From the Editor Chris Berg

n the security scare that followed September 11, it be- statements. (‘It was wrong to break the law to get people out of came something of a sport for American news organisa- slavery—that’s what you just said’) Itions to sneak prohibited items through airport screen- And The Chaser is never funnier than when they are ha- ing security. rassing humourless politicians at their press conferences. So when The Chaser— But Left politics relies on the Australian political satire It was wrong to break the law the heroic politician, blessed group—loosely disguised them- with intellect and political selves as the Canadian delega- cunning, to enact policies in tion convoy, and easily passed to get people out of slavery— the ‘national internet’ for the the security at APEC, it wasn’t betterment of ‘society’. Cyni- surprising. The media pounced that’s what you just said cism about the type of people on the incident—after all, not who choose to go in to politics much else was happening of interest at APEC. The Chaser’s and the capabilities of government action does clash with the War on Everything, when it aired the next week, achieved its ongoing hunt in the left for the political saviour. highest ratings ever. For this reason, The Chaser’s jokes may seem fairly left- The Chaser is part of a genre of satirical news programs, wing, but by undermining the sacred authority of the political which include the US’s The Daily Show and its spin-off, The class, satirical news tends to be more libertarian than socialist. Colbert Report that are gathering loyalty from the apparently A generation raised on cynicism and sarcasm are far less likely ‘disengaged’ youth demographic. to jump on the bandwagon of a charismatic leader-type. (It is conspicuous that the commentators who bemoan The IPA Review has been sceptical of governments, poli- the Australia’s ‘disengaged’ youth always assume that once ticians, regulators and other self-appointed ‘leaders’ for sixty they become engaged they will immediately become Left ac- years, and this edition is no different. tivists. But what if all those yoof got off their bed, put down Sinclair Davidson and Ken Phillips criticise the ideo- their headphones, and en masse joined the Young Liberals?) logical baggage of the union movement, in teaching and The popularity of satirical news programs with youth construction respectively. Tim Wilson treats yet another call audiences has led some on the Left to view these programs as for a government petrol price inquiry with the contempt it the saviour of democratic engagement. But satire is a double deserves. Jennifer Marohasy and Alan Ashbarry decry the cul- edged sword. It doesn’t always do what you think does. tural divide of forest politics. And in our cover story, Nicholas Some on the Left have cottoned on to the uncertain po- Eberstadt stares directly into the eyes of the anti-natalists, and tential of satirical news. One piece last year in the Boston Globe asks what they have against children. was titled ‘Why Jon Stewart Isn’t Funny’, and it argued that Wolfgang Kasper reminds us that federalism is more than the host of The Daily Show, through his relentless satire of just anachronistic ‘State’s rights’, as the Prime Minister seems Washington buffoonery, encouraged political complacency. to consider it. Instead, the principles of federalism are at the The article claimed that The Daily Show leads audiences heart of liberal government. And Richard Allsop completes to adopt a ‘holier than art thou attitude toward… national the thankless task of reading recent Prime Ministerial biog- leaders’ and undermined ‘any remaining earnestness that lib- raphies, to try to discover more important things than the erals in America might still possess’. hometown of John Howard’s grandfather. Given the dreary sanctimony of so many of those in the There is, of course, the standard array of book reviews, American Left, if this is true then Jon Stewart does a fantasti- complaints about regulation, personal digs at high-profile cally important public service. But the Boston Globe writer is environmentalists, and references to Adam Smith that have spot on. Satirical news programs display an extremely cynical made the IPA Review Australia’s leading free market review of attitude towards the political class. politics and public policy. After all, making fun of politicians is really easy, and fan- tastically rewarding. The Colbert Report and The Chaser’s War I P A on Everything are able to take advantage of the self-seriousness and cautious approach to the media that politicians harbour. Stephen Colbert, in his ‘Better Know a District’ interviews, successfully tricks junior politicians into making outlandish

OCTOBER 2007  R E V I E W Volume 59 Number 3 Inside this issue Oct 2007

1 Editorial 28 Are there too many people? COVER STORY ‘Stabilising’ human population 2 Inside this issue and the anti-natalists 3 From the Executive Director A demographic spectre is haunting authoritative and influential circles. Nicholas Eberstadt 5 Regretting privatisation: broadband and the 2007 election 34 Australia’s hollow federalism: can we revive Telstra was barely sold a year ago, but both major parties competitive governance? appear to regret it. Chris Berg Federalism is more than states’ rights. Wolfgang Kasper 9 The NT intervention: what next? 39 From botox to Bell Bay The race is on to save Aboriginal children. Gary Johns Forest politics is rife with cultural divides. Jennifer Marohasy & Alan Ashbarry 10 People, pundits and prime ministers: what biographies reveal about Australia’s political culture 41 Burning off the petrol price myths There is more to the Prime Ministerial biography than It’s hard to imagine a retail product more closely party politics. Richard Allsop scrutinised than petrol. Tim Wilson 15 It’s all in Orwell: Eric Blair’s uncertain legacy The joining of the literary world with the actual world is BOOK REVIEWS an old trick. Andrew Kemp 45 Chris Berg reviews Hubbub: Filth, Noise and Stench in England 17 Economic freedom delivers results Economic freedom is heavily associated with prosperity, 47 Matt Brown reviews High and Dry longer life expectancy, and low poverty. Alan Moran 49 Andrew McIntyre reviews Ideas: A History from Fire to 18 A new protectionism: dashed hopes and perhaps Freud worse for US trade policy 51 John Roskam reviews The Age of Turbulence: Some would argue that US protectionism is beyond the Adventures in a New World budding stage. Daniel Ikenson 52 Richard Allsop reviews 150 Years of Spring Street: 22 Who decided that private property was subservient Victorian Government, 1850s to the 21st Century to political protest? 53 Fred Hanson reviews Adam Smith: A Primer The rule of law requires uploading the law. Alan Moran 55 Jayde Lovell reviews Greens in the Balance: 23 Australian Education Union distorting the debate Environmentalism is Hazardous to Your Health! Every student that exits the public system further highlights the failures of the AEU. Sinclair Davidson 56 Strange Times 25 The workplace and the churches Ken Phillips, with contributions from Jodie Patron and Paul Duckett

Editor: Chris Berg. Associate Editor: Mary Calomiris. Executive Director: John Roskam. Printed by: Pinnacle Printing, 288 Dundas Street, Thornbury VIC 3071. Published by: The Institute of Public Affairs Ltd (Incorporated in the ACT) ACN 008 627 727. Level 2, 410 Collins Street, Melbourne Victoria 3000. Phone: (03) 9600 4744. Fax: (03) 9602 4989. E-mail: [email protected] Website: www.ipa.org.au Unsolicited manuscripts welcomed. However, potential contributors are advised to discuss proposals for articles with the Editor. Views expressed in this publication are those of the authors and do not necessarily reflect the views of the IPA.Reproduction : The IPA welcomes reproduction of written material from the IPA Review, but for copyright reasons the Editor’s permission must first be sought. From the Executive Director John Roskam

he spate of massive advertising campaigns by ily. If you didn’t care about the status of the family this wouldn’t the federal government has legitimately drawn be a problem. Indeed entire political systems have been built on Tcriticism. Kevin Rudd recently commented the basis that the state should replace the family. Plato’s Republic that that is almost impossible to turn on the television attempted to create a model of social organisation in which biologi- without being bombarded by government advertis- cal parents had no role. Conservative governments are supposed ing. What he didn’t say is that advertising by state to protect the family—and the Howard government is avowedly Labor governments is on a similar scale to that under- ‘conservative’. taken by the federal Coalition. No administration has Two recent federal government advertising campaigns— been able to resist the temptation of taxpayer-funded replete with glossy brochures—deal with issues of legitimate advertising. To stop such advertising will take an act community concern. One campaign is costing $189 million. It of will that is beyond the power of any politician. is the NetAlert—Protecting Australian Families Online program. There is another problem with government ad- The other campaign is part of the government’s $1.4 billion Tough vertising. When government takes it upon itself to do on Drugs initiative. It attempts to tell parents how to talk to their the job of parents, or it tells parents how to bring up children about illicit drugs. their children, the government undermines the fam- The ostensible reason for both campaigns is that they provide ‘information’ to parents. The difficulty is that in providing ‘infor- mation’ the government invariably makes value judgements about matters that are best left to the discretion of parents. Son, the government tells me For example, the NetAlert campaign contains warnings on mat- ters such as how to limit childrens’ access to inappropriate online the internet is dangerous! material, the dangers of ‘cyber bullying’, and internet fraud. Some of the information is so obvious as to be trite. The NetAlert booklet informs parents that ‘Personal informa- tion in the wrong hands can lead to online abuse’ and ‘Children are also vulnerable online scams’. Yes—children are vul- nerable to online scams—and so are adults. Do we need the government to tell us this? Likewise, do we need the government to tell us that ‘Hurt- ful comments and nasty rumours spread through text message or chat programs are just as damaging as those made in real life.’ Parents are advised in the NetAlert booklet that they should consider enter- ing into a formal ‘internet safety contract’ which is agreed between parents and their children. This sounds suspiciously like the government telling parents how to raise their children. Thankfully the government does at least acknowledge that ‘values differ from individual to individual’.

I P A

OCTOBER 2007  R E V I E W R E V I E W  OCTOBER 2007 Regretting privatisation Broadband and the 2007 election Chris Berg

elstra was sold barely a year ago, but both mains the same regulatory framework governing the industry in major parties want to bring the government 2007. While technology and consumption patterns are almost un- Tback into the telecommunications infra- recognisable a decade later, the regulation hasn’t budged. structure game. This regulatory framework was designed to encourage the The Federal Government has responded to competitive provision of telecommunications using the legacy its own failure to reform the decade-old regulatory infrastructure owned by Telstra. By purchasing capacity from framework for telecommunications with an array the infrastructure owner, competitors could share the network, of subsidies and initiatives to introduce high-speed introducing competition where previously there was none, and broadband networks. In response, the Labor Party without the need for competitors to build their own network dangles in front of voters a $4.7 billion high speed from scratch. The approach favoured by regulators under such fibre-optic network. a framework is to encourage competitors first to resell Telstra’s Both parties are trying to make political capital products, and then progressively to install hardware into the net- out of the regulatory quagmire which government work to compete with the dominant telco. action has created for the telecommunications in- With carefully regulated access prices, this ‘ladder of invest- dustry. But their proposals offer far less than sub- ment’ is designed to encourage both competitors and incumbents stantive regulatory change could, and they offer it at to invest in infrastructure—the former in order to siphon off some a much greater cost to taxpayers. of the market share of the incumbent; the latter to invest to stave off hungry competitors. How broadband became an election issue The high level of competition for basic internet and telephony A decade is a long time in the communications in- service attests to the success—at least on one metric—of this dustry. regulatory model. Indeed, at one time, there were more than 600 In 1997, the ABS reported that barely 300,000 internet service providers (ISPs) in Australia. Australians subscribed to Internet connections. In But a mere two dozen of those have had more than 10,000 2007, that figure is now six-and-a-half million. (The customers, and competition is not merely a synonym for ‘lots number of actual users is far higher. With modern of companies’. Most Australian ISPs are small shoestring opera- networking hardware not widely available a decade tions—reliant on regulated access prices for reselling Telstra ser- ago, many people share Internet access in the house- vices, and highly prone to failure. This segment of the industry hold or workplace.) looks like a caricature of the economic models of ‘perfect competi- With the limited speeds offered by dialup tech- tion’—hundreds of companies, prices down to marginal cost, and nologies, accessing video and audio was then idle fu- homogenous products. turism. Today, some estimates place video and audio Nevertheless, the structure of the market is not the most sig- downloads at 90 per cent of traffic. nificant flaw in the existing regulatory framework. Critically, the Nevertheless, the regulatory framework which ‘ladder of investment’ theory is unable to deal with major shifts was developed in 1997 to govern the industry re- in technology. When it becomes time to move beyond the legacy copper-wire network—the need for a fibre-optic network in Aus- tralia is manifestly clear—access regulations are unable to encour- Chris Berg is a Research Fellow with the Institute age the creatively destructive investments required. of Public Affairs and Editor of the IPA Review. After all, regulators have encouraged firms to invest further

OCTOBER 2007  R E V I E W Figure 1: Government supplied Opel WiMAX Figure 2: Government supplied Opel WiMAX coverage map, Gippsland coverage map, Wakefield

Omeo Omeo

Cann River Balaklava

Orbost Port Wakefield Tarlee Bairnsdale Kapunda 20km range Sale +5km range (possible) Rosedale Gawler 20km range +5km range range (possible)

Source: Broadband Connect Infrastructure Program, Source: Broadband Connect Infrastructure Program, http://www.broadbandnow.gov.au/opel-map.htm http://www.broadbandnow.gov.au/opel-map.htm

Figure 3: Realistic estimate of likely WiMAX Figure 4: Realistic estimate of likely WiMAX coverage, Gippsland coverage, Wakefield

Omeo

Cann River Balaklava Orbost Port Wakefield Tarlee Bairnsdale Kapunda 10km range Sale Rosedale Gawler 10km range

Source: IPA Source: IPA

Note: Contrary to some media reports, a comparison between the coverage maps for Optus’s GSM network and the Opel maps reveal that the WiMAX network will consist, at least in part, of greenfield installations.

R E V I E W  OCTOBER 2007 With the ink barely dry on the full sale of Telstra, das broadband problem has politicians wanting to try their hand again at managing the telecommunications industry.

and further into the existing Telstra infrastructure. These firms rely on a enthusiasts proclaimed a range of seventy specific regulatory framework to provide them with a business model. Fur- kilometres, and when the technology failed thermore, the prospect of entirely new networks threatens their existing to deliver even half of that, cynicism about hardware investments—a fibre-optic network may strand a firm’s assets, its capabilities crept in. or at the very least provide unwelcome competitive pressures. Understand- The Communications Minister has ably, these firms resist any proposed change to the telecommunications not avoided this trap. Releasing maps of the access regime. coverage of the Opel network, the Govern- The ‘ladder of investment’ may encourage investment up the ladder, ment has assumed a range of 20 kilome- but it discourages investment in alternative ladders. tres, with a ‘possible’ further 5 kilometres, a There have been indications that this framework was distorting in- much further distance than the broadband vestment for some time. Optus had been migrating customers off its own is likely to be available. cable network and on to the Telstra network when the regulated access Two other factors work against the price turned in its favour. Fearful of having its service declared by regula- network’s favour. First, the Opel network tors as open access, Telstra is only turning on its recently upgraded high- will deploy a ‘fixed’ WiMAX network, speed ADSL2+ equipment in areas where there is investment from com- which is being superseded by the superior petitors—in Tasmania, for example, the telco has installed ADSL2+ in ‘mobile’ WiMAX technology. Second, such more than 100 telephone exchanges, but has switched it on in only three. range is only possible on licensed spectrum, But the big evidence came in a flurry of controversy last year. The to which the Opel network does not cur- impasse between the Australian Competition and Consumer Commission rently have access. WiMAX operating on (ACCC) and Telstra late last year over the access price for their proposed unlicensed spectrum has to compete with fibre-to-the-node network pivoted around the application of the regula- a range of consumer technologies such as tory framework to new infrastructure investments. home wireless phones, private radio trans- The fact that the two organisations could not come to an agreement mitters, garage door openers, and so on. (Telstra very publicly announced that it was scrapping its plans to build a Given these problems, a more likely new network) should have provided federal policymakers with a very clear range for the WiMAX deployments would indication that the decade-old regulations had finally collapsed. be in the region of five to ten kilometres. Unfortunately for taxpayers, this was not to be the case. Instead of To be uncharitable, when considering en- reform, the political reaction to this regulatory failure has been to propose vironmental and topographical factors, a subsidies, grants, programmes, initiatives and plans. Worse—all of the maximum range of as little as one or two proposals on the table would increase government involvement in com- kilometres is entirely possible. munications investment, not decrease it. When the maps of WiMAX coverage With the ink barely dry on the full sale of Telstra, das broadband prob- that were paraded around by the Com- lem has politicians wanting to try their hand again at managing the tele- munications Minister after the Opel an- communications industry. nouncement are redrawn with a more real- istic range, the difference is stark. Picking winners, 2007 style Figures 1 to 4 illustrate this difference When Communications Minister Helen Coonan announced a one billion in two marginal electorates—Gippsland dollar award to an Optus–Elders consortium (dubbed ‘Opel’) to deploy in rural Victoria, and Wakefield in north- a WiMAX wireless network for regional and rural broadband, she had to ern Adelaide. (In an election year, elector- defend the technology against its legion of critics. ates are always the most appropriate unit WiMAX is a successor technology to the WiFi standard that is com- of measurement.) Figures 1 and 2 are the mon in home internet networks. In optimal conditions—that is, with maps produced by the Department of access to the right licensed spectrum band, and in the best geographic Communications, which assume a twenty and environmental circumstances—the technology can deliver broadband kilometre range with a possible added 5 ki- speeds at distances of up to ten or fifteen kilometres, wirelessly from the lometres for the WiMAX network. Figures base station. 3 and 4 depict what the coverage would be However, WiMAX’s reputation has suffered from over-hype. Early like when we assume a more realistic, but

OCTOBER 2007  R E V I E W It is hard to justify the use of taxpayer money to build a network that the private sector—in this case, Telstra—was desperate to build itself.

still charitable, range of ten kilometres. set up by the Government has released But less facetiously, it is hard to jus- In both cases, what appeared to be guidelines for firms applying to build tify the use of taxpayer money to build a blanket coverage is now revealed as rela- a network. Applicants have until April network that the private sector—in this tively spartan. to apply, and can specify any necessary case, Telstra—was desperate to build it- A range of ten kilometres may still regulatory changes required. The minis- self. And instead of regulatory reform, be too optimistic. Many WiMAX experts ter has gone so far as to suggest that one both the ALP proposal and the Federal predict even less—down to five, or even possible regulatory change would be to Government’s proposal lock the telecom- one or two kilometres. Experience with grant an infrastructure monopoly to the munications sector back into a cycle of a similar technology used by the wireless successful firm to protect it from compe- government investment and regulated ISP Unwired in Sydney gives little hope. tition, something which would resemble access. That the likely range of a wireless the legislative monopolies that have char- To appropriate the graceless network could be overestimated is cer- acterised Australia’s economic history for expression made famous by the tainly not unique. A firm competing in most of the twentieth century. Neverthe- Communications Minister, neither an open market that found its network less, one of the core guidelines recom- proposal adequately ‘future-proofs’ the was under performing would merely de- mended by the taskforce is the mainte- communications sector. When the next ploy more towers or upgrade to a better nance of an ‘open access’ regime. inevitable infrastructure upgrade is technology. But when the source of fund- It is clear that few lessons have been faced—fibre-to-the-node is hardly the ing is public dollars, it should be of some drawn from the failures of access regula- last communications network that will be concern. tion in the telecommunications sector. built in Australia—the same regulatory As these maps make clear, it is highly challenges will arise, unless a more unlikely that the one billion dollar grant ‘Well, we could just pay for the comprehensive and ‘future’ orientated for rural broadband will produce the ser- damn thing ourselves’ reform is pursued. vices advertised. While the federal government has pro- As Alan Moran and Warren Pengilley There is one further core problem vided the most detailed plans, they have demonstrated in their recent Insti- with the Federal Government’s rural were beaten to the punch by the ALP. tute of Public Affairs monograph, Regu- broadband proposal. While the choice In March, the Federal Labor Party an- lation of Infrastructure: Its Development of WiMAX has been the major pub- nounced its solution to the broadband and Consequences, telecommunications is lic focus, the Opel plan also relies on problem—a $4.7 billion grant to build a hardly alone in suffering from inappropri- widespread ADSL2+ installations. (For national fibre-optic broadband network. ate access regulation. Ports, gas, airports, instance, Omeo in Gippsland will be ser- Specifically, the ALP proposes a fibre- electricity and railroads have all been viced by ADSL2+, rather than WiMAX.) to-the-node network, which is the same negatively affected by infrastructure regu- However, as we have seen above, Telstra sort of network that Telstra proposed and lation which grants competitors access to has deployed ADSL2+ in hundreds of ex- then abandoned six months earlier. their networks at a regulated price. changes, but because of the risk of regu- There is a degree of irony when con- In telecommunications, a regulatory latory appropriation, has not switched it sidering the source of the $4.7 billion. framework that includes a disincentive on until there has been competing invest- $2.7 billion will come out of existing to invest is particularly damaging—tech- ment. communications funds—a legacy of the nological change requires continuous in- It is yet another striking demon- more than a dozen broadband infrastruc- vestment. Broadband in Australia is less stration of the perversity of the regula- ture programmes of the Howard Govern- than it could be, not because the federal tory framework that governs the sector: ment’s last five years. But the remaining government has failed to assume respon- once Opel has installed its equipment two billion dollars will be drawn from sibility for its infrastructure, but because in exchanges around the country, and the Future Fund, itself a result of the sale it refuses to reform obsolete regulations as a result Telstra feels free to switch its of Telstra. Telstra is, as the country’s big- that hold private investment back. Bring- equipment on, taxpayers will have paid gest telecommunications infrastructure ing the government back into the tele- to build duplicated infrastructure. providers, likely to be a big contender for communications market is no solution. Broadband to urban areas is to be the grant. The ALP proposal may return I P A dealt with separately, and a taskforce to Telstra the proceeds of its own sale.

