably get a lesser service.

A recent issue shows how the market can directly impact health issues. In relation to a female chronic condition called endometriosis, a drug is available specifically to control the condition but it is not yet sold in Australia, although readily available overseas. The manufacturer, Bayer, does not yet believe it would make a profit from selling it in Australia (although it is ‘assessing the feasibility of introducing this product to the Australian market’). Even the AMA said its introduction to Australia was a commercial matter. When the operation of a free market can affect people’s health in this way, one has basis to question the ethics or morality of the whole economic system.

But that is the freedom of a free market, as neo-liberal economists see it.

Economics has drawn on the two basic approaches to freedom discussed in my earlier piece ‘Whose freedom?’: the freedom of the rational person to make their own decisions and choices; and the freedom that comes from there being no interference or coercion in making those decisions and choices.

Classical economics is pinned to ‘rational choice theory’ that assumes individuals always make prudent and logical decisions that provide them with the greatest satisfaction and are in their best self-interest. The pillars of this approach are self-interest, omniscience (‘perfect information’) and conscious deliberation. Adam Smith also created the ‘invisible hand’ whereby this rational self-interest actually creates benefits for others and for society at large, which is the basis of the ‘trickle down’ approach in economics.

The very concept of ‘the market’ is based on the idea that people freely interact, and freely exchange goods and services. In this concept, I exchange my labour for other goods and services and money has become the medium of exchange: it allows my exchange of labour with one person to be used, through the use of money, for exchanges with other people. [Although most economists state that money is not a ‘good’, there is a market for money so it must also have the characteristics of a ‘good’, not just a medium of exchange; in which case, it is the ‘good’ I receive for my labour and then exchange.] But the emphasis is that people freely and rationally make the decision to exchange because each party expects to gain from the exchange, a gain that provides ‘utility’ — or ‘satisfaction’, ‘pleasure’, ‘personal welfare’ (each words that have been used at different times to explain the economic meaning of ‘utility’).

The first glaring fallacy is that in classical economics this is based on a person having ‘perfect knowledge’ of the market, of all goods and prices, and being able to rationally assess that knowledge and make the best decision that meets their needs. ‘Perfect knowledge’ is, however, an impossibility: theoretically, if knowledge was perfect there could only be one rational decision that it would lead to, and that is clearly not the case.

There has been much work in the latter half of the twentieth century, and in the current century, that questions the classical approach, with many works showing that knowledge in the market is imperfect and even that people do not always make rational decisions — decisions can be influenced by emotions, by peers, by previous decisions and experiences, and so on.

Some have argued that it is this less than perfect information that actually leads to distortions in the market and market failures. Hayek and the ‘Austrian school’ recognised imperfect information in the 1940s and argued that each person has only a little information but maintained that it is a free market that efficiently allows each person to use what information they have. On the other hand, firms can raise prices or lower wages because they recognise the greater cost to the consumer or the worker of obtaining the necessary information that may lead them elsewhere: for example, a worker accepts a lower paid local job rather than undertake the effort (‘cost’) to search far and wide and relocate to a higher paid position.

There was also the classical view of ‘perfect competition’ which would produce the best possible outcome for consumers and society. Under perfect competition there would be only one price for equivalent goods because the market demand would be equal to the market supply (an equilibrium). When a good is first produced it may reap super profits for the initial providers but the high price attracts other players into the market, increasing supply, driving down the price, then driving some suppliers from the market, until it moves to equilibrium. This is one reason some economists think that ‘bubbles’ are not a market failure but are self-correcting. (It would also appear to be the underlying economic reasoning for the constant creation of new products, as firms try to obtain that initial advantage, and super profits, in the market.)

In this perfect world of rational buyers and sellers, of ‘perfect information’ and ‘perfect competition’, there is no need for advertising or branded goods. The model doesn’t exist in the real world (although it is argued by some that the money markets, and trading in items like tea and coffee come close) but it is still used as a model against which economic judgments are made. It is at the heart of the argument that unemployment comes about because the labour market is not ‘free’ (being subject to interference by government regulation, like minimum wages, and unions) and that, if it was completely free, wages would settle at a level where there was no unemployment.

All the ‘perfect’ models that make economics work lead to the fact that it is not operating in the real world. Many economic theories use ceteris paribus (‘all things being equal’), meaning they work unless other matters intrude — such as the real world. No doubt that gives rise to the joke that, for economic theory, the real world is an exception. It also means that it takes no account of the real-world social issues that impact freedom and therefore an individual’s capacity to participate or ‘compete’ in the so-called free market.

The neo-liberal economists lay claim to the John Stuart Mill approach to freedom:

The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to attain it.

