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f¼ INSTITUTE OF PUBLIC AFFAIRS LIMITED (Incorporated in the ACT) IPA REVIEW ISSN 0019 0268 Vol. 41 No. 2 August-October 1987

6 The Rat Pack 64 An Economic Bill of Rights Gerard Henderson President Reagan proposes to reinforce the It prides itself on the independence, incisive- political freedoms guaranteed in the Ameri- ness and critical powers of its members—but can Constitution with economic freedoms. even the Canberra Press Gallery has its blind spots. 14 Debt: the Real Implications Des Moore The true nature of Australias debt crisis is not widely appreciated. What we have borrowed IPA Indicators is less important than how we have spent it. 3 Which AustralianAustralia companies recorded the losses 1n8 c p 18 Peacemaking—No Childs Play Editorial Rita H. Joseph 5 The Labor Government must face some hard Peace educators have acted reprehensibly in decisions if it is to get the economy right. loading their own fear and panic about an impending nuclear holocaust onto the Defending Australia shoulders of children. 22 Harry Gelber Deadlier than War The neglect of foreign affairs and security 24 issues in the recent election campaign reveals R. J. Rummel the unreality of Australias view of the world. Absolutist governments—especially commu- nist governments—have proved a far greater 38 Map: Advance of Democracy threat to life than war. In ten years ten countries in Latin America and the Caribbean Basin have become demo- 31 Handbooks for Good Government cracies. Michael James Two Australian think-tanks have produced 40 Focus on Figures quite different policy strategies for reducing Jacob Abrahami government. Australians drink more, drive more and depend on government more than they did 40 Reviews 40th Birthday years ago. 35 Its a very different looking journal now, but from its inception Review has occupied a 47 Ten Conservative Principles respected position in public debate. Russell Kirk An eminent Philosopher for Freedom illumi- 43 Public Service or Political Service nates the art of the possible. Les McCarrey Governments around Australia are sacrific- 59 Around the States ing the independence of the public service to Les McCarrey the interests of the party. If the founding fathers had foreseen current levels of taxing and spending, federation 52 The Capture of the Welfare State might never have happened. Delia Hendrie and Michael Porter The current welfare system serves the inter- 62 Strange Times ests of some people, but rarely those most in Ken Bakers further tributes to New Age need. Awareness. 56 Privatization a la Francais IPA Councils Prime Minister Chirac is breaking with the 46 long-time French tradition of asserting the superiority of the State in all things. 37 Subscription Advice

Editor-in-Chief Rod Kemp Editor.• Ken Baker

Advertising: Peggy Nicholls (03) 8301097 Review Office • . Articles and Letters Production Assistant: Fiona Macaulay 6th Floor, Unsolicited manuscripts should be accompanied by Circulation: Laura Johnson (03) 614 2029 83 William Street, a stamped, addressed return envelope. Distribution: Melbourne, 3000 Letters to the Editor should be kept to no more than Gordon Gotch Ltd. 300Vie words. TYP esettinS• DudleyY E. Kingg Pty.Y Ltd. Views expressed in the publications ofthe Institute of Printing: Wilke Company Ltd. Phone: (03) 614 2029 - Public Affairs Limited are those of the authors and Design: Bob Calwell Associates Facsimile: (03) 62 4444 do not necessarily reflect the views of the Institute.

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Increase in major crimes reported in Victoria Cost of loading a tonne of scrap metal in the USA: between 1945 and 1985-86: 1,060 per cent. Increase $3. In Britain: 64 cents. In Queensland: $15. in number of police over the same period: 303 per cent. Increase in population: 106 per cent. Estimated cost in 1978 of the new Parliament House in Canberra: $469 million (in 1987 dollars). Largest losses recorded by Australian companies in In 1987 $997.5 million. 1986: $619 million by the Victorian State Insurance Office, $221 million by the Victorian State Transport Authority and $140 million by the Fastest growth in part-time jobs between 1973 and Victorian Metropolitan Transit Authority. 1985 of all industrial countries: 6 per cent in Australia.

Proportion of Australian households relying on direct government benefits as their principal source Number of unpaid parking fines incurred by the of income in 1974: 13 per cent. Nigerian high commission in Britain in 1984: In 1984: 26 per cent. 108,000.

Number of military personnel in USA: 2,143,955. Number of domestic, maintenance, cleaning etc. In USSR: 5,130,000. staff per 100 in-patients in public hospitals: 91.8. In private hospitals: 51.5.

Ratio of generals to personnel in the US Army: 1:1,735. In Australia, for all Services: 1:500 Number of divorces in Australia, average per (approx.). annum 1971-1975: 17,348 (1.3 per thousand population). In 1986: 39,417 (2.5 per thousand population). Population of Afghanistan in December 1979: Number of dependent children of parents divorcing 13-14 million. In December 1986: 8 million. in 1986: 45,200. Proportion of marriages in 1986 in which one or Increase in working days lost due to strikes in the both partners were previously divorced: year to March 1987 compared with the year to 31 percent, March 1986: 23.2 per cent. Proportion of employees participating in strikes Proportion of all employees in Australia employed over the same period: 1:8. by Coles Myer, Australias largest retailer one in 38. Wage growth in Australia in the latest twelve Profit made by Coles Myer in each dollar of sale: months: 4.9 per cent Average for Germany, Japan, less than 2 cents. USA: 2.4 per cent. Number of people apprehended by Coles Myer for shop stealing or fraudulent theft claims in the ii months to June 1987: 41,000. Most common sources of income used by addicts to buy heroin, in order sale of drugs; social security Number of robberies or break-ins suffered by Coles payments; employment or savings; property crime; Myer stores in the same period: 687. prostitution. Number of bomb threats: 235.

SOURCES;(1) Victorian Police Statistician, TheAge, May 15 1987; (2)Australian Business, May 13 1987;(3)Iohn rreebairn, Michael Porter and CIiffWalsh, Spending and Trcring: Australian Reform Options. Allen and Unwin, 1987; (4) Encyclopaedia Britannica Year Book, 1987; (5) Michael OConnor, Testing the Water, Australian Defence Association. 1987; (6) Encounter, April 1987; (7) ABS. Industrial Disputes Australia March 1987. Cat No. 6321.0, ABS, Employed Wage and Salary Earners A usrralia March Quarter 1987, Cat No. 6248.0 (B) The Economist, July 25 1987; (9) The Bureau ofCrime statistics and Research. Drugs and Crime, Phase Two, NSW 1987; (10) Liberal Party "Rort Report" BR 13, May 22 1987; (11) The Auditor-General, Efficiency Audit Report, Parliament House Construction Project Management, June I987;(12) The Economist. July 41987;(13) The Spectator. May 21987;(14) Senate Select Committee on Private Hospitals and Nursing Homes, Pri rate Hospitals in Australia, April 1987; (15) ABS, Dirorces Australia 1986, Cat. No. 3307.0; ABS, Marriages Australia 1986, Ca t. No. 3306.0; (16) Brian Quinn, Managing Director and Chief Executive ofColes Myer Ltd., James Thompson Memorial Lecture, July 23 1987.

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0 EDITORIAL

What Direction Now?

With its election victory, Labor assumes a heavy support for a centralized wage determination pro- responsibility for putting the economy right. cess, and its increased regulation of business, has The Government must first clearly acknow- made investment less profitable and more risky. ledge that the task is much greater than it has so far The growing taxpayers revolt is forcing Australian recognized. The wild fluctuations in assessment of Governments to put a cap on their revenue raising; the economic outlook and of required policies do but there is a need to go much further than this. not inspire confidence. Nor has the Opposition The Government would considerably enhance done a great deal better. In short, there has been a the prospects of sustained economic recovery if in lamentable failure to provide leadership. the forthcoming Budget it were to: • An acknowledgment of past mistakes would • clearly acknowledge the need for major structu- be a helpful start. After Mr. Keatings first Budget ral change involving a reduction in the size of in 1983 the IPA argued that "the Hawke Govern- government and in government "regulation". An ment has made critical errors in economic manage- announcement of targets for reducing Common- ment—budget policy and wages policy." The sub- wealth expenditure and the size of government sequent blow-out in Australias external debt, pri- would be a useful start. For example, a reduction marily reflecting expansionary fiscal policies, and in the overall size of government equivalent to acceptance of wages growth inconsistent with three percentage points of GDP a year would achieving international competitiveness, confirms reduce the government sector to around 36 per that assessment. The Government should accept cent of GDP in 1989/90 compared with an esti- that the worsening terms of trade since early 1985 mated 42 per cent in 1987/88; have only brought forward the need to recognize • cut back strongly total public sector borrowings that over recent years the Australian economy has by recognizing its inability to control net State been on a declining path. sector borrowings and budgeting for a substan- That path has meant weakening growth in tial surplus on Commonwealth account. national disposable income, reflecting deteriorat- It should reject the "corporatist" approach ing productivity and investment. That in turn has inherent in the ACTUs Australia Reconstructed reflected a growth in Government that has wrought and in the Industrial Relations Bill shelved during unprecedented—and inappropriate —changes to the election campaign. Instead, the Government the structure of society and the economy. We have should recognize the need for a much more compe- become a society of consumers, living predomi- titive labour market, based on enterprise unions nantly for the present. It is scarcely surprising that which would allow a more internationally competi- interest rates and unemployment have over recent tive wage structure and would recognize the scope years moved to ever higher levels while the dollar for much needed productivity gains of the sort has fallen. Despite the Governments propaganda, achieved at enterprises such as SEQEB and Robe the depreciating dollar is scarcely an achievement: River. The time has come to accept that, while con- it reflects a loss of competitiveness that has increas- frontation is never desirable, acquiescence to union ingly forced a "bargain basement" sell-off of Aus- demands is not the road to peace and prosperity; it tralian assets. simply stimulates further demands while under- The Governments responses have been slow mining the long-term health of the economy. in coming and inadequate when they have come. At a time of great uncertainty internationally, Neither before nor during the election has the Gov- Australia urgently needs to reduce its vulnerability ernment provided any clear guidance as to its to external shocks and to build up its economic plans. This needs to be remedied. strength. The Government must put aside policies, The IPA has consistently argued that the main including the Australia Card, which divert atten- problem is the size ofgovernment itself. The explo- tion from the over-riding economic priorities. The sion of the public sector has reduced private sector way forward is to reduce dependency on govern- incentives to save and to work and increased incen- ment and encourage individual initiative, enter- tives to consume. The Governments continuing prise, and responsibility. THE RAT PACK that I might be aiming at some kind of hatchet job. public censures of the media had .left a mark. I But he conceded that he could not refuse an inter- recall, for example, a certain tension developing view. Kate Legge also predicted a demolition piece. with some of my interviewees when I raised the She actually mentioned some of my earlier essays question whether journalists (like politicians) on the "Industrial Relations Club" and the "Fridge should be required to declare any pecuniary inter- Dwellers". ests. I was still getting phone calls on this on the day Michelle Grattan greeted my arrival in her before this article hit the presses. office with the news that she was "tired and mudd- During the campaign there were those who led." It was, after all, 11.30 p.m. when I spoke to her directed their criticisms at the proprietors—espe- but Michelle has never allowed a politician or a cially Alan Bond (National 9 Network), Kerry staffer to get away with this excuse when she is Packer (Australian Consolidated Press) and Rupert chasing a late story for the second (or third) edition Murdoch (News Corporation). And there were of The Age. I have known some staffers to auto- those who focused on the role played by journalists matically answer . "Hello Michelle" if the phone in the election—in particular the Canberra Press rings anytime between midnight and dawn. Not Gallery. Former Prime Minister Malcolm Fraser only was she tired and muddled, I found that Ms. concentrated his fire on Rupert Murdoch while Ian Grattan had developed a sudden aversion to tape Macphee and Ian Sinclair both went for the Bond- recorders. She initially objected when I turned on Packer-Murdoch trifecta. Mr. Doug Anthony the machine claiming that she never used tapes. To blamed proprietors and journalists alike. But Sena- those who know Michelle, this comment is almost tor Michael Baume (who initiated the controversy) Nixonian. During my period in Parliament House I and Liberal Party Director Tony Eggleton identi- cannot recall anyone with a more insatiable appe- fied the alleged problem as stemming from the tite for tapes and transcripts. Needless to say, I working journalists. So did (then) Shadow Treas- treated Ms. Grattan in the same manner as she urer Jim Carlton who accused the media ofa "bit of treats politicians and recorded the interview. naughtiness." And then there was Paul Kelly. Mr. Kelly also The debate over bias demonstrated that there expressed shock/horror when I produced my tape- is much misunderstanding about the media. recorder. It was like conversing with a politician Messrs. Macphee, Fraser and Sinclair have got it sitting on a less than one per cent majority in a wrong. The key movers and shakers are not the swinging seat. There were requests to go off the proprietors or the editors (although the latter do record (where I obliged by turning off the tape). determine whether to accept or reject copy) but There were also enormously long pauses while Paul rather the working journalists. The leaders of the weighed up the pros and cons of saying this or that. Rat Pack—Laurie Oakes, Michelle Grattan, Paul During one interminable silence my eyes glazed Kelly, Greg Hywood and (from Sydney) Max over. Having just asked a tricky question I Walsh—are among the most influential figures in imagined myself getting up from the table, going to Australia. Increasingly they have more than one the bar to ring a cab and returning just in time for media outlet. For example, Laurie Oakes has a reg- Mr. Kelly to commence (yet another) excessively ular column in The Bulletin. Paul Kelly appears on cautious answer to a rather incautious question. Network 10 as a political commentator. Max Walsh I dont know where Michael Dodd learnt jour- has columns and a TV show. Michelle Grattan and nalism. But from my experience he seems to have Greg Hywood bob up regularly on radio and televi- picked up his question-response technique from sion. In terms of setting the political agenda and Paul Kelly. Mr. Dodd is noted for his ability to fire assessing policies and performance, the Rat Pack fast verbal yorkers at the feet of politicians. But are more significant than an Alan Bond, a Kerry when it comes to batting against my medium-pace Packer, a Rupert Murdoch or (indeed) a James attack he adverted to a stone-walling technique Fairfax. which would have done. Trevor Bailey or Ken There is no doubt that Senator Michael ("Slasher") Mackay proud. Baumes decision to raise media bias as an election My interviews with the Rat Pack took place issue was a valuable political tactic. The Liberal less than two weeks after the election. As such the and National campaigns were (and remained) a discussions were affected by the widespread allega- disaster. At one time it looked as though media bias tions of media bias that surfaced during the cam- was the only issue which the Liberals had. Cer- paign. As a group, journalists are quite insensitive tainly it was one of the few they seemed willing to to criticism but it was obvious that some of the run with (trade union power, waste, etc. having THE RAT PACK

^^ Laurie Oakes

`y The Gallery has "an inflated view of itself

_ Kate Legge Estimates that about 80 per cent of the Gallery vote Labor, Paul Kelly but does not have "strong The Gallery is "very much criticisms of the Gallery or the into practical politics: way it operates".