R E V I E W  OCTOBER 2007 The NT intervention: what next? Gary Johns

My fear is that when life on The report blames the destruction of to have every child in a remote Aborigi- the communities becomes too social mores on alcohol and pornography. nal community attend school? The ab- restrictive [grog and pornogra- It is less forceful on the real cause of the sence of law enforcement over 30 years phy restrictions] or too uncom- misery, the mistaken view that Aborigines has condemned Aboriginal children to fortable in its level of change do not have to pay the price of admission hell on earth. I asked a senior education [abolition of work for the dole], to the modern world. The price involves public servant in the Northern Territory bush people will head for Alice taking personal responsibility, attending recently why the law was not enforced. Springs rather than stay. That school for at least ten years, and working. ‘You would get a real debate about that will exacerbate our issues of ac- Each of these has been missing. The chal- up here’, was the response. What’s to commodation and … jobs. lenge for the future is to ensure that these debate? Are Aborigines so different that — Fran Kilgariff, mayor of Alice Springs, factors are reintroduced. they do not have to attend school? speaking to the Bennelong Society confer- The report made plain the common Saving children is bound to be ence, 1 September 2007 finding of the 40-or-so reports before tough in regional centres, it is nearly im- it: sexual promiscuity (and drug abuse) possible in remote communities. Many he race is on to save Aboriginal among sub-teenage Aboriginal children is good teachers have attempted to do the children. Those who argue that rife. The reason that there have not been right thing and been shunned by com- it can be done in situ in remote commensurate adult arrests for child munities. Not so long ago, a teacher at T sexual abuse is that much of the abuse is a remote school established a tuck-shop communities have to overcome a major hurdle. A good education is probably performed by young boys and girls upon for students. It proved so successful that impossible in remote communities. It is their peers or the very young. the parents began to eat there. The local marginally more hopeful in regional cen- The story reveals the collapse of shop, owned by the elders, got wind of tres. morality. The number of teenage preg- the tuck-shop and demanded royalties Until the Howard Government, and nancies ensures that the cycle of immatu- from the sales. The teacher refused to be in particular the minister Mal Brough, rity and inappropriate behaviour repeats blackmailed and was thrown out of the intervened in remote Aboriginal com- itself rapidly. Banning pornography and community. munities, governments feared offending grog is sensible, but only as a breather It is very difficult indeed to teach the Aboriginal industry. and as a signal that grog and under-age children who come from places where The pretext for the intervention, the sex are diversions from a decent life. everyday behaviour is appalling, where Little Children are Sacred report, found The essential message that informed the only expectation is to have sex and that sexual abuse is rampant in virtually the Australian Government’s North- consume drugs. A school in every com- every Aboriginal community in the Ter- ern Territory Emergency Response Task munity would not solve the problem. ritory. Its recommendations struggled to Force is that if Aboriginal children are The teachers who have the skills to han- avoid offending the prevailing consen- not socialised in the same way as every dle such children are few. sus—the dream of a separate Aboriginal other Australian child, they are doomed. Alice Springs and the larger centres society. The dream has condemned Ab- Is it possible, though, to teach children will have to get ready for the changes origines in remote communities to a short when they live in an appalling social en- ahead. and meaningless existence. As a colleague vironment? Is it possible to have good of mine observed, ‘in Aboriginal policy, teachers in remote areas? Of the almost the Left have blood on their hands’. 1,200 discrete Aboriginal communities in Australia, nearly 500 have no primary school or are at least 25 kilometres from I P A one. Only 40 communities have a sec- Gary Johns is President of the ondary school up to Year 12. Bennelong Society. Is it possible in these circumstances

OCTOBER 2007  R E V I E W People, pundits and Prime Ministers What biographies reveal about Australia’s political culture

Richard Allsop

R E V I E W 10 OCTOBER 2007 t the time of the 2004 Federal Election, John grandfather in Australia in 1855 through to Howard’s election to Federal Howard had been the subject of one biogra- Parliament at the age of 34 in 1974, all in just 19 pages. Aphy. He faced an opponent, Mark Latham, The new Howard biography, co-authored by Wayne Errington and who was the subject of several. Peter van Onselen, expands this period of his life to 50 pages. This is better, In 2007, the contest will be more equal. John but one is still left feeling that there must be more that could have been Howard has managed to score a second while, com- mined. In contrast, Rudd’s life before he entered parliament, which admit- pared with Latham, Kevin Rudd has only attracted a tedly took him beyond the age of 40, takes over 100 pages in each of his comparatively modest two biographers. two biographies. It has become something of a cliché to note a greater propensity for books to be written about La- bor, rather than Liberal, political figures. This situa- There is perhaps more to tion has been ascribed variously either to the political biases of authors and publishers, or to the fact that the becoming a biographical subject book-buying public is not interested in books about Liberal politicians. than party affiliation. In fact, when one considers that John Hewson and Peter Costello both became the subjects of two biographies comparatively early in their parliamentary Although they share some similarities, the two Rudd biographies also careers (while Kim Beazley and Simon Crean scored have significant differences. Rudd co-operated fully with the Robert Mack- just one between the two of them), there is perhaps lin book, whereas he ‘told a number of people not to speak with’ Nicholas more to becoming a biographical subject than party Stuart. It is perhaps no surprise, given this situation, that Macklin’s work is affiliation. the one more prone to hagiography, while Stuart’s retains a higher degree One factor that publishers and authors obviously of scepticism. To cite but one example where they differ, Macklin says of like is the idea of being the first with the full story on Rudd’s 1998 election in Griffith that Rudd ‘out-polled the national trend’, people who have recently assumed a role as a potential while Stuart states that ‘out of the 27 electorates in Queensland, all but Prime Minister (they obviously did not see Crean in three had produced bigger swings to Labor’. this light). This phenomenon is a comparatively new Macklin believes that Rudd offers ‘an electoral asset of the most ex- one in the Australian political scene. traordinary potential’. He claims that any doubts he previously had about The first Prime Minister to have been the sub- Rudd have gone, declares him ‘the man for our time’ and asserts that ‘his ject of biography, before assuming the post, was Bob election to the Prime Ministership of our country is vital’. This style of Hawke, about whom two books had been written work is unfortunately not unprecedented in Australian political biography. (in 1979 and 1982) before his election win in March Norman E. Lee eventually settled on the title John Curtin: Saviour of Aus- 1983. Before that, there had been only one example tralia for his 1983 biography only after a close contest with an alterna- of a biography being published even early in a Prime tive which he describes as ‘equally true’—John Curtin: Australia’s best loved Ministership—about John Gorton in 1969. Prime Minister. Walter Murdoch, the author of the first biography of an While some may scoff at the concept of the ‘rising Australian Prime Minister admitted that he was ‘an ardent admirer’ of his star’ biography, one of Rudd’s two recent biographers, subject, Alfred Deakin, while Deakin was alive and that his admiration ‘has Nicholas Stuart, asserts that ‘we need to know about only deepened with the deeper knowledge of his life and character that has Rudd now’. While that is unarguably true, it does not come to me since his death’. At least Lee and Murdoch were writing after necessarily follow that a biography is required for us the event. to have an understanding of a politician. Most people In Macklin’s case, what grates even more than his growing love af- had a fair idea of what John Howard was on about in fair with Rudd is the short throwaway descriptions of other characters. We 1996, without the need for a biography. learn that when Rudd, the diplomat, went to Beijing the ambassador was When a biography of Howard did appear the ‘the respected Dennis Argall’, until he was replaced by ‘the highly respected following year, John Howard: Prime Minister by David Ross Garnaut’. Where Stephen Smith is described as a ‘prodigious worker’, Barnett and Pru Goward, it was panned by the crit- Lindsay Tanner ‘did not have a reputation for consistent hard work’. ics and quickly disappeared from bookshop shelves. Despite these irritations, Macklin’s book does have some advantages While some of the criticism was perhaps more aimed over Stuart’s. His access to the recollections of Rudd himself, his wife and at subject than author, there were unsatisfactory as- siblings is clearly useful. However, the fact that Stuart had to look elsewhere pects to the book. The opening chapter took the for interviewees meant that he unearthed some interesting and important reader from the arrival of John Howard’s great-great alternative voices. Examples include other members of the Eumundi com- munity talking about what the town was like in Rudd’s youth, political scientist Scott Prasser talking about his critique of Rudd’s role in the Goss Richard Allsop is a Research Fellow at the Government in Queensland and Kim Beazley talking about recent key po- Institute of Public Affairs.

OCTOBER 2007 11 R E V I E W Norman E. Lee settled on the title John Curtin: Saviour of Australia for his 1983 biography only after a close contest with an alternative —John Curtin: Australia’s best loved Prime Minister.

litical events. He also unearthed a former Rudd staffer who described his ful anecdotes about personal life. Errington and van ex-boss as ‘hard, abrupt and exploitative’. More significantly in the area of Onselen raise ‘rumours of infidelity on Howard’s public policy, he reminds readers that, in September 2002, Rudd stated em- part’, but conclude that these were ‘simply slurs’ on phatically that Saddam Hussein did possess weapons of mass destruction. the basis that the only people giving them any cre- Lacking access to close personal interviews does occasionally lead Stu- dence were anti-Howard. When the issue of affairs art into error, as when, for example, he refers to Rudd’s Stockholm diplo- and infidelity arises in Stuart’s book, he comments matic posting as his first trip outside Australia—which indicates that he that ‘the point is that there is none of this talk about does not know about the year (1979) he spent in Taiwan. Rudd’. (Macklin is content with references to how The Stuart work is unusual for an Australian biography in that it does much Kevin and Therese Rudd love each other.) Re- not include an immigration story. By contrast, Macklin tells an interesting vised editions may need to mention the New York yarn about Rudd’s convict ancestor Mary Wade who ‘arrived on the Second strip club visit. Fleet and became perhaps the most prolific matriarch of our short colonial history’. Both books naturally cover the issue of the Rudd family eviction How political is the personal? from the property that his father had managed before his death. It appears In the past, quite a few Australian political biogra- that Rudd may have embellished the story a little, but it is hard to see how phers seemed to be deliberately excluding the per- his opponents can make much political capital by attacking the recollec- sonal aspect of their subjects’ lives by using terms tions of an 11-year-old boy. such as ‘A Political Biography’ in the title. A good ex- The death of Rudd’s mother was also dragged into the political arena ample is provided by John Robertson’s J.H. Scullin: following the publication of Mark Latham’s diaries. While not wanting to A Political Biography. Robertson states that Scullin’s be an apologist for Latham in this instance, in more general terms, the ex- 1907 marriage ‘caused little or no change in his po- punging of his political existence by the Labor Party and the media is a litical ideas’. distortion of the record. Three years ago, large sections of the ALP and the However, in more recent times, there has been media saw Latham as the messiah. They cannot now simply dismiss him a notable change in how marital and sexual matters as mad and leave his assertions undebated. Macklin says of Latham’s di- are treated. ary that ‘there are thirty-six references to Rudd in the book, none of them This is perhaps best illustrated by comparing favourable’. Well—let’s have an assessment of them to see whether Latham the two biographies of Ben Chifley. In L.F. Crisp’s sometimes had a point. volume, published in 1961, Chifley’s secretary Phyl- Macklin’s book places an emphasis on Rudd’s intellectual develop- lis Donnelly’s name is mentioned only twice. ment, underscored by reprinting his article from The Monthly on Dietrich But when David Day wrote his Chifley biogra- Bonhoeffer as an appendix. phy 40 years later, he makes it explicit that Donnel- However, none of the three newly published political biographies goes ly, as Chifley’s mistress, had played a far larger and anywhere close to a work such as Philip Ayres’ Malcolm Fraser: A Biography, more significant role in Chifley’s life than Crisp had which devotes considerable attention to what books Fraser read at Oxford acknowledged. Day further explained that he had University and to the ideas contained in his essays. Ayres’ focus on the de- married a woman ‘who seemed never able to pro- velopment of Fraser’s ideas is a constant throughout the book with, for in- vide him with children or perhaps even the normal stance, a detailed analysis of Fraser’s 1971 Alfred Deakin Lecture. While conjugal intimacies of marriage’ and editorialised John Curtin had a very different upbringing from Fraser’s, his biographers that it was thus ‘not surprising that he would look still managed to chart his intellectual development despite its lack of formal elsewhere for sexual fulfilment’. Day does not seem academic training. Both Lloyd Ross and David Day describe the impact to find it in any way worthy of negative comment that Frank Anstey had upon the young Curtin from the time they met dur- that Chifley chose the unorthodox way of doing ing Anstey’s campaign for the State seat of Brunswick in 1902, through to this not only by having a sexual relationship with the ‘small gatherings of like-minded youths’ which Anstey would host on Phyllis Donnelly, but also with her older sister Nell, Sunday mornings, where Anstey would ‘lecture to them on socialist prin- confining the former to Canberra and the latter to ciples and debate the questions of the day’—something that continued even Bathurst. Day certainly raised the ire of the Chifley when they were living on opposite sides of the country. family who, as he acknowledges, ‘mostly deny the While the Howard and Rudd books could have done more on intel- relationship’. lectual life, they probably are limited when it comes to providing colour-

R E V I E W 12 OCTOBER 2007 Kevin Rudd: John Winston Howard: Kevin Rudd: An The Biography The Biography unauthorised political By Robert Macklin By Wayne Errington & biography (Viking, 2007, 254 pages) Peter van Onselen By Nicholas Stuart (MUP, 2007, 458 pages) (Scribe, 2007, 282 pages)

Before writing his Chifley biography, David Day had al- The Australian biographic practice ready written one about Curtin, giving Day the surprisingly With the exception of D’Alpuget, who was a novelist, and one unique position of being the only writer of biographies about or two others, almost all the biographies of PMs, or potential two different Australian Prime Ministers. He finds Curtin’s early PMs, have been written either by journalists or by academics. sexuality a perplexing topic and says ‘we can only speculate about Undoubtedly, with their experience of daily deadlines, journal- the strains imposed upon Curtin by his priest-like devotion to ists are well suited to the ‘rising star’ biography genre when the socialist cause and his abstention so far from romantic love speed is required. Macklin says that he had four months to and, apparently, the pleasures of the flesh’. complete his work and one assumes that Stuart had a similar Day finds Curtin’s middle-aged behaviour as Labor Leader timeframe. more straightforward when he describes his friendship with the With its much longer lead time, the Howard biography housekeeper of a Perth pub ‘with whom he was apparently sleep- was more suited to academics. Academic biographers have gen- ing’. He also discusses whether Curtin had an affair with Hotel erally been historians. Before Errington and van Onselen, the Kurrajong manageress, Belle Southwell, without coming to a two previous political scientists to have written prime ministe- firm conclusion. rial biography wrote psychological biography, rather than using Another biography written in the twenty-first century the narrative style favoured both by journalists and historians. which brings a breezy tone to sexual peccadilloes, a style which Judith Brett’s study of Robert Menzies and Stan Anson’s biog- would have been unimaginable in earlier times, is Ian Hancock’s raphy of Bob Hawke attempt to explain what they see as flawed biography of John Gorton. Hancock is at pains to deny the ex- public careers on the basis of the psychology of their subjects. istence of a sexual relationship between Gorton and his contro- Chifley argued against academics writing about politics versial 22-year-old Principal Private Secretary, Ainsley Gotto, but on the grounds that they were ‘too remote’. This accusation does acknowledge Gorton’s ‘having “two or three” extramarital cannot be made against Errington and van Onselen. In fact, relationships’. the publication of extracts from their book in the newspapers Gorton’s reputation for enjoying a drink was one which was virtually made them political players. shared by Bob Hawke and, in the case of the latter, it was clearly Their major coup was to get Treasurer Peter Costello to a significant issue before his assuming the position of Prime Min- talk so revealingly about his frustrations. While there was not ister. Blanche D’Alpuget’s biography played a significant role in a lot new said about the current leadership issues, Costello educating the broader public that Hawke had indeed had a prob- offered quite an expansive critique of Howard’s years as Trea- lem with alcohol. In the 1970s, television reporters were doing surer, saying that he ‘had not been a great reformer’ and ‘not what would be unthinkable today and ‘covering up for Hawke a success in terms of interest rates and inflation’. and scrapping film of him recorded when he was drunk’. There are other revelations. Apparently, in 2001, when

OCTOBER 2007 13 R E V I E W the government’s fortunes picked up, this is with some of the other sentiments that the basic Howard narrative was of the Peter Reith seriously reconsidered his expressed in the work, one even wonders if battler made good, confounding his crit- announced retirement. This was ‘unbe- the co-authors brought somewhat differ- ics. Eighteen months later, with the Gov- known to Howard’ who, in an interview ent perspectives to the table. The chapters ernment trailing 41–59 in the most recent with the authors, said that he wished Re- on the Howard Government, in the words Newspoll, Howard is back looking more ith had told him because he would have of Australian journalist George Megaloge- like the failing figure of his first spell as ‘twisted his arm’ to stay. nis, ‘try to cover too much ground and Opposition Leader or of his early Prime The interviews provided by Janette struggle with the balance between policy Ministership. The Howard story will be Howard also give us a much clearer insight and politics’. told very differently if he loses the upcom- into the often speculated degree of influ- The balance that Howard has chosen ing election and, in particular, if he suffers ence she wielded over her husband. The between policy and politics has proved dif- the humiliation of losing his own seat. fact that those close to Howard were pre- ficult to categorise throughout his career. Maybe when Howard does go, his pared to be interviewed for a book which, Just when one thinks that Howard has run critics may begin to appreciate how absurd on balance, is a negative for him, either a generally responsible government, he their anti-Howard rhetoric was. displays a refreshing openness or a politi- flies into Devonport and announces a bad As Errington and van Onselen state, cal misjudgement. piece of public policy at the local hospital. ‘John Howard’s Australia, with its high Aside from its newsworthy aspects, Commenting on Howard’s centralisation levels of immigration, close ties with Asia, the book has other strengths. It highlights of power, Errington and van Onselen note booming wages, record workforce partici- the crucial role of key staff in the Howard that ‘a future Labor Government will en- pation for women, record taxation, and office and provides an excellent description joy pulling the levers of power that How- record spending on health and welfare, is of how the Cabinet process has worked in ard has centralised in Canberra’. a long way from the country imagined by the Howard Government. It also shows The lack of respect for traditional his critics’. an interest in, and some understanding boundaries between the Commonwealth Perhaps the post-Howard critics will of, the key role that the ‘dries’ played in and the states is but one manifestation of be those who hoped to see significant fur- changing the intellectual climate in which how Howard has altered the way in which ther free market reform and smaller gov- politicians operated from the late 1970s politics is conducted. Stuart’s Rudd biog- ernment. They may well turn on Howard onwards. The input from John Hyde is raphy has a fascinating paragraph where in a similar manner to that which (correct- a very valuable aspect of the book. The a Beazley-supporting member within the ly) greeted Fraser after his March 1983 de- authors recognise that, in government, Federal Labor caucus condemns the un- feat. As the authors comment, ‘Howard’s Howard has been far from a free-market doing of Beazley brought about by his departure will once again spark a debate ideologue, pointing out the absurdity Rove McManus/Karl Rove gaffe. The un- about the direction of the Party’. of Kevin Rudd’s claim that Howard is a named individual argues that ‘leaders don’t Liberal Party members remember the disciple of Hayek. As they note, ‘the true need to and shouldn’t comment on every period after the defeat of the Fraser Gov- disciples of Hayek were distraught about bloody thing anyway’. She argues that it ernment as the worst of times; policy-driv- Howard’s economic record’. They are also leads to politicians becoming just another en types recall that time as actually being clever enough to recognise that there is a part of celebrity culture and ‘the dumbing quite exciting. distinction between being pro-business down of political discourse’. I am not sure Whatever happens at the coming and pro-market. if the female caucus member would agree, federal election, there will certainly be the They also understand the fact that but in my view it also inexorably leads to need for more Howard biography; despite many ‘who early in Howard’s government ever bigger government, as no problem in Errington and van Onselen’s best efforts, had seen plenty to criticise, soon found society is deemed to be outside the legiti- there is still much analysis to be done of themselves defending Howard from the mate range of interest of the federal gov- this hugely significant character. Only a worst excesses of his critics’. These critics ernment. Labor victory will produce the need for have never been able to decide whether The trouble with writing any sort of more to be written about Rudd; between Howard is a rabid ideologue or a poll- book about contemporary politics is that them, Macklin and Stuart have done their driven opportunist. As Errington and van it quickly gets overtaken by events. Those more limited job well enough. Onselen point out, he is never attacked by pre-2004 election Latham biographies all the Left for a classic piece of opportun- looked a bit silly within a year of their ism—banning guns in the wake of the publication. I P A Port Arthur massacre. Before the new Howard biography, However, there are also problems. the best book about the Howard Govern- There are occasionally sweeping statements ment was the collection of essays by Aus- such as ‘economic reform, while successful tralian journalists, The Howard Factor. It on its own terms, had left an emptiness at probably still retains that status. When it the nation’s heart’. Given how inconsistent was published, in early 2006, it appeared