They certainly place a lot of emphasis on the first part of Mill’s statement as an integral part of a free market. They partially cover the second part with their view that their ‘perfect’ free market allows people to enter and leave as they choose without cost (despite the reality that there is usually a ‘cost’). But, to my mind, they pay very little attention to the third part, regarding not impeding the efforts of others to attain freedom. In other words, they basically cherry-pick the concept of freedom and use only those parts that support their ‘free market’.

This is reflected in the approach to private property which is considered essential to a well-functioning free market: a means of managing resources (all forms of resources, whether natural, produced or intellectual). It is, however, actually a constraint and creates a basic anomaly in economic theory. One person’s ownership of a resource obviously limits the extent to which others can access it, but the economists argue that without private ownership there would be constant conflict over resources: in essence, private property provides a peaceful means to make resources available. The extent to which that resource is ‘desired’, or is valued by others, will be reflected in its price.

Private property is also essential to the concept of the market itself. To exchange something in the market, I must own it in the first place and the other party must also own what they are exchanging. The logic of this seems apparent when one considers what a thief may offer for exchange: we undoubtedly consider that not to be a fair exchange because the thief does not actually own the item of exchange — or does he? The thief clearly has ‘possession’, so there must be a logical difference between ‘ownership’ and ‘possession’ in the economic system. When one considers the history of conquest around the globe, it is easy to argue that what in many countries is called ‘ownership’ is in fact only ‘possession’. Take Australia for example: non-indigenous Australians possess the continent but do they own it? That question is, of course, central to the land rights debate.

It goes back to history and C B Macpherson’s argument that political freedom came before economic ‘freedom’ and was first obtained by the property-owning elites who then used it in their own self-interest. And it also goes back to history in the sense that much modern ownership is based on past dispossession of previous owners, and yet the economic system is based on the modern possession not the historic ownership.

So there is an illogicality in the underpinnings of the economic system and it is prefaced not on freedom but an historical loss of freedom imposed on others. It is essentially a system imposed by the ‘winners’.

That loss of freedom continues in the modern economy.

Some economists like to consider that their discipline is a science and, like the natural sciences, ‘value free’, but that ignores they are dealing with social issues which inherently have cultural values driving them; and also ignores that the entire field of economics is culturally derived and culturally driven. And they ignore that their whole economic system relies on the basic social value of trust. The thief is able to exchange the item he has only because we normally trust people to undertake a genuine exchange. The shopkeeper trusts us to pay for an item when it is handed over and/or we trust the shopkeeper to hand the item over when we have paid — otherwise we would either be there all day negotiating who should first begin the exchange, or we would need to have enforcers in every store to oversee the exchange. Without trust the ‘cost’ of exchange would become prohibitive. The economists tend to say that such social issues fall outside their field of study, yet their whole system depends on them.

By ignoring the social implications of the market, they ignore Mill’s dictum that freedom includes not impeding the freedom of others. This actually distorts their view of the ideal that there should be no government interference in the market. Putting those two together they can come up with this:

Consider the case of a black woman who wants to rent an apartment from a white landlord. She is better able to do so when the landlord has the right to set the rent at whatever level he wants. Even if the landlord would prefer a white tenant, the black woman can offset her disadvantage by offering a higher rent. A landlord who takes the white tenant at a lower rent anyway pays for discrimination.

According to this line of thinking, rent controls (in the USA) reduce competition based on monetary exchanges and increase competition based on personal characteristics: because the landlord is restricted in what rent can be charged, he then pays more attention to personal characteristics in selecting a tenant. How can we have any faith in people arguing that it is the lack of a free market that leads to discrimination?

The obvious flaw is that the black woman may not have sufficient money to offer a higher rent. And, if she has to pay a higher rent than a white person might to obtain the same apartment, isn’t that also discrimination? — but that doesn’t seem to exist in the thinking of the neo-liberal economists. They take the view, as explained in the ‘Whose freedom?’ article, that ‘lack of means’ is not a lack of freedom and they completely overlook that it may well be historical circumstances, an historical lack of freedom, that has created the current lack of means. There is no room in economic theory to overcome the economic injustices of the past. If economics can’t address economic injustices, then surely governments should, but not so according to the neo-liberal economists for that would be interference in the market.

‘Lack of means’ overlaps with the whole concept of competition. The economists argue that competition allows the real value of items, to individuals, and through them to society, to be determined (despite the fact that their ‘perfect competition’ actually leads to no competition). Thus, the auction of a house produces a price that reflects the personal value given to that piece of real estate by the individuals at the auction. If, however, I am outbid because another individual has greater means, I have surely had my own freedom to satisfy my self-interested ‘utility’ curtailed. I obviously look elsewhere in the market, so for the economists I still have freedom, but that original competition has impeded my freedom by imposing greater costs (information search) to continue looking for a house and, if those greater costs start exceeding my means, I may give up looking altogether (which is something the government needs to consider in its approach to younger jobseekers). Giving up is still a rational decision because the individual has decided that the cost of gaining more ‘information’ has reached the point of outweighing the benefits. (Note that ‘cost’ here, and in much of economics, is not just monetary but may include physical effort, time and other resources.)