_

Michelle Grattan "A significant proportion, probably a majority, of the people in the Gallery would think that the Hawke Government has performed as a government pretty well. " - Mike Steketee__ r^. Believes that the Gallery reported fairly the "other side" (i.e. the Thatcher- Howard position) of the South African sanctions issue. THE RAT PACK been virtually ignored). But, tactics aside, the role All maintained that political preference was of the media is an issue that deserves evaluation in irrelevant and that, by and large, professionalism itself. Is there media bias? If so, what form does it rules—OK. Greg Hywood was emphatic that once take? What is the role of the Canberra Press Gallery a journalist entered the Gallery "ideology really in all this? Does it matter? These questions (among gets sucked out very quickly" and that journalists others) were in my mind when I headed off to Can- made essentially pragmatic judgments on parties, berra to meet the Down Under version of journal- policies and politicians based on "their knowledge isms best and brightest. of the way the system works." Paul Kelly regarded it as natural that members of the Pack were "very Middle Class and Left-Liberal much into practical politics" because most were not economists or specialists in other fields. There From my seven years experience of working in was a widespread view that the Gallery was very Parliament House I have formed a view of the much influenced by .its assessment of political Press Gallery which I was anxious to test on the competence. Michelle Grattan expressed the current members of the Rat Pack. The Gallery is opinion that "a significant proportion (probably a predominantly middle class in background and majority) of the people in the Gallery would think left-liberal in political attitudes. The overwhelm- that the Hawke Government has performed as a ing majority of journalists vote ALP—albeit with a government pretty well." Laurie Oakes conceded certain scepticism towards political parties and that if you hold that the Government "is more politicians born of the latent contempt which Par- competent than the Opposition. . . then that is the liament House familiarity invariably breeds. way you will end up voting, I suppose." The Pack operates according to an informal By and large, the Rat Pack members rejected hierarchical structure with Pack leaders determin- my view that the Gallery was infatuated with Paul ing the political orthodoxies and fashions. Because Keating. I could find no other way to explain why of the similarity in attitudes of Pack members, Keating had received wide acclaim when he was a there is very little diversity within the Gallery. In regulator and potential nationalizer, when (in 1983) other words, heretics are hard to come by. By and he became a deregulator but remained a big spen- large the Gallery acts professionally. After all, a der and when (two years later) he was further con- story, is a story, is a story. But the political orienta- verted to cost cutting. There was, however, a gen- tion of Gallery members is such that if there is any eral agreement that Keating was a skilled politician slippage in professional standards (as there must be who worked harder than any of his contemporaries from time to time) it is the non-Labor side that will on either side of politics in selling his message by invariably suffer. Moreover, conscious bias aside, constantly treading the Gallery corridors. No one the attitudes of journalists must affect the manner disagreed with Laurie Oakes view that Keating in which issues (as distinct from political parties or was regarded as "colourful, tough, outspoken, party leaders) are presented. brave (and) competent." Most of the Rat Pack members to whom I One of the few areas in which there was spoke agreed that the Gallery consisted of predom- genuine disagreement turned on whether there inantly Labor voters. Greg Hywood put the figure were any common Gallery attitudes. I believe that at 70 per cent while Kate Legge went 10 points there was almost a unanimous Gallery position on, higher. Michelle Grattan, Mike Steketee and John for example, the David Combe affair, the MX mis- Stanley conceded that a majority of the Gallery sile issue and the Liberal Partys policy of labour votes Labor. Laurie Oakes had the impression that market deregulation. The Gallery almost to a man this was so in the 1987 Federal election but (and woman) opposed the Hawke Government on expressed some doubts as to whether this was the first two and the Liberal-National Opposition always the case. Paul Kelly declined to comment on the last one. The Combe and MX affairs were on the record (even after a long pause) but did sug- one-off issues. But in my view opposition to John gest that there were "more Liberal supporters in the Howards approach to industrial relations and sup- Gallery than people think." Michael Dodd was not port for the ALP-ACTU Accord has been a consis- convinced that there was majority support within tent Gallery position. So has support for economic the Rat Pack for the ALP but he could only identify sanctions against South Africa. one Liberal supporter. (Note to Editor—I think I On 31 October 1985 (less than two months wasted some of my allowance on the Michael Dodd after Mr. Howard became Opposition Leader) Greg lunch.) Hywood introduced a report—not a comment

I0 THE RAT PACK

piece—with the assertion that "the deep problems criticism among the Rat Pack of the approach John Howard is having with his policy on South taken by Messrs. Keating, Willis and Hayden to Africa were epitomized at a press conference..." economic policy, industrial relations and foreign (Mr. Hywood is quite fond of this type of introduc- policy respectively. At times this is taken to ridicu- tion.) Hywood wrote that Howards position was lous lengths—for example when Kerry OBrien (the "away behind the times" and as a result of this "his ABCs chief political correspondent) suggested chances of receiving a sympathetic hearing for his during a radio, interview that there was virtually views from the Australian media" were "minimal." nothing on which you could criticize the economic Howard, Hywood suggested, was "set for a difficult policy of the Hawke Government or when there time on South Africa." And so it turned out to be. was a similar suggestion in a Sydney Morning Her- During our interview Greg Hywood main- ald feature article written by one-time Rat Pack tained that South Africa was different because this member John Edwards. issue was essentially bipartisan. By this he meant that there was a common Bob Hawke-Malcolm The Heretics Fraser position. A similar view concerning the essential difference of the sanctions debate was put I believe that subconsciously at least there is by Grattan and Kelly. Steketee and Dodd main- some. concern about .what Michelle Grattan con- tained that Hywoods October 1985 assessment ceded was a Gallery tendency towards "some sort was wrong—with Steketee holding strongly to the of common view of the world." Invariably when I view that the media had fairly reported "the other raised this sensitive issue, members of the Rat Pack side" (by which he meant the Thatcher-Howard (with the conditioned reflexes of a herd of Pavlovs position). Oakes and Stanley did agree, however, dogs) would invariably bark out the name David that there was some kind of Gallery position on Barnett. During my interviews Paul Kelly, South Africa and that this did influence the way Michelle Grattan, John Stanley, Michael Dodd and this particular issue was reported. Oakes clearly Kate Legge all raised the spectre of Barnett. regarded South Africa as an exception—claiming David Barnett was Prime Minister Frasers that since the Gallery consisted of "middle class press secretary from 1975 until April Fools Day people with human rights concerns" it was more 1982. He writes a one-page column each week for likely to run a line on an issue like sanctions than The Bulletin and has no regular television or radio on more mainstream political or economic. issues. commentary spots. But, nevertheless, he appears to John Stanley said he sometimes "wondered" be consistently on the minds of Rat Pack members. whether members of the Gallery seek safety in It is as if Barnett is perceived as the resident conser- numbers. In my view this is especially so with vative heretic who can be conveniently trotted out young Gallery reporters—of which there are when allegations are made concerning political many. imbalance in the Gallery. You get the impression If there is (or was) a Gallery position on, say, that if David Barnett were to fall off.the Gallery South Africa then it is quite plausible to suggest perch, a waxworks model would be created over- that there will be other positions across a wide night by Rat Pack members and placed in a promi- range of issues. It is hard to find anyone in the Gal- nent place outside the office of the Leader of the lery these days who is not an economic rationalist Opposition. or who is highly critical of the way the Government There are a few—but not many—Gallery here- is handling the economy. Nor are there many who tics who consistently criticize the Government would now argue against the view that Australias from the left. .Recidivist Keynesians are hard to industrial relations system needs more flexibility find these days—with the notable exceptions of provided this is achieved within a centralized sys- Ken Davidson (The Age), Paul Malone (Canberra tem. Nor are there many who would oppose a for- Times) and (perhaps) Mungo MacCallum. eign policy approach which allowed the US Navy Melbourne Herald journalist Peter Smark access to Australian ports but which was critical of recently wrote that the "Canberra press gallery certain aspects of the Reagan Administrations pol- these days looks like an interchange bench for poli- icies on, for example, the Strategic Defence Initia- tical press secretaries." The problem is that the tive, the Comprehensive Test Ban Treaty and sup- bench is overloaded with those who are willing to port for the Contras in Nicaragua. pull on a Labor guernsey but very few want to run To put it another way (to use one of Neville around for the Opposition. Sometimes you get the Wrans famous terms), there is not much evident impression that David Barnett comprises the THE RAT PACK backs, the forwards and the interchange bench of "usual press conference semi-yell." What, you one side—all rolled into one—and that arrayed might ask, is the professional justification for this against him is a side that is fielding teams in all put-down and others like it? three grades. The complicated issue of journalistic compe- In the latter years of the Whitlam Labor tence is virtually never tackled by the media. It is Government when the media proprietors were per- much easier to write endlessly of leadership chal- ceived to be supporting the Liberal-National lenges (which inevitably tend to involve Opposi- parties, a number of key journalists (including Rat tions rather than Governments) than to undertake Pack members) signed a petition expressing con- the hard task of analyzing what the latest current cern at the "overwhelming concentration of media account or debt figures really mean. The Sunday ownership in Australia" and dissociating them- Telegraphs Warwick Costin in recent times has selves from what they described as the "inherently emerged as the Malcolm Mackerras of the Liberal conservative bias expressed by the majority of pro- leadership prophets. Costin predicted in February prietors." The signatories included Alan Kohler, 1987 that John Howard had only "weeks if not Mungo MacCallum, Paul Malone, Kerry OBrien, days" left. In June he suggested that Howard might Alan Ramsay, Ken Randall and (wait for it) be rolled even if he won the 1987 election and Richard Farmer. In 1987 when two key media pro- became Prime Minister. prietors—Alan Bond and Kerry Packer—publicly You can learn all about academic Mackerras declared themselves for the Hawke Labor Govern- false election prophesies in the media. But journal- ment there was no similar response. ists seldom criticize one another. During the elec- Mike Steketee believes that a government tion campaign the Sydney Morning Herald dealt always has some advantages when dealing with the with one allegation of media bias by interviewing media primarily because it controls access to such paid-up members of the Rat Pack as Richard stories and information. Certainly this has been so Carleton, Paul Kelly, Mike Steketee and Geoff Kit- since the election of the Hawke Government in ney. Not surprisingly they all felt their election March 1983. Labor handles the media very well. reportage was very much up to (if not above) But, at times, there is an atmosphere of intimida- scratch. It was akin to asking Pope Pius IX in tion in the air. This was evident during the election December 1864 whether he approved of the Sylla- campaign when (in an off-the-record briefing) Mr. bus of Errors: Ms. Legge is a lively journalist with Keating indicated that he had marked certain jour- an enquiring mind. Yet she informed me with a nalists whom he felt had dealt unfairly with him. straight face that she did "not have strong criti- Even Mr. Mick Young felt compelled to suggest cisms of the Gallery or the way it operates." The that perhaps the Treasurer was becoming too Rat Pack is like that. sensitive. During the seven years I worked with the The Liberal and National parties, on the other Coalition in Canberra (1976-79 and 1984-86) I was hand, do not sell their political product to the staggered by the amount of genuine respect, if not media with the same degree of intensity as do their awe, which Liberals and Nationals had for the lead- Labor colleagues. Nor do they consistently fight ers of the Rat Pack. I had been brought up in the back hard when they believe they are the victims of Malcolm Muggeridge "from pulp thou art to pulp unfair reportage. Media bias may become an issue thou shalt return" school. So I was genuinely sur- every three years at election time. But sporadic prised to see many senior Coalition figures race for offensives seldom work. the newspapers or turn on their radios and televi- The 7.30 Reports David de Vos recently sions to await with bated breath for this or that referred to the "ever polite" John Howard. In comment from leading Gallery figures. It was as if September 1986 Ms. Grattan described Mr. they were actors waiting for reviews of a first night Howard as a "soft media target." When I was performance. The problem was compounded by Howards Chief of Staff I used to (privately) joke the fact that almost every night was first night. that there was Methodism in his madness. The According to Laurie Oakes, the Gallery takes excessive and continual snide personal references itself too seriously. I agree and merely add that the to Howard in the media suggests that nice guys tend Liberals and Nationals take the Gallery too ser- to get treated badly. I recall a prominent Financial iously. Mrs. Thatcher has demonstrated that it is Review report (published on the day before the possible to appeal to the electorate over the heads election) where reference was made to Mr. of the media. It would be worth trying Down Howards "worried, gold-capped grin" and his Under.

12 THE RAT PACK

There are many able and professional journal- Channel 2 watcher, during his coverage of the ists in the Canberra Press Gallery. But there are not election results on the evening of 11 July Mr. many Liberal or National supporters. I was Walsh twice used the term "we" when referring to reminded of this the other night when I turned on the Labor Party. Maximilian Walsh was not Tim Bowdens ABC Backchat program and noted the first prominent Australian journalist to make that a viewer had written in complaining about this election night slip. I doubt that he will Max Walsh. According to the (somewhat irate) be the last.