R E V I E W 14 OCTOBER 2007 When the critics are at a distance, mood of the Howard years is an uneasy fear following example from an opinion piece and friends close at hand, litera- of each other, the fear that we’re growing in the Washington Post by Zbigniew Brzez- ture is projected as an accurate apart’—that is according to David Marr, inski, former national security advisor to and vivid mirror of the world; public intellectual extraordinaire. the Carter Administration. when the critics close in, and the The joining of the literary world with The phrase itself is meaningless. friends are absent, oh well, then, the actual world is a practice that was picked It defines neither a geographic some degree of literary licence up long ago. Yet political writing today is context nor our presumed en- has to be tolerated in the name typically influenced by the political writing emies … But the little secret of creative imagination.’ that has characterised twentieth-century here may be that the vagueness — Richard A. Epstein politics, the writing to which we are in- of the phrase was deliberately (or troduced at school and later at University, instinctively) calculated by its o keep up with current affairs re- should we be that unfortunate. sponsors. Constant reference to quires a lot of reading. In Austra- The topic at hand is the literary and a ‘war on terror’ did accomplish lia, one would naturally look to political mastery of George Orwell. It is one major objective: It stimu- T difficult to make proper commentary on the Quarterly Essay journal as a medium lated the emergence of a culture for understanding what issues are making twentieth-century politics without Orwell of fear. Fear obscures reason, in- Australians scratch their heads. You could looming over our shoulders. His presence tensifies emotions and makes it learn, for instance, that Australians have grows stronger still into the twenty-first easier for demagogic politicians been encouraged to fear each other. In century, as anti-terror laws have the effect to mobilize the public on behalf case you hadn’t noticed it (you obviously of impeding our liberty and tripling the of the policies they want to pur- haven’t been reading enough), ‘the defining number of literary allusions to Nineteen sue. Eighty-Four. This is dripping with Orwell. Assuming These allusions are sometimes strik- the essence of Brzezinski’s premise is cor- ing, but often self-indulgent. The phrase rect (after all, these arguments rely a lot Andrew Kemp is a regular contributor ‘War On Terror’ is often associated with the on ‘essence’; see ‘vibe’ for more detail), to the IPA Review. Orwellian invention of Newspeak. Take the

OCTOBER 2007 15 R E V I E W there remains at least one critical error. right and wrong can be restored makes it easier to produce an ‘argument’ Fear obscures reason except when ap- to politics. that might otherwise be discredited by plied to Brzezinski, whose genius goes so If you go looking for Orwell’s in-depth, inconsistencies with real-life facts. far as to penetrate the power of fear and empirically based justification as to why To hark back to our opening exam- prevent it from destroying the analytical these two types of political/economic sys- ples, the atrocities of the Nazi regime, or faculties of his own mind. Other excep- tems necessarily lead to similar ends, you the Soviet regime, are still too recent to tions, of course, would be the countless won’t find it. Would such a wordsmith begin comparisons with contemporary others who take issue with the current allow his literature to be spoiled by sta- governments, without offending people US administration’s foreign policy. tistics and facts? This would be a harsh who’ve experienced both. We can, how- With 9/11 clouding international judgement on Orwell, though partly ever, compare the Bush Administration affairs today, literary figures have con- evident in his short article title ‘What is to ‘The Party’ in Nineteen Eighty-Four, jured up frighteningly new dystopias in Science?’ where his skepticism is made even if Orwell’s imagined regime was a the mould of Orwell’s Oceania. Other known. lot worse. social democrats who have disowned So- Orwell was rightly critical of the idea Similarly, it would be too much to viet communism or the false historicism that scientists are better able to appreciate suggest that dealings with the nuclear of Karl Marx have begun to target Ameri- and understand social phenomena than industry are like dealing with Adolf, so can neo-liberalism as the new totalitarian the historian or the literary writer. After we can choose Satan instead. A ‘Faustian threat, though in a more sophisticated, all, chemical reactions in a test-tube are bargain’ sounds a lot less offensive than subtler way. Journalists and political sci- predictable, where as human behaviour ‘holding hands with Hitler’, even if Satan entists salivate at the opportunity to dis- is not. is more evil. sect political language and propaganda Again, however, Orwell falls prey to Richard Epstein’s brilliant essay, that might otherwise have deceived the his constant literary generalisations: ‘Does Literature Work as Social Science? unknowing masses. If you happen to The Case of George Orwell’, describes an Put in these words, and the apol- purchase a copy of Nineteen Eighty-Four undergraduate class he attended where ogist of scientific education will from the online ABC shop, you’ll notice the teacher presented two different texts usually agree. Press him further, that the product description describes the describing the conditions of the working ask him to particularize, and book as ‘more relevant than ever’. class in England and France during the somehow it always turns out that This is hardly a surprise, and fur- nineteenth century. One of the texts was scientific education means more thermore, it is an accurate description. a novel by a famous French novelist, the attention to the sciences, in other Orwell’s writing was so prolific, his gen- other a non-fictional defence of industri- words—more facts. The idea that eralisations so magnificent, that there is alism. By far, the class preferred the no- science means a way of looking literally something for everyone. Social- vella over the dry historical defence. at the world, and not simply a ists can take ease at reading his hopes for Literature has the ability to sweep body of knowledge, is in practice universal equality. Conservatives can en- us off our feet or hit us with a crushing strongly resisted. joy his musings on the English language emotional blow. This is probably, ironi- and its abuse by Stalinist dogmatists. Orwell’s critical mind and his skepticism cally, where Zbigniew Brzezinski sees We know that we can never agree are what makes him a deserved hero, but George Bush’s generalisations as danger- with Orwell on everything, and so we his reliance on literature as a medium ous. This may unfortunately be half true. embrace the particular writings of his through which to deliver his analysis lets Politicians are just as bound to utter crass that fit into our own conception of the him down. That is not to say that litera- generalisations as the humble wordsmith. universe. Orwell is both the working-class ture is ultimately useless, or dangerous. But fighting fire with fire never solves the hero and the patron-saint of intellectual- Rather, it is the strongest medium for problem, not in any effective way at least. ism. He is the defender of a socialist state expressing human emotion, and weaker Moreover, the general public are always and a warrior against totalitarianism. He as a tool for constructing empirically less stupid than intellectuals make them tried to reconcile these two positions in verifiable observations of the real world. out to be. this manner: Moreover, literature is easier to write, be- Orwell stands on top of political lit- cause we are our own masters of how we Capitalism leads to dole queues, erature, and to some extent he has suc- feel and connect with the world around the scramble for markets, and war. ceeded in making many of us think with- us. The scientific method requires a dedi- Collectivism leads to concentra- in the same paradigm as he did. It is time cation to an analytical frame of thinking tion camps, leader worship, and to recognise the weakness of this method, that challenges us to separate emotion war. There is no way out of this however, and take a more critical look at from fact. unless a planned economy can the work of Eric Arthur Blair. There are benefits to deploying the be somehow combined with the literary, fictional world for political writ- freedom of the intellect, which ers, however. The use of metaphors, simi- I P A can only happen if the concept of les and allusions to other literary works

R E V I E W 16 OCTOBER 2007 Economic freedom delivers results Alan Moran

he Institute of Public Affairs participates in an annual assessment of economies compiled by Countries with the greatest degree of freedom TCanada’s Fraser Institute. Called the Economic also experience the highest GDP per capita Freedom of the World, the compilation assesses 141 countries against 42 criteria to determine how open 30,000 they are to private enterprise. These criteria include: $26,013 • Size of Government; • Legal Structure and Security of Property Rights; 20,000 • Access to Sound Money; • Freedom to Trade Internationally; and $10,773 • Various labour market, credit and other business 10,000 regulations. $6,103 The assessment, which commenced in 1975, owes $3,305 much to the late Milton Friedman, who is easily the PPP (constant GDP per capita, 2005 2000 international $), most outstanding economist of the latter half of the 0 twentieth century. Friedman assigned tasks for the first Least free Third Second Most free assessment and personally collated the ratings. Economic Freedom of the World Index Quartiles Unremarkably, the best performers in the index Source: Economic Freedom of the World Index, 2007 are the open market free enterprise economies led by Hong Kong and Singapore, but including the US, western European countries, New Zealand and Can- Those going backwards are the basket-case failing economies ada, as well as Australia. Also, since the fall of Com- such as Myanmar and Zimbabwe, soon to be joined by Venezuela munism, we have seen a steady increase in economic where retrograde assaults upon property rights are still masked by freedom in almost every country. oil wealth. (Some countries, such as North Korea and Cuba, which The Eastern European economies have progressed would fall squarely within this category, are not rated in the compila- particularly strongly this past 20 years. Indeed, Esto- tion.) nia, Latvia, Kazakhstan (yes, Borat truly is a myth!) and In aggregate terms, economic freedom is heavily associated with Slovakia are now up with the leaders. China has seen prosperity, longer life expectancy, faster economic growth and even a rapid improvement, as has India which has emerged lower levels of poverty. In fact, the income share of the poorest 10 from a long period when its economy was mired by per cent tends to be remarkably similar at a little over 2 per cent of state planning and controls. total GDP in all categories of economies. Average levels of per capita In Africa, Botswana, the one country which start- income are illustrated below ed early on the free market, small government path, Australia comes in at ninth in the world, above Japan and most has been the stand-out achiever. More recent reforms of Western Europe as well as the Usual Suspects. in countries such as Ghana, Kenya and Tanzania have This rating may be mildly flattering, since the assessment crite- yet to be translated into solid sustained income divi- ria are of necessity somewhat rigid. They may therefore fail to detect dends. some of the deficiencies in property rights with which we are famil- iar in Australia—matters such as the diminished certainty resulting Alan Moran is Director, Deregulation Unit at the from Native Title, and the fact that, unlike the Federal Government, Institute of Public Affairs. the States are not obliged to provide ‘just terms’ compensation for The Economic Freedom of the World Report is property seizures. available at www.freetheworld.com I P A

OCTOBER 2007 17 R E V I E W R E V I E W 18 OCTOBER 2007 A new protectionism: dashed hopes and perhaps worse for US trade policy

Daniel Ikenson

ver the next 14 months, culmi- antidumping and countervailing duty cases and launching WTO com- nating in US elections in Novem- plaints are all permitted within the global trade rules. Those actions are Ober 2008, the world will learn not necessarily cause for alarm—at least relative to what could be in store whether America’s budding protection- in the months ahead. ism reaches full bloom or is just a passing The Democratic Party, which has grown increasingly hostile towards fancy. The global economy can shake off trade over the past decade, controls the legislature, and thus the policy a failed Doha Round of multilateral trade agenda, for the first time in 12 years. negotiations without missing two beats. President George W. Bush’s authority to negotiate trade agreements But if the United States turns inward as and present them to Congress for an up-or-down vote (the so-called Fast well, the consequences could be profound Track or Trade Promotion Authority) expired in June, and will not be re- and far-reaching. newed. Completed bilateral trade agreements with South Korea, Colom- Some would argue that US protec- bia, Peru and Panama have been shunted aside to consider, instead, trade tionism is already beyond the budding legislation that is antagonistic, if not expressly protectionist. Although a stage. There has been an explosion in the few of those bills were crafted mostly for political effect, it is a good bet use of trade remedies in 2007, including that some of the nearly two dozen pieces of provocative trade legislation the first US antidumping case initiated will at least make it to the floors of both chambers of Congress for official against Australia in 15 years (involving the votes before the 2008 elections. electrolytic manganese dioxide industry). As Congress reconvenes in Washington, it is likely to begin moving Earlier this year, the United States some of those bills, which include, among other things, provisions that: launched three high-profile complaints • make enforcement of trade agreements systematic and mandatory; against China in the World Trade Organi- • lower the current evidentiary thresholds for imposing antidumping, zation, and reversed its 23-year-old policy anti-subsidy, and China-specific safeguard duties; of not applying the countervailing duty (or anti-subsidy) law to so-called non-market • establish a panel of retired federal judges to review adverse WTO economies, when it initiated a case against decisions and advise Congress on the propriety of those decisions Chinese paper manufacturers in April. before any steps toward compliance are undertaken; And there has been a lot of sabre-rattling • forbid the United States from entering into any new trade agree- in Congress over a host of allegedly unfair ments; Chinese trade practices. • revoke China’s ‘normal trade relations’ status; But, by and large, the United States • define and treat currency manipulation as a countervailable subsidy; has yet to cross the precipice. Bringing • require the President to pursue concrete measures to achieve greater trade balance with countries that have persistent trade surpluses Daniel Ikenson is associate director of the with the United States; and, Center for Trade Policy Studies at the Cato • expand trade adjustment assistance programmes to cover people Institute in Washington, D.C. who have lost jobs in the services sectors due to outsourcing.

OCTOBER 2007 19 R E V I E W To the mercantilists in Congress, the large and growing trade deficit is confirmation that the United States is losing at trade. And it is losing because US trade partners are cheating.

Implicit in this legislation: trade liberali- toric tendency towards tit-for-tat trade wars. Until now, at least. sation is bad, US trade partners cheat, and the Once-giddy expectations for comprehensive international trade folly of America’s embrace of globalisation is evi- liberalisation at the outset of the Bush Administration have been denced by its massive human toll. downgraded to hoping that the US President is prepared to veto the The primary target of most provocative slew of anti-trade legislation expected to reach his desk. Not too long legislation is China. But that shouldn’t prompt ago, Bush Administration officials spoke optimistically about a free sighs of relief in other countries. Thwarting Chi- trade zone ‘from Alaska to Tierra del Fuego’, and a world free of in- nese imports into the United States is an indirect dustrial tariffs by 2015. The Administration initiated bilateral trade assault on other countries, particularly those in talks with dozens of countries as part of its programme of ‘competitive the Asia-Pacific region. What the US Congress liberalisation’, hoping that the momentum that it spurred would lead fails to grasp is that many products imported to a relatively quick and successful conclusion to the Doha Round. from China comprise value-added materials and But Doha lies in a cryogenic state and it remains to be seen labour services provided mostly in other coun- whether the Bush Administration is able—even willing—to hold the tries. In that regard, the bilateral US trade deficit line against the impending protectionist offensive. Some in Congress with China is a meaningless statistic. Yet it fuels speak of veto-proof majorities (Congress can override a Presidential the legislative push for action. veto with support from two-thirds of each chamber), which attests to Adoption of the kinds of protectionist poli- the growing bipartisan nature of skepticism over trade. cies under consideration in the United States Not long ago, Republicans were solidly in the pro-trade camp, would likely have a dramatic, adverse impact while Democrats abandoned the pro-union, anti-trade line with in- on the global economy, with particularly acute frequency and at their individual peril. As we enter the spirited US consequences felt in countries that supply China election season, President Bush is likely to be pressured by Republican with components, machinery, and raw materi- lawmakers and the party leadership to acquiesce before the rising pro- als. If the world’s largest consuming nation buys tectionist tide in an effort to minimise Republican losses in November fewer Chinese wares, Chinese factories won’t 2008. be buying as much iron ore, bauxite, electronic The era of negotiation and accommodation and optimism has components, or LCD screens. There is indeed a yielded to one of confrontation and litigation and skepticism. bit of Australia, Japan, Korea, and Malaysia in It is difficult to pinpoint a specific event that precipitated Amer- the typical Chinese cargo container unloaded in ica’s apparent change of heart. It has been more of a drift, perpetu- Long Beach, California. ated by a confluence of several factors, including the rise of China, Furthermore, legislation that effectively the myth of US manufacturing decline, relentless salesmanship from challenges the efficacy and legitimacy of the politicians and media personalities of their mercantilist narratives, WTO dispute settlement system can only lead widespread disaffection for President Bush and, also, the failure of the to a weakening of the multilateral trading sys- Bush Administration to make a convincing, comprehensive case to tem, as other countries are tempted to follow the American public about the benefits of trade liberalisation. suit and treat adherence to the rules as optional. That last factor is probably the most significant determinant of Ironically, the Congress is seeking to beef up US the present state of affairs. Had the Administration done a better job enforcement and prosecutorial capacity to bring of communicating the merits of a liberal trade agenda through its more WTO cases, while it simultaneously con- words and actions, the other factors might never have risen to promi- siders a bill that denigrates the WTO process, as nence. well as other bills containing provisions likely to But instead, the Bush team opted to politicise the process. They be WTO-inconsistent. reckoned that with a Republican majority in Congress at the time, The WTO system isn’t perfect, but it has the trade agenda could advance without need of much Democratic worked well to facilitate the growth of trade and support. Given the anti-trade sentiments permeating the Democratic investment, while practically extinguishing the his- caucus, that strategy had virtue, if not merit.

R E V I E W 20 OCTOBER 2007 Ultimately, though, that approach alienated important Demo- Congress seeks fireworks, not durable solutions. crats who now control the congressional trade agenda. And it would But why focus on the trade balance at all? Japan be naïve to think that experience doesn’t colour their current per- has run a trade surplus for decades, but its economy spectives on trade policy. has been stagnant for the better part of the last 15 Bush granted steel tariffs to make it easier for certain Repub- years. The Germans have a large trade surplus, but licans in Congress to support trade promotion authority—a move double-digit unemployment. The United States has characterised by former US Trade Representative Robert Zoellick as a large and growing trade deficit, but also consis- ‘one step back for two steps forward’. Similar protectionist back-steps tently strong economic growth and an unemploy- were taken to secure support from key Republicans in textile- and ment rate, near all-time lows, of 4.5 per cent. farm-states, as well. In that process, the Administration legitimised Still, the trade account as scoreboard metaphor the claims to exceptional treatment for import-competing industries resonates. Americans are told repeatedly that their while preaching the merits of free trade abroad, a hypocrisy that con- jobs are being exported to China and India and that tributed to the poisoned atmosphere surrounding the Doha Round. the trade deficit is a proxy for job loss. The loss of The Administration also erred badly in the way it promoted nearly 3 million US manufacturing jobs during the trade agreements. The USTR’s office has had a short-sighted tenden- recession of 2001–2002 is constantly cited as evi- cy to focus on the benefits of trade from an exporter’s perspective. A dence of failed trade policies, even though the US common refrain from the USTR when pitching trade liberalisation economy has generated 1.8 million net new jobs is that the United States runs an aggregate trade surplus with the every year, on average, since 1980, when imports, dozen or so countries with which the Administration had concluded in real terms, were only 45 per cent of what they bilateral or regional trade agreements—the implication being that are today. strong export growth and minimal import growth constitutes suc- Policymakers have perpetuated a myth that the cess. But if that’s the appropriate metric, it doesn’t take much of a US manufacturing sector is in decline, which has leap to conclude that US trade policy is failing given an overall trade encouraged further skepticism among Americans deficit approaching $1 trillion. about trade. But closer examination reveals not That kind of salesmanship—touting exports and downplaying only that US manufacturing is thriving according the benefits of imports, which are the source of most of the gains to every relevant financial yardstick (in 2006, the from trade—played into the hands of the mercantilists in Congress, sector achieved record sales, record profits, record where too many already believe that exports are good, imports are output, and record return on investment), but that bad, and the trade account is the scoreboard. To them, the large and it is thriving in large measure because of relatively growing trade deficit is confirmation that the United States is losing open US trade policies. at trade. And it is losing, in large measure, because US trade partners Access to foreign markets has been a crucial are cheating. component of US manufacturing revenue growth. In China’s case, the purported transgressions include currency And access to imported raw materials, components, manipulation, widespread subsidisation of industry, unfair labour and capital equipment has helped keep the lid on practices, intellectual property theft, opaque market barriers, among US manufacturers’ costs. In fact, US producers ac- others. Some of the allegations have some degree of merit, but not counted for 55 per cent of total US imports in 2006, to an extent that comes close to explaining even a fraction of the which affirms a long-observed relationship in the bilateral deficit. manufacturing sector: imports and output move in Allegations of currency manipulation and its adverse impact on tandem. the US manufacturing sector have dominated the political discourse It is unlikely that the truth about trade and this year. As Congress gripes and threatens action, the Chinese Yuan manufacturing will suddenly prevail upon the po- continues to appreciate against the US dollar. It is up nearly 8 per litical discourse and reverse America’s growing skep- cent since the firm dollar peg was abandoned in July 2005. Yet the ticism. Not with an election on the horizon. Perhaps bilateral deficit continues to rise. It is quite clear that Congress hasn’t the best to hope for is that some of the pending leg- given much thought to the prospect that a dramatically appreciated islation is made less onerous as it advances through Yuan could actually increase the deficit. the process, while President Bush does his part to The key to achieving greater trade balance without sparking veto legislation that would take the United States, a US recession is not to tax US consumption through protection- and the world, down a path it would regret. ist legislation, but to encourage Chinese consumption. That is the essence of what has become known in Washington as the ‘Paulson I P A Approach’. Treasury Secretary Henry Paulson has been engaged in dialogue with his Chinese counterparts, trying to foster the kinds of structural changes needed to dissuade excessive thrift there. However,