Neo-liberal economists deride the old mercantilist view that any increase in means can only come at the expense of others but there is still an element of that in their ‘competition’. Competition is not necessarily fair when the resources and means are unequally distributed by private property and the historical accidents that led to it. There is, therefore, no real freedom in competition. But what the neo-liberal economists won’t admit is that it is competition, not freedom, that is fundamental to the economy they have created. Although my costs may increase or I lack means, that does not mean I am not free to make other choices, just that I have lost the competition. So it is not really a system about freedom but about protecting the competition’s winners.

In a short piece like this, I obviously cannot do justice to the full range of economic thinking. I have focused on a few key aspects of classical economics partly because that is what the neo-liberal economists returned to when they rejected Keynesian economics.

All is not lost because there are many new economic approaches, including Modern Monetary Theory (see 2353’s post here) and ‘middle out’ economics (see Kay Rollison’s piece here). There seems to be growing exposure of these ideas and they offer some hope for a new approach to economics but, unless they accept Mill’s dictum on freedom in full, not just in part, and allow a role for government in ameliorating economic injustices, the free market will still not be free.

What do you think?



Jesus was a refugee


I regularly drive past a Christian church in a suburb of Brisbane that has a reputation for being a ‘nice’ area. When I drive past as a service is concluding, the attendees are going to their newish model cars to return to their homes that, if they live in the same area, are worth more than the median price across the City of Brisbane. While generalisations are frequently incorrect, the attendees at the service seem to be older and more conservative than the general population: in this case, however, the area usually votes for the conservative side of politics so the generalisation probably has some merit. A week or so ago the message board outside the church carried the message: ‘Jesus was a refugee’. As I drove past, I thought that it was an interesting statement to make in a ‘conservative’ area and, being on a sign outside a church, they probably have the evidence to support the assertion as well.

The Political Sword usually stays away from religion — and this piece won’t go there either except to question why conservatives invoke ‘their god’ as a basis for their ethics and morals while promoting actions that are diametrically opposed to those promoted by their religious beliefs.

Let’s start with the obvious one. Prime Minister Abbott is a practising member of the Catholic Church, as are a number of his ministers. Regardless of the display of wealth from the Vatican (something that it seems is being addressed by the current leader of the Catholic Church), members of the Catholic Church around the world do some amazing things to help their fellow humans live better and more fulfilling lives. For example, the Sisters of Mercy’s website details a number of programs with worthy aims, such as eliminating human trafficking and assisting the homeless. Funding for these actions comes from the operation of commercial enterprises such as the ‘Mater’ or ‘Mercy’ Hospitals.

In contrast, Christian Abbott and atheist Gillard (and you could argue that as ‘ten pound poms’ they were economic refugees) led the race to the bottom on treatment of refugees by imposing increasingly draconian conditions in the treatment of people who literally risk all to create a better life for themselves and their families — with assistance from the ‘out there’ Christian Kevin Rudd. How are the actions of any of these people in accordance with Christian morals and ethics?

Not that Australia’s leaders are alone in overtly claiming to have a moral and ethical compass derived from Christian beliefs while observation of their daily actions would suggest otherwise.

Nearly a millennium ago, the Pope of the time (Urban II) called upon the armies of Western Europe to go to war against those in the Middle East who followed the Islamic religion. The Islamic people then vowed to wage a holy war (jihad) against the Christians. The Western Europeans continued their crusades to the Middle East until the 16th century after which they were ‘distracted’ by the Reformation. Clearly both sides in the conflict thought that ‘God’ was on their side.

The Reformation was the commencement of the rise of the Protestant churches within the Christian ethos. Until the 1500’s, if you were a Christian, you were a Catholic. While there were some theological differences between the different branches of Christianity, the Reformation was in part due to perceptions of corruption within the ruling elite of the Catholic Church (the Curia) and a subsequent lessening of political influence enjoyed by the Pope.

The American Civil War (1861 to 1865):

… resolved two fundamental questions left unresolved by the revolution: whether the United States was to be a dissolvable confederation of sovereign states or an indivisible nation with a sovereign national government; and whether this nation, born of a declaration that all men were created with an equal right to liberty, would continue to exist as the largest slaveholding country in the world.

Yet, religion played a part in this battle over equality versus slavery, as reflected in the speech President Lincoln gave at his second inauguration in 1865, a month before he was fatally shot. The relevant section is quoted below:

Each looked for an easier triumph, and a result less fundamental and astounding. Both read the same Bible and pray to the same God, and each invokes His aid against the other. It may seem strange that any men should dare to ask a just God's assistance in wringing their bread from the sweat of other men's faces, but let us judge not, that we be not judged. The prayers of both could not be answered. That of neither has been answered fully.