Journalists on Media Bias

"...what a lot of people suspect is probably Hawke Government. Most of them think its a true: that most of the press gallery journalists in good government, that it contains some of the Canberra support the Labor Party... (Partly this best and the brightest, that it believes in econo- would) result from the fact that the gallery is mic rationality and so forth, and theyve let that quite young, unconventional in life-style and, interfere with their professionalism." therefore, liberal in attitudes." Brian Toohey, The 7.30 Report, June 22 Phillip Chubb, Time, July 13 1987 1987 "I do not believe the gallery has set out to "Whilst John Howard remains in conten- get Howard; it has simply given him away." tion, his chances are gradually being whittled Peter Bowers, Sydney Morning Herald, away by a press, led by the flagship of the Fairfax June 23 1987 empire, the Sydney Morning Herald. Not since "... considerable sections of the media Arthur Calwell has a Federal political leader seem now to be acknowledging that the Govern- been given such a rough time by the media." ment has got away with more than it should have R. D. Chalmers, Inside Canberra, June 19 in this campaign, and that even if the Leader of 1987 Opposition is taking a long count, the media still "For the past couple of days, I have forsaken has a professional job to do." the soft luxuries of the campaign and headed David Bowman, The Age, June 24 1987 into the newspaper morgues. . . Over many "There has been a bias against Mr. Howard hours, in two cities, I reviewed all the coverage in his period as leader and, of course, judgments by the main newspapers on sale in Sydney and about this can only be subjective. It was more Melbourne. As a result of these studies, I firmly easily identified in the initial six to nine months. believe that the coverage has, at times, been Unusually, Mr. Howard got no media honey- unfair to the Liberals." moon as leader. The media were a factor in the Robert Haupt, The Age, June 19 1987 initial undermining of his leadership." "...the media. . . probably are ailowing the Paul Kelly, The Australian, June 18 1987 Government to get away with more, more easily, "Of course the media is biased. Even Blind than it allows the Opposition." Freddy and his dog can see it. The real surprise Michelle Grattan, The Age, April 7 1986 would be if it wasnt. After all, at least 80 per cent of the people who work in it would be intending "Paul Keating admitted this week the media ALP voters.. . But it is largely a bias of omis- generally had given the Government a `fair sion, rather than commission." go." David Clark, Australian Financial Review, Michelle Grattan, The Age, September 19 June 22 1987 1986 "...theyre not doing their job properly, "...the most biased election coverage theyre not doing it professionally. . I think part against the Liberals that I can recall." of the reason is they personally admire the Brian Toohey, ABC Radio PM Program, Hawke Government, most of them support the June 18 1987

13 Debt: The Real Impliocadoons

Des Moore

In the last IPA Review, Nobel Prize winner, Professor James Buchanan, wrote about the moral and econo- mic crisis being threatened by the growth of debt in the USA. This article outlines the results of a major research study on Australian debt conducted by Des Moore, to be published shortly by thie, IPA. To date, it argues, the debate, has concentrated too much on the source of the debt and insufficiently on how the borrowings are being used.

Australians have heard a lot about the growing selves"—overlook the key point that what really foreign debt, have been told by the Government matters is how borrowings have been used. Internal that the . large increase- in recent years mainly debt can be just as much a real burden as external reflects adverse external developments beyond our debt if the borrowings are not used productively. control, and have been warned that this will require Unfortunately, that is just what has happened. adjustments to policies to limit the increase in liv- The increase in total borrowings has not been used ing standards (or, in some versions, to prevent any to finance increased investment but has, rather, increase) and to effect a restructuring of our indus- financed increased consumption. As a result, Aus- tries. What we have not been_ told by the Govern- tralians have incurred a lot more debt but have not ment, however, is that it is of less significance that commensurately increased the productive _assets the debt increase is entirely in foreign debt than needed to service that debt (which explains the that the increased borrowings have been used to increasing proportion of incomes going on debt finance consumption, that debt has grown relative servicing). Moreover, an increasing proportion of to income because failed domestic government investment has been for replacement of"worn out" policies have wrought major structural changes in capital rather than expanded productive capacity the economy and in social attitudes that have been and some of the investment that has been financed inimical to economic growth, and that we are prob- by borrowing has not produced satisfactory ably now falling into a deflationary debt trap which returns. will end in a depression unless major. changes in a Per Cent To GDP wide range of policies are implemented. Con- Gross The essence of the debt problem is this. For the sump- Invest- Gross Debt past 15 years or so, Australians have been increas- tion() ment(b) Total(c► External ing their borrowings at a faster rate than . their Av 1970/71 to 73/74 72.5 18.5 124 12 incomes and, for each of the three major sectors of Av 1974/75 to 77/78 75.6 17.4 110 9 the economy-government, corporate and house- Av 1978/79 to 81/82 77.1 18.0 114 13 hold—the cost of servicing those borrowings has Av 1982/83 to 85/86 79.0 17.4 129 29 been taking an increasing proportion of receipts. 1986/87 (est.) - 77.4 17.0 140 41 These trends have worsened since the early 1980s. (a) Private plus government. Includes consumption of Too much can be made of the fact that the capital. increase in total debt and debt servicing costs is a (b) Excluding investment in dwellings (and real estate trans- fer expenses) and stocks. reflection of increased foreign debt. Those who (c) Excluding all debt of financial institutions, i.e. is under- argue that external debt "matters"_ while internal stated to the extent of borrowings by financial institutions debt does not matter—"because we owe it to our- from overseas.

Des Moore, Senior Fellow at the IPA, was formerly Deputy Secretary to the Commonwealth Treasury. 1. In his book, Public Principles of Public Debt: A Defence and Restatement (1958), Professor Buchanan established that borrowing involves a voluntary exchange in which there is no "burden"incurred at the time of the borrowing. rather the burden of debt is on the future generation. Hence, the importance of haw borrowings are used. He also pointed out that there is no essential difference between borrowing externally and borrowing internally unless (real) domestic and external interest rates differ. Of course, if (nominal) interest rates take inadequate account of exchange rate changes such differences may arise and may exacerbate the burden of external debt.

IPA Review, August-October 1987 14 THE REAL IMPLICATIONS

These developments do not conclusively One reason is that, as the factors that have establish the existence of a debt problem. In my contributed to the accumulation of debt have also judgment, however, debt levels—and more par- contributed to the slowing economic growth, high ticularly debt servicing levels—have reached a levels of debt relative to income are thus seen as a point, relative to income, where they are inhibiting symptom of other failings and are not recognized as spending on consumption, and (more importantly) a contributor per se. Another reason is that any on investment, to such an extent that we are prob- slowing down effects from the build up of debt ine- ably now falling into a deflationary debt trap. The vitably involves a gradual process that cumulates basic notion of such a process is simple. over time and is not susceptible to measurement: in If people and businesses find that, after paying these circumstances there is a natural scepticism interest, they have less income left with which to about assessments that must be based essentially finance other spending (or, if not less, a slowing on judgment rather than statistical "proof. Also, growth in other income), they will naturally tend to the focus of economists (and others) on the short- spend less on goods and services or to take less risks term economic outlook may have contributed to a in expanding productive capacity. This process can tendency, which has only recently started to be be self-reinforcing in the sense that the less people remedied, to have less regard to longer term struc- spend on buying goods and services the less likely tural changes and their implications for the econ- businesses will be to undertake new investment to omy. This has tended to result in an assumption provide those goods and services. Moreover, gov- that adjustments in key short-term economic vari- ernments are susceptible to the same influences. As ables (such as public sector borrowing or the debt levels increase relative to income, there is thus exchange rate) will do the trick. Associated with an in-built, albeit almost imperceptible, tendency this is the tendency to suggest that the major cause for economic growth to slow. of our debt problem is the adverse overseas econo- But the process does not necessarily end there. mic trends; while such an approach does not reject As debt levels become excessive relative to income, the need for domestic policy action it avoids attri- fears of default increase and risk premia demanded buting fault to earlier domestic policy failings—and by lenders also increase. At a certain point, high implies the need for adjustments in policies that are debt levels—and associated major concerns about limited mainly to taking account of the changed default—not only deter investment but start to international economic scene. undermine confidence more generally. Something Of course, Australia has been adversely like this process may have been an important factor affected by slowing overseas economic growth and in the 1930s depression, which was preceded by a increased agricultural protectionism, resulting in a large increase in debt. The stage has now been long-term decline in our terms of trade. But, while reached in Australia where there is a real possibility sudden changes in the overseas scene can provide that excessive debt levels will lead to the debt trap short run "excuses" for inadequate policies, such being sprung and a depression ensuing. excuses are not credible over an extended period: Of course, debt traps can be avoided ifgovern- Australia has to cut its coat according to its cloth ment policies and community attitudes are condu- and is not incapable of doing so. In any event, as cive to an increase in labour productivity and to the graph shows, there was virtually no change in investment. But high debt levels mean that major our terms of trade between the September quarter policy and attitudinal changes need to be made to of 1977 and the December quarter of 1984, by overcome the inhibiting effects of those high which time gross external debt was already well levels. over $50 billion and the exchange rate was already If there is a real possibility of falling into a debt clearly overvalued.3 The main recent adverse trap why isnt there greater recognition of that— movement in our terms of trade has occurred only and why arent governments taking more steps to since early 1985. We should face the reality that the prevent it? recent downturn in our terms of trade has only

2. See Professor Schedvins article, "The Australian Economy on the Hinge of History" in Australian Economic Review 1,87 which shows that propert y income payable abroad as a percentage ofexports ofgoods and ser vices is now about the same as it was in 1928— about 25 per cent. It subsequently peaked at over 40 per cent in the early 1930s. J. i.e. the level of external debt in Australian dollars was understated at that time because it would necessarily be increased by subsequent depreciations. Moreover, a substantial part of the subsequent increase in external debt - which may have reached around $110 billion at end June 1987— cannot be attributed to the fall in the terms of trade from early 1985. Also, it is unlikely that policies would have been "tightened" as early as they were in the absence of the fall in the terms of trade from earfv 1985.

15 THE REAL IMPLICATIONS brought forward the need to recognize the deterio- economic policies since the late 1950s and early rating path we were pursuing. 1960s, has been partly financed by debt. Even more There is also a tendency to argue that, as Aus- importantly, however, this expansion of the State tralias total debt relative to GDP is still consider- has reduced private sector incentives to save and to ably lower than in many OECD countries, we can- work and increased incentives to spendand to go not be said to have a debt problem. However, into debt to do so; private sector "gearing up" has OECD countries economic growth has also been been stimulated by perceptions that the State has slowing and they may be experiencing similar put a "safety net" under the economy, both via "over-borrowing" and the factors contributing to industry support and through the Welfare State. that .4 Alternatively, they may have used their Moreover, the spreading perception that getting increased borrowings to a greater extent than Aus- into debt is acceptableeven economically tralia to finance an increase in productive assets; responsiblehas probably enhanced private sector this is almost certainly true of countries such as debt accumulation, especially in the more recent Japan. Moreover, most OECD countries face fewer environment of financial deregulation. Also, the difficulties in expanding exports. increasing involvement of the State in income redistribution, whether directly through taxation Terms of Trade or "social wage" programs, or indirectly through (1979-80 = 100.0) interference in the wage determination process, and increased "regulation" of business, has made investment less profitable and more risky. 20 The end "product" has thus been an increased emphasis on consumption, financed increasingly by borrowing, and a decreased emphasis on invest- ment, resulting in slowing economic growth and a diminished capacity to service the accumulating debt. What I argue, essentially, is that the growth of government has been responsible for a slowing down in the output (or income) side of the equation but that this bigger government has not taken

Sept 69 Sept 71 Sept 73 Sept 75 Sept 77 Sept 79 Sept 81 Sept 03 Sept 85 Mar 87 action to restrain the spending side commensur- ately. The difference between the output and Comparisons of international debt levels are spending sides of the equation has been made up by not something, therefore, from which we can draw increased borrowings which, after a time, start to comfort any more than we can draw comfort from have their own independent effect in deterring both comparisons that show that the government sector spending and output. in Australia is smaller than in most OECD coun- tries. It avails us little to be running with the many What Should We Do? tortoises that exist amongst those countries! Equally, given the uses to which increased borrow- If we are falling into a debt trap, how do we ings have been put, we cannot draw comfort from avoid it? The short answer is that we have to adopt the fact that total debt levels are not historically policies that will result in increased output while at high relative to GDP. the same time containing spending. There now Finally, to conclude that the policies pursued seems to be general agreement on that. But what is over the past 15 years or so have largely been inap- not agreed is the speed, extent, and even (in some propriate.is not something that finds ready accept- cases) the nature of the changes. In particular, there ance. Yet an examination of developments over the is as yet only limited recognition of the ongoing whole period makes it difficult not to conclude that detrimental effects that the increased size of gov- this debt problem has emerged because of a com- ernment (and particularly the increase in social prehensive failure of government policy which has welfare spending) is almost certainly having on the involved, as a key part, a marked expansion in the incentive to save and to work. The recent report on size of the government sector. This growth of the "Structural Adjustment and Economic Perfor- public sector, fuelled by adherence to "Keynesian" mance" by the OECDa body not known for being

4. There is considerable evidence that the USA has, for one.

16 THE REAL IMPLICATIONS a supporter of small governmentprovided some three percentage points of GDP annually to encouragement to such supporters when it around 33 per cent; included as one conclusion that the growth of pub- • after allowing for a reduction. in the net public lic spending has operated, at the margin, to reduce sector borrowing requirement to two per cent of national income of OECD countries by 10 to 15 GDP (from its present level of around four per cents for every extra $1 raised in taxes. The analysis cent), a broadly commensurate reduction in suggested that it is the interaction of the combined taxation; effects of higher taxation and increased welfare • the establishment of a wage negotiation system expenditure that is relevant. Some academic that allows/encourages a substantial increase in studies suggest that the effects of high taxation productivity. This would best be achieved by a alone are probably even greater.5 Little attention system under which wages and conditions of has been paid in Australia to such studies. employment are negotiated primarily at the Unless we take radical action across a number enterprise Ievel, with full protection for indi- of fields to halt the growth in debt, we face at best a vidual employers and employees from attempts long period of economic stagnation; indeed there is by unions to exercise monopoly power; now a real risk of an economic depression. Those • the improvement of productivity in the public who argue that radical action is "impracticable" sector through the virtual elimination ofcontrols and cannot be "forced" on society do not address preventing businesses from competing in the the point that, unless society is "persuaded" to take markets of goods and services produced by most such a course, the continuation of a "gradualist" public enterprises, and the "privatization" of approach towards change will result in even more most such enterprises; drastic action being required later. There is also far • the reduction of costs through a reduction of too much "fence-sitting" by those who accept the industrial protection against imports at a signifi- need for major change but who are reluctant to cantly faster rate than envisaged by present fully engage the debate because they fear being plans; labelled politically: what we require is leadership • pending an improvement in productivity, poli- from all major non-political groups, including cies which exercise heavy restraint on consump- businessmen, academics and bureaucrats, in the tion spending. To the extent that other policies long run national interest. But, above all, we need do not ensure this, monetary policies will need to the Government to provide the community with a be operated "so as to produce continued high realistic assessment of the difficulties we face and interest rates. to implement the policies to overcome those To state such a program is to indicate just how difficulties. great our difficulties are. The worst is far from over if we are to avoid the debt trap, we should set a and we will need strong leadership from the Gov- three year program along the following lines:- ernment, and from other groups, if our debt prob- • a reduction in government outlays of around lem and its underlying causes are to be overcome.