OCTOBER 2007 21 R E V I E W Who decided that private property was subservient to political protest? Alan Moran

f terrorists were to invade Bob Brown’s ens they were just protesting against cli- and it is up to individuals and property house and create hundreds of thou- mate change’. But the facility is on 5,000 owners to take evasive action. Isands of dollars of damage to his an- hectares of land. It has a 40 kilometre pe- We need to see the rule of law restored tique collection, he would be understand- riphery and it has a major road running with appropriate penalties for invasion of ably irked. His anger would hardly be through the middle of it, a road that di- property and the associated losses to those muted if the terrorists turned out to be vides the plant proper from the mine and whose property or business interests are Green activists complaining about him as the conveyor feeding it. In other words, it damaged. a householder burning greenhouse gases to is less easy to secure than almost any farm Aside from having the law upheld, ward off the cold and to power himself to in the State. several other measures recommend them- his Canberra office. If the reaction to economic terrorists selves. Yet his reaction to an invasion of the is to call for property owners to increase First, those involving themselves in Loy Yang Power Station, as part of the security, then the upshot is higher prices. such activity should pay a personal penalty APEC protests, was to blame the Victorian This is the very outcome that the terrorists which would include forfeiture of their and Federal Governments for inciting the are hoping for with coal-fired electricity— taxpayer-financed payments in unemploy- demonstration by their climate policies. in other words, we are rewarding them for ment benefits or student allowances that The invasion cost the station alone some their anti-social activities. offer them the opportunity to engage in $200,000. Whatever happened to the protec- destructive activity. Four people were arrested for the tion of property as a goal of the authori- Second, any organisation supporting break-in. One of whom was a spokesper- ties themselves? Property protection starts that supports breaking the law should lose son for Friends of the Earth, a tax-excmpt with appropriate penalties as a deterrence its any privileged tax-free status they hold. environment group. to those who would attack it. If we set The community should not be offering Not only that, but the perpetrators— lower standards of protection against those financial support to those who seek to un- when they are apprehended—are treated assessed to be protesting about climate dermine its basic fabric. lightly. They get bailed to appear some change, should we not also apply similar Third, people who believe in private time later and will doubtless be punished standards to those protesting about animal property and the rule of law should be able with a nominal sentence involving ‘com- rights? And what about those protesting to fund and proceed with civil cases against munity service’ of some sort. against the Infidels who fail to recognise miscreants and organisations who have en- Contrast this with the mythical peo- the one God and His Messenger? gaged in destructive behaviour. ple who might have trashed Bob Brown’s In fact, the notion of private property Unfortunately, we have become so in- expensive antique collection in a violent and its protection by the community as a ured to the progressive relaxation of prop- protest. Doubtless, since all of them have whole is what sets successful societies apart. erty rights and the elevation of the rights of previous form, they would have been re- There is no function of government more those who claim to hold strong views with manded in custody awaiting trial and vital to the achievement of high standards passion that none of this will happen. We would eventually have faced jail sentences. of living than upholding rights to property will, instead, see a progressive increase in It should make no difference that one and all this entails with a police force and costs to accommodate the ‘rights’ of those form of damage is squarely shouldered by judiciary. And yet we see the protective who would trample on the property rights an individual, whereas the other is incurred mechanisms snubbed by protesters, violent of others. by individuals as shareholders. or non-violent, secure in the knowledge Some reacted to the scandalous in- that the penalty will be a slap on the wrist trusion by blaming Loy Yang. The Herald and lionisation by their co-conspirators. I P A Sun editorialised, ‘It is clear that security at The damage to property and harm the plant is laughable’ and ‘Thank heav- to individuals we have seen with protests, including last year’s G20 riots and the S11 protests about the World Economic Fo- Alan Moran is Director, Deregulation rum, have entailed a curious reversal—the Unit at the Institute of Public Affairs. protesters have licence to create mayhem

R E V I E W 22 OCTOBER 2007 Australian Education Union distorting the education debate

Sinclair Davidson

ritics of private schools are play- ing an increasingly shrill game of Every student that exits the public Cone-upmanship. In May of this year, Catherine Deveny—a columnist system further highlights the failures of for The Age—wrote a scathing op-ed on private schools. She used explosive terms the AEU and its members such as ‘social apartheid’ and ‘false econ- omy’ to describe private schools. ing is biased towards private schools. In Until recently, the school funding Deveny had, in turn, been inspired particular, that public school children go debate occurred in a factual vacuum. In- by an ideological rant by Shane Maloney, without because private school children deed, the AEU would have it no other recounting how he had verballed a group get all the government funding. way. It is easy to blame the shortcom- of school boys at Scotch College. Writing The AEU even produced figures ings of the public school system on an again in The Age, Maloney argued, ‘our showing that private school children have elitist Howard Government and its al- children are increasingly divided into greater per capita funding than public leged under-funding of public schools. educational ghettos that undermine our school children. It suggested that Com- It isn’t enough that the public school civil values and reward religious funda- monwealth funding was ‘the major con- lobby wants more money from the fed- mentalism’. (It is not clear from his ar- tributor to the fact that private students eral government, it wants private schools ticle, however, whether it is public and have more spent on their education’. defunded. private schools that he considers as ‘ghet- This remarkable statement is refuted by In response to this attack, the Asso- tos’.) the AEU’s own data. Its data show that ciation of Independent Schools of Victo- Meanwhile, Deveny argued that the single largest source of funding for ria (AISV) commissioned an analysis of non-public schools were ‘divisive, dis- private schools comes from private sourc- total government spending on schools. criminatory, [and] reliant on hand-outs’. es—school fees and endowments and the Using data for 2004–05, that study finds Her fundamental point was that if people like. Private school students have more that total public funding to government wanted to send their children to private spent on their education because their schools is far greater than that to non- schools, they should pay for it them- own parents chose to do so. government schools. The AISV argued selves. Figure 1 shows school funding data that the existence of a private school sys- Running through this ugly com- for the period 1998–99 to 2005–06. In tem saved the taxpayer $4.9 billion in mentary is contempt and hatred for reli- the first instance, it is clear that the lion’s that year. This calculation was performed gion—yet the Victorian Equal Opportu- share of school funding comes from the on the basis of what it would have cost nity Commission has yet to bring charges State and Territory governments. The for all private school children to be edu- under Victoria’s Racial and Religious Tol- public education lobby tries to be vague cated at a public school. erance Act. about the actual funding of schools. For The AEU responded with a press The Australian Education Union example, in its press release of 20 August, release headlined ‘Independent schools (AEU), with its celebrity and media al- the AEU cited Commonwealth funding sector research confirms the imbalance of lies, has been running an appallingly dis- figures per student, but not State fund- federal education funding’. You have to honest campaign against private schools. ing figures. The AEU went on to argue, admire the chutzpah. We hear and read that government fund- ‘That is what the Education Minister, In the 2005–06 financial year, total Julie Bishop should be explaining rather government spending on primary and sec- than hiding behind state funding figures ondary education amounted to $35 billion. Sinclair Davidson is a professor in …’ Yet it is plain to see that the Com- The Commonwealth’s share of that fund- the School of Economics, Finance and monwealth is not a large player in fund- ing was a mere 22 per cent, with the States Marketing at RMIT University. ing education. and Territories paying the remainder.

OCTOBER 2007 23 R E V I E W not public students. It is public schools Figure 1: State and Commonwealth funding for schools that are reliant on hand-outs. Imagine if the public education lobby achieved its goal of having no private school system. 30 Commonwealth States All those students would come into the 25 public system that would then be fund- ed at the rate of approximately $10,390 20 per student. At best, funding per stu- 5 dent would fall. Indeed, if the Com- monwealth exited the school funding $ billions 0 market, the per capita funding would 5 fall dramatically. Clearly, it is nonsense to suggest that private school funding 0 deprives public schools of resources. 4 5 The first $4,000-or-so of private -0 school fees simply makes up the short-fall 998-99 999-00 2000-0 200-02 2002-03 2003-0 2004 2005-06 in government funding to those schools. Source: ABS Cat. 5512.0 (Various) Yet, the public school lobby complains that it is government schools that are starved of resources. The AEU claims that public schools across Australia are under-funded by $2.9 billion. Yet if pub- The AEU would rather have under- lic school children’s parents were to pay a mere $1,300 per child, that shortfall funded schools than ask parents to help would be made up. Indeed, that amount would be far less than the average short- pay for their own children’s education. fall that private parents have to pay. It seems that the AEU would rather have The States and Territories paid to public schools, with the remainder go- under-funded schools than ask parents to $28.19 billion for schools in that year, ing to private schools. Consequently, it is help pay for their own children’s educa- with the Commonwealth paying just possible to calculate total funding to each tion. $7.8 billion. Schooling is not a Com- sector, public and private. The share of The blunt reality is this: every stu- monwealth responsibility and, unsurpris- total government money going to pri- dent that exits the public system further ingly, the Commonwealth plays a minor vate schools is slightly over 24 per cent, highlights the failures of the AEU and its role in funding schools. School funding and funding going to public schools just members. Parents are leaving the ‘free’ makes up 3 per cent of the Common- slightly over 75 per cent. Yet, only 67 per education system for an expensive edu- wealth budget, while it comprises over 20 cent of students attend public schools. cation system. As a response, the AEU per cent of State and Territory budgets. The public school system has a greater engages in class warfare and continues to In other words, if there is a problem in share of government funding than is jus- argue that private schools are elitist and school funding and performance it is pri- tified by its share of students. Yet, some- snobbish. Never mind that Dr Andrew marily a State and Territory government how, the AEU and its allies are able to Leigh of the Australian National Univer- problem. The AEU claims that public claim that they are hard done by. sity investigated that very question and schools are under-funded by $2.9 bil- We can go one step further. Total found no evidence that private school lion—it is a State responsibility to meet government funding per public student children were less tolerant than public that funding shortfall—if it exists at all. in 2005–06 was approximately $11,790, school children. The data do not get any better for and approximately $7,589 per private Of course, we should recognise that the AEU. Approximately two-thirds of student. The ratio of private spending our union-dominated public school sys- Commonwealth funding is spent on pri- per student to public spending per stu- tem is in crisis. The AEU wants to cre- vate schools, with one third going to pub- dent is 64 per cent. In other words, I ate a monopoly education system with a lic schools. This is the basis of the AEU estimate a discount to private schools of monopoly provider of teachers. And yet, complaint. Yet what the AEU doesn’t 36 per cent. The AISV estimates a dis- as always, parents want choice and com- tell us is that State government funding count of 42 per cent (it includes capital petition. is distorted too. Approximately 88 per costs in its analysis). If anything, pri- I P A cent of State and Territory funding goes vate students are being under-funded,

R E V I E W 24 OCTOBER 2007 The workplace and the churches Ken Phillips

As part of our ongoing investigation of the industrial relations debate, this edition of the IPA Review has a look at three features of the workplace reform in the construction sector. The Institute of Public Affairs held a conference into the future of the construction industry in September 2007.

ny effort to promote workplace reform in Australia Jensen attacked what has been branded ‘the cult of individu- is always confronted by moral arguments against the alism’ which he defined as ‘the liberal view of ever-expand- Areforms mounted by coalitions of unions, Christian ing choice’ but which, according to him, is in fact ‘selfishness churches, labour academics and significant sections of the masquerading under the grand name of liberalism’. He as- ALP. Permanent reform will never be achieved unless the serted that individualism causes the decay of unions, clubs, moral issues are dealt with. voluntary associations and churches, presenting ‘as great a At the heart of the moral objections is the assertion that danger to our true humanity as the collectivist spirit of Marx- employees are always in a position of unequal and subservi- ism proved to be’. ent bargaining power when compared with employers. State For those who have longest been promoters of workplace institutions, it is argued must always control the employment reform, the reforms have merely been an extension of the free- contract to prevent employers engaging in the exploitation of market arguments for removal of tariff barriers and artificial employees. Exploitation cannot be prevented, it is presumed, industry protection. For them, the morality of free markets unless unions are secured an institutional role in society. is about the liberation of people and the primary reason for Further, it is assumed that senior executives and employ- communism being brought to its knees. For reformers to be ers are shorn of their normal, personal moral reasoning and accused of being as evil as Marxism is not only illogical, but behaviour because of their slave-like subservience to the profit an insult and affront to their own ethics, which are frequently motive. It is said that to consider employees only within an deeply religious. economic context is to treat them as if they were commodi- The fact is that workplace reform is essential for the ties. Employees must never be treated as commodities because moral improvement of Australia and our capacity to work to- they are humans with rights, emotions and sensibilities—so gether as communities. the argument reasons. More broadly, reforms are seen as de- It is true that the employer–employee relationship is at stroyers of community and of the social mission to achieve law one of unequal bargaining power. This is embedded in social justice which is a hallmark of the Christian faith. the legal definition of the contract, which determines that the The Catholic Bishops of Australia have mounted these employer has the ‘legal right to control’ the employee. But arguments against the WorkChoices laws in a 2007 publica- true workplace reform seeks to undo that. The first phase is to tion Workplace Relations: A Catholic Perspective. initiate facilitative legislative change which enables the nur- The Anglican Archbishop of Sydney, Peter Jensen, also turing of manager-to-worker relationships that reflect equal- argued these points in his 2005 ABC Boyer Lecture series. ity of bargaining. Unions and some Christian churches, however, deny that this is possible. They bow to the inevitability of inequality at Ken Phillips is Director, Workplace Reform Unit at the work. But in doing this, they condemn society to sustaining Institute of Public Affairs. debilitating relationships of class warfare, which never allow

OCTOBER 2007 25 R E V I E W Improved productivity from construction reforms Jodie Patron

study by Econtech has found that construction The cost gap has closed because of improved pro- industry productivity has improved significantly ductivity in the construction industry. The report shows Adue to the existence of the Office of the Austra- that there has been a 17.6 per cent lift in productivity in lian Building and Construction Commissioner (ABCC) commercial building and a 9.4 per cent gain in labour and related industrial relations reforms. productivity for the construction industry as a whole. Historically, the costs of construction tasks in the These gains are due to ABCC’s enforcement action commercial sector have been consistently higher than around industrial relations laws. those in domestic construction. This result was first Case studies support the findings that the existence discussed in a 2003 study by Econtech for the Depart- of the ABCC and its supporting regulatory framework ment of Employment and Workplace Relations. The has led to significant improvements in labour produc- study used data from the highly respected Rawlinsons tivity. Furthermore, actual construction industry labour Australian Construction Handbook to compare the costs productivity (as measured by the ABS) has outperformed for commercial construction tasks with the costs of the predictions based on historical performance by 9.5 per same tasks in domestic construction. Importantly, this cent, similar to Econtech’s identified labour productivity comparison was based on the same tasks in the same impact of 9.4 per cent. States in the same years. The study found that a signifi- So what does this mean for the Australian econ- cant cost gap existed between the two sectors, and that omy? While there is no doubt that the overall costs of this gap was largely due to more restrictive work prac- construction have increased significantly over the past tices in the commercial sector. couple of years, the study shows that these costs would Interestingly, this cost gap has now almost vanished. have been even higher without the ABCC. Further, con- This is shown in our 2007 report for the ABCC, which sumer prices are lower (by 1.2 per cent) and Australian contains an update of its 2003 analysis. This update GDP is higher (by 1.5 per cent) than they would have shows that, after averaging 10.7 per cent in the ten years been if the ABCC had not existed. to 2002, the cost gap has recently closed dramatically to only 1.7 per cent in early 2007. The cost-gap closing Jodie Patron is an economist with Econtech. has coincided with the operation of the ABCC and its predecessor, the Taskforce.

pathways to reconciliation. They too often lose their moral and academics, and by some Christian churches, who cam- authority because their arguments reflect those of rent-seek- paign against anti-terrorism laws even where those laws retain ers who seek to retain institutional privilege by defending the the presumption of innocence. These groups appear blind to ‘underprivileged’ classes. their own moral hypocrisy. This is taken to the extreme, for example, by New South The moral debate for workplace reform in Australia has Wales’ work safety laws. Occupational Health and Safety pros- a long journey ahead of it, which must enter a new phase. ecutions conducted under the legislation strip vital protec- One thing that reformers cannot do is shy away from the tions from the system of criminal justice in NSW. Employers moral dimension to the debate. The anti-reformers are too are presumed guilty and are denied full rights of appeal. The often institutional self-servers, no matter how well they are laws have strong academic support—evidenced by academic normally regarded, who must be engaged with countervailing papers that argue that corporate executives have no morality moral argument. because of their single-minded pursuit of profit. I P A This flagrant denial of human rights for corporate ex- ecutives is taken to be acceptable by unions, labour lawyers

R E V I E W 26 OCTOBER 2007 Workplace reform is essential for the moral improvement of Australia and our capacity to work together as communities.

Managers need to adjust to new environment Paul Duckett

raditionally, industrial relations in Australia has Manufacturing has introduced various Total been viewed as a conflict between capital and Quality Management systems over the last two de- Tlabour. Unions and employer organisations cades. These seek workforce participation as part of the have played this out within a system that promoted inputs to deliver operational efficiency. Organisations conflict. who have made substantial investment in this area, dis- Forces for change started gathering momentum in cover that it’s on the engagement front that the real the late 1980s. Industries who found themselves facing dollar value is yet to be realised. But the manufacturing the full force of a competitive world market realised sector hasn’t undertaken the same degree of strategic that a different approach was needed. If they were to change in labour relationships as the mining sector. survive and thrive, then reliability of supply and op- The construction sector is seeing the value of erational efficiency were critical. Sectors such as alu- improved direct relationships, due to the changes fol- mina and iron ore began long-term strategies based on lowing the Royal Commission. It has still yet to dem- managerial leadership and workforce communication onstrate—particularly in States such as Victoria and to dilute the third-party influences that traditionally NSW—that projects can be built in a truly competitive polarised their workforces. manner, but there are emerging examples of progress. This process of change gained momentum with It is still Australia’s resources sector that continues the Keating Government. Strong economic growth to maintain the productivity jumps through the foster- and falling unemployment have created further pres- ing of leaders who value the one-on-one relationship. sures on Government to facilitate efficiency at the en- Australian management in general needs to realise the terprise level. The sustained gains made by the mining possibilities that can arise out of such strategic think- industry provided impetus for the Howard Govern- ing. Managers need to put in place strategies that fully ment to further facilitate changes. utilise the new legislative, that foster engagement and Despite what many commentators say, it is not the building of relationships at the enterprise level. legislation that is driving change. Rather it is a new This point is lost in the current industrial rela- paradigm of strategic business thinking—one that sees tions debate. The debate and effort need to focus on the need to engage an increasingly mobile and aware how Australia develops, maintains and continues to workforce in order to sustain and improve competitive enhance a fair and competitive workplace environ- performance. ment. It is from the workplace level that Australia’s Confronted with a buoyant economy, a growing future competitive edge will come. Business needs to shortfall in skilled labour, and increased competition, focus on leadership and engagement. Unions need to Australian business is realising the strategic imperative proactively work to deliver competitive certainty to of engaging their with employees as well as the mutu- both their members and the businesses who work with ally beneficial outcomes of working together. This is them. not a new concept for management. It was the basis of the strategic one-on-one engagement that the mining Paul Duckett is a management consultant who has industry embarked upon in the late 1980s. had a long a career as a senior HR and IR executive manager with some of Australia’s largest companies.

OCTOBER 2007 27 R E V I E W R E V I E W 28 OCTOBER 2007 Are there too many people? ‘Stabilising’ human population and the anti-natalists Nicholas Eberstadt

A demographic spectre is haunting authoritative and influential circles.