The history of conservatives marginalising their own people while claiming to be representing all, as Lincoln was suggesting above, continues in the USA. The USA, however, also has a long and proud history of ‘protest songs’ that question actions taken by, usually, Republican Presidents such as Nixon, Bush the elder and Bush the younger. It is easy to suggest that Bob Dylan made, and is still making, a living from protest songs. The Dixie Chicks suffered severe criticism for prefacing a song at a London concert with criticism of George W. Bush sending troops to Iraq and contemporary pop musician Pink released ‘Dear Mr President’ during the term of George W. Bush — it still resonates today.



This piece started with a reference to an outwardly conservative Christian church in suburban Brisbane and its statement that Jesus was a refugee. It seems that humans have a long history of discrimination against those who we perceive are not our equals. Superficially we’ve looked at Christians’ treatment of Muslims nearly a millennium ago, treatment of slaves in the USA and, in recent history, those that are less fortunate than the majority. It seems that traditionalists have commenced these battles — and progressives have railed against them.

So what is the difference between the Abbott and Gillard families coming to Australia as economic refugees in the 1960’s and current refugees attempting the trip from our northern neighbours?

Is the answer superior genetics?

Genetically, Abbott, Gillard or Rudd’s personal gene pool is very similar to that of any other person alive.

If it is religion, the differences again are not that great.

Like Judaism and Christianity, Islam teaches that there is one God in the universe, giving Muslims a monotheistic worldview Also like Judaism and Christianity, Islam teaches about the ministerial office of the prophet, although not all of these faiths agree on who is, and who isn't, a prophet. For example, Christians believe John the Baptist was a prophet and Jews and Muslims don't. And Muslims believe that Muhammad was a prophet, yet Jews and Christians don't. All three faiths also believe in an afterlife, although the makeup of those destinations can be immensely different from each other.

Both faiths insist that you must be a practising member of the faith to enjoy the ‘afterlife’. Muslims and Christians also share similar beliefs regarding how they live their life on earth will affect their ‘afterlife’ (here for the Muslim belief and here for the Christian version).

If the reason for the failure to address the arrival of refugees with humanity is because we as a nation didn’t ask them to come, then the Indigenous people of Australia didn’t ask the English to invade in 1788 (and it’s a pretty good bet to surmise they themselves didn’t ask permission some 40,000 years earlier), just as the English and French most likely didn’t take the opinions of the ‘first peoples’ in the US or Canada into account either.

Is it because those of the Muslim faith want to take over the world? If you believe the media, maybe: it is more likely, however, that only a small radicalised group within that religion has such lofty aims. Don’t forget the Catholic Church was responsible for the Crusades to the Middle East (which occurred for a period of around 400 years) and that up until very recently the Catholic Church claimed the only way to ‘salvation’ was to be a practising member of the Catholic Church.

It doesn’t make sense that anyone or anything can support two diametrically opposed arguments at the same time to the elimination of all other arguments — as Abraham Lincoln alluded to in the inauguration speech discussed here. In a similar way, those that use a religious book promoting living a good and just life to justify murder, rape and pillage (such as routinely demonstrated in the religious wars that have engulfed parts of the world in the past millennia) have to be dishonouring the text they claim to be a fundamental belief.

Who demonstrates the morals and ethics of their chosen religious text better? Is it the conservative political leaders who stand by and watch people starve or suffer ill health or the Sisters of Mercy and other religion-based organisations that actively channel profits from provision of services to help those less fortunate? Is it those conservatives who suggest that ‘stopping the boats’ is a worthy aim or those that suggest that Jesus was a refugee and accordingly we should assist and care for those that have felt the need to make the refugee journey? Is it the conservative people who invade a country and impose a rule of law or those with religious beliefs that go about their daily lives and attempt to help someone in need? Without being religious, I know where my vote would go. It isn’t to the conservatives.

What do you think?



Words, words, words


Lenore Taylor reported in August that Tony Abbott had told a ministerial meeting that the party had not broken any election promises, not one. My first reaction was that this was the sign of a narcissistic personality, someone who cannot bear to be wrong. On second thought, I pondered that perhaps it is true. After all, as Humpty Dumpty said:

When I use a word, … it means just what I choose it to mean — neither more nor less.

Was Abbott merely playing Humpty Dumpty in Through the Looking Glass, and using words, words, and more words as he intended them, not as the electorate might understand them?

Take a careful look at Abbott’s and Pyne’s statements regarding education and the Gonski reforms. ‘Gonski reforms’ — what are they? ‘Gonski’ is not mentioned, although the media continued to refer to Abbott’s proposed education funding by the shorthand ‘Gonski’. Why does this make a difference? — because the Gonski funding reform was actually about improving funding for disadvantaged schools and that was a key aspect supported by the electorate.