5. See, for example, Edgar K. Browning. "On the Marginal Welfare Cost of Taxation" in the American Economic Review, March 1987.

17 Peacemaking-No Childs Play Rita M. Joseph

"Peace at any price" is an unworthy ethic to instill into our children.

In the summer of 1212, an estimated 50,000 chil- us to doubt the truth of that old adage. Indeed, we dren set out from Europe for the Holy Land to should be moved to ask why the more senior mem- make peace between the Christian world and the bers of the Peace Movement, who may have man- Muslim world, to conquer by love instead of mili- aged, before these days of Mickey Mouse options, tary might. There were two groups of children, one to acquire a smattering of history, have deliberately led by a French shepherd boy named Stephen from ignored or conveniently forgotten the lesson of his- Clove-sur-le-Loir, and the other by Nicholas, a ten tory so painfully learned by adult European society year old from Cologne. It was a peace march par nearly eight centuries ago. excellence and it generated tremendous excitement While it should be acknowledged that these and attracted enormous crowds of cheering specta- Peace educators are sincere people, it should be tors. But it was to end in terrible tragedy. Some of pointed out that their sincerity cannot compensate the children became lost, others were shipwrecked, for the deficiency in prudence and wisdom of many and the rest fell into the hands of slave-traders who of their judgments. No doubt they mean well but shipped them to the slave markets of Northern the road to slavery is paved unfortunately like the Africa from where they were sold as slaves to the road to hell. . . Their campaign is designed around East. two distinct thrusts, which are, oddly enough, so With horror we may wonder now how the contradictory as to border on the irrational. parents and those in authority in 1212 could ever On the one hand, like their mediaeval for- have condoned the Childrens Crusade. But really bears, they have fostered unrealistic expectations it should not puzzle those of us who watched last of the ability of childpower to achieve peace. They year as our own children were caught up in an have inspired a naive zeal for peace, equipping excess of crusading fervour, whipped up by some of children from kindergarten upwards with an the more fanatical adult members of the Peace armoury of simplistic catchwords and glib slogans Movement, and assisted by the only slightly less with which they are assured of being able to convert unscrupulous persuasiveness of well-publicized the warmongers. television programs like "Mum, How Do You Spell On the other hand, the Peace educators have Gorbatrov?," in which children were presented deliberately dispelled the natural peace of mind glamorously as splendid ambassadors of peace. and heart that has traditionally belonged to chil- It is all too easy to imagine those crusading dren. The natural security and trust that character- children of long ago as they set off in good faith and izes childhood has been blasted to smithereens with high hopestheir faces aglow with the zeal with the Peace educators "realistic" horror-inspir- that can be seen on our childrens faces each year at ing predictions of imminent nuclear immolation Palm Sunday Marches. for the whole world. That this part of their teaching In moments of optimism, it has been said that program has been superbly successful was demon- we learn by our mistakes. But even the most cur- strated recently in the results of a poll taken among sory glance back over the manipulative antics and Australian schoolchildren, which revealed that the Peace Studies programs devised for children to overwhelming majority was convinced that the mark the International Year of Peace should cause world would end in a nuclear disaster "in their life-

Rita M. Joseph has been a teacher for 17 years, of both Primar y and Secondary students and of a broad array of subjects. including History.

IPA Review, August-October 1987 E 8 PEACEMAKING-NOCHILDS PLAY

time". The childrens optimism appears to have destruction). A prelude in which small human been utterly destroyed. Optimism, so natural to beings should be allowed gradually and con- childhood, has been tampered with, replaced by a trolledly to come to grips with the myriad problems defeatism programmed by Peace educators to of the adult world. A prelude in which children swamp any consideration of happier possibilities slowly but surely come to learn both the more such as that encouraging lessons of history—that good can • human ingenuity may yet devise solutions, a dis- triumph over evil even under the most intimidat- covery, perhaps, that will render nuclear ing circumstances —and the more sobering . les- weapons obsolete, or sons—that they must be vigilant against evil, learn- • human resourcefulness and tenacity of purpose ing to recognize it and learning above all not to may yet secure for us the capacity to surmount underestimate it. They must come to learn what and survive a nuclear conflagration. those poor children of 12J2 were never taught— In every age there have been uncertainties, that zeal for peace is useless without prudence, frightening possibilities, looming disasters. The without the wisdom furnished by that most funda- ghastly slow-motion of famine, the swift scourge of mental of all history lessons that teaches the for- raging diseases like smallpox and the Black Death, midable nature of evil and the treachery that ine- the utterly monstrous inhumanity of genocide, and vitably ensues from abject surrender to it. the horrific destruction of wars with massacres, pillaging and burning... Man has always had to live with these things. In the history of civilization, the reversal of But over the thousands of years of history, we this tradition of protecting children is a should.be able to take some comfort and courage remarkably rare aberration; and it will be to from the sure, vivid testimony therein to the our eternal shame if we are prepared to indomitability and astonishing resilience of the condone such an aberration in our own age. human spirit. And of these characteristics, nowhere is there more evidence than in the readi- There is so much to learn, and as I sift through ness of each generation to go to extraordinary, even the recommended textbooks and resource mater- heroic lengths to protect the next generation, trying ials for the various Peace Studies courses offered in to ensure that their children might enjoy, however Australian schools, I am appalled at the narrow- briefly, some measures ofcarefree happiness, that if ness of the perspective being given, at the blinkered they reach adulthood, they might retain some sus- sentimentality of their hopelessly simplistic blue- taining memory of the good and enduring things of prints for achieving peace. life. True, we cant get far along the road to peace • In the history of civilization, the reversal of without the will to forgive. But an essential ingre- this tradition of protecting children is a remarkably dient for forgiveness is universal recognition of the rare aberration; and it will be to our eternal shame wrong that has been perpetrated. And this is where if we are prepared to condone such an aberration in Australian Peace Studies are farcically inadequate. our own age. In truth, it is a cruel and shocking Comprehensive history lessons would be far more perversion to seek to reverse the natural roles, to pertinent. For it is in the sympathetic acknowledge- dump adult burdens of fear, doubt and anxiety on ment by the rest of the world (including Australian childrens shoulders. The shallow spiel about how teachers and students) of injuries sustained and it helps children to grow up to be responsible, injustices endured that the reconciliation process, peace-loving, non-aggressive adults needs to he amelioration of the burning anger from the long examined more closely for traces of self-righteous years of bitterness can begin. Peacemakers who try rationalization. to negotiate "no fault" settlements cannot succeed. It is imperative that adult society thinks more For there are few things that rankle more than the carefully about that small precious prelude called swiftness of others to grant blanket pardons to the childhood. A prelude in which small human beings perpetrators of an injustice done to oneself. should be privileged surely to grow confident and Yet in the name of Peace, Australian school- sturdy in a protected environment (not frightened children are being exhorted to forgive the Soviets out of their wits by the certainty, mercilessly and on behalf of the Afghans, to forgive the Vietnamese hysterically thrust upon them in the name of real- for the ordeals of anguish suffered by their boat ism, that panic-stricken adults have lost control of people, and by the people of Laos and Cambodia. a world that is reeling inexorably towards nuclear Such "forgiveness" is ludicrously presumptuous,

19 PEACEMAKING-NO CHILDS PLAY for to be valid, forgiveness, like insurance, requires drilled in the shockingly immoral principle: "Peace that one has a vested interest (the insurable interest at any price". It is this principle that surreptitiously principle). underpins the standard peace education programs. Courses are so structured as to leave students with What About Justice? the overwhelming conviction that the pacifists hasty resort to surrender is the only rational option Teachers may need to be reminded that, while in the event of a threat of foreign aggression or the peacemakers shall be called the children of tyranny. Students are gulled into adopting the cyni- God, the thirst for justice is blessed too. Children cal belief that all war is crazy, that there is abso- need to learn from history the intrinsic complexity lutely nothing worth fighting for. of intertwined atrocities, anomalies and mistakes Such a reversion of educational philosophy to that have to be negotiated to achieve a just and last- nihilism is scandalous. Essentially, education ing peace. They need to know that all too often in should always constitute a civilizing influence; but the past our peacemakers have been too eager for this new Peace education is, in effect, a reversion to peace—that in their haste to have done, they have barbarism, to the barbaric notion that there is laid the foundations for further conflict and more nothing to discern between good and evil, that war. In short, children should not be given to there is no point in even attempting to champion understand that peacemaking is childs play. It is good above evil, for good and evil are indistingui- not comprised of preposterous activities like shable. (Again and again, the USSR and the USA Samantha Smith-style pilgrimages, anti-American are acclaimed by Peace literature to be morally graffiti writing, the erection of road signs like "Wel- equivalent; and the Westminster system of law and come to Waverly, a Nuclear-Free Zone", and the justice and the Soviet systems are proclaimed to be wearing of T-shirts boasting slogans of such exqui- equally flawed. One wonders whether the Soviet site insight as "Make love not war", and "Every- Jews and Ukranians in the Gulags really would be body, learn to sing together". all that indifferent to a transfer to Newgate or even It would appear that the overwhelming Bogga Road) emphasis has been placed on fostering an appal- And perhaps the most significant blunder in lingly naive tolerance. But incredibly, the Peace the Peace education initiatives is this fanatical alle- educators have refused to draw the crucial ethical giance to the idea that the threat of nuclear war is so distinction between tolerance of cultural differ- horrendous that it warrants that we be willing to ences and tolerance of evil. Nowhere is it made sacrifice everything, including our principles, to clear to children that to tolerate evil is no virtue avoid it. But how can Peace educators be so sure and that not even that most virtuous of motives, that our fear is greater than any other generation viz, for the sake of peace, can make it so. has ever known, thus justifying as never before the As the French Resistance understood only too abandonment of any concerted effort to resist the well, tolerating evil is tantamount to collaborating aggression of a superior power? with it. Even in the present, there are countless So why then are we permitting the nuclear people who are attesting in the most vivid way to threat to frighten us out of our wits, paralyzing the the truth that one cannot collaborate with an evil hope which up until now has sprung eternal in the regime without oneself incurring some of the blame human breast? Why then are we sabotaging sane, and compromising ones own integrity... Soviet brave, resolute efforts to retain human decency and dissidents in psychiatric hospitals, Lithuanian and avert disaster, with wanton displays of unbridled Vietnamese clergymen in prisons and labour panic and craven cries of"Peace at any Price"? For- camps, and political prisoners and exiles from a get justice, forget human dignity, forget everything score of African and South American countries. that man has ever learned of nobility and goodness, And if ever silence about injustice and decency and fairness, compassion and love—lets acquiescence to aggression is the price of peace, all surrender unconditionally, turn ourselves over then surely we must teach children that it is too to evil, sell our children into slavery, anything, any- high a price. Silence and acquiescence are synony- thing at all, just to be assured of being allowed to go mous with complicity. In effect, Peace Studies are on living... useless if they do not teach that the preservation of That is the Peace Movements fundamental human integrity is a higher value than the preserva- message to our children, and what a contemptible, tion of human life itself. pathetic and dishonourable message it is. Instead, however, our children are being

20 1r I.

N. 4k I ___ JL •

1 7A.UdAhbVE AND IIOPV1

onald McDonald House is a place of love, a home Raway from home for the parents and families of children undergoing treatment for leukaemia, cancer and other serious illnesses. There are two Ronald McDonald Houses, one in Sydney and the other In Melbourne. They came into being when senior paediatricians recognised that children respond better to treatment when their families are close by. McDonalds was approached and offered assistance. In the words of Sydney House Manager, Virginia Delaney, "The families and children support each other. They share the good times and the bad times. Its a very warm, very loving atmosphere! Love built the Ronald McDonald Houses and love sustains them.

MCD More than a restaurant. DEFENDING AUSTRALIA

Harry Gelber

more than by ones in Sydney and Canberra. Or that The Cost of Ignoring the viability of Australian enterprises can depend on Japanese investment policies in Europe. Or that Foreign Affairs the fate of Australian farmers, depends in part on One of the most disturbing aspects of the the success or failure, of agricultural modernization recent election campaign was the almost total in China and the USSR, or on the outcome of the omission, by both sides, of foreign relations and political/economic dispute between the USA and security issues. It was a highly significant indicator the European Community. Or of the obvious fact of the prevailing public view of the world, which that in a period of expanding Australian overseas harbours at least three kinds of illusion. It thinks investment, the success of that investment can that foreign -affairs are somehow separate from depend, sometimes critically, on the political rela- "real" domestic problems and can be put on the tions between Australia and the country into which back-burner when we concentrate on serious things investments are placed. like social services and taxation. It assumes that For that matter, the entire corpus of proposed security has almost solely to do with defending industry policies and the improvement of Aus- Australia against invasion or other direct attack; tralian competitiveness depends fundamentally on and since that is very unlikely, paying attention to an understanding of external factors. If our focus is security is a waste of time. And it assumes that domestic, as traditionally it has been, industry because we are inoffensive and far away, we would policy will be one in which government action can be wise not to embroil ourselves with the outside largely substitute for the market. If, however, we world except in things like sport and trade, prob- focus on the global economy, no industry policy ably in that order. can make sense unless it becomes market-con- What all this ignores is the fact that foreign and forming instead of market-replacing. Altogether, security considerations, economic and social poli- governments must increasingly compete with one cies at home, trading advantage, political clout and another to make their countries attractive targets the preservation of our values and interests, form for investment. The entire regulatory and taxation one complex whole, where warp and woof are system must therefore be redesigned with an eye on inseparable. The importance of external relations the potential investor in Rio or New York or Lon- in shaping the fate of Australia, including the daily don, who can only be persuaded, not constrained. lives of individual Australians, has increased, is And if he is to be persuaded, that must be a political increasing and cannot be diminished. task as much as a financial one. It is true that a major strand in the electoral There has been even less mention of the way in debates has been the question of Australias com- which Australian views and news can be affected petitiveness. But even that has been treated almost by almost instant world-wide flows of news and entirely as a yardstick for discussions of domestic opinion, or the way in which turmoil, political or reform. There has been almost no mention of the religious dispute in other continents can have quick fact that our interest rates are determined by views repercussions in our own. and judgments in New York and Zurich rather It may be that illusions about security have

Harry Gelber is Professor of Political Science at the University of Tasmania.