This spectre is the supposed imperative to ‘stabi- ers, spokespersons, and commentators in the media. Politically, lise human population’. That objective is today the goal of ‘stabilising world population’ is officially approved by embraced by a panoply of subsidiary institutions USAID (America’s foreign aid apparatus). within the ‘UN family’, including the United Na- And the quest to stabilise is championed internationally by tions Environmental Programme, the United Na- political figures who are both influential and widely popular: one tions Children’s Fund, and the United Nations of America’s most passionate and outspoken exponents of ‘world Population Fund, which explicitly declared its mis- population stabilisation’, former Vice-President Al Gore, very sion in 2002 to be the promotion of the ‘universal- nearly won the presidency in the closely contested 2000 election. ly accepted aim of stabilising world population’.’ But what, exactly, does ‘stabilising human population’ actu- That goal of ‘stabilising human population’ is ally mean? Though the objective is widely championed today, the also championed by a broad network of popula- banner itself is somewhat misleading, because advocates of stabi- tion and environmental advocacy groups, includ- lising are in fact not concerned with stabilising human numbers. ing most prominently Planned Parenthood and the If they were, one would expect champions of stabilisation to Sierra Club. turn their attention to the outlook for Europe and Japan, where Further, ‘stabilising human population’ is a populations are currently projected to drop significantly over the prospect that has been welcomed and financially next half century. Or focused on the decline in the Russian Feder- supported by many of the world’s most promi- ation over the past decade—in 2006 alone, that country suffered nent and successful captains of industry—among almost 700,000 more deaths than births. Yet virtually no support- them, self-made multi-billionaires Ted Turner, ers of ‘population stabilisation’ have agitated for coordinated mea- Warren Buffet and Bill Gates. The propriety—or sures to lower Russia’s death rate, raise its birth rate, and staunch necessity—of ‘stabilising global population’ has its ongoing demographic losses. been expounded by a wide array of respected writ- The reason for such seemingly curious insouciance about de- mographic decline by self-avowed population ‘stabilisers’ is that their chosen standard does not quite describe their true quest. For exponents of ‘stabilising human population’ do not simply Nicholas Eberstadt holds the Henry Wendt Chair look for population stabilisation. Rather, as the former Executive in Political Economy at the American Enterprise Director of the United Nations Population Fund framed the goal, Institute, and is a Senior Adviser at the National they strive ‘for stabilisation of world population at the lowest pos- Bureau of Asian Research. He is the author of ‘Too sible level, within the shortest period of time’. Many People?’ published by the International Policy Upon inspection it is apparent that ‘stabilising human popu- Network in July 2007. lation’ is really code language: a new name for an old and famil-

OCTOBER 2007 29 R E V I E W iar project. Today’s call for ‘stabilising human Overpopulation? population’ is actually a rallying cry for anti- Jared Diamond associates what he calls ‘overpopulation’ with ‘more natalism. deforestation, more toxic chemicals, more demand for wild fish, After all, its envisioned means of achieving etc’, while Gore writes that an ‘overcrowded world is inevitably a ‘stabilisation’ is through limiting the prevalence polluted one’—a verdict that many of those worried about world and reducing the level of childbearing around population growth would accept without reservation. the world, especially in the developing world— But ‘overcrowding’ is not as easily established as some might implementing policies to reduce births, and suppose. thereby depressing fertility in various venues Population density, for example, might seem to be a reason- around the globe (and particularly where fer- able criterion for overcrowding. By that criterion, Haiti, India, and tility levels are deemed to be ‘unacceptably’ Rwanda (each with over six times the world’s average population high). density) would be somewhat ‘overcrowded’. Bangladesh—with al- The ongoing anti-natal population crusade most 20 times the inhabited globe’s average density—would be couches its arguments in the language of social massively ‘overcrowded’. By that same criterion, however, Belgium science and invokes the findings of science to (2000 population density per square kilometre: 336) would be bolster its authority—but it cannot withstand more ‘overcrowded’ than Rwanda (2000 population density per the process of empirical review that lies at the square kilometre: 289). heart of the rational scientific method. But the most ‘overcrowded’ country in the world would be The case for action to ‘stabilise world pop- Monaco. With a dire 33,268 persons per square kilometre in 2000, ulation’ rests upon four specific premises: it ‘suffers’ a population density almost 40 times that of Bangladesh. • we are in a crisis of ‘overpopulation’; Yet, as we all know, population activists do not agitate themselves • this population growth is unsustainable; about the ‘overcrowding’ problem in Monaco—or in Bermuda, or in Bahrain. • reducing birth rates provides a solution; Moreover, it is hardly self-evident that there is any association and at the international level between population density and econom- • well-placed decision-makers can effective- ic performance. ly and expeditiously engineer the desired Do other demographic measures provide a better reading of changes in worldwide population patterns the population problem that so many take to be so very obvious through deliberate policy interventions. today? Perhaps we might look at rates of population growth. At the To the extent that any of these separate prem- dawn of the twenty-first century, sub-Saharan Africa was estimated ises are testable, it would appear that they are to have the world’s very highest rate of population growth, and demonstrably false. Whether they realise it or sub-Saharan Africa is clearly a most troubled area these days. not, advocates of ‘world population stabilisa- However, if we look back in history, we will discover that the tion’ are devotees to a doctrine, not followers United States had an even higher rate of population growth at the of facts. end of the 18th century—in the decade 1790–1800, in fact, the US pace of population growth was 3.0 per cent a year. Some to-

R E V I E W 30 OCTOBER 2007 day may believe that sub-Saharan Africa has too many people—but Figure 1: Estimated GDP per capita, world and selected would they say the same about regions, 1900–2003 early frontier America? The ‘population crisis’ that 7,000 World advocates of ‘world population Asia stabilisation’ wish to resolve is im- 6,000 possible to define in demographic Latin America Africa terms alone, because it is a prob- 5,000 lem that has been mis-defined. In most people’s minds, the notions 4,000 of ‘overpopulation’, ‘overcrowd- ing’, or ‘too many people’ are 3,000 associated with images of hun- gry children, unchecked disease, 2,000 squalid living conditions, and aw- ful slums. 1,000

Those problems, sad to say, GDP per capita (1990 international $) are all too real in the contempo- 0 rary world—but the proper name 1900 10 20 30 40 50 60 70 80 90 2000 for those conditions is human Year poverty. Source: Angus Maddison, ‘Historical Statistics for the World Economy: 1-2003 Is population growth AD,’ Table 3: Per Capita GDP, available at http://www.ggdc.net/maddison/ unsustainable or unstable? The relationships between popu- lation change and economic or political change encompass an ex- Figure 2: World population vs. prices of wheat, maize and rice traordinarily broad and compli- 1900–2003 cated set of interactions with an array of multi-directional influ- ences, and consequential second-, Wheat price index third- and even higher-order im- 700 Maize price index 7 pacts. Rice price index 600 6 It is for this reason that the World population development economist Robert 500 5 Cassen has described the state of current research trying to demon- 400 4 strate a link between population growth and per capita economic 300 3 growth as ‘unsettled’, writing that 200 2 ‘attempts to demonstrate such an Commodity price index Commodity

effect empirically have produced 100 1 population (billions) World no significant and reliable re- sults…’ 0 0 Between 1900 and 2000, hu- 1900 10 20 30 40 50 60 70 80 90 2000 man numbers almost quadrupled, leaping from around 1.6 billion to over 6 billion; in terms of pace Sources: Commodity price indicies: 1990-1984 compiled from World Bank data and magnitude, nothing like that by Enzo R. Grilli and Maw Cheng Yant, World Bank; data for 1985-2003 compiled surge had ever previously taken from World Bank data by Stephen Pfaffenzeller, University of Nottingham. (Ad- place. But why exactly did we justed for CPI inflation.) The author thanks Stephen Pfaffenzeller for providing experience a world population ex- this data. World population: US Bureau of the Census. plosion in the twentieth century?

OCTOBER 2007 31 R E V I E W The ongoing anti-natal population crusade invokes the findings of science to bolster its authority—but it cannot withstand the process of empirical review.

It was not because people suddenly started breeding like Anti-natalist public policy? rabbits—rather, it was because they finally stopped dying The third premise of ‘world population stabilisation’— like flies. that birth rates must be lowered to alleviate the world Between 1900 and the end of the twentieth century, population crisis and to mitigate the adverse economic, the human lifespan likely doubled: from a planetary life resource, and political consequences of rapid population expectancy at birth of perhaps 30 years to one of well over growth—requires absolutely no substantiation if one is a 60 years. By this measure, the overwhelming preponder- true believer in the anti-natalist creed. ance of the health progress in all of human history took To the anti-natalist way of thinking, the purposeful re- place during the past hundred years. duction of birth rates (and especially birth rates in poorer Among the most important proximate reasons for the regions) is an incontestably worthy policy objective—for, to global surge in life expectancy was the worldwide drop in this way of thinking, it is axiomatic that fewer births trans- infant mortality rates. In the early 1950s, according again lates directly into benefits for present and future generations. to United Nations Development Programme estimates, For those who must be convinced that a problem exists be- 153 out of every 1,000 children born around the world fore consenting to the public action proposed to redress it, did not survive their first year of life; by the start of the that premise rests on their first two premises—and for the new century, that toll was down to 54 per 1,000. empirically inclined, as we have seen, those are shaky foun- Even in troubled regions, great advances in infant dations indeed. survival were achieved. In sub-Saharan Africa, for exam- But even if we were convinced of the pressing need to ple, the infant mortality rate is thought to have declined take public action to lower global birth rates, it would not by over two-fifths, and Russia’s infant mortality rate may necessarily follow that the desired result could be achieved— have declined by over 80 per cent. or achieved at an acceptable cost—or achieved voluntarily. These sweeping and radical declines in mortality are Here lies the pivotal importance of the fourth premise of entirely responsible for the increase in human numbers ‘world population stabilisation’: for this tenet maintains that over the course of the twentieth century: the ‘population it is an established fact that ‘population specialists’ know explosion’, in other words, was really a ‘health explosion’. how international birth rates can be lowered, and that these Now, with respect to economic development, the specialists can consequently provide policy-makers with reli- implications of a health explosion—of any health explo- able advice about the precise interventions that will bring sion—are, on their face, hardly negative. Quite the con- about fertility declines. trary: a healthier population will clearly be a population In the final analysis, the single best international pre- with greater productive potential. Healthier people are dictor of fertility levels turns out to be desired fertility lev- able to learn better, work harder, and engage in gainful els—the number of children that women say they would like employment longer and contribute more to economic ac- to have. tivity than unhealthy, short-lived counterparts. If a government sets population targets and wishes There are, to be sure, explanations for this paradox— to stand a reasonable chance of achieving them, the mis- but the ‘stabilisation’ project’s second premise, which chievous independence of parental preferences means that holds axiomatically that population growth must result in wholly voluntary population programmes cannot be relied resource scarcity, is hardly able to provide it. upon. If states, rather than the parents, are to determine a The dilemma can be stated even more starkly: if the society’s preferred childbearing patterns, governments must presumptions incorporated in that premise regarding the be able to force parents to adhere to the officially approved interplay between population growth, living standards and parameters. resource scarcity were valid, the twentieth century should Despite previously denouncing coercive and violent not have occurred. population control techniques, Jared Diamond in Col- lapse—How Societies Choose to Fail or Succeed praises the Chinese government’s courage to ‘restrict the traditional

R E V I E W 32 OCTOBER 2007 freedom of individual reproductive choice…’ It is this type of population should be acceptable?)—humanity has enjoyed control—coerced restrictions, forced abortion, infanticide—that appar- unprecedented and extraordinary improvements ently ‘contributes to [his] hope’ and ‘may inspire modern First World in material living standards over the past century, citizens’ to follow a similar path. and over the past few decades in particular. Whether they recognise it or not, every advocate of anti-natal popu- Those improvements are represented in the lation programmes must make a fateful choice. They must either opt for worldwide increases in life expectancy and per voluntarism, in which case their population targets will be meaningless. capita income levels that we have already re- Or else they must opt for attempting to meet their population targets—in viewed. which case they must embrace coercive measures. There is no third way. The tremendous and continuing spread of The grim and inescapable connection between population growth health and prosperity around the planet beto- and mounting economic problems that is posited by today’s anti-natal kens a powerful and historically new dynamic doctrine is hardly faithful to the actual record of global demographic and that anti-natalists today only dimly apprehend. economic development over the past century. This is the shift on a global scale from the reli- But the apparent anxiety that some proponents of ‘stabilising world ance on ‘natural resources’ to the reliance on ‘hu- population’ experience in contemplating a future with 11 billion, 14 bil- man resources’ as fuel for economic growth. The lion, or more human inhabitants of our planet may also be misplaced for worldwide surge in health levels has not been an a more prosaic reason—to judge by current trends, such levels may never isolated phenomenon. To the contrary: it has be achieved. been accompanied by, and is inextricably linked The experience of the past four decades is worth bearing in mind. In to, pervasive and dramatic (albeit highly uneven) the four decades since the early 1960s, global fertility levels are thought increases in nutrition levels, literacy levels, and to have dropped by almost half: from a ‘total fertility rate’ (TFR, or births levels of general educational attainment. per woman per lifetime) of around 5 in 1960/65 to one of about 2.6 It is in ignoring these very human resourc- in 2000/2005. Over that same period, the average TFR for ‘developing es that so many contemporary surveyors of the countries’ is thought to have dropped by over half, from 6 to under 3. global prospect have so signally misjudged the de- The largely overlooked fact is that parents still caught in Third World mographic and environmental constraints upon poverty have been choosing to have ever-smaller families. development today—and equally misjudged the Fortunately for our perennially troubled planet, humanity’s popula- possibilities for tomorrow. tion demographic and development prospects appear to be seriously mis- construed by the pessimistic doctrine of ‘world population stabilisation’. I P A While the prevalence of poverty across the globe is unacceptably great to- day—and will continue be so in the future (after all, what level of poverty

OCTOBER 2007 33 R E V I E W R E V I E W 34 OCTOBER 2007 Australia’s hollow federalism Can we revive competitive governance? Wolfgang Kasper

ost peaceful, free and affluent democracies The Australian federal dilemma have federal constitutions, which divide The Australian Federation began with a robust commitment to strong Mthe business of governance between two States and a limited role for the Commonwealth. This has served the or three tiers and encourage competition among vari- nation well. Nevertheless, Australia has been moving against the global ous governments. This of course inflicts costs, but the trend. Canberra has ceaselessly tried to centralise powers, often eagerly resulting checks and balances have the weighty long- assisted by the High Court, which performed juridical conjuring tricks term advantage that the rulers’ power is controlled with the external affairs and the corporations powers to relieve the States and that the creative search for better administrative of some of their original roles. solutions to emerging policy problems is encour- The Achilles heel of Australian federalism has been a lop-sided fis- aged. A federal constitution is a precious possession cal arrangement, which makes the Commonwealth the predominant that helps to safeguard individual freedom and pro- tax collector and the States dependent on hand-outs to fund their tasks. motes good governance. As the collectivist tide that This fiscal constellation is often justified with an egalitarian aspiration: had characterised most of the twentieth century pe- distribution according to need, and equal living conditions irrespec- tered out, more and more nations have adopted fed- tive of performance or luck. It inspired much of Australia’s collectivist eral constitutions and devolved powers to competing ‘Settlement’ at the time of Federation, but most of its props have long lower-level authorities—for example, Spain and Rus- been jettisoned. Industrial protectionism on a ‘needs basis’, centralised sia. Even formally unitary countries—such as Britain, wage-fixing, and welfare handouts without responsibility are all gone. France, Indonesia and China—have been moving in The only surviving collectivist residue from that long-past era is the the direction of greater devolution. And one reason Federal–State financial system; indeed, the members of the rulers’ cartel why most Europeans are rejecting the proposed EU have even managed to strengthen the protections against both competi- constitution is that—official lip-service to subsidiar- tion amongst governments and political responsibility. ity notwithstanding—it shifts too much power to Despite occasional protestations to the contrary, State politicians unelected rulers in far-away Brussels. have gladly connived in the centralisation of the tax system. That shield- Friends of freedom favour federalism because ed them from the opprobrium for raising taxes, gave them access to they understand the dilemma inherent in all collective Canberra hand-outs and allowed them to blame Canberra for shortfalls governance. It was described by the great American and blunders. The result has been much fiscal irresponsibility, spin doc- constitutionalist James Madison in this masterful way: toring, arm-twisting and State-Federal acrimony—as well as a grow- ‘If angels were to govern men, neither external nor ing dependency of the subordinate authorities and an emaciation of internal controls on government would be necessary. Australia’s original federalism. Why should State governments promote In framing a government which is to be administered the growth of their own economies by enterprise-friendly arrangements by men over men, the great difficulty lies in this: you as a means of enhancing their tax base? The tax pipeline from Can- must first enable government to control the governed; berra often even rewards them for hindering economic development by and in the next place oblige it to control itself.’ Along- poor regulations. Whereas the constitutional principle of ‘fiscal equiva- side electoral democracy and openness to the world, lence’—that each State should raise the taxes to finance its tasks—would no constitutional provision has been more effective create a balance of responsibility between public spending and raising than federalism in obliging those wielding political taxes, the Australian tax-sharing model has removed fiscal discipline and power to control their political opportunism. induced State governments to pursue political aims, whether this hurts the local economy or not. It has also introduced rigidities and removed incentives to learn and adapt by experimentation—features that are cru- Wolfgang Kasper is an emeritus Professor of cial in times of rapid change. Economics, University of New South Wales.

OCTOBER 2007 35 R E V I E W When fundamental constitutional rules are altered to suit the political opportunity of the moment, security, confidence and freedom are diminished.

True liberals have always seen federalism as a political problem-solv- freedom lovers into arrogance, stupidity and a reluc- ing device and one of the means of maintaining control over the (alas, tance to learn. Power concentrations therefore always necessary) rule of men. By contrast, social democrats and conservatives carry within themselves the seeds of destruction. have often taken a more collectivist approach, centralising or cartelising One consequence of vertical tax transfers and political powers. They tend to believe in mechanistic interventions and federal takeovers is that under-performing State gov- have a static view of social interactions, whereas genuine liberals know ernments need not fear that the electorate will pun- that every action in our complex, evolving societies has unexpected side- ish them at the next poll—a right of the citizens and effects and that no individual or governing committee has the knowledge one of the classic ways to control governments which necessary for top-down interventions. Madison had in mind. When special-purpose grants Conservatives and social democrats also tend to see government or direct Federal takeovers reward State irresponsibil- more as a master than a servant of the citizens. Labor governments in ity, the citizens consider Canberra, which pre-empts Canberra have typically been overly confident that central policies can their judgements, as high-handed and arrogant. They achieve set objectives and have consequently favoured centralisation, such feel sidelined. Little wonder, also, that the centralists as centralised wage-fixing or using the lure of central funding to take over in all parties unite to argue for the abolition of the what originally were State functions. One stereotypical occurrence was the States. Whitlam Government’s takeover of the universities in the 1970s, followed People who understand the importance of the rule in the 1980s by the ‘Dawkins reforms’ of the Hawke era, which created a of law (in contradistinction to the arbitrary rule of am- ‘unitary tertiary system’. Quality competition amongst diverse universities bitious men) know that fallible humans need reliable and a diversity of higher-education establishments with different purposes rules to guide them. When fundamental constitutional and approaches to conveying knowledge and skills were not promoted rules are altered to suit the political opportunity of the by these measures, but administrative command-and-control mechanisms moment, security, confidence and freedom are dimin- and juicy bureaucratic career opportunities proliferated. ished. People then need to invest much costly effort In recent years, the Howard Government has deftly accelerated into co-ordinating their pursuits, and political risks Canberra’s anti-federalism trend. Thus, the overdue reform, which gave and insecurity prevent many potentially useful actions. us the goods and services tax, came with the fatal birth defect that the Liberal philosophers, such as Friedrich Hayek, rightly State-financing GST is collected by the Federal Treasury, and not by self- made the point that it is often essential to uphold a responsible States. The States became even more dependent on transfers confidence-inspiring rule, irrespective of practical con- from Big Daddy in Canberra. Then, new Commonwealth workplace leg- sequences in a particular circumstance. He warned that islation centralised industrial relations matters and de facto did away with unprincipled political opportunism gradually destroys diverse, potentially competing State systems. Those who applauded the the constitution of liberty. reform because of its more market-conforming nature overlooked the fact Maybe the spreading cynicism among Australians that such institutional centralisation gives a future union-driven federal about the ad hoc opportunism at Canberra Centre, too, government the powers to overturn the new workplace rules in one fell is informed by a vague understanding of the costs to swoop. Most recently, all the traditional niceties about the States’ sover- liberty and prosperity that centralising interventionism eign role were cast aside when the Murray–Darling waters were placed and the disempowerment of the States inflict. Perhaps under Commonwealth control, one Tasmanian hospital was singled out voters perceive that Canberra cannot solve all problems for preferential takeover by the Commonwealth, as were complex matters in this wide, diverse land and should confine itself to of local Aboriginal administration in the Northern Territory. It has, of fewer tasks, but do them better, instead of scheming course, always been easy to identify some good, specific reason for such Napoleonic takeovers when it suits them politically. takeovers. But the cumulative effect is that the federal constitution is be- Australians appear to have a pretty good understand- ing hollowed out. ing of the merits of ‘subsidiarity’—that governance Admittedly, liberal values can be promoted by a powerful centre. In tasks should be undertaken at the lowest possible level, the history of the West, liberals have often placed their hopes in enlight- where the rulers are close to the action and where citi- ened reformers at the centre. Recent Australian history, too, shows that zens are well informed. Of course, rulers are never keen liberalisation can be enforced from the top down. But, over the long run, on citizen control and often pursue ideological causes the consequences of centralism tend to be negative in terms of social har- irrespective of local aspirations. The bien pensants may mony, individual freedom and prosperity. The progressive concentration assume that the rulers are angels, but the more worldly of political power is invariably likely to turn the good intentions even of wise know the perils of distant government and weak

R E V I E W 36 OCTOBER 2007 constitutional controls. Observers with a each government should raise the taxes by short-term opportunism to engage sense of history know that elected represen- (and be responsible for the public debts) in costly subsidy wars to attract indus- tatives work less conscientiously on behalf to finance constitutionally assigned and tries away from other States, instead of of those whom they represent and scheme politically chosen tasks. It is a guarantee competing by providing good institu- more recklessly to stay in power, the more that the subordinate levels of govern- tions and policies. Subsidy wars can eas- remote they are from the people. ment remain incorruptible and au- ily be conducted at the expense of other, tonomous. When the powers to tax are legitimate public policies and unfairly Why competitive federalism? insufficient or have been surrendered burden future generations. by opportunistic leaders, the States lose Federalism protects the freedom and pros- These points, which were made in two pub- their autonomy. They also become irre- perity of the citizens, controls opportunis- lications of the IPA’s Federalism Project in sponsible and in the eyes of the people tic governments and promotes the nation’s 1995 and 1996, are even more pertinent to maybe even illegitimate: No representa- international competitiveness best, if it good governance today than they were then. tion without taxation! Copious vertical embraces the following constitutional ele- The citizens are better informed and more and horizontal transfers only make the ments: mobile than ever. The electronic age empow- give-and-take in public policy non- The rule of origin ensures that any ers us to network and move assets indepen- transparent and promote political op- good or service, which is legally pro- dently of big government, big business and portunism. They penalise States with duced in any one State can be sold and big media. The global competition for mo- good economic policies and reward the traded without regulatory impediments bile capital and enterprises among different reckless spenders. ‘Welfare for the States’ in all others (free trade). Thus, if Ca- jurisdictions is hotting up. This means that thus destroys proper incentives and pro- nadian salmon can be sold legally in job creators shop around for those jurisdic- motes mediocrity and dependency. Sydney, it must not be prohibited from tions that offer the best support services for sale in Hobart, as this would offer unfair Since governments have coercive competitive costs in terms of taxes and user protectionism and profit advantages to sovereign powers to tax and incur debts, fees. We do not need self-seeking rulers, but local salmon producers. it is also necessary for a proper system support organisations that help us to keep of competitive federalism to have an The tasks of governance should our jobs in Australia and beat the overseas enforceable ban on political dis- be assigned exclusively to one level of competition. In particular, the challenge for crimination. A national competition government, so that duplication costs government administrations now is to pro- policy is needed to implement some- are avoided and citizens can hold one vide good infrastructures and trustworthy thing akin to the most-favoured nation particular authority accountable. Thus, institutions by legislation, administration clause in the international trade order: we should not have Federal as well as and expedient adjudication. The best school If a preferment is offered to one, it must State departments of health or educa- for learning this is competitive federalism be offered to all comers. When a State, tion duplicating services or even schem- as outlined above. International competi- for example, offers a subsidy to attract ing against each other. tive success begins with good competition one car manufacturer, such subsidies at home, which is one reason why so many Fiscal equivalence has already must be made available to all. Other- other jurisdictions now opt for greater devo- been mentioned. It is the principle that wise, State politicians might be driven lution.