Thus, when Abbott said he was on a ‘unity ticket’ with Labor on education, people took that to mean that he supported Gonski, but that wasn’t what he said, although it was clearly the impression he meant to leave. Mainly he spoke about funding and implied that there may be changes, by emphasising that an Abbott government would reduce the ‘command and control’ (a military phrase, for which he has a penchant) in Labor’s funding model. So although he spoke about the ‘funding envelope’ and promised no school would be worse off, the media coverage and the public perception continued to relate that to ‘Gonski’ and the (unspoken) issue of educational disadvantage. That led to further problems and the famous double backflip.

On 26 November 2013 Pyne announced that the new government would only honour the Gonski funding model for 2014 and develop a new funding model for subsequent years. He suggested that, as well as Queensland, Western Australia and the Northern Territory not being included, Victoria and Tasmania had also ‘not signed bilateral agreements’ with the federal government. What the premiers of those latter two states quickly pointed out was that they had signed ‘heads of agreement’, or in other words the outline of the agreement, or an in-principle agreement. But according to Pyne, in Humpty Dumpty words, they had not signed the agreement. When does an agreement become an agreement? Even courts recognise that verbal agreements can be legally binding.

Pyne blamed the press gallery for the eruption that followed, suggesting ‘It’s not my fault if some members of the press gallery don’t understand the complicated nature of the school funding model.’ Abbott supported him, saying that ‘Our pre-election commitment was that there will be exactly the same quantum of funding …’ — here we are back to the ‘funding envelope’, perhaps the same envelope on the back of which budget calculations are made.

Eleven days later, Abbott, with a sheepish looking Pyne beside him, announced that the government would provide funding for four years in accord, in dollar terms, with the previous Gonski model. Pyne added:

… no school, state or territory, can be worse off because of the Commonwealth’s actions.

But Abbott was also back onto ‘command and control’, insisting his funding would remove the control that the Canberra bureaucracy would have been able to exercise under the original Labor agreements on funding. What he was saying effectively removed any concept of overcoming educational disadvantage, but that was never reported and perhaps not so easily seen amongst the words he used. That did, however, come back to bite Abbott and Pyne when they were forced to concede that they could not guarantee that no school would be worse off because, in reality, how the money was spent was now a matter for the states — no more ‘command and control’. Pyne’s little addition that no school would be worse off ‘because of the Commonwealth’s actions’ was vital: the fact he phrased it that way suggests that he was already aware that the ‘promise’ of no school being worse off was in tatters.

That announcement came after Pyne had reached ‘in principle’ agreements with the previous non-signatory states. Is an ‘in principle’ agreement the same as a ‘heads of agreement’? While Pyne had earlier claimed that Victoria and Tasmania had not signed up because they had only signed ‘heads of agreement’, now he was claiming validation of his approach because he had an ‘in principle’ agreement. For Pyne, like Abbott, an ‘agreement’ is what he says it means.

Embedded in that debate was whether or not an amount of $1.2 billion actually existed. Labor had initially kept that amount for the states and territory that had not signed up but it was removed in the PEFO prior to the election. That allowed Abbott and Pyne to claim that they were putting an additional $1.2 billion into education. If it was previously foreshadowed, is it an extra amount? In the sense that it had been temporarily removed, perhaps it is, but it was always intended that those jurisdictions should receive some increase in funding. In Humpty Dumpty’s world, our normal understanding of words is not sufficient to clarify when money actually exists, and that also became central to the 2014 budget.

The education debate helped give rise to the classic $80 billion ‘savings’ in education and health in the budget. Labor attacked these as ‘cuts’. What is the difference between a ‘saving’ and a ‘cut’? — or is there a difference?

When Labor attacked it as a ‘cut’ Abbott responded that it did not exist as it was never included in any Labor budget, so nothing had been ‘cut’. The dollar amount certainly wasn’t in Labor budgets but Labor’s funding formulae would have led to increased health and education funding over a ten year period. The deals Labor had negotiated on education lasted up to six years (not just the four that Abbott was then supporting) and were ‘back-loaded’, meaning more money was paid in the later years rather than at the start of the agreements. The details do not really matter because if the money wasn’t there can it be a ‘saving’? It is a little like a game some mates and I used to play when we stayed out too late at Friday night drinks after work: we would calculate how much we had ‘saved’ by each bus that we missed. Abbott avoids the word ‘cut’ but still insists it is a ‘saving’. For the States it is a cut in the sense that they will now not receive, in the future, money that they were expecting, even if that expectation was not set in concrete. It is the same as someone being told they can expect a pay rise and on that basis planning to buy a new car but the pay rise doesn’t eventuate, and so, nor does the new car. For Abbott, that means they haven’t lost anything but he has saved by not giving the pay rise. See what I mean about Humpty Dumpty words. In this context, Abbott is saying that it can only be a ‘cut’ if it is the reduction of something the states already have, ipso facto, if the states don’t yet have it, it’s not a cut!