IPA Review, August-October 1987 22 DEFENDING AUSTRALIA been especially damaging. They have not merely led Vietnam, would be highly vulnerable in the event to the assumption that economic and security con- of war. But in the meantime it is of very great value siderations are separate, but to the view that what- as a means of "showing the flag" and exercising ever happens nearbylike the Fiji coup or develop- political influence, as well as for intelligence opera- ments in Papua/New Guineamatters to us while tions, not to mention any positioning of forces developments further afield probably do not. prior to the outbreak of a conflict. Still less does Australian opinion seem to have focused on the seeming retreat from reform and More surprising still, given its immediate liberalization in China, on the tensions in that huge relevance to Australian affairs, is the way in society between modernization and Party control, which general Australian opinion either between xenophobia and the desire to learn foreign ignores the implications of the Japanese- techniques or even on the careful balance, in the American dispute on trade, payments and management of Chinas external relations, between investment, or else regards it as a kind of the West and the Soviet Union. football match in which we are interested but More surprising still, given its immediate rele- essentially unconcerned spectators. vance to Australian affairs, is the way in which gen- eral Australian opinion either ignores the implica- Yet a moments reflection must show that the tions of the Japanese-American dispute on trade, Fiji affair, however regrettable, is relatively trivial payments and investment, or else regards it as a and in any case not a matter where we could or kind of football match in which we are interested should seek to intervene. Ethnic and racial disputes but essentially unconcerned spectators. Yet the dis- will not disappear from the world merely because pute harbours dangers of major political as well as we say we want them to. Whether Fiji has a regime economic disruption, with potential results of the that we like will, in the end, make very little differ- greatest seriousness for us and for others. That an ence to the security and welfare of Australia. By election campaign of several weeks should go by contrast, events in Europe or the Persian Gulf or without so much as a mention of the economic, let even Central America could have a decisive effect. alone the political, implications of these events is If, for example, unrest and "revolution" in Central surely alarming. To indicate just two of the possible America were to spread to Mexicoand little in developments: what if serious political difficulties Mexicos political and social structure gives one were to produce a major Japanese economic down- confidence that it could notthe United States turn? Or what if such difficulties were to propel would be placed in a most difficult position. Japan into a more rapid development of various Washington might be forced to divert massive kinds of post-nuclear, even if chiefly defensive, effort and attention to its Southern border, if only strategic weapons? because millions of frightened Mexicans might try We have even ignored the organic relationship to cross it to seek refuge. Such a diversion of effort between security, research and development and could easily make the maintenance of the US posi- industry policy, including the much-discussed tion in Europe and the Pacific impossible. There is business of technological upgrading. One looks in no sign that those Australian groups which vain to the recent Defence White Paper, or to the specialize in airing moral outrage about US policies election campaign, for more than a brief aside in Latin-America have seriously considered what about fhe new strategic arena of space which has would happen to Australias security and other been opened up by the superpowers and, increas- interests if such a thing happened. ingly, by others also. Yet that area of competition is Nor is there much sign that the wider public likely to be decisive not just for many aspects of has thought about the problems of the Northern intelligence, communications and defence but for Pacific, or the wider implications of the Soviet the development of many of the lead-technologies naval and air build-up in the region. Messrs. of the next era of Western economic development. Hawke and Beazley have no doubt been correct to Can it really be wise for most Australians to look argue that the Soviet base at Cam Ranh Bay, in the other way?

23

Deadlier than War R. J. Rummel

If the peace movement is serious about preventing the slaughter of human lives, it should rethink its central focus---for a greater killer of people than war has been absolutist governments, and the most murderous of these have been communist governments.

While libertarians have recognized the economic responsible for the massacre, executions, starva- and moral virtues ofa free society, they have largely tion, and deaths from forced exposure, slave- ignored or been ignorant of an intrinsic hallmark of labour, beatings, and torture of at least 95,153,600 freedom: that libertarian governments of free people in this century, or 477 people per 10,000 of societies are the most peaceful, the greatest their populations. By contrast, the number of battle respecters of the value of human life. casualties from all wars in this century is In a number of scientific books and articles, I 35,654,000, or 22 per 10,000 people of the popula- showed that libertarian governments do not make tions involved. On a per capita basis, communism war on each other, that they have the least foreign is at least 20 times deadlier than war. Communism and domestic violence, and that the greater the in this century has killed even more people, aside freedom in two nations, the less there has been from communist wars, than the 86 million that per- military violence between them. Indeed, the most ished in all the wars and revolutions since 1740. violent governments have been totalitarian, those Before elaborating on these incredible asser- least free. And this is not only historical fact but is tions, let me present and define the relevant data. what we should expect in the future. Non-violence Table 2 provides the definitions and national data is inherent in freedom. and Table I gives the summaries. In a recent article (Reason, October 1985), By war is meant any international or civil vio- James L. Payne calculated that communist lent conflict (such as a guerrilla war, rebellion, revo- regimes, the dominant totalitarian form today, are lution, or terrorist campaign) involving at least clearly the most militaristic. They have an average 1,000 killed in battle or action. This includes not of thirteen full-time military personnel per 1,000 population, compared to six for non-communist nations. Table 1: Twentieth Century Killed by Cause Cause Total Averages per That non-free, or absolutist, nations are more (thousands) 10.000 population violent and militaristic has been occasionally Government 119,394 349 pointed out by libertarians and others. The major Non-Free 115,423 494 virtue of recent research is to provide the statistical Communist 95,154 477 confirmation and to make more people aware of Other Non-Free 20,270 495 these facts. Partially Free 3,140 48 But what is generally unknown about absolu- Free 831 22 tism, and to my knowledge has not been mentioned War 35,654 22 International 29,683 17 elsewhere, is that absolutist governments kill many Civil 5,970 26 times more people than have been killed in all the The data on wars is from J. David Singer and Melvin international and civil wars put together. Small, Resort to Arms: International and Civil Wars, 1816- And the worst type of these absolutist govern- 1980 (Beverly Hills: Sage, 1982). All figures in the table are ments is communism. It is a killing machine, rounded, therefore totals may be slightly out.

Dr. R. J. Rummel is Professor of Political Science at the University of Hawaii. 1. R. J. Rummnel, Understanding Conflict and War (Vol. 1-5, Beverly Hills, California; Sage Publications, 1975-1981); "Libertarianism and International Violence, "The Journal of Conflict Resolution (Vol. 27, March 1983, pp. 27-71), "Libertar- ianism, Violence within States, and the Polarity Principle, "Comparative Politics (Vol. 16, July 1984, pp. 443-462): "Libertar- ian Propositions on Violence Within and Between Nations: A Test Against Published Research Results," The Journal of Conflict Resolution (Vol. 29, September 1985, pp. 419-455).

IPA Review, August-October 1987 24 DEADLIER THAN WAR Table 2: People Killed by Government in the Twentieth Century

State Years Govt. Pop. Killed Killed per Code NOTES Type2 (mil)l (000) 10,000 Pop I. Occupying or colonial states Afghanistan 1978-79 C,NF 19.9 27 13.6 S responsible for the deaths in a nation are given in parenthesis. Albania 1944-47 C,NF 0.8 150 1,816.0 S 2. C = communist; NF = non-free; Algeria (France) 1945;1955 F 47.0 36 7.7 S The partially free; the esti Allied Democracies 1943-1947 F 218.6 7955 36.4 S 3. The population is the estimated Angola 1976-78 C,NF 7.0 71 101.4 U mid-point figure over the indi- Argentina 1976-81 NF 26.5 15 5.7 A cated years. Brazil 1960- PF 93.0 1 0.1 R 4. Government killed is defined as Bulgaria 1944-45 C,NF 7.1 4 5.6 U any direct or indirect killing by Burundi 1965; NF 3.5 I50 428.6 A government officials, or govern- 1972-73 ment acquiescence in the killing by others, ex, of more than 1, hat Cambodia 1975-79 C,NF 7.5 2,000 2,666.7 A people, except execuUOn for what Chile 1973- NF 9.2 17 18.5 S are conventionally considered China 1949-70 C,NF 670.0 45,000 671.6 A criminal acts (murder, rape, spy- Colombia 1948-57 PF 11.6 67" 57.7 S ing, treason, and the like). This Croatia 1941-44 NF 4.5 836 1,857.8 5 killing is apart from any ongoing military action or campaign, or Cuba 1959- C,NF 7.4 21 28.3 U any conflict event. That is, those Cuba 1952-59 PF 6.0 1 1.7 U killed in a riot by the police are not Czechoslovakia 1945- C,NF 13.3 1309 97.4 U counted; nor are those civilians East Timor(Indoncsia) 1975- NF 0.6 100 1,666.7 S thatdiefromurbanbombingdur- Eastern Europe 1944- C,NF 60.4 2,10010 348.0 M ing a war, or from starvation dur- E. Europe USSR s 1945-50 C,NF 2,1 1 1 S ing a military siege or enemy El Salvador 1931-44; PF 2.6 42 159,7 S embargo. 1979- 5. A = an approximate average of numerous published estimates; Equatorial Guinea 1968-79 NF 0.4 50 1,250.0 S M=a clear minimum estimate; Estonia (USSR) 1940-45; C,NF 1.1 65 570.8 R R = authors rough guess and 1949 probably an underestimate; Ethiopia 1977-78; C,NF 29.4 150 51.0 U S = directly from one source; 1985 U =a most likely underestimate. Germany 1939-45 NF 17,00012 S 6. The estimated Soviet killed of Germany. E. 1945- C,NF 16.0 81 50.6 U Soviet citizens, POWs and Rus- Agn exiles repatriated by the Germany, E. (USSR) 1944 C,NF 16.0 500 312.5 R Allies. Guatemala 1966- PF 5.4 20 37.4 M 7.OfethnicIndians. Hungary 1944- C,NF 9.5 10 10.5 U S.Of the approximate 200,000 Hungary 1941-44 NF 9.5 19013 200.8 A killed by contending political Hungary (USSR) 1944 C,NF 9.0 150 166.7 S partiesand"bandits",one-third is Indonesia 1965 PF 104.9 600 57.2 S attributed to the government Iran 1960-78 PF 28.7 1 0.3 R (party in power). 9. Partially based on an estimated 5 Iran 1979- NF 34.6 21 6.1 U per cent per annum death rate Japan 1937 NF 450.0 4014 0.9 U over ten-years for those in tabour Korea. N. 1948- C,NF 11.1 10 9.0 R camps. Laos 1974- C,NF 3.3 2015 60.6 U 10. Exclusive ofethnic Germans and Latvia (USSR) 1940-45; C,NF 2.0 72 366.5 S ReichcitizensexpelledfromEast- 1949 ern Europe. 11. Includes only those ethnic Ger- Lithuania (USSR) 1940-45; C,NF 2.6 152 590.7 R mans and Reich citizens that were 1949 killed Wor died during their forcm Malaysia 1979-80 PF 13.0 156 11.5 S post-WWII expulsion From Mexico 1914-20 PF 14.9 10 6.7 R largely Eastern Europe. Mozambique 1975- C,NF 9.5 1 1.1 R 12. Includes Europeans and Soviet Nicaragua 1979- C,PF 2.4- 1 4.2 S Jews, Gypsies, Soviet POWs, Nicaragua" 1960-79 PF 2.0 1 5.1 R Poles and Ukrainians. 13. Jews killedbytheHungariangov- Nigeria 1966 PF 49.9 719 1.4 S ernment,independentofGerman Pakistan 1971 PF 117.0 2,000 170,9 A The "Rape. Paraguay uaY 1966-72 PF 2.3 1° 4.3 M 14. The "Rape of Nanking". Poland 1944- C,NF 26.2 1 1 21 4,2 R 15. See note 9. Poland (USSR) 1939-41 C,NF 12.0 285 237.5 S 16. An estimated 20 per cent death Romania 1941-44 NF 15.1 21022 139.1 S toll of those Boat People forced Romania 1944- C,NF 15.6 100 64.0 S back to sea by thegovernment. Romania (USSR) 1944 C,NF 15.0 430 286.7 S 17. Sandinista government. 18. TheSomeTn government. Romania 1940-41 C,NF 2.0 63 312.5 S 19. Of Northern ethnic Ibo.lbo. Bessarabia (USSR) 20. Of Ache Indians. Russia 1900-17 PF 160.0 3 0.2 S 21. Includes Ukrainians killed during Rwandi 1959-63 PF 3.1 20^3 65.4 S resettlement. Spain 1936-39 NF 24.8 12614 50.8 S 22. Jews killed by the Romanian gov- Sudan 1955-66 PF 12.6 150 119.3 S ernment, independent ofGerman Syria 1980-82 NF 8.0 15 18.8 S Ofethauthorities 24. By thnic utsi. (China) 1955-71 C,NF 1.5 325 2,166.7 A 24. By both the Republican and Turkey 1909; NF 19.0 1,50025 789.5 A Nationalist governments. 1914-18 25. Includes mainly Armenians, but USSR 1918-22; C,NF 170.0 39,50026 2,323.5 A also Greeks and Christians. 1930-53 26. Includes the deliberate Ukrainian Ugandan 1971- PF 12.0 200 166.7 A famine of 1933-34. Vietnam 1945-6; C,NF 17.0 51026 300.0 A 27. Includes post-Idi Amin govern- ments. 1956c; 28. Includes 100,000 Boat People. 1974- Yugoslavia 1945- C,NF 16.1 1,105 688.4 S TOTAL AVERAGE 119,394 349.5