OCTOBER 2007 37 R E V I E W Can we revive the federal spirit? ity and a disposition for solving problems dards and individual freedom. Nor would Given the emasculation of State loyalties in by fair compromise and cooperation. This a construct, which makes many citizens the Senate by central party discipline and seems a good attitudinal basis for a re- dependent on caring governments, prove the lack of commitment by political par- vival of the federal spirit at a time when robust and resilient in the face of military ties to a truly federalist cause, the question globalisation is increasing the competitive or terrorist aggression. arises: Will the call for competitive federal- pressures on the average Australian. People This means that we—the citizens ism simply remain a pipedream as far as now understand that the recent reforms who are the principals in the national po- Australia is concerned? Will we see future of capital, labour and product markets, as litical venture—must ask our temporarily Commonwealth governments take over well as privatisations, have underpinned a elected political agents to devolve powers more and more specific management tasks, record rise in prosperity, but that treating and to compete with each other. To this whatever the cost? Can we believe political any particular sector, such as the public end, we must give up unrealistic egali- assurances that Commonwealth interven- sector, as a holy cow, which is exempt from tarian dreams, because egalitarianism in tions will be short-term and cheap, only competitive challenges, distorts the entire present-day circumstances would cost the to witness subsequent government failure system. It places unfair burdens on those next generation its prosperity, security and and cost blowouts? whose jobs have to compete in open mar- freedom. kets. In any event, a return to a compre- One cannot be optimistic in the light I P A of the Federation’s history. However, Aus- hensive, egalitarian and protective ‘Austra- tralians—like those ardent and successful lian Settlement’ is unthinkable in today’s federalists, the Swiss—have a healthy mea- fast-moving, open world. We would suffer sure of scepticism about political author- almost immediate losses of living stan-

The Central Office Satire by Kurt Tucholsky, 1925 Central Office knows everything better. The Central Office is designed to put down the energy and initiative of its subordinates. The Central Office has no The Central Office watches over everything, it has faith in its ideas and expects others to implement them. The Central overview, it keeps the record files. At the Central Office, men Office is just a tiny bit more infallible than the Pope but no- are busy among themselves with endless quarrels, but they where near as good-looking. slap you on the shoulder and say: ‘My dear friend, you can- The practical man does not have it easy. He curses the not understand this from your individual vantage point! We Central Office violently, tears all its decrees to shreds, and are the Central Office…’ uses them to wipe his eyes. That done, he marries his boss’s The prime concern of the Central Office is to remain a daughter, is promoted and winds up in the Central Office— Central Office. God have mercy on the subordinate entity making it to the records room is advancement, after all. Hav- that dares to act independently. Whether something is sen- ing arrived there, he clears his throat, straightens his tie, tugs sible or not, necessary or not, urgent or not- the Central Of- his shirt cuffs down and starts to govern—as part of a god- fice must first be consulted. Why else is it the Central Office? given Central Office, riddled with contempt for the simple It is because it is- make note of that! Subordinates out there practical man, deeply engaged in endless problems with his better learn to cope. colleagues at the Central Office. He sits there like a spider in The men at the Central Office are not clever, just wily. A its web spun by others, prevents others from doing sensible man who tends to his own little job may be clever, but he is work, issues irrational orders—and knows it all better. not wily. If he were, he would duck out of it and for that there (This diagnosis is true of child-care centres, foreign is only one thing to do – the reform proposal! Thanks to this ministries, newspapers, health insurance agencies, forestry proposal, a new department is created, which, it goes with- departments, and bank personnel and is, of course, a hu- out saying, is subordinate to the Central Office and under its morous exaggeration that does not apply to one institution: charge… One person chops wood and thirty-three others yours.) just stand around and watch – this is the Central Office. I P A Kurt Tucholsky was a German journalist, satirist and writer. He died in Sweden in 1935

R E V I E W 38 OCTOBER 2007 From botox to Bell Bay The cultural divide Jennifer Marohasy of forest politics & Alan Ashbarry

eoffrey Cousins, a well known Sydney businessman and confi- The pulp mill is planned for the most Gdante of the Prime Minister, ran a campaign against a pulp mill planned significant industrial estate in Tasmania for Bell Bay in Tasmania. He enlisted the support of famous Sydney actors, with an operating aluminium smelter playwrights, sports stars and business ty- coons. What hope did the democratically and powder plant, a ferro-alloy elected government of Tasmania have of getting the proposal up, when Sydney’s processing plant, seafood processing elite decided they knew what was best for Bell Bay? facility, power station, sawmill and Tasmania has long been the central battleground of forest politics and, as a export woodchip facility. result, the State has some of the highest environmental protection measures in Australia. In 1989, the proposed Wesley volved the Federal Government, the pub- sultancy, concluded that 92 per cent of Vale pulp mill was scrapped when the lic, regulators and experts. the guidelines are met by the project, then Federal environment minister, Gra- The guidelines specify that any with the remaining able to be addressed ham Richardson, intervened. The gov- pulp mill needs to be either elemental through permit conditions. ernment has since increased the area of chlorine-free or totally chlorine-free and ITS Global undertook a review of the forest reserve almost four-fold. The State operate on a hierarchy comprising waste net social and economic benefits of the now has 42 per cent of its land area re- avoidance, waste recycling/reclamation, proposed mill and concluded that the mill served, up from 13 per cent in 1982. and waste re-use. Any marine discharge will add approximately 2.5 per cent to an- Stringent regulations for the construc- at the end of these processes must have nual Gross State Product which, in lump tion of pulp mills have been developed. In no significant environmental impact. sum terms, is equivalent to $6.7 billion in 2004, the Tasmanian Government revised Any proposed mill must adhere to the net present value terms to 2030. The pulp the existing guidelines and approved a Stockholm Convention on Persistent mill was also assessed as broadening and new set following recommendations from Organic Pollutants while applying the strengthening the industrial base of the the Resource Planning and Development principles of best practice environmental Tasmanian economy. Commission. The guidelines were devel- management, best available techniques Contrary to claims that the mill will oped over a nine-month period and in- and accepted modern technology. be built in ‘classic Tassie wilderness coun- The Tasmanian Minister for Plan- try’, it is to be located in the Bell Bay Pre- ning contracted two independent consul- cinct. This is already the most significant tants to undertake an assessment and re- industrial estate in Tasmania, with an op- Jennifer Marohasy is a Senior Fellow view of the proposed Bell Bay Pulp Mill erating aluminium smelter and powder at the Institute of Public Affairs. against the 2004 guidelines and the Pulp plant, a ferro-alloy processing plant, a sea- Alan Ashbarry is a researcher for Mill Assessment Act 2007. food processing facility, a power station, a Timber Communities Australia. SWECO PIC, a Swedish-based con- sawmill and an export woodchip facility.

OCTOBER 2007 39 R E V I E W Figure 1: Reserved forest in Tasmania, 1982–2006

13% 21% 42%

1982 1992 2006

Source: Timber Communities Australia

On 10 August, a Federal Court development was being debated in the seat of Wentworth are very concerned judge rejected claims by the Wilderness Tasmanian Parliament and appeared to about environmental issues, including Society and a group calling itself Inves- have passed all environmental hurdles. those in Tasmania. tors for Tasmania’s Future that there were Then Geoffrey Cousins decided to But if The Butcherbird reveals any- problems with the Commonwealth’s as- run his campaign, which gained traction thing of its author’s’ attitude towards sessment process for the Bell Bay pulp in the national media on the basis that Turnbull’s Wentworth constituents, then mill. The judge concluded that the pro- the pulp mill had been ‘fast tracked’ and he has a rather narrow view both of pulp cess had been fair and reasonable and that the mill should be relocated to a less mills and Sydney’s social elite. Cousins’s that the public had ample opportunity to pristine site! Without mentioning the fictional Wentworth residents, with their state their views. Federal Court decision, the report from penchant for fast cars, Botox and casual The Federal Department of Envi- the Swedish consultants, or that Bell Bay sex, don’t seem the sort that would be ronment and Heritage has not identi- is already an industrial precinct, the na- greatly concerned about environmental fied any likely significant impacts on the tional media have repeated Mr Cousin’s issues in far-away northern Tasmania. marine environment from the pulp mill, assertions. Nonetheless, Turnbull delayed giv- but has suggested that it is ‘desirable’ (not Mr Cousins claimed that he was ing approval for the mill for another six essential) to force the developer, Gunns forced to act after being told ‘the truth’ weeks, pending yet another review. Limited, to do more modelling and more from a Tasmanian fiction writer. While In other words, a long and tedious monitoring over and above the require- Mr Cousins does not claim to have a par- approval process for a pulp mill planned ments in the 2004 guidelines, which have ticular knowledge of the Tasmanian forest for an industrial precinct in Tasmania since been accepted as the national stan- industry or the timber communities de- was put on hold because Sydney’s elite dard. pendent on it, he is considered an expert believed that they knew what was best. The mill will also help in the strug- on Sydney high society. In July 2007, he On 4th October Mr Turnbull ap- gle to reduce greenhouse gases. By reduc- published a book called The Butcherbird. proved the pulp mill, but as a conse- ing shipping and by producing surplus It is being marketed by Allen & Unwin quence of Mr Cousins campaign there power, it will remove 1.3 million tonnes as a boisterous thriller set in the board- will be an extra twenty-four conditions at of CO2 each year. This is more than will rooms, yachts and waterfront mansions a cost of $2 billion. Perhaps it would be be removed by the first four years of the of Australia’s most decadent city. easier to build the pulp mill in Sydney. Commonwealth’s light bulb replacement Geoffrey Cousins’s campaign against plan. the Bell Bay pulp mill is targeting Mal- Until late August it looked likely colm Turnbull, the Federal environment I P A that the pulp mill would be built—the minister, because voters in his Sydney

R E V I E W 40 OCTOBER 2007 Burning off the petrol price myths Tim Wilson

t’s hard to imagine a retail product as In recent years, there have been ma- industry. A vocal contributor to the current closely scrutinised as petrol. Consum- jor shifts in the industry. Partnerships inquiry is the Service Station Association Iers watch it, hawk-like, as prices rise emerged between Caltex and Shell and the that represents non-chain service stations and fall and Governments respond to the supermarket chains Safeway (Woolworths throughout Australia. Its Chief Executive, slightest fluctuations with a new inquiry. nationally) and Coles. The refiners have Ron Bowden, has come out with his bat In June, the Federal Treasurer, Peter increasingly handed their retail trade to the swinging, attacking the schemes by arguing Costello, directed the Australian Competi- supermarket chains, and then coupled pet- that they are a duplicitous way of securing tion and Consumer Commission (ACCC) rol sales with aggressive convenience store market share. Bowden claims that the part- to hold an inquiry into the price of un- marketing. nerships are aggressively discounting petrol leaded petrol in Australia. The last major Most importantly, the supermarkets and recouping profits through higher gro- inquiry into petrol pricing was held in are offering loyalty through their shopper cery prices. 1996. Since then, numerous smaller parlia- docket petrol discount schemes. The shop- Bowden is not the only one making mentary, government and regulatory inqui- per docket scheme works by providing dis- this point. Chief Executive of the National ries have been held into every facet of the counts to shoppers who buy their groceries Association of Retail Grocers, Ken Hen- industry. No aspect has been left unexam- at the supermarket chain allied to the ser- rick, also argues that supermarkets are hik- ined—from the introduction of the shop- vice station outlet. After spending a certain ing prices so that they can offer petrol dis- per docket discount scheme to changes in amount, consumers are given a docket that counts. During inquiry hearings, Henrick prices around a single weekend. entitles them to a discount on their petrol was asked to substantiate his claims with The current inquiry will assess the bill. evidence. Not surprisingly, he couldn’t, structure of the industry, competition in A 2003 ACCC investigation into the but simply referred to grocery prices go- the market, prices, and barriers to efficiency proposed shopper docket petrol discount ing up. in the industry. It is due to report to the schemes reported that they were likely to Of course Bowden and Henrick may Federal Treasurer by mid-December. reduce prices for petrol, increase non-price be right—higher grocery prices may be competition and, most importantly, en- covering for reduced petrol prices. How- courage a culture of discounting. ever, such a practice is hardly news and Tim Wilson is a Research Fellow at the But these supermarket–petrol retailer similar practice has been used throughout Institute of Public Affairs. partnerships have upset many within the the industry for years.

OCTOBER 2007 41 R E V I E W Figure 1: Average petrol prices in Melbourne in June 2006 (cents/L)

Week prior Week of Queen’s Week after Queen’s Queen’s Birthday Birthday Birthday Monday 131.90 137.30 No data collected Tuesday 131.40 135.30 132.50 Wednesday 131.00 133.90 132.30 Thursday 142.00 143.40 144.20 Friday 140.00 140.60 141.90 Saturday 139.60 139.10 139.70 Sunday 138.10 136.80 137.30

Source: RACV Submission to the Senate Economics Legislation Committee Inquiry into the Price of Petrol in Australia, July 2006.

Independent service stations have tra- entire supply chain the total profit is only Round and round we go ditionally had convenience stores attached around 10 per cent—a comparatively low Exchange rates and the world price are not to them which sell products with much profit ratio for a retail product. Fortunately, the only contributors to the price of petrol. higher profit margins than petrol. Retailers petrol is a high turn-over good, so low re- The least understood component of petrol have to make a profit somewhere and using turns are offset by high consumption. pricing is the price cycle. The factors con- competitive petrol prices lures customers Australia’s petrol is amongst the cheap- tributing to the price cycle are numerous into buying profit maximising chocolate est in the world. We extract and refine the and poorly understood. But there is one bars and drinks. And it is not just the in- vast majority of it domestically and import factor that is universally understood to be dependent chains that see a convenience only 15–20 per cent. A high level of do- the most important—demand. store as part of their business model. In its mestic production does not make us im- The price cycle is famously blamed submission to the 2007 ACCC inquiry, BP mune from the world price, however. Aus- for peaks just before and on weekends and stated that convenience-store sales make up tralian petrol is priced against world prices public holidays. Yet the evidence points to half of its service station revenue. to remove enticements to export to other something different. The price cycle follows Ultimately it doesn’t matter if service markets which could cause a domestic a largely predictable pattern. Current trend stations are using petrol as a lead-in prod- shortfall. data from Melbourne show that peaks in uct. If consumers want to reduce their pet- Petrol prices fluctuate primarily price generally occur on Wednesdays and rol bill, they only need resist that chocolate around the world price sourced from the Thursdays and then prices decline until a bar. Asia-Pacific’s major petrol trading market trough starting on Monday or Tuesday. and source of our imports—Singapore. As As a result, service stations are heavily de- Pricey petrol? a commodity traded in US dollars, we are pendent on the average takings of the en- The attack on loyalty programmes, the also affected by changes in the Australian/ tire week, not just a one- or two-day peak. shopper docket scheme and the neces- US dollar exchange rate. If the price cycle is an effort to gouge the sity to draw incomes from more profitable Despite the occasional blip, there is a public for higher prices, retailers should be consumer goods demonstrate one essential very strong correlation between the Singa- a little less transparent. point—retail petrol operates in a competi- pore price and the price at the bowser. Shifts And public holidays are no different. tive market and retailers are compelled to in the world price take up to two weeks to Following the June 2006 Queen’s Birthday be creative to attract consumers. flow on to Australian consumers because of weekend, the Senate Economics Legislation Unleaded petrol is a generic product the time it takes to transport petrol and for Committee held an inquiry into alleged in- whose price is widely known and attracts stations to replenish stocks. Similarly, be- creases in prices. Yet for all the hoopla made little or no brand loyalty. Of a typical tank of cause smaller country service stations have by politicians, it was up to the motorist’s petrol, roughly 41 per cent of the total cost lower turnover and less frequent replenish- lobby, the Royal Automobile Club of Vic- is tax, 53 per cent is production costs and 6 ment rates, the flow on of higher or lower toria (RACV), to hose down the hype. In per cent is profit for the retailer. Across the prices can take longer in the bush. its submission, the RACV provided data

R E V I E W 42 OCTOBER 2007 Ultimately it doesn’t matter if service stations are using petrol as a lead-in product. If consumers want to reduce their petrol bill, they need only resist that chocolate bar.

from Melbourne showing surprising stabil- rent take by Government is only around a year, the Government introduced a new ity in the market at the time and no abnor- third of the final price, but still a significant set of regulations—Oilcode. Oilcode is de- mal price hikes. (See Table 1) contributor to the price at the pump. signed to regulate, and increase the trans- And all the criticism of the price cycle The Federal Government has regula- parency of, petrol pricing. Its centrepiece is presumes that consumers are being exploit- tions that also add costs for imported petrol. the introduction of Terminal Gate Pricing ed. The ACCC, petrol companies, petrol As an example, in 2001 the Federal Gov- that primarily requires wholesalers to ad- retailers and the RACV all beg to differ. ernment introduced requirements limiting vertise the price per litre of product to buy- Data collected by the ACCC show that a the content of benzene to less than 1 per ers and the public at large. majority (roughly 60 per cent) of petrol is cent, thereby adding additional refinement And it’s unlikely that Government sold below the average of the price in the costs on already imported refined petrol. interference will end there. When burnt, price cycle, not above. But the Federal Government is not petrol is an emitter of carbon dioxide. With The Senate Inquiry following the the only one to blame. In Western Austra- the ‘threat’ of catastrophic climate change Queen’s Birthday weekend demonstrates lia, regulations exist that stop petrol com- on the political agenda, consumers should the biggest enemy of low petrol prices— panies from changing discounts and prices not expect a reprieve in prices. Caltex has politicians. throughout the day. Service stations in WA already modelled how carbon price signals When petrol hovered around a dol- have actually been fined for reducing their will impact on petrol prices. A carbon price lar a litre, the biggest slice was taken by the price of petrol. The aim of the regulations signal could contribute anywhere from Government through the fuel excise and is to stop peaks in a price cycle, but their 2.4–12 cents per litre. If the Government GST. Following political pressure from the effect is to encourage retailers to set prices wants to stop petrol price rises, perhaps it Opposition, backbench Liberal MPs and cautiously higher in order to manage the should conduct an in-depth review of the the public at large, the Government’s fuel risk of undercharging and losing out. science supporting climate change. excise take was capped at 38 cents per litre. GST is added on after excise and all other Consumers beware costs and contributes 10 per cent of the Despite inquiry after inquiry giving oil I P A final price—currently between 10 and 15 companies the all-clear, it hasn’t stopped cents. Because of the cap on excise, the cur- Government interference. In March of this