The changes to health and education also reflect the meaning of ‘agreement’ as used by Pyne. When Abbott was forced to concede that cuts to health funding would occur in the current financial year, and not four years into the future as he originally maintained, that involved scrapping or making unilateral changes to a number of agreements with the states and territories, particularly the national partnership agreement on public hospitals. So even a negotiated and signed agreement may not be an ‘agreement’ when the word is used by Abbott and Pyne.

In defending the budget, Abbott said it was ‘fundamentally honest’. ‘Fundamental’ has a few inter-related meanings:

  • forming a necessary base or core, of central importance
  • relating to the essential nature of something or the crucial point about an issue
  • so basic as to be hard to alter, resolve, or overcome
If used in the first way, it echoes John Howard’s core and non-core promises. Or if used in the second way, is the budget only honest in its ‘essential nature’, perhaps implying there may be parts that are dishonest? Would he dare suggest that the budget is so honest no-one could challenge it (the third meaning)? I would think not but don’t put that beyond Abbott. In fact, in Humpty Dumpty speak, Abbott is using the word in all three ways. It leaves him free to respond to questions in any way that suits him at the time.

He went on to say that ‘the most fundamental commitment I made was to get the budget back under control.’ It is true that the opening promises of his 2013 election launch were:

We’ll build a stronger economy …
We’ll scrap the carbon tax …
We’ll get the budget back under control …
We’ll stop the boats.
And we’ll build the roads of the 21st century …

No mention of health or education, the aged or unemployed, or other welfare recipients, at least not in these opening ‘core’ or ‘fundamental’ promises. If you look at them, they are the promises that he does appear to have done most to keep (even if his view of a strong economy is somewhat at odds with the views of those outside the IPA or those who are not economic rationalists). Given his history of not reading important documents, perhaps he can only remember those opening promises, or perhaps his advisers have not yet gotten past them. Whatever the reasons, it appears that these are Abbott’s ‘fundamental’ promises. Did the electorate understand before they voted that ‘fundamental’ related only to the opening promises of his speech and not to the many other promises made in the subsequent pages? Or was Abbott saving that explanation for later?

Another matter was in March when Abbott and Morrison celebrated that it had been 100 days since an asylum seeker boat had reached Australian shores. Note that it was Australian ‘shores’. What do they mean by ‘shores’? They mean actual landfall because it does seem that at least one boat was in sight of Christmas Island, before it was taken back to Indonesian waters, which would suggest it was in Australian territorial waters (extending 20kms off shore). And perhaps it does not include reefs. Another popular site for people smugglers back in 2000-01 was Ashmore Reef, another Australian territory less than 150kms from the Indonesian island of Rote. We have heard nothing of it under Operation Sovereign Borders. If a boat had landed there, we would no longer be told but they would definitely be on an Australian ‘reef’, though perhaps not a ‘shore’. What may be a ‘shore’ can thus be very flexible — it may depend on whether the tide is in or out! We have also learned in the High Court challenge regarding the boat from India that ‘shores’ also does not include the deck of an Australian vessel, even though that is effectively Australian territory.

Now just a word or two on Abbott’s military phraseology. We have Operation Sovereign Borders and Operation Bring Them Home, which are self-explanatory. When Abbott and Morrison first announced Operation Sovereign Borders at a joint press conference in Brisbane prior to the election, Abbott said of it, ‘we will have the appropriate command and control structures’. Recognise that phrase? In this context, he was using it to highlight his ‘adult’ approach to asylum seeker boats but in the education debate he used it as a pejorative phrase describing Labor’s approach. Is it a positive way to approach policy issues or a negative way? Obviously Abbott can use it as both. ‘Command and control’ is bad if it is Labor but good if it is Liberal. Does that sound like Humpty Dumpty?

Abbott promised an ‘adult’ government. But he has also used that word in a couple of other contexts. When the state governments reacted angrily to the education and health ‘cuts’ in the budget, Abbott said:

… we make no apologies for wanting the states to be grown up, adult governments that take responsibility for the programs that are theirs, for the institutions that they run.

Being an ‘adult’ government, then, is not something that automatically applies to Liberals but only to Abbott’s own government. Even state governments of his own political persuasion are not ‘adult’ if they can’t manage the reduction in future funding, and it is not Abbott’s problem now, it is theirs, so they need to grow up. And he said of the unemployed, who would now not receive unemployment benefits for six months, that ‘Being an adult means taking responsibility for the choices you make and making the best possible choice in the circumstances you face.’ Has Abbott been taking responsibility for his choices? Perhaps not, but that does not matter because the way he uses the word it is his government that is ‘adult’ by definition — everybody else needs to be told when to grow up and how to be ‘adult’.