25 DEADLIER THAN WAR only all the major wars, but also such "little" wars Fig.1 Twentieth Century Killed as the Druze War (1925-1927) of France, the Communist Governments and War Indonesian War (1945-1946) of the Netherlands, Total 155,048,000 and the First Kashmir War (1947-1949) of newly independent Pakistan and India. Examples of the Communist kind of civil wars whose battle deaths are counted 61.4% here are the Spanish Civil Wars (1936-1939), the Palestinian uprising in Jordan (1970), and the Leftist campaign in Guatemala (1970-1971). Civil War The figures on those killed by war can only be 3.9% estimates, of course. But war deaths have been the yr object of much recent social science and historical research and I believe that even better data col- International War lected in the future will not significantly alter the Non-Communist 156% 19.1% tables totals. Killed per 10,000 Population The statistics for the number killed by govern- Communist Governmentsrn versus War ment are a different story, however. I know of only 450 one, very incomplete, attempt to tabulate the over- 400 all number of people killed by government (Gil 350 Elliot, Twentieth Century Book of the Dead). In the 300 case of some of the most lethal governments, such 250 as those of the USSR, China, Nazi Germany and 200 Turkey, there are also figures based on much 150 scholarly and demographic research. But I am sure 100 that there are many more cases of "minor" mas- 50 sacres, genocide, and the like, that are underesti- 0 Communist Non-Communist InterI War Civil War mated or for which information is unavailable, and which together would increase significantly the military action. Unless otherwise indicated, figures totals in the table. These overall totals in Table I for for government killed are assumed to be for killings government killed, therefore, are most likely an apart from war. absolute minimum and perhaps an underestimate While any intentional killing that is govern- by twenty per cent or more. This makes the com- ment policy obviously must be included, should parisons to war even more fantastic. those that indirectly die from government policy be Now, government killed is defined here as any counted also? What about those political prisoners direct or indirect killing by government officials, or who perish from exposure and thirst while packed government acquiescence in the killing by others, into freight cars transporting them to slave-labour of more than 1,000 people, except execution for camps, who freeze to death while being forcibly what are conventionally considered criminal acts, marched long distances to labour in the snow in such as murder and rape. This killing is apart from insufficient clothing, or who succumb to disease, any ongoing military action or campaign, or any malnutrition, exposure, or beatings in camps where ongoing national or international conflict. That is, the death rate may be ten to thirty or more per cent those killed in a riot by the police are not counted; per annum? What about those who die in perilous nor are those civilians that die from urban bomb- attempts to escape abroad from being rounded up ing during a war, or from starvation during a mili- for concentration camps, forced resettlement in tary siege or enemy embargo. inhabitable wasteland, collectivization, or simply The Jews that Hitler slaughtered during World fear and terror? War II would be counted, since their merciless and When the policies of the government are so systematic killing was unrelated to any campaign repressive and terroristic that citizens imperil their (and actually conflicted with Hitlers pursuit of lives by trying to flee their country, then I believe war); similarly, the genocidal massacre of Ibo in that government should also bear the responsibil- Northern Nigeria in 1966 was quite apart from the ity for the resulting deaths. Where figures are avail- Nigerian Civil war; and the deliberate Armenian able, they are included in the list of government genocide by the Turkish Government during World killed. Thus, for example, I added into the totals War I had nothing directly or indirectly to do with the conservatively estimated 100,000 Boat People

26 DEADLIER THAN WAR

that have died on the ocean fleeing Vietnam and forced requisitions of food by the Soviets, imposi- Cambodia. tion of a command agricultural economy, and Moreover, as far as government responsibility liquidation campaigns of the Cheka. This famine is concerned, I see little difference between govern- resulted in three to five million dead. My estimate ment executing a dissident and sentencing him to is four million. labour in a gold mine for ten years under condi- The second famine is the worst in history, and tions that reduce his life expectancy to less than until recently, a well kept secret. It was caused in three years, except that the latter death is a relief China by Mao Tse-tungs agriculturally destructive after a kind of prolonged torture. Thus, I have Great Leap Forward in 1958-1959. As many as included estimates of those who have died in the forty million people may have perished; I would slave-labour camps of the Soviet Union and China, estimate twenty-seven million, which is closer to and the "new economic zones" of Vietnam. that of American demographic studies. The The total killed in Table 2 also includes the Chinese government itself now admits over ten Soviet Governments planned and administered million dead. starvation of the Ukraine begun in 1932 as a way of I believe that the Soviet and Chinese govern- breaking peasant opposition to collectivization and ments should be held accountable for the dead in destroying Ukrainian nationalism. As many as ten these famines, no less than should a drunken driver million may have been starved to death or suc- be responsible for those he kills on the road, or an cumbed to famine related diseases; I use the figure hotel owner for those who cannot escape a fire of eight million. Had these people all been shot, the because of blocked exits and lack of alarms. How- Soviet governments moral responsibility could be ever, because including the dead from these two no greater. famines would be so controversial as to distract There are two more famines for which govern- from the other figures, I will exclude them from ment responsibility is more attenuated and contro- further consideration here. versial. The first of these is the Soviet famine of One more aspect of the table needs clarifica- 1921-1922 caused by the disruption of the 1918- tion. That free governments have killed 831,000 1921 civil war in the countryside and especially the people in our century should come as a shock to most readers. This figure involves the French mas- sacres in Algeria before and during the Algerian war (36,000 killed, at a minimum), and those killed by the Soviets after being forcibly repatriated to them by the Allied Democracies during and after World War II. It is an outrageous fact that in line with (and even often surpassing in zeal the letter of) the Yalta Agreement signed by Stalin, Churchill, and Roosevelt, the Allied Democracies, particularly Great Britain and the United States, turned over to Soviet authorities more than 2,250,000 Soviet citizens, prisoners of war, and Russian exiles (who were not Soviet citizens) found in the Allied zones of occupation in Europe. Many of these people held international passports, some even having lived in Europe since fighting the Bolsheviks in the Russian civil war of 1918-1921. Most of these people did not want to be turned over to the Soviets, were terrified of the conse- quences, and refused to co-operate in their repa- triation; often whole families committed suicide to avoid it. British and American officials had to use lies, deceit, and force (and tight secrecy and public deception to avoid public outcryapparently even relevant officials who might have blocked the repa- triation were deceived) to achieve this repatriation.

27 DEADLIER THAN WAR

Incredibly, Soviet agents were allowed behind American policeman dying in the line of duty, or of Allied lines to help hunt down those who tried to a mountaineer being killed while climbing a moun- escape repatriation; numerous escapees were shot tain. Note especially, however, that the worldwide in the process. risk of being killed by ones own government Select high British and American officials because of ones race, ethnic group, politics, etc., is knew that large numbers of those returned were more than three times greater than the risk of war, executed within hours, most of the others being and greater than that for a motor vehicle accident, sent off to slave-labour camps to die slowly. Of or policeman. In fact, you are safer climbing moun- those the Allied Democracies so turned over to tains than you are from government generally. communist mercies, an estimated 795,000 were The high risk of being killed by government is executed, or died in slave-labour camps or in mainly due to the death toll of communism. The transit to them. annual risk (odds) of being killed by the govern- If a government is to be held responsible for ment for those living under communism is about those prisoners who die in freight cars from priva- 1,000 to 1, or up there with the risk of dying from tion, or in camps from exposure, surely those liber- any cancer or from smoking a pack a day. tarian governments whose officials turned helpless Turning now to compare the overall mortality people over to totalitarian rulers with fore- statistics shown in Table 1, it is a sad fact of recent knowledge of their peril, also should be held decades that tens and hundreds of thousands of responsible. people can be killed by governments with hardly an international murmur, while a war killing several Comparative Risks thousand people can cause an immediate world outcry and global reaction. Simply contrast the To give a different perspective on the figures of international focus on the relatively minor Falk- Table 1, the annual risks of a citizen being killed in land Islands War of Britain and Argentina with the war or by government, especially communist gov- wide-scale lack of interest in Burundis killing or ernments, is compared in Table 3 to some of the acquiescence in such killing of about 100,000 Hutu largest commonplace risks. These political risks are in 1972, of Indonesia slaughtering a likely 600,000 simply extraordinary, indeed fantastic, for both "communists" in 1965, and of Pakistan, in an their size in comparison to common everyday risks initially well-planned massacre, eventually killing and to the general lack of knowledge about them, from one to three million Bengalis in 1971. even among experts. For example, the worldwide Figure i graphically compares the total killed annual risk of dying in war is close to that of an by governments to that for all wars. American (I presume from the source) being in a A most noteworthy and still sensitive example motor vehicle accident (including pedestrians), an of this double standard is the Vietnam War. The

Table 3: Comparison of Political to some of the Largest Commonplace Risks Type Annual Risk x Uncertainty (odds of x to 100,000) Commonplace Cigarette smoking a pack a day 360 Factor of 3 All cancers 280 10% Mountaineering (mountaineers) 60 50% Motor vehicle accident 24 10% Police killed in line of duty 22 20%

Political Killed in any war 18 25% upward only Killed in international war 15 20% upward only Killed in civil, guerrilla, or revolutionary war 3 50% upward only Killed by government genocide, mass murder, etc. (total) 62 20% upward only Killed by communist genocide, politicide, mass murder, etc. 61 ?% upward only For those living under communism 110 ?% upward only

28 DEADLIER THAN WAR international community was outraged at the Stalin to a total over the whole communist period American attempt to militarily prevent North of 83 million. For China under Mao Tse-tung, the Vietnam from taking over South Vietnam and ulti- communist government eliminated, as an average mately Laos and Cambodia. "Stop the killing" was figure between estimates, 45 million Chinese. The the cry, and eventually, the drumbeat of foreign and number killed for just these two nations is about domestic opposition forced an American with- 84,500,000 human beings, or a lethality of 252 per drawal. The overall number killed in the Vietnam cent more than both World Wars together. Yet, War on all sides was about 1,216,000 people. have the world community and intellectuals gen- With the United States subsequently refusing erally shown anything like the same horror, the them even modest military aid, South Vietnam same outrage, the same outpouring of anti-killing was militarily defeated by the North and com- liierature,over these Soviet and Chinese megakill- pletely swallowed; and Cambodia was taken over ings as has been directed at the much less deadly by the communist Khmer Rouge, who then tried to World Wars? recreate a primitive communist agricultural When one considers this killing per 10,000 society. All urban centres were immediately emp- population, the comparison is even starker. Wars tied of people by force; all former government offi- have killed 22 people per 10,000 of the populations cials were executed; all bourgeois were liquidated; involved. The Soviet Government killed 2,323 per any actual or possible opponents or resisters were 10,000; the Chinese Communist Government 672; killed; most of the remaining educated and profes- the Cambodian Khmer Rouge 2,667. sional Cambodians were murdered; and "com- Compared to war, these figures are so large as to mon" folk violating tie numerous rules governing seem absurd. Yet, even if the most conservative, their dawn to dusk forced peasant labour were indisputable figures are used, the difference remains killed. incredible. The minimum and best documented While international attention finally did turn figure on the Soviet Union that I have seen is the 20 to Cambodia and the United Nations was pushed million killed under Stalin given by Robert Con- into taking reluctant official notice, this was as a quest in his The Great Terror (and this he considers a murmur compared to the screams over Americas probable underestimate by 50 per cent or more). efforts to prevent, among other consequences, just Even that absolute minimum is greater than the bat- such a bloodbath that would follow communiza- tle deaths of World War 11, more than half of the tion. The best estimate of those killed after the deaths in all international and civil wars in this cen- Vietnam War by the victorious communists in tury; it is an absolute minimum of 1,176 people Vietnam, Laos, and Cambodia is 2,270,000 (not killed per 10,000, or 54 times the number killed per counting those who have died in the subsequent 10,000 of the populations involved in war—that is wars of Vietnam with China and Cambodia, and 54 tines the death risk of war. the continuing guerrilla war in Cambodia). This is As can be seen from Table 1 and especially almost twice as many as died in the Vietnam War. from Figure 1, communist governments are overall And this government killing still continues. almost four times more lethal to their citizens than To view this double standard from another non-communist ones, and in per capita terms perspective, consider the horror over the deaths nearly twice as lethal (even considering the huge from mankinds two greatest wars. Nine million populations of the USSR and China). However, as died in battle in World War 1; fifteen million in large as the per capita killed is for communist gov- World War II. Both wars cost together twenty-four ernments, it is nearly the same as for other absolu- million lives. But many more than this number of tist governments. This is due to the massacres and their own citizens have been killed by the Soviet or wide-scale killing in the very small country of East Chinese communist governments alone. From Timor, where since 1975 Indonesia has.eliminated 1918 to 1953, the Soviet Government executed, (aside from the guerrilla war and associated vio- slayed, slaughtered, starved, beat or tortured, to lence) an estimated 100,000 Timorans out ofa pop- death, or otherwise killed, 39,500,000 of its own ulation of 600,000. Omitting this country alone people (not counting the Lithuanians, Latvians, would reduce the average killed by non-commu- Estonians, Poles, Romanians, Germans etc., the nist, non-free governments to 397 per 10,000, or Soviets exterminated during its military occupa- significantly less than the 447 per 10,000 for com- tion of these countries and absorption of all or part munist countries. of them). This is my best estimate among figures In any case, even including the special case of ranging from a minimum of 20 million killed by the forced repatriation of millions to the Soviet