OCTOBER 2007 43 R E V I E W R E V I E W 44 OCTOBER 2007 A disgusting history of England

maps and architectural drawings, Cock- Chris Berg reviews ayne lovingly combs the margins of the Hubbub: Filth, Noise & period to document all the possible griev- ances that an individual could have with Stench in England everyday life. No nuisance is left unac- by Emily Cockayne knowledged. She neatly divides the book (Yale University Press, into separate categories of complaints: ‘ugly’, ‘itchy’, ‘mouldy’, ‘noisy’, ‘grotty’, 2007, 335 pages) busy’, ‘dirty’ and ‘gloomy’. Some of these grievances seem, at or Europe, the seventeenth and least upon their first citation, relatively eighteenth centuries saw the rise of petty. Hobbes may invite ridicule for hav- the nation state and the consolida- ing dressed too young and French for his F Rochester’s debauchery leads to the maca- age, but vanity certainly did not disappear tion of sovereign power. It was a period in which the Baroque and Rococo move- bre but inevitable contraction of syphilis. with France’s ancien régime. Ugly people ments celebrated the aesthetic potential Emily Cockayne’s Hubbub: Filth, were ridiculed, but being ugly did not of art, and in which we can first glimpse Noise & Stench in England keeps the at- seem to harm career prospects, at least for modernity in the fields of political theory, tention firmly on all this unpleasantness. men; women were at a much greater dis- the media, commercial endeavours and Influential and great individuals figure in advantage, and those with physical defor- industry. her survey of everything that was repulsive mities even more so. But it was also very disgusting. about life in the period, but only inciden- As Cockayne’s sources are by neces- Two recent films graphically depict tally. sity biased towards the literate upper class, the repulsive squalor of urban Europe on Samuel Pepys is awoken in 1660 to it is not surprising that the din of every- the cusp of the Industrial Revolution. Per- discover that ‘a great deale of foule wa- day commercial traders and street sellers fume: The Story of a Murderer, based on ter’ had seeped into his parlour from his receives a great deal of attention. The poet Patrick Suskind’s novel of the same name, neighbour’s house. Alexander Pope is dis- Nicholas Breton summed up the situation describes the ghastly scent of eighteenth- gusted by the ‘large tribute of dead dogs’ well by noting that ‘the cry of the poore is century Paris—from its gruesome mon- floating down the Thames. Jonathan unpleasing to the rich’. tages of fishmongers, rotting meat, ma- Swift, frustrated by the roar of a vegetable And some of the poor must be for- nure, to the heat and stench of the tannery merchant hawking his wares to passers-by, given for perhaps thinking that this essen- to which the protagonist is apprenticed. complained that tially aesthetic complaint had the backing The perfume of the title is the ultimate Here is a restless dog crying cab- of the force of law. Two individuals were contrast to the film’s visceral portrayal of bages and Savoys, plagues me convicted of vagrancy in 1685, despite urban life. mightily every morning about this their protestations that they were shilling In The Libertine, the 2nd Earl of time. He is at it now. I wish his for work: one yelling ‘have you got any Rochester—played by Johnny Depp— largest cabbage was sticking in his knives to grind?,’ the other ‘have you got pursues his rakish lifestyle amongst the throat. any worke for a tinker?’. Similarly, satirists singled out ugly, squalor of Restoration London. While Thomas Hobbes also pops up in a section scruffy and apparently atonal buskers for wealth largely protects Rochester from on the ugliness of growing old: 60 years ridicule. the filth experienced directly by the pro- old, but dressed in a manner inappropri- Cockayne notes that the wealth of tagonist in Perfume, his end is nevertheless ate for his age, and a little bit ‘French’. the new merchant class combined with gruesomely unglamorous. It is not reveal- As Cockayne writes in the first chap- increased literacy had architectural conse- ing too much about the plot to write that ter, is designed to provide an al- Hubbub quences. In the early sixteenth and seven- ternative to the customary histories of the teenth centuries, a study tended to be lo- period—which tend to focus on the plea- cated on the outside of an urban dwelling sures of the times—by looking at all that Chris Berg is a Research Fellow at the to maximise light. The heightened sensi- is noisome and disgusting. Drawing from Institute of Public Affairs and Editor of tivity to noise felt by a literate occupant diaries, paintings and illustrations, court the IPA Review. meant that, by the eighteenth century, records, government archives, and even

OCTOBER 2007 45 R E V I E W studies were mostly located in the centre But not all of the risk for food shop- Furthermore, Cockayne rarely leaves of buildings to minimise street noise. pers was unintentional. Shoddy merchants the city limits. Rural life had its own share Some of the complaints were mere often knowingly disguised rotting meat of complaints—urban unpleasantness was nuisances. Others were certainly not. or stuffed bread with filler—grit, wood, so visible to contemporaries because it was ‘Itchy’ and ‘mouldy’ make for very un- sand, and even stones were used to make relatively new. Living and working in the comfortable reading. up weight. English countryside was scarcely the idyl- Sometimes the source of an itch was The list of unpleasantness is nearly lic life portrayed in Marxist anti-Industrial the ubiquitous wigs of the period. Wearers endless. Choking smog so blanketed Lon- Revolution tracts, or even by John Stuart would shave their heads for fitting, but the don that people detected house fires not Mill or William Cobbett. rough underside of the hairpiece would by the smell of smoke, but by the crackle Even so, at the end of the period of have caused much discomfort. Wigs could of flames devouring wood. The pavement Cockayne’s survey, London was progress- accumulate dirt and become greasy and was so uneven as to be dangerous. The ing towards a cleaner, healthier place, de- disgusting. wheels of carts bumping along poorly laid spite the conspicuous acceleration of the Poor quality clothing was not helped streets would shed their lubricating fat, Industrial Revolution in the last few de- by almost non-existent hygiene. It is dif- which would combine with animal dung, cades of the eighteenth century. ficult to discern how often or how thor- soot and other filth. Indeed, this period has modern po- oughly people washed in this period, but The Thames was so ‘impregnated litical significance. Modern environmen- what little evidence we have does not flat- with the filth of London,’ said a charac- talists point the finger at the Industrial ter—rare was the ‘wet wash’. (It is alleged ter in Tobias Smollett’s The Expedition of Revolution as the originating point of to- that Louis XVI took just one bath in his Humphry Clinker, that ‘human excrement day’s environmental problems—Leonardo life.) While the diarists of the period rarely is the least offensive part’. DiCaprio’s upcoming The 11th Hour will mention bathing, Pepys manages to slip in Cockayne’s catalogue of the filth of reportedly do just that. a note that he ‘rubbed myself clean’. Soaps urban England is hardly balanced. There But as Hubbub reveals, long before were either greasy irritants or extremely are scores of histories extolling the virtue even the most revisionist historian dates expensive. of the polished and refined city lifestyle the beginning of the Industrial Revolu- Worse still was the food. It is no sur- (albeit upper class city lifestyle), and to tion, Londoners were complaining of prise that one of the most popular cook- match each description of filth with a ‘duskie cloudes’ over the city. Traditional books of the era, Hannah Glasse’s 1747 counter example of the luxuries of elabo- biofuels such as wood, coal and charcoal The Art of Cookery, had a section to teach rate sixteenth century English gardens were big sources of lung damage. The shift aspiring cooks how to clear a room of would be fatuous. towards electrification that came in the bugs. Cockayne’s descriptions of the dete- But she does address the overwhelm- early twentieth century may have spurred riorating food quality of this period are as ing question that Hubbub raises—if the a great increase in the use of natural re- close to gut-wrenching as a history book city was so bad, why did it continue to sources for energy generation, but it also can get. Her description of everything that grow? City life was certainlye filled with shifted noxious smoke out of the kitchen could go wrong with pork is indicative of unpleasantness, but individuals were and the living room. the culinary challenges of the time: aware of the need to accept trade-offs in The improvements in sanitation, While rootling in the back alleys order to prosper. As Cockayne writes, public works, masonry—Cockayne de- and dunghills, pigs picked up con- There were consolation prizes for tails how poor craftsmanship meant that tamination from city industries those citizens prepared to put up buildings in this period tended to fall and noisome ditches filled with with congested roads and grimy down without warning—medicine and night soil and street sweepings. houses. The prospect of finding food technologies achieved during the Mingling with dogs increased the secure employment, with the Industrial Revolution have increased liv- circulation of disease and intes- opportunity to specialise and di- ing standards far beyond the imagination tinal worms. Pork from city pigs versify, attracted migrants to the of seventeenth-century diarists. Whatever needed to be cooked thoroughly cities and induced them to settle, environmental challenges we face, we are to ensure it did not cause illness despite the risks and squalor. not served well by naïvely utopian paeans to pre-industrial Europe or by appeals to or worm infestation. …Pork with ‘Muck and money go together’ said a wind back development. flabby fat and a hard ring, or with contemporary proverb. So too did the Annoyances such as toothaches, itchy any part that felt ‘clammy’, should social interactions, arts and cultural life clothing, excessive noise and drunken stay on the block. offered by urban density. And while the neighbours are all recognisable to twenty- Butcher shops open to the elements were primary source for Hubbub is a seemingly first-century Australians, but to be so im- susceptible to mud splashes and insect endless list of contemporary complaints, mersed in it is not. contamination. Fruit was prone to disease: individuals were able to acclimatise and apples were dismissed by one contempo- cope with the vast majority of daily nui- I P A rary author as ‘unwholesome’. sances.

R E V I E W 46 OCTOBER 2007 After 11 years, is there anyone who hasn’t been a ‘senior Liberal advisor’?

11 attacks set Howard on a path to op- Matt Brown reviews posing the ratification of Kyoto, using the lack of targets for developing na- High and Dry tions as his excuse to bail out. This cul- by Guy Pearse minated, according to Pearse, on World (Penguin, 2007, 496 pages) Environment Day, 5 June 2002, when ‘John Howard announced to the Parlia- ment that Australia would not ratify the Kyoto Protocol because it would harm he US State Department’s web- the Australian economy and because it site provides some useful infor- did not require large emitters like China Tmation about misinformation. to reduce their emissions’. It notes, ‘Does the story claim that vast, Pearse then uses the pretence of this powerful, evil forces are secretly manipu- ‘announcement’ to claim that ‘the deci- lating events? If so, this fits the profile of sion not to ratify Kyoto was made uni- a conspiracy theory’. No self-respecting laterally by the Prime Minister, not by Self-dubbed climate change martyr his cabinet’. Guy Pearse ticks all those boxes and more The only problem is: Howard didn’t in his recent polemic, High and Dry. conspiracy theory ‘announce’ anything. Pearse’s claims to be a ‘Howard In Howard’s words—not directly government adviser’ and a ‘ministerial would be complete quoted by Pearse—Australia would ‘con- minder’ were recently exposed when it tinue to oppose ratification … [because] was revealed that he had been employed without a starring … the arrangements currently exclude for a total of five weeks by a Parliamen- both developing countries and the Unit- tary Secretary, but had never been em- role for George W. ed States’. ployed by a Minister. Obviously after Howard was simply re-stating his eleven years in office, the ‘Howard gov- Bush. Government’s very public position—a ernment insider’ tag has become some- position determined by Cabinet almost what devalued. tions, embellishments and factual errors, a year before Pearse’s alleged ‘crucial dis- Strangely enough, the ABC was all aimed at sustaining a flimsy conspir- cussion’ between Bush and Howard, and prepared to send a journalist half-way acy theory. almost two years before the so-called ‘an- around the world to challenge the cred- High and Dry casts Australia as the nouncement’ to the Parliament. ibility of global warming sceptic Martin climate change villain led by an evil Prime The Minister for the Environment Durkin, but has given Pearse a clear run Minister who has become ‘captured by a and Heritage at the time, Senator Rob- to spruik his anti-Howard credo on nu- small cabal of powerful greenhouse pol- ert Hill had been just as blunt about not merous occasions. luters’. Conveniently, this cabal also con- ratifying the protocol without US in- High and Dry is full of contradic- trols pretty much anyone who questions volvement. the existence of global warming. In a speech to the Pew Centre in Of course, no self-respecting con- Washington, five months before the Matt Brown is a former long-serving spiracy theory would be complete with- Howard–Bush meeting, Hill said ‘It is staff member for Senator Robert Hill, out a starring role for George W. Bush. our view, however, that it is not possible who has also worked in the resources Pearse contends that ‘a crucial dis- to have an effective Protocol without the sector and is now a Liberal Party Senate cussion’ between Bush and Howard in United States of America. If the United candidate. Washington on the eve of the September States has therefore determined that the

OCTOBER 2007 47 R E V I E W Pearse and his fellow-travellers have a simple approach to anyone—qualified or otherwise—who wishes to engage in debate about the science behind global warming: smear them.

Protocol is unacceptable … then we will by buying cheap overseas offsets through repeatedly—and even Pearse himself. want to explore with the United States the Clean Development Mechanism. And that’s before we get to his other its views on the international architec- But perhaps the most outrageous ‘reputable’ sources such as Bianca Jagger, ture which can deliver an optimal global aspect of High and Dry is Pearse’s sanc- Anthony Albanese, Peter Garrett, Bob response’. timonious admonitions of the Liberal Brown and so on. Hill had made similar statements Party, and John Howard in particular, Perhaps the most ridiculous and as far back as 1998. Pearse even refers to for not tolerating dissent and debate. offensive of Pearse’s smears is his ‘Car- one in High and Dry, but still promotes Global warming zealots such as bon Club Honours List’—a list of more the myth that this was all decided unilat- Pearse, his mentor Clive Hamilton and than 40 people who have received hon- erally by Howard some four years later. his idol Al Gore are in no position to ours ‘since John Howard was elected’ Many of Pearse’s other claims only preach to anyone about tolerating dis- and who Pearse insinuates have been serve to confirm just how detached he sent. rewarded for their ‘campaign to deny was from the reality of climate change Pearse and his fellow-travellers have the science and/or delay emissions cuts politics pre-Kyoto. a simple approach to anyone—qualified by Australia’. Pearse notes that ‘most of For example, he claims of an inci- or otherwise—who wishes to dissent the committee approving such awards, dent in March 1997, ‘as far as I knew from, or engage in debate about, the including its chair, are appointed on the … the government was preparing for a science behind global warming: smear advice of John Howard’ and that this was binding emission target following the them. Label them and their work as ‘pol- ‘the tip of the iceberg’. Kyoto conference’. luter funded’. That, apparently, wins the So these people haven’t been re- The fact is that Australia refused to argument. And under no circumstances warded for their years of service to in- commit to the concept of binding tar- engage with them on the detail of their dustry, the community or politics—they gets right up until the Kyoto conference position. received their gongs from a grateful PM itself. At COP-2 in Geneva in July 1996, In Pearse’s mind, tagging these for being climate change sceptics. Pearse Hill went so far as to dissociate Australia groups as ‘polluter-funded’ then relieves expanded the list to 61 on his website, from the Ministerial declaration, saying: him of the responsibility actually to chal- but apparently was forced to take it ‘Australia does not endorse the aspect of lenge the factual basis of the arguments down after one of the people he named the statement which commits the Parties their contributors have put forward. threatened legal action. To understand to include in the final instrument legally Pearse makes numerous references how absurd this list is, one need only binding targets’. to the ‘polluter-funded Energy Futures consider that, since the election of the Australia was attacked constantly Forum’ (a group coordinated by the Howard Government, more than 28,000 for arguing the need for differentiated CSIRO) and lists the fossil fuel compa- honours have been awarded. Finding 61 targets while at the same time refusing nies involved. Hidden in the fine print of people with tenuous links to industries to say whether, if we were granted such a the endnotes at the back of the book are affected by the greenhouse debate would target, we would then commit to it being the Forum’s other members: Pacific Hy- appear to be stretching a loopy conspira- legally binding. dro, Hydro Tasmania, Westpac, the Aus- cy theory to the limit. Apart from numerous mistakes, tralian Automobile Association, WWF, Unfortunately there appears to be Pearse is continually forced to contradict the ACTU, ACOSS and the Public In- little in the way of truth in High and himself to sustain his ‘Australia is the bad terest Advocacy Centre—hardly a ‘Who’s Dry—convenient or otherwise. guy’ position. Who’ of climate change bad guys. On the one hand, Australian indus- Pearse glibly refers to ‘self-appoint- I P A try should be forced to reduce its emis- ed experts with little or no qualification sions at source and not be allowed to buy in any relevant field’ who have had their cheap offsets from overseas. But Pearse work questioning global warming pub- defends the EU countries who are failing lished. Such a charge could be equally dismally on their Kyoto commitments, applied to Clive Hamilton, Al Gore, saying that they will achieve their targets Tim Flannery—all of whom he quotes

R E V I E W 48 OCTOBER 2007 An ambitious work of philosophical synthesis

the propagation of the Christian message Andrew McIntyre reviews of St Paul, the Roman world and its Law, the decline and virtual disappearance of Ideas: A History from Fire Hellenism, the gradual withdrawal from to Freud Aristotelian thinking, and the eclipse of by Peter Watson the Hellenistic values that accompanied the fall of Rome and the subsequent (Phoenix, 2006, 1,118 pages) plunge into the ‘dark ages’. Watson calls this period the ‘near death of the book’. While attributing it deas is one of those stupendous books to a combination of pressures—natural that turns up now and again, attempt- causes, the barbarian invasions, the rise Iing the impossible task of making of Christianity, the rise of the Arabs—he sense of our history. Like physic’s holy shows how the rise of the influence of the grail—The Theory of Everything—it is anti-intellectual St Paul, in the fourth cen- ambitious and attempts to synthesise the tury, had an effect on the decline of clas- myriad threads of the significant ideas that Classical ideas sical learning. The dialectical method—as formed Western civilisation, and ultimate- epitomised by Aristotle, for example—was ly its success and prosperity. For anyone were saved and outlawed. ‘The scientific study of the heav- interested in the power of ideas, and the ens could be neglected’, claimed Ambrose, unique reasons that make the West what preserved only Bishop of Milan (374-39) for ‘wherein it is, this ambitious book deserves to be does it assist our salvation?’ The Hellenist widely read. because they were idea of a round Earth—and remember the The author, Peter Watson, succeeds exact size of the Earth and distance to the in providing a most remarkable overview hoarded by Arab Moon had already been calculated hun- of the intellectual development of humans dreds of years before—was so thoroughly from the discovery of fire up to the begin- interpreters. rejected that, in 748AD, a Christian priest ning of the twentieth century. His skill is named Vergilius was convicted of heresy considerable in maintaining a coherent, tred of many within the West itself. for believing in the Antipodes. overarching perspective which is both ab- After looking at the emergence of lan- So, far from recounting an inevitable sorbing and exciting. In many respects it guage, the control of fire and agriculture, and linear progress in Western thought, is the juxtaposition of the practical Aris- Watson moves on to the first ‘set’ of im- the book gives us a greater understanding totelian heritage against the Platonic uto- mense changes in human civilisation, the of just how easy it could have been to have pianism that has played out over the ages. so-called Axial Age of the ancient world lost all that went before. As we know, clas- It is this struggle between these two urges or, in the words of Karl Jaspers, ‘the most sical ideas were saved and preserved only in the present political world that can help deep cut dividing line in history’. This pe- because they were hoarded by Arab inter- us better understand the challenges faced riod saw the invention of ‘history’ itself, preters. Watson provides valuable insights by the West from Islamic terrorism, global the exploration of the physical world with into the nature of this continuation and warming, justice and inequality, Third the Atomists, mathematics, astronomy, the mechanisms for transmission through World development, or even the self-ha- literature, and the long shadows cast by both the Islamic Middle East and Spain, Plato and Aristotle. The author moves and their subsequent re-emergence. forward to provide a particularly deft and Consequently, the author nominates Andrew McIntyre is a Research Fellow lucid description of the complex sets of the two centuries from 1050-1250AD at the Institute of Public Affairs. interactions between the Judaic tradition, as central to the emergence of the West

OCTOBER 2007 49 R E V I E W It would seem that nothing much of value came from Christianity—apart from some art. This is surprising, considering the critical role of the Church that Watson describes in some detail.