Abbott promised going into the election that his would be a government of ‘no surprises’. Well, certainly no surprises for Abbott. Like Humpty Dumpty, he was the only one who understood what he meant.

In the end none of this matters. In a quote from Abbott’s swearing in as prime minister, which I have referred to a couple of times in earlier pieces, he said:

We hope to be judged by what we have done rather than by what we have said we will do.

Consider that carefully. He is basically saying ‘all bets are off: as from the day I have become PM, we start afresh, ignoring all I have said before, and only what we actually do from now on counts’. Why wasn’t that statement given more prominence by the media at the time? It is a catch-all statement wiping the slate clean of election promises and starting over: it is a clear statement that his election promises were vacuous.

As with so many of Abbott’s statements, it is easy to find another that is contradictory, unless we understand and accept that he uses words as Humpty Dumpty did — they mean what he chooses them to mean, no more and no less!

What do you think?



Middle Australia: a new narrative for Labor?


Tucked away in one of the last Fairfax-Nielsen public opinion polls in mid-July is the intriguing fact that although the ALP was leading on a two party preferred basis, and Bill Shorten was preferred as Prime Minister to Tony Abbott, Abbott was ‘way ahead of Mr Shorten on the issue of “vision for Australia's future'’, leading 54 to 38 per cent’. It’s an odd finding in the sense that while voters appeared to think Abbott has a vision, a good number of them don’t seem to like it. It’s a worrying finding in that many voters don’t think Labor has a vision. A similar problem dogged Julia Gillard as Prime Minister: journalists said she didn’t have a ‘narrative’, a story that linked together Labor’s policies into a coherent vision.

I find this a bit surprising, because I’ve always assumed Labor does have a vision that has been summed up as a ‘fair go’. But apparently this vision either doesn’t resonate with voters or isn’t being adequately communicated. Or maybe Labor isn’t being true to it?

I can’t really comment on what appeals to voters; after all, they voted for Tony Abbott. A small but significant number of them have since changed their minds, at least for the time being, perhaps having seen in Joe Hockey’s budget just what vision the LNP actually has for Australia — free markets, small government and burgeoning inequality. It’s worth noting, however, that even when public opinion polls were looking dire for Labor before the last election, many of the policies of the Labor government were actually quite popular. Essential polling suggested that a majority of people would be prepared to pay more taxes for better government services, and spending on health and education, the National Disability Insurance Scheme and the NBN all attracted majority support. More recently, polls suggest that a significant majority support putting a price on carbon. So there’s at least some evidence that voters approve of policies whereby government intervenes in the free market to even up the playing field, or to require polluters to pay for their pollution.

The result of the last election is therefore proof positive that Labor isn’t adequately communicating its message. Of course it was difficult for the party to do this when the Murdoch-owned print media was solidly — ridiculously, extravagantly — against them. Then there were the negatives: the changes of leadership, the disunity, the sense that the government was somehow not legitimate. Abbott’s relentless negativity was allowed to dominate the debate, leaving little free air for a more positive message from the government. Labor policy was suffocated in the public mind, partly by clever tactics by their enemies. But maybe the message wasn’t clear enough. It’s unfortunately not good enough to make logical arguments in favour of sensible policies; you have to grab the public imagination as well.

It’s hard to judge how Labor in opposition is selling its policies. At this point in the electoral cycle, conventional wisdom dictates that an opposition is not required to present alternatives to government proposals: their role is supposed to be to critique what the government puts forward. Anything they do say is unlikely to be given prominence in the mainstream media. Furthermore, Bill Shorten has said that the first year in opposition should be spent reforming the party; new policy development should follow on from this, the assumption being that new members should be able to contribute through reformed structures to what the party decides. I don’t entirely buy this. The party needs some basis on which to offer criticism; what they say is wrong with the government’s proposals should reflect Labor’s vision. Specific policy proposals can possibly wait until nearer the next election, but everything Labor members say — in parliament, in press conferences, in their electorates — should reflect Labor’s vision. So it’s worth being clear what that is.

There are also obviously some areas where the problem is not lack of stated vision, but failure to live up to it. The most glaring example is Labor’s policy on asylum seekers — check out this bitter cartoon showing Julia Gillard putting out ‘the light on the hill’ because ‘it attracts the boats’. Labor will struggle to present itself as a party that believes in a fair go, however expressed, while it continues to defend off-shore processing on Manus Island and Nauru. There is no easy solution to the asylum seeker dilemma, but the present position is poisoning any attempt by the party to portray itself as caring about people.