29 DEADLIER THAN WAR

Union by .the Allied Democracies, we can still see slaves. Mass killings, executions, forced depriva- from the table and from Figure 2 that the more tion; and the like, then become a practical means to freedom in the nation, the fewer people killed by maintain power, eliminate opposition, punish dis- government. Freedom acts to brake the use of a obedience, and pursue political, economic, social, governing elites power over life and death to pur- and religious policies. Without the restraints of sue their policies and ensure their rule. Why should opposing power foci, regular competitive elections, this be so? For the same reasons that libertarian free speech, and a pluralistic social system, it is nat- governments are least violent and militaristic. ural that human life will be secondary to a regimes Where there are civil and political rights, free desire for self-preservation, power, and the success and secret elections, and a wide franchise, the gov- of its policies. erning elite are dependent upon the electorate for Hitlers Mass murder of millions of Jews is their power and continuance in office. Moreover, widely believed to have been an historical aberra- their power is limited and divided among different tion, a once only, monstrous result of an absolute elites and groups, and they constantly have an offi- rulers sick racism. If this article achieves anything, cial opposition looking over their shoulder for the I hope that it shows that the Jewish Holocaust, for slip, the mistake, the misuse of power that could be all its horror and the outrage it has deservedly pro- used to wrest authority from them in the next elec- voked, is but a particular example of mass killings tion. Moreover, with such freedoms, the society by governments—and not even among the blood- develops diverse overlapping groups, elites, and iest. Hitler killed from 4.2 to 4.6 million Jews, but power foci, a rich pluralism that cross-pressures he also killed (aside from military action) 425 thou- and thus moderates interests and policies. Govern- sand Gypsies, 2.5 million Poles, 3 million Ukrain- ment is not only responsive to the core interests ofa ians, 1.4 million Belorussians, and 2.5 to 3 million free people, but also reflects the central moderation Soviet prisoners of war. Overall, Hitler was respon- and civility of the plural, cross-pressured society, sible for the mass murder of about 17 million produced by freedom. people. But Stalin killed a minimum of 20 million. But above all, people are not interested in Mao killed perhaps 45 million. And Pol Pot, hav- being sent to slave-labour camps, executed for their ing slaughtered over 25 per cent of the Cambodian beliefs, or tortured and beaten for criticizing the population in four years, might have even doubled government. In its essence, no libertarian govern- the records of these bloody tyrants if he had ruled ment can do other than mirror and respond to this as large a population for as long. core interest of the people in self-preservation and Of course these tyrants are responsible for this avoiding pain. butchery. But what enabled them to do it was their This axiom appeared to be violated in two absolutist and totalitarian power. It would be a aforementioned special cases. One was the French grave error to focus on them alone as the cause of Government carrying out mass killing in the mass killing. We should concentrate instead on the colony of Algeria, where compared to Frenchmen enduring political pattern that breeds such mons- the Algerians were second=class citizens, without ters and encourages and facilitates their bloody the right to vote in French elections. In the other work. Such is the pattern whose variations we call case the Allied Democracies acted during and just totalitarianism and absolutism and dictatorship. after wartime, under strict secrecy, to turn over And such a pattern is at its core the lack of civil foreigners to a communist government. These rights and political freedom. It is non-freedom. foreigners, of course, had no rights as citizens that Absolutism is not only many rimes deadlier would protect them in the democracies. In no case than war, but itself is the major factor causing war have I found a libertarian government carrying out and other forms of violent conflict. It is a major massacres, genocide, and mass executions of its cause of militarism. Indeed, absolutism is man- own citizens: nor have I found a case where such a kinds deadliest scourge of all. governments policies have knowingly and directly In light of all this, the peaceful, non-violent resulted in the large-scale deaths of its people pursuit and fostering of civil liberties and political through privation, torture, beating and the like. rights must be made mankinds highest humanitar- Where the government is totalitarian, as under ian goal. Not simply to give the greatest number the Soviet communism or the current Muslim ayatol- greatest happiness, not simply to obey the moral las of Iran, or absolutist as under Idi Amin of imperative of individual rights, not simply to Uganda or Francisco Macias of Equatorial Guinea, further the efficiency and productivity of a free the ruling elite have the same effective power over society, but also and mainly because freedom pre- their people that slave masters have over their serves peace and life.

30 . Handb- oks.for Good Government Michael James

The Australian Institute for Public Policy in Perth and the Centre of Policy Studies at Monash University in Melbourne have each produced detailed programs on how to reduce the size of and thereby improve the quality of government in Australia.

During the campaign that preceded its re-election competition in the generation of long-term policy on 11 July, the Hawke Government gave very little goals.. indication of how, and how fast, it intended to con- tinue the restructuring of the public sector and the The Proposals Compared reordering of priorities that it began in its Expendi- ture Statement last May. It returned to office bound Both these books put forward detailed, practi- by few clear and precise commitments, the two cal ways of reducing the scale of government inter- main ones being: not to increase the burden oftaxa= vention in Australia. But they differ in some tion over the next three years, and to abolish child important respects ; Mandate to Govern has a brief poverty by the end of the same period by means of introduction, setting out the rationale and the stra= a new, selective welfare program, the Family Assis- tegy of the book, followed by useful chapters on tance Scheme. Since then; however, it has macroeconomic policy and government and announced a radical reorganization of the public administration. Spending and Taxing goes much service, involving a cut in numbers employed by further in this respect.. It begins with several chap- 3,000 and an estimated saving of $96 million. This ters that -summarize the facts. about the -size and promising start to Mr. Hawkes third term suggests growth of Australias public sector, explain why that the Government may be receptive to the ideas government growth seems to be out of control, and contained in two major and independent policy argue for -ways • of determining which activities handbooks that were published in the first half of shouldbe lefttothe market and which should be 1987. undertaken, or at least assisted, by government. Mandate to Govern and Spending and Taxing These chapters incorporate some of the latest are both products of the growing disenchantment research findings about the redistributive effects of with big government, a mood reflected not only in the welfare state. The main such finding is that cash Western public opinion but even in some of the transfers are much more effective in targeting wel- reforms recently introduced in the_ communist fare. to the needy and disadvantaged than are in- countries. They are also evidence of the extent to kind services like health and education, which to a which policy studies have ceased to be the exclu- great extent simply .churn government revenue sive concern of governments, but are now pursued back into the pockets of the original taxpayers. The by an increasing number of private bodies, not just authors demonstrate how easy it is for special inter- policy institutes but employer organizations and ests to `capture the processes of politics and to veto trade unions. This is itself an effect of big govern- the discontinuation of spending programs from ment, which, so it is widely believed, now protects which they benefit, even when those programs no so many powerful partisan, bureaucratic and pro- longer serve any public purpose. One very impor- ducer interests that it can only benefit from private tant result of this finding is that, although the free

Dr. 1tIichael James is a Senior Lecturer in Politics at La Trobe Universit - 1. Mandate to Govern: A Handbook for the Next Australian Government, edited by John Nurick, is published by andavallable from the Australian Institute for Public Policy, 25 Mount Street, Perth. Spending and Taxing: Australian Reform Options, edited b y J. Freebairn, M. Porter and C. Walsh, is published by Allen and Unwin in association with the Centre of Policy Studies National Priorities Project.

31 IPA Review, August-October 1987 HANDBOOKS FOR GOOD GOVERNMENT

Mandate to Govern and Spending and Taxing Summary and Comparison of Main Policy Recommendations

Mandate to Govern Spending and Taring Taxation Immediately index tax thresholds and allowances to CPI. Cut business tax revenue by $2.4 billion, and cut top company tax rate to 30%. Establish committee to design a reformed tax system, to be Cut income tax revenue by $5 billion and reform tax system presented within a year to Parliament for acceptance or as follows: rejection as a package. Cut top personal income tax rate to 30%. Protect worst-off by system of rebates, social benefit rate adjustments, and family income supplement. Adopt one of the following options: Option T: tax all income received, but apply income tests providing tax-free thresholds for low and middle income earners only. Option U: allow optional individual or family tax filing, and a $3,500 tax-free threshold for low and middle income earners only. Place a 5% tax surcharge on higher incomes io recapture income tax forgone by threshold. Option V: Replace wholesale sales tax with 10% broadbased VAT, and raise all pensions and benefits by 6% to compensate worst-off for price rises caused by VAT.

Public Spending Promise that public spending will not be higher in real terms Cut public spending by $12.1 billion to eliminate budget after three years than on taking office, except for defence, and deficit and finance tax cuts. Make savings from health, labour that the budget deficit will be eliminated within three years. market, education, and social security programs as below.

Health Increase Medicare levy to cover full public health costs and Abolish Medicare and universal subsidies. lower income tax by same amount. Require minimum health insurance, and subsidise lower Subsidise health insurance for lower income groups and income groups and the chronically ill. non-social security recipients. Transfer subsidies for the poor and the chronically ill to social security budget and deliver via health card or circumstance-tested voucher system. Privatize Medibank Private and allow a competitive private Allow a competitive private insurance market. insurance market. Fund public hospitals by fee-for-service system for public as Fund public hospitals by direct charges and eventually well as private patients. privatize them. Net savings: $7 billion.

The Labour Market End compulsory membership of trade unions. Increase labour market flexibility to help young gain job experience and work skills. End compulsory arbitration and facilitate legally binding labour contracts. Adjudicate labour contracts in ordinary courts. Guarantee free choice of superannuation funds. Abolish Community Employment Program and replace with Abolish a]I labour market programs and replace with training modest work-for-dole scheme. and education loans or vouchers for young people. Net savings:$500 million. Education Replace recurrent funding of non-government schools with Introduce universal voucher system, each voucher worth 85% regulated voucher system, with higher value vouchers for ofcurrent expenditure per pupil. disadvantaged children. Cut funding of government schools by 15%.

32 HANDBOOKS FOR GOOD GOVERNMENT

Mandate to Govern Spending and Taxing Introduce a universal system of literacy and numeracy testing Retain and increase external assessment in schools. in schools. Consider merit pay for teachers. Transfer responsibility for tertiary education to the States Abolish Schools Commission and Tertiary Education (except in the ACT). Commission.. Require ANU to charge fees at rate of 12.5% of average cost of Make universities and colleges raise 50% of current grants by the course undertaken. self-generated income (e.g. fees). Introduce Commonwealth scholarships and loan guarantees. Facilitate student loan transactions. Net savings: $2.5 billion.

Social Security Raise minimum age for dole to 17. Raise minimum age for dole to 18. Allow dole for new claimants only ifgainfully employed for at Reduce dole by 25% after 6 months (but allow supplementary least 6 months of preceding year. benefit for worst-off, tested for family income and assets). Means test family allowance. Means test family allowance. Maintain supporting parents benefit but enforce maintenance Cut supporting parents benefit by 25%. awards through private debt-collection agencies. Remove tax liability from pensioners and beneficiaries and End tax concessions for superannuation. introduce revised means test. Retain Family Income Supplement and increase with savings from housing expenditures. Net savings: $2. I billion.

Main additional Policy Recommendations in Mandate to Govern

Foreign Affairs and Defence . Privatize airports, Qantas, Australian Airlines and Australian National Line. Increase defence spending by at least the 3°/° assumed in the Dibb Report. Communications Privatize the naval dockyards and the government defence Place Australia Post, Telecom, OTC and AUSSAT on wholly factories. commercial footings. Housing Require cost-based pricing for all services and oppose cross-subsidies. Abolish first home-owners scheme. Rapidly increase the number of TV channels in the cities: End Commonwealth-States Housing Agreement and increase rent allowances and Family Income Supplement payments to Reduce funding for the ABC and encourage it to close Radio achieve equity between low-income tenants in privately and National. publicly-owned dwellings. Hand SBS over to the ethnic communities. Trade and Industry Primary Industry Phase out all protection in 10 equal steps over 5 years, with Deregulate and privatize Commonwealth meat inspection. modest adjustment assistance measures. Deregulate the price and delivery requirements of wheat. Abolish cost-ineffective non-tariff import barriers. Discontinue the super and nitrogen fertilizer bounties. Abolish controls on mineral exports. Discontinue drought subsidies and underwrite private rainfall Abolish the Foreign Investment Review Board. insurance policies. Strengthen and extend the Trade Practices Act. The Environment Halve expenditure on CSIRO. Increase conservation areas substantially. Transport Allow mineral exploration according to a standard strict code Regulate only the prices and supplies of monopoly producers. in conservation areas. Terminate the two-airline agreement. Allow oil exploration on the Barrier Reef but require explorers to be adequately insured against clean-up costs after a spill. Deregulate air fares, routes, capacity, and imports and exports of aircral. Where resistance from conservationists is politically impossible to override, consider vesting land rights in Allow freedom of entry into Australian coastal shipping. conservationist organizations.

33 HANDBOOKS FOR GOOD GOVERNMENT market can fail in various ways.to bring about the reject as a whole. It sees this as the only way of best social outcomes, it doesnt follow that govern- avoiding a repeat of the fiasco of the 1985 Tax ment intervention will automatically remedy those Summit. deficiencies. Rational decisions about where gov- Otherwise, Mandate to Govern offers by far the ernment should intervene need to be based on care- wider range of policy prescriptions. It looks not ful comparisons between the performance of the- only at the high-spending programs but also at the market and that of the state. many `off-budget interventions in.areas like trans- These chapters are very well written and are port and the environment, but above all. in the worth reading in their own right as well as in prepa- labour and the import markets. Sometimes its ration for the detailed policy proposals that follow determination to comment on every type of inter- them. vention exceeds its inspiration: for instance; in a Mandate to Govern and Spending and Taxing section on regional and country television, it differ also in the range of policy areas they address. solemnly declares that `The government should ask As the accompanying table summarizing and com- country viewers what they want (p. 175). But the paring their main recommendations makes clear, book is an education in the sheer scale and com- Spending and Taxing confines itself to taxation and plexity of government intervention in Australia. budgetary reform, especially in the high-spending Opponents of cuts in government intervention areas of health, education and welfare. Its aim is to often claim that Australias public sector is not reduce public spending by $12.1 billion (about 10 especially big by Western standards. That may be per cent of the 1986-87 total), while targeting wel- true of budget outlays, but not of interventions like fare more efficiently towards the genuinely disad- public ownership and regulations, which permeate vantaged. This would bring the public sectors the economy and go far towards explaining its share of Gross Domestic Product down from 44.3 present stagnation and rigidity. per cent to less than 40 per cent, which is where it was in 1981-82. Cuts ofthis magnitude would elim- The Strategies Compared inate the budget deficit (about $4 billion) and finance income tax and business tax cuts of about The books differ in scope and emphasis $7.4 billion, with a substantial margin to allow for because they are pursuing different strategies of differences in judgments about precise costings. reform. They agree that the problem is one ofcreat- The main aim of the tax cuts is to provide the ing a constituency for reform that is strong enough opportunity for radical income tax reform, which is politically to overcome the formidable coalition of really the centrepiece of the study. The authors vested interests that defend the status quo and col- offer three income tax reform options, each of lectively veto attempts to substantially cut back the which reduces the top rate to 30 per cent and, by public sector. Mandate to Govern adopts an essen- being integrated with social security adjustments, tially indirect approach as a way of economizing on protects the position of low-income groups. The scarce supplies of political will and capacity. It con- authors are confident that the incentive and effi- centrates on deregulation and privatization, since ciency gains from the reforms would be substantial, in these areas at least, politicians may have a and generate about $2 billion of extra revenue. chance to isolate the special interests that oppose However, they have not taken this sum into them, and to override them with the full political account in calculating the cost of the reforms, treat- and intellectual weight of public opinion behind ing it instead as a bonus that could in principle be them. The economic growth that should follow used to finance additional tax cuts. such measures will then greatly ease the task of • In contrast, Mandate to Govern avoids reforming taxation, which in the meantime will detailed costings of its proposals. It calls on the probably have to be tackled by the . minimal- next government to promise not to increase public change approach introduced by the Fraser govern- spending in real terms. The implication is that ments and continued by the Hawke governments. revenue increases should go primarily towards Spending and Taxing, meanwhile, aims to cut closing the budget deficit, which it wants done in directly through the tangle of interests bound up in three years. It also avoids offering detailed tax the major public spending programs. The authors reform proposals, and confines its recommenda- reject the minimal-change approach to tax and tion here to a government commission charged spending reform because it brings plenty of across- with elaborating a non-negotiable package of the-board pain but very little in the way of com- reforms that Parliament would have to accept or pensating pleasure, and so is unlikely to have any

(continued on page 55) 34 Reviews 40th Birthday

The first number of IPA Review-appeared in March 1947. This year is therefore its 40th anniversary.

Throughout the years Review can claim to have still flirting with versions of central economic played a major part in influencing official and pub- planning and pump-priming development, Kemp lic opinion on the leading economic controversies was a leading voice on the realities (and con- of the time. straints) of the free enterprise system. IPA Review Since its inception Review has been concerned through these years provided commentary on to elucidate the. economics of the market economy national policy which still reads with a freshness and to demonstrate the superiority of free competi- and relevance. Inflation, for example, was a central tive enterprise over government-dominated concern. Hardly a year has passed without several economic. systems. articles analyzing its causes and stressing its threat There is much still to be done to advance this to a stable social and economic order. Ref Kemp goal. Nevertheless there has been growing recogni- was assisted by Maurice Williams (now a member tion in recent years on both sides of politics of the of the Victorian State Parliament) and in- later essential` validity , of the case for a free market. years by Jacob Abrahami. Review has played a considerable part in bringing Until recent years all Review material was sub- about this-change of attitude. ject to the critical scrutiny of an editorial commit- In the last two years, two senior Labor politi- tee before publication. Since Review never pulled cians-- Treasurer, Paul Keating, and NSW Minister for Planning and the Environment, Bob Carr— have voiced in the pages of Review their disillu- sionment with doctrinaire socialism. In the mid 1980s under the editorship of Rod Kemp, the range of issues which Review covered greatly expanded. While continuing its long-stand- ing concern with economics and industrial rela- tions (the first Review was composed entirely , of articles on this latter subject) Review took to exam- ining cultural issues—such as education, the radi- calization of the churches and media bias—and foreign policy. This is one of three major changes to the Review since its foundation. The other two have been the complete revamping of the journals size and layout. in 1985 •(with modifications since) accompanied by its introduction to the news- stands (encouraged by the former President, Sir James Balderstone), and the - opening of Reviews pages to experts. from academia, business, the media, the professions and other sections of the community. . . Until 1982 the great part of Review was writ- ten by the founding Director, Charles (Ref) Kemp. An exhibition-winning student of Professors Giblin and Copland at Melbourne University, Kemp played a unique role during the post-war IPA s founding Director, Charles Kemp, addressing an period. At a time when academic economists were audience at the University of Melbourne in 1954.

35 IPA Review, August-October 1987 REVIEWS 40th BIRTHDAY its punches, discussion on the committee was often rate. Sir Walter Massy-Greene, chairman of some marked by some strong exchanges. The first Chair- of Australias greatest companies, whose interests man of the Committee was Geoffrey Grimwade, lay in the export field, was horrified and threatened blunt, intelligent and altogether an admirable char- to resign from the IPA if publication went ahead. acter. One article was so strongly critical of an arbi- But Grimwade was adamant that the commit- tration court decision that it was felt it ran the risk tee should not retract. He asked the Director to of "contempt of court". Grimwade bluntly smooth things over with Sir Walter. It took Kemp observed that in the event of proceedings against some lengthy letters and interviews to accomplish the IPA a member of the full-time staff and not the this difficult and unenviable task. chairman would have to stand trial. Ref Kemp retired from full-time employment On his regular visits to Canberra during the with the IPA in 1976 although he continued to con- fifties and sixties Ref Kemp usually visited the tribute regularly to Review. Roger Neave and later incumbent Secretary to the Treasury. Once, when Gerry Hampel (for one year) also assisted with the with Sir Richard Randall they were interrupted by editorial and production of Review up to 1982, when the number two man, the legendary Maurie Rod Kemp took over directorship of the IPA. ODonnell, who kindly stated that the only worth- John Stone was appointed a Senior Fellow of while critiques of government budgets were those the IPA from 1984 to 1987. In opening the IPA published in Review. branch in Canberra in April 1987, he recalled that On another occasion, Ref Kemp in a visit to the April-June 1969 Review contained his first pub- Canberra was granted an interview with the Prime lished article, entitled, "Inflation and the Interna- Minister, Sir Robert Menzies. Since Review, in a tional Monetary System." number of recent articles, had been strongly critical Dr. Ken Baker, now . Editor, has guided the of Government economic policies he approached it journal into new topics and formats. His analysis of with some trepidation. The interview, however, the National Bicentennial Program in the Summer proceeded in a friendly fashion. But when Kemp 1984-85 Review is acknowledged in the 1987 Ency- was on the point of leaving and had reached the clopaedia Britannica Yearbook as having spear- door of the PMs office, Sir Robert called out "By headed the criticisms of the Australian Bicenten- the way, what about saying something nice about nial Authoritys plans. the Government now and then in that publication How successful Review has been must depend of yours?" on the judgment of others. But over the years it has Review of course could not please everyone all won accolades from prominent Australians, the time, even those amongst its most prominent including Sir Robert Menzies, who early on said of supporters. During the "Korean" inflation of the Review: "On the documentary side of political early 1950s it decided to advocate, among other economy no better work has been done during my things, a 10 per cent appreciation of the exchange 21 years of Parliamentary life."

36 Ideas Which Count

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Eou.dor The last decade has witnessed a remarkable shift in the political systems of Latin America and the Caribbean toward democracy. In ten years ten countries have democratized. In nine of the ten, elected civilians replaced military presidents: Pam Argentina (1983) stimulated by Britains victory in Brazil the Falklands War, Bolivia (1982), Brazil (1985), Ecuador (1979), El Salvador (1984), Guatemala (1986), Honduras (1982), Peru (1980) and Uruguay (1985). In the Caribbean Basin, the six Bolivia former British dependencies—Antigua and Bar- buda, Belize, Dominica, St. Christopher and Nevis, St. Lucia, and St. Vincent and the Grena- dines—that became independent nations during the past decade did so as democracies. Paraguay Fifty nationwide elections in 24 independent countries have been conducted since 1980, with record numbers turning out to vote. Even in coun- tries where voting is not compulsory turn-outs were often high, for example 85 per cent in Gren- ada in 1984 and 89 per cent in The Bahamas in 1982. utiyu•y An improvement in education is one factor which has contributed to democratization. In Argentina 1960, only 35 per cent of the regions children aged 12-17 were enrolled in school; a mere 6 per cent of the university-age population attended universi- ties and technical colleges. By 1980, these figures were 63 per cent and 26 per cent respectively. The growth of the middle classes has been a key factor in the trend toward democracy. The tradition of authoritarian centralism in much of Latin America is strong, however, and it remains to be seen whether the new democracies can achieve stability. (Source: Democracy in Latin America and the Caribbean: The Promise and the Challenge, U.S. Department of State. Washington D.C., 1987.) FOCUS ON FIGURES

Jacob Abrahami

While public transport may not have 1947 to 1987: advanced in 40 years, private means of transport have expanded spectacularly. The number of Improved Living motor vehicles over the period has risen from one Standards Declining for each eight Australians to one for each two. The Prospects Income Recipients by Source of Income Forty years ago, in March 1947, the first issue 7947 Veterans 10.4% 409,000 of the IPA Review was published. What kind of Govt Employees 14,3% world was it then? How different from today? 564,000 Sick and Other 0.3% The accompanying charts and table highlight 11,000 some of the changes in Australian society in the Unemployed 0.2% past 40 years. Of course not all changes tan be con- 6,000 densed into a set of figures and summarized in a Widows 1.1% 43,000 chart or table. In particular no set of figures can Aged Invalid 9.6% describe the changing mood of a nation. Yet there is 376,000 little doubt that a marked change has taken place. In 1947, Australia, in common with the rest of the free world, had recently emerged. victorious Private Employees 64.2% from a global war, full of hope and expectations of a 2,524,000 prosperous and harmonious future. Today, while there is no immediate threat of a global conflict, there is nonetheless a great deal of pessimism and uncertainty about the future. 1987 While some of the hopes and aspirations of post-World War II Australia have been largely Sick and Oth er 1.0% Single Parents 1.7% realized, several disturbing trends have emerged to 103 179 take the glint off these achievements. Veterans 6.3% Unemployed 5.9% On the positive side we begin by noting that 654,000000 620,00,000 workers today earn (in real terms) 50 per cent more Govt Employees 16.7 Widows 1.5% than they did in 1947. Pensioners are even better 1,742,000 153,000 off with benefits twice those available 40 years ago. Aged Invalid 16.5% After paying income tax the 1987 worker is, 1,720,000 however, only one-third better off than his 1947 counterpart. In 1947 53 per cent of families owned or were buying their own homes; today the figure is over 70 Private Employees 50.4% 5,256,000 per cent.

Jacob Abrahami is Senior Economist at the IPA.

IPA Review, August-October 1987 40 FOCUS ON FIGURES

"gadgets" of modern life have spread at a similar Many of the things that make life today more rate. The number of telephones, to quote one comfortable were not available in quantity, if at all, example, has increased almost ten-fold from less 40 years ago. For example, today Australian house- than a million to nearly nine million, thereby holds commonly have washing machines, dish- increasing the ratio of telephones from ten for each washers and microwave ovens which enable them 100 Australians to one for each two. to devote more time to their televisions, videos, The resources devoted to education at all personal computers, direct interstate and interna- levels have also greatly expanded. For instance, the tional dialling and live satellite broadcasts from proportion of adults now studying at universities is around the world. almost twice that of 40 years ago. Of course it is At work main-frame computers, word proces- quite another thing whether education standards sors, automatic bank tellers, facsimile machines have improved. and more recently robots have all improved effi- Life expectancy over the 40 years has ciency and reduced some of the drudgery asso- increased by some 10 per cent to 79 years for ciated with what was previously mundane routine women and 73 for men. Infant mortality at the manual work. same time has declined by two-thirds from 30 per The frontiers of medical science have also 1,000 births to only 10 per 1,000. advanced with the development of organ trans- Despite improved health conditions the plants, micro-surgery, artificial joints and invitro- current population growth of less than 1.5 per cent fertilization. per annum is substantially below the 2.3 per cent None of these improvements were available in rate of the late 1940s. Yet Australia over the 40 1947. years has managed to more than double its popula- If Australians of the 1980s are more highly tion from 7.5 million to over 16 million. In no paid, better educated, healthier and more comfort- small measure this is due to the large influx of ably housed why is there so much gloom about the migrants. In 1947 one in 10 Australians was born future? overseas, today the figure is around one in five. The The great improvements of the past four migrants have come from an increasingly diversi- decades have been mainly of a physical or material fied background. Whereas in 1947 about three- nature. Less tangible, but no less important, aspects quarters of foreign born Australians came from the that make up the quality of life have in many UK and Ireland, today a little more than a third respects deteriorated. In particular two negative were born in the UK and Ireland. developments stand out: the decline in traditional

INDICATORS OF CHANGE 1947 and 19871 Unemploy- Adult Weekly ment Benefit Consumption Consumption Award Wage Basic Pension Rate Adult with Cost Portable Melb. to Syd. Weekly Rent of beer per of wine per Rate wife child Radio Airfare for House head head %of Award S S Wage Rate $ $ $ $ litres litres 1947 172.86 50.25 29.1 67.00 460 148 34.40 69.7 6.2 1987 289.23 112.15 38.8 204.00 6 170 133.30 115.6 21.3

Cweatth Per cent of Cwealth State Taxes Share of Share of Unemployed GDP per State Outlays per head per Exports going Exports going Housing Loan Receiving Population head per head week to Japan to U.K. Interest Rate Govt Benefit Bankruptcies Million S S S % % % 1947 7.5 5760 2217 28 1.81 29.0 3.8 7.4 352 1987 16.1 16270 6530 94 28.40 3.5 15.0 89.0 8597 All money figures are in 1987 dollars. Or nearest years for which figures are available.

41 FOCUS ON FIGURES standards and values and the erosion in some who foot the bill. That the loss has been substantial aspects of individual freedom. is easy to illustrate. Tax collected by governments The rising crime rate, for example, is one increased from $828 million in 1946/47 to $78,500 reflection of the decline in traditional standards. million in 1986/87. Adjusted for inflation this is a The crime rate has increased more rapidly than the seven-fold increase. Per head and adjusted for population despite a more than three-fold increase inflation tax collection has risen from $28.40 per in the number of police. week to $93.80 per week. Many people link the rise in the crime rate But even taxes of this magnitude are not with the decline of the family as the basic institu- enough to satisfy the apparently insatiable appetite tion of Australian society. While the traditional of governments for spending money, which have family is still the dominant unit, marriage is not as had to resort to ever-increasing borrowings. In popular as it was in the 1940s and divorce is very 1947 public sector debt stood at around $6 billion, much more common. The current marriage rate of of which at least half was associated with the then 70 per 1,000 of population in the 1980s is little recently concluded war. Current public debt stands more than two-thirds the 101 per 1,000 of 1947. at $105 billion with little prospect of that figure While the population has doubled in the last 40 declining noticeably in the near future. This has years the divorce rate has increased almost five- contributed in no small measure to the high inter- fold. As a result there has been a large increase in est rates with which Australian businesses and the number of households not able to function as a households are now forced to live. Housing loans, traditional family and in need of State support. For for example, cost 3.8 per cent in 1947; today the example in 1987 there are 177,000 supporting rate is around 15 per cent. parents, mostly mothers, receiving $1,300 million There has also been an enormous increase in in financial assistance from Government at an business and private debt, placing further strain on average of $7,300 per head per year. In 1947 there the Australian economy. was no such benefit. In such an environment it is not surprising In 1947, there were three private sector that many feel the prospects for the future are less employees for each person receiving a pension or than good. We are creating a divided nation; one- benefit from government. Today the ratio is five to half dependent on government and the other half three. If we include in "dependency" calculations who must keep handing over an ever-increasing people who receive wages and salaries from gov- proportion of their income to support the increas- ernment and their authorities, then the dependency ing number of dependants. While this generation ratio doubled from one dependent for each two pri- may be able to muddle along and live on the fruits vate sector income earners to one for one. of the past, we are handing over to future genera- Dependence on the State involves a loss of tions a debt-ridden economy ill-equipped