from this stupor and how the explosion of ocratic) form of authority. And it notion. From the world of the soul to the new ideas at that time were central to the is this, the authority of the experi- world of the experiment is the fundamen- West’s identity and spectacular growth. ment, the authority of the scientif- tal difference between the ancient world Numbered in this period was the influ- ic method, independent of the sta- and the modern. ence of Thomas Aquinas who attempted tus of the individual scientist, his Nevertheless, one of the consequenc- an amalgamation of Aristotelianism and proximity to God or to his king, es of this sense of the ‘second self’, or inner Christianity, helping to fashion the pos- and as revealed and reinforced via voice, is that it is this which inflamed the sibility of a secular world, cathedrals and myriad technologies, which we Romantics and has led to the dead-end the emergence of universities, crop rota- can all share, that underlies the research of Freud and the therapeutic soci- tion, the invention of the experiment, the modern world. ety; in Watson’s words, ‘the last great turn- rise of accuracy—in counting, measuring, This is the heritage of Aristotle, that emi- ing in’. But, according to him, science is punctuation—the introduction of equal nently empirical thinker who once un- gradually showing us that there is no soul, hours and silent reading (essential for sub- dertook a survey of 158 different political that the Platonic ideal notion of the ‘inner versive thoughts), the widespread adop- systems from Marseilles to Cyprus and self’ is misconceived. He concludes that, tion of Hindu numerals, the development became convinced that an ideal state did ‘Looking in, we have found nothing’. of musical notation and double-entry not, and could not, exist. What are the implications for us to- bookkeeping. Contrasted with this is Watson’s other day? This inner voice has become that of There is no room to go into the nu- big theme, that of the exploration of man’s the Left, the moral vanity of conviction merous turns and eddies of this book, but inner life, his soul or second self; what we politics, leading people, paradoxically, to Watson really does touch on everything: might label Platonic. Probably the most a rejection of scientific objectivity, with Hume, Burke, Mill, Kant, Freud, the original idea in Watson’s analysis is the a swag of new beliefs in Platonic utopian radical effects of the romantic movement, role of the ‘soul’ in forming the Western ideals, with futile solutions to the environ- of Darwinism and the discovery of deep sense of self, the individuality that gave ment, injustice and poverty, and at the time, the rise of America, sociology, the him his ability and motivation to anal- same time leading to the discounting of concept of the average man, and modern- yse the material world around him. This empirical evidence or logical argument. ism in all its guises. capacity certainly distinguishes Western This is indeed the heritage of the West’s In the end, Watson comes down man from all other cultures until the re- ‘turning in’ which Karl Popper, over 50 heavily on the side of the take-no-pris- cent past. Watson argues that the preoccu- years ago, warned us about The Open So- oners ‘atheist’ position, echoing Richard pation with the soul and the afterlife gave ciety and its Enemies. There is an urgent Dawkin’s view that ‘ethical monotheism religion, on the one hand, a way to control challenge to maintain and continue to … has been responsible for most of the men’s minds, especially through the me- argue for an open exchange of ideas and wars and bigotry in history’. It would dieval period, and inhibited freedom of thereby explain those things that have seem that nothing much of value came thought and progress. made the West a uniquely free, prosperous from Christianity—apart from some art. However, the abuses of what we and open society. This is surprising, considering the critical might call ‘soul technology’ in the Roman role of the Church that Watson describes Church lead to the Reformation, took I P A in some detail. that control from the clergy, and hastened Watson affirms that the material doubt and non-belief. Watson traces the and political success of the West is based various transformations from the tripartite squarely, almost without exception, on sci- soul of the Timaeus, the Renaissance con- entific innovations based on observation, cept of homo duplex, Marvell’s dialogue experimentation, and deduction. Experi- between the soul and the body, Hobbes’ mentation, he says, is argument that no ‘soul or spirit existed’, all important here as an indepen- and Descartes’ reconfiguration of the soul dent, rational (and therefore dem- as a philosophical as opposed to a religious

R E V I E W 50 OCTOBER 2007 The known unknowns, unknown unknowns, and John Locke

on the photos pages (opposite photos of Arthur Burns who was Greenspan’s faculty John Roskam reviews mentor at Columbia University, and Ayn The Age of Turbulence: Rand). Greenspan summarises the wisdom Adventures in a New of The Wealth of Nations as follows: eco- World nomic growth in a country is determined by Alan Greenspan by 1) the degree of domestic competition, and the extent to which that economy is (Penguin, 2007, 544 pages) open to trade and integrated with the rest of the world, 2) the quality of country’s institutions, and 3) the success of its poli- lan Greenspan’s memoir covers a cymakers in implementing the measures vast array of issues, including his necessary for macroeconomic stability. Adealings with various US Presi- (However Greenspan’s interpretation of dents, his opinions on the American health Smith in point three might be some special none. As prices careened down- and education systems, and his predic- pleading on behalf of the world’s central ward on that day, human nature, tions for the future of China. But perhaps bankers. It would be more accurate to in the form of unreasoning fear, what’s more interesting than these topics is conceive of point three as an injunction took hold, and investors sought Greenspan‘s analysis of what we know and from Smith to policymakers to do little relief from pain by unloading their don’t know. more than not interfere in the operation of positions regardless of whether it In the same way as the community ex- the free market.) made financial sense. pects the health profession to alleviate every John Locke is important because as ailment, there is the demand that central The difficulty of ‘managing’ the economy Greenspan stresses without an individual’s bankers regulate the economy to provide is that ‘the economy’ is nothing more than right to ‘life, liberty and estate’ there is for steady growth and prevent every boom millions of individual decisions made minimal incentive to material improve- and bust. But as Greenspan explains this daily by individuals. To manage this com- ment. isn’t possible. In 1987 ten weeks after he plex interaction is impossible—which, of For Greenspan if there is any one started as chairman of the Federal Reserve course, is Hayek’s great insight. Individu- single thing that drives economic develop- stockmarkets around the world plunged. als like investors in the stock-market are ment it is property rights. ‘My experience On October 19, 1987 the Dow Jones fell liable to emotion. ‘Perhaps someday in- leads me to consider state-enforced prop- by twenty-two percent. What happened is vestors will be able to gauge when markets erty rights as the key growth-enhancing a lesson in behavioural economics which veer from the rational and turn irrational. institution... People generally do not exert Greenspan nicely explains. But I doubt it. Inbred human propensities the effort to accumulate the capital neces- [T]he theory of efficient mar- to swing from euphoria to fear and back sary for economic growth unless they can kets cannot explain stock-market again seem permanent: generations of ex- own it.’ crashes... What new piece of in- perience do not appear to have tempered Secure property rights allow individu- formation surfaced between the those propensities.’ als and corporations to make the sort of market’s close at the end of the While we don’t know what will move continual investment necessary to keep up previous trading day and its close the stock-market, we can be more certain with competitors and the changes wrought on October 19? I am aware of about what will make economies grow and by technological change. And this is the what will improve people’s living standards. relevance of Schumpeter. It is impossible And Greenspan thanks Adam Smith for to gain the benefits of ‘creative destruction’ these insights. Smith, together with John without property rights. John Roskam is the Executive Director Locke, and Joseph Schumpeter are the of the Institute of Public Affairs. stars of the book. Each gets their portrait I P A

OCTOBER 2007 51 R E V I E W A fine work of ‘mere’ craftsmanship

to provide bricks, mortar and Richard Allsop reviews salaries and teaching was for the 150 Years of Spring Street experts. Murray presents both sides of almost ev- Victorian Government: ery political issue that he covers and he 1850s to 21st Century carries his quest for fairness into a gen- by Robert Murray erally charitable attitude towards politi- cians. He argues, for instance, that while (Australian Scholarly politicians can be criticised for their be- Publishing, 2007, 244 pages) haviour in the 1880s’ land boom ‘it is hardly fair to single out one group’ when people at all levels of society were caught he current debate about the ap- up in the speculation. He also laments propriate role of the States high- the fact that ‘those who have had to lights the need for good writing make the tough decisions in Victorian T became important features of the Prot- about their political histories. This has politics have usually been disparaged’. estant hegemony for much of the twen- not been a particularly well-hoed field, He works good short descriptions tieth century. especially in Victoria. of many of the significant Premiers into Murray challenges the common It is thus fortunate that the 150th the narrative and the reader’s apprecia- view that the period from Federation to anniversary of responsible government tion of these characters is enhanced by 1952 was, in the words of The Victorian has triggered two new works. Last year, the book’s liberal use of cartoons, ex- Premiers, a period of ‘arrested develop- two political scientists, Paul Strangio tending from Melbourne Punch in 1856 ment’. Murray argues that ‘Victoria was and Brian Costar, edited a book of es- to Mark Knight in the Herald Sun in regarded as both a national and world says, The Victorian Premiers: 1856-2006, 2002. leader in the semi government agency and now Robert Murray has produced The only real criticism that one can operating at a remove from the govern- an excellent short history of the evolving have about this book is the Foreword by ment of the day’. Some consideration of politics of the colony and the State. academic historian John Lack. Most of contemporary criticism of such bodies, Murray brings a confident hand to what Lack writes is a neat summary of such as F.W. Eggleston’s critique, may the task. He was the Victorian political the book, but in his final two paragraphs have rounded out his discussion on this writer for the Australian Financial Re- he manages to combine factual error, topic. view from 1964 to 1975 and has also left-wing ideological prejudice and a Murray is very perceptive at point- written extensively on political history, patronising attitude to non-academic ing out some of the political contradic- probably being best known for his his- historians. tions that seem to escape other writers. tory of ‘The Split’. Lack says that ‘like Geoffrey Blain- An obvious nineteenth-century example Given his knowledge of the role of ey, he [Murray] is a craftsman whose is the fact that ‘the liberal side was the sectarianism in politics, it is not sur- writing gets you in’. Maybe if a few pro-tariff side in Victoria, whereas liber- prising that he is particularly adroit at more academic historians had a greater als supported free trade in both Britain analysing issues to which there was a re- interest in, and understanding of, politi- and New South Wales’. He also observes ligious dimension, such as the debates cal history, we would not have to give so how, under the later Bolte Government, around State aid in the 1860s and 1870s much thanks that there are mere ‘crafts- Victorian students became early victims and again in the 1960s. He also spots men’ such as Murray around to fill the of the trendy educational agenda. the fault lines on issues such as tem- void so adequately. perance and Sunday observance which It was a paradox that this mo- mentous change slipped in un- I P A der an otherwise conservative Richard Allsop is a Research Fellow at government, taking the old view the Institute of Public Affairs. that the government’s job was

R E V I E W 52 OCTOBER 2007 Revealing the moral Smith

his time. (He even wrote a dissertation Fred Hansen reviews on astronomy where the phrase ‘in- visible hand’ is also found indicating Adam Smith: God or Providence.) A Primer His lectures at Glasgow Univer- by Eamonn Butler, with sity have survived only in students notes. They covered the philosophy of commentary by Craig Smith science, the psychology of communi- (Institute of Economic Affairs, cation, the evolution of languages and 2007, 272 pages) last, but not least, government and public policy. Another good reason for Butler to t is for a good reason that Eamonn introduce us to the whole of Smith’s Butler, director of the Adam Smith output is the recently announced plan IInstitute in London, has chosen to of no less a personality than the new include selections from all of Adam Smith’s cluster of UK Prime Minister to publish his own Smith’s works in his new primer on the version of the ‘true’ Adam Smith. founder of economics, and not simply individual values Gordon Brown has upset free- his best known Wealth of Nations. One market think-tank communities and forms a much better understanding are more important others with his plan to review the leg- of Adam Smith’s powerful analysis of acy of Adam Smith under the auspices the free market economy if one first than the general of the utopian early socialist move- acknowledges his genuine social psy- ment. However, Dr Butler shows that chology. it is not group-centred solidarity but Trained as psychologist, philoso- rules provided by individual-centred sympathy (mod- pher and economist, Dr Butler is well- ern empathy) which lies at the core of suited to his subject matter. So it may the state to ensure Smith’s social psychology. be reasonable to read Butler’s extract And it is not mere coincidence, of Smith’s Theory of Moral Sentiments that free markets indeed, that Smith achieves an elegant first and his Wealth of Nations later. balance by distancing himself from As Butler renders it, Smith’s cluster of actually work. special interest groups or rent-seeking individual values are more important individuals, including entrepreneurs. than the general rules provided by the This is a nice expression of what He is also an invaluable source for that state to ensure that free markets actu- can be taken as the creed of Anglo-Sax- good old Whig liberalism which can ally work. Together, they represent the on empiricism, as opposed to abstract only flourish with some shared hu- famous ‘invisible hand’ which simul- French rationalism. However, Butler man values—not in the splendid iso- taneously epitomises Smith’s strong points out that Smith refers to the lation of value-free neutrality, as some belief that major human achievements phrase ‘the invisible hand’ only twice modern liberals have it. Amazingly, are more “the result of human action in his entire output and, even then, it has only been quite recently that than the product of human design”— not really in the commonly presumed the importance of this difference has as his close friend Adam Ferguson put sense of crude self-interested actions re-emerged in the controversy about it. that mysteriously produce some social French rationalist versus Scottish/ benefit. Like the French Encyclopae- English empiricist Enlightenment, as dists, Smith was an Enlightenment fig- discussed in the works of Gertrude ure who had a comprehensive knowl- Himmelfarb. Fred Hansen is a physician and edge of the classical scholars and of all It is in this context, where Dr journalist. major disciplines of thought present at Butler, who is, like Smith and Gordon

OCTOBER 2007 53 R E V I E W Brown, a Scot, weighs in, rendering or matching demand and supply. ter off to go for the invisible hand as Smith’s social psychology as a: Smith exposed the fallacies of the a source of social order and peace. Is it real scientific breakthrough. It mercantilists who argued that the econ- too farfetched to suggest that this atti- shows that our moral ideas and omy would benefit from exports rather tude may have saved the Anglo-sphere actions are a product of our very than from imports, because the latter from any dictatorship? nature as social creatures. It ar- would deplete their money reserves. Eamonn Butler’s book is, of course, gues that this social psychology This myth is still present in some con- much easier to read than the eigh- is a better guide to moral action tinental provinces where an obsession teenth-century texts it cites. However, than reason. It identifies the ba- with exports and a dislike of consump- it favours a style which would have sic rules of prudence and justice tion prevail. Smith also criticises the pleased Adam Smith himself, who, for that are needed for society to French Physiocrates, who thought that his time, anticipated an impressive, al- survive and explains the addi- wealth was only created by agriculture most journalistic style, which focused tional, beneficent, actions that and not in the busy cities. This myth on accessibility. To wit: short sentences enable it to flourish. has probably not vanished either, and and precise, consistent and clear lan- may fuel French reluctance to let go of guage. Smith also advocates a very modern their European farm subsidies. form of small government—with the I P A Furthermore, Smith is very well exception of his view of the state’s role aware of the traps of regulation, speak- in education, which Butler (of course) ing of the ‘man of system’ who has an wants to be left to parents and compet- intrinsic calling to become a zealot. ing school types—anticipating the now Since there is no such thing as omni- overwhelming evidence that markets science in human affairs, we are bet- are much better at allocating resources

R E V I E W 54 OCTOBER 2007 Greens in the balance

natural sciences and a respect for ‘nature’s Jayde Lovell reviews harshness’, as well as sincere gratitude for Eco-Freaks: the technologies that humans had in- vented. Contrary to urban myth, Reagan Environmentalism Is genuinely loved the outdoors, and was Hazardous to Your Health! so gentle a lover of nature that he went to great lengths to ensure that even the by John Berlau rattlesnakes on his ranch were protected. (Thomas Nelson, This story stands in stark contrast 2006, 256 pages) to Al Gore’s pompous pronouncements that humans are the root of all environ- mental evils, delivered in the auditori- ritiques of the environmental ums of luxury hotels around the world. movement may have multiplied While Gore will, in the blink of an eye, as we tragically saw in the preventable in recent years, but bookstores attribute every one of the world’s ills to C flooding of New Orleans after Hurri- remain intent upon concealing them be- global warming, Reagan is revealed as a cane Katrina, or the rapid collapse of the hind the 50 unsold copies of Al Gore’s well-read President with a balanced ap- Twin Towers, which weren’t properly fire- Earth in the Balance that grace the display proach to science policy—a far cry from proofed in the midst of the anti-asbestos shelves. the conservative caricature portrayed by hysteria. Yet, in contrasting to many of its the Left. Berlau’s underlying message is a cousins in the anti-environmental cor- While Berlau is highly critical of the reminder that disease, environmental rectness genre, John Berlau’s Eco-Freaks fuzzy environmentalism of today’s activ- catastrophes and wastelands all existed is both eminently readable and scrupu- ists, it would be a mistake to call this book naturally, and in abundance, long before lously footnoted. Unlike Michael Crich- ‘anti-green’. Far from it. Berlau takes a human pollutants, global warming or ton’s Aliens Cause Global Warming, which common-sense approach to preserving tree-clearing ever did. Environmentalists takes a light-hearted and satirical jab at the environment, without over-reacting who yearn for ‘the good old days’ have the eco-fundamentalists, Berlau’s lively or overcorrecting. While Reagan loved forgotten the truth of the Hobbesian de- retort is refreshing in its commitment to the American redwood forests, he was ra- scription of primitive life: nasty, brutish cold hard facts. tional enough to realise ‘if you’ve looked and short. As Berlau, the director of the Center at 100,000 acres or so of trees … how The doomsday scenarios about ‘pop- for Entrepreneurship at the US think- many more do you need to look at?’ ulation explosions and massive cancer cri- tank, the Competitive Enterprise Insti- Green opposition to development is ses from pesticides’ have been shown to tute, shows rather adroitly, environmen- not based upon any legitimate grievances be false, yet we’re left with public policies talism today isn’t so much about facts as against each individual initiative, but on based on environmental delirium. And in it is a religion; a fluffy regard for nature a fundamentalist brand of environmen- many cases, we’ve already lost what pro- as a kindly and benevolent force, one talism that views capitalism, prosperity, tected us from the wrath of nature, with which has suffered at the hands of man and the human pursuit of happiness as ‘public health hazards caused by environ- with his high walls and big machines. In the height of depravity. mental policies already on the scene’. an effort to ‘rewild’ the developed world, Perhaps if all who read The Weath- Unapologetic and direct, Berlau at- technologies put in place by our grand- ermakers would also read Eco-Freaks, we tempts to expose the media’s fear-mon- parents have repeatedly been slandered might begin to see something resembling gering and strip away the Green rhetoric and banned on the flimsiest of evidence, an informed and balanced discussion on that has penetrated public discourse. Ber- from DDT to dams and levees. environmental policies. But, in all like- lau recounts the full story behind some of But when you take away lifesaving lihood, those who really need to read it the most commonly misrepresented and technologies, you’re going to lose lives; will never turn the first page. Those who misunderstood ecological fables. are already converted will enjoy the ser- In a delightful true story of Ronald mon. Reagan’s reverence for the American wil- Jayde Lovell is the political advisor I P A to the Australian Parent’s Council, derness, Berlau shows us that the Presi- and former delegate to the Joint dent so hated by environmentalists actu- Environmental Mission, USA. ally had a sound understanding of the

OCTOBER 2007 55 R E V I E W STRANGE TIMES

Imagine this, but saltier.

TREE-SLUGGERS The employee grilled one of the burgers Hey Fat Kid! In Stoke-on-Trent, England, tax-payers and ate it herself on her dinner break, In the Thai culture each child is given are in a tizzy about the town council’s dubbing them edible thus satisfactory a nickname at birth that is meant to re- approval of a new monument. The for sale. When a police officer bought flect the true nature of the individual. monument is to be installed as part of a one of the burgers and became ill he Lately, some nickname-purists have new green initiative promoting environ- claimed that the employee intentionally been outraged by the growing popular- mental awareness. Approved in July, the over-seasoned his burger and charged ity of English-derived nicknames such plans entail erecting a 21-foot-tall metal- her with reckless conduct. Police rushed as Mafia or Seven (short for 7-Eleven). sculpted tree to highlight the intrinsic to the scene, photographed the lethal They insist on reinstating the common worth of the public nature park. The burger and hauled the employee off to use of the wholesome old-time favou- council has also approved the clearing of the slammer. rites like Yaay (big), Ouan (fat), and 20 real trees to make way for the metal Dam (black). The problem has become Taking it to the cleaners one. Additionally, eight 26-foot-tall so dire, according to a Thai English light posts and 30 floor lights are to be In 2002 Judge Roy L. Pearson Jr., a teacher, that more than half of her stu- installed. It appears some environmental Washington D.C. judge claimed that dents have nicknames like Tomcruise groups haven’t quite grasped the idea of he deserved US$65 million in damages or God. The New York Times reports increasing environmental awareness by for the ‘mental suffering, inconvenience that the Thai government and the of- preserving the environment. and discomfort’ he endured after a local ficial arbiter of the Thai language will dry cleaner lost a pair of his trousers. The publish a special handbook containing A Salty Situation / A Salty suit, including a jacket and the trousers a collection of acceptable traditional Attitude / Getting Grilled in question was worth US$1,100. The nicknames, categorising them accord- / Meat Your Doom / I’ll make trousers were found a week after going ing to headings like fruit, animals, and mince meat out of you / Beef missing but Judge Pearson has continued colours in an attempt to curb this wave with the Cops with the suit for years, basing his case on of non-Thai nicknames. Let’s get back A McDonalds employee in Georgia in the the false signage in the window of the to those good old-fashioned monikers United States was arrested and jailed in cleaners that read ‘satisfaction guaran- like Som Prieow (Sour Orange)! September for over-seasoning a police of- teed’ and ‘same day service’. ficer’s burger. According to the employee, Out of compassion for the first Mary Calomiris is an intern at the she was mixing the meat and accidentally generation immigrant family threatened Institute of Public Affairs. spilled a hefty amount of salt and pepper with bankruptcy, Judge Pearson kindly into the mixture. Her manager, who was dropped his claim from US$65 million present at the time of the incident, made to a paltry US$54 million, and is in the patties out of the contaminated meat. process of filing his appeal

R E V I E W 56 OCTOBER 2007