They aren’t safe on economic and social policy either. Labor in office faced the same budget realities that Joe Hockey is dealing so poorly with now and, if re-elected, would face them again if they continue to accept the prevailing economic doctrines. The revenue side of the budget is in crisis, with receipts falling below spending, even if, as under Wayne Swan, spending is also cut back. Think of the reaction to the Gillard government’s placing of single mothers on Newstart after their youngest child turned 8, even though this was already policy for new entrants into the scheme. Labor tried to run the line that being in work is better than being on welfare, and so it is, but this means creating more jobs, and government has only limited capacity to influence employment these days. Even if Labor can resist the pressure to promise balanced budgets, it will likely make cuts to existing entitlements, and while there is room for reduction of welfare for the well off, such as changes to superannuation, on past evidence there could be problems with fairness in selling a message either promising cuts or, much more justified but harder, increasing taxation.

I think, however, the problem with Labor’s vision is deeper than asylum seekers, or single mothers, or any other group they might in the future fail to treat fairly. Labor is, like most centre-left parties the world over, still wedded to a neo-liberal understanding of economics. After all, they were the government under Paul Keating that did most to usher in the era of the floating dollar, reduced tariffs, privatisation of public assets, lower taxation and spending cuts. At the heart of this set of policies is the belief that because wealth trickles down, measures that promote equality are only achieved at the expense of greater national prosperity. You can have a safety net, but only if you can afford it. Look at the whole thrust of the Hockey budget, with its narrative that welfare spending is out of control. It’s all very well to say that Australia is a rich country and can afford proper welfare but even when times are good it’s hard to convince people that they should give up something for someone else. It’s the old ‘you’re working to pay someone else’s welfare’ lifters and leaners line that Hockey is still using. Neo-cons can use the language of fairness too, when the trickle-down paradigm remains unchallenged.

Labor needs to come out decisively with a new story. Small government, tax cuts for the rich, competition in health and education are all recipes for greater wealth inequality — Labor must unequivocally reject all elements of such policies. To their credit, some Labor figures, such as Andrew Leigh and Jim Chalmers, are talking about wealth inequality and the destructive effects it has on communities. But the party as a whole still uses the language of ‘the fair go’ in ways that are compatible with the trickle-down theory. The ‘fair go’ addresses the people who lose out under neo-liberal capitalism, but doesn’t look at the rich — those who benefit completely disproportionately from the current economic arrangements. We need a story that values the real wealth producers in society.

Economists’ views, even in the mainstream, are changing. Many now agree that trickle-down economics doesn’t work for the public good. And a significant number are now arguing that prosperity and greater equality aren’t alternatives; in fact you can’t have one without the other. Rich people do not generate most of the jobs in society — small business and middle class consumers do. My consumption fuels your business; the more people in a position to consume, the more profitable your business. Instead of top-down economics, we need ‘middle-out’ economic policies.

According to Eric Liu & Nick Hanauer, its foremost proponents, ‘middle-out’ economics offers a new, or at least revived, explanation of where prosperity comes from — ‘a "circle of life"-like feedback loop between consumers and businesses’ that creates conditions ‘that allow both middle-class consumers and the businesses that depend on them to thrive in a virtuous cycle of increasing prosperity for all.’ This means that a prosperous economy revolves not around a tiny number of the very rich but around a great and growing number of middle-class consumers and small businesspeople. It follows from this, Liu and Hanauer argue, that:

  • Demand from the middle class — not tax cuts for the wealthy — is what drives a virtuous cycle of job growth and prosperity.
  • Rich business people are not the primary job creators; middle-class customers are. The more the middle class can buy, the more jobs we'll create.
  • A nation has the right and the responsibility to decide where the jobs created by its middle class will be located — here or off-shore.
  • Trickle-down has given us deficits and a decimated middle class.
  • Middle-out economics means investing in the health, education, infrastructure, and purchasing power of the middle class.
  • Middle-out economics marks the difference between what is good for capitalism broadly versus what protects the vested interests of a select group of capitalists narrowly — and it invests in the former.
You can read further explanation of this term here, and see what sort of policies arise from this view of how the economy actually works best for the community. Unsurprisingly, they include creating a truly progressive tax system, investing in the skills and health of the middle class, pushing for a fairer and more equitable split between workers and owners of the value created by enterprises, and investing strategically in the industries of the future.

Labor already has policies in most of these areas — though it needs to do more. But even more important, it needs a message that isn’t just about improving welfare, or even levelling up the growing inequality that arises from the unregulated free market. It needs a message that can’t be derailed by the cry of class war — however spurious that cry is. It’s not just about a fair go, and greater equality of opportunity. These messages will fail if the electorate thinks the Liberals are better economic managers, that fairness is unaffordable, and that wealth will, as they claim, trickle down. Labor needs to tie its policies into a narrative that embraces ‘middle-out’ economics — a narrative that values ordinary people as workers, consumers and taxpayers, who together create the wealth of our society.

What do you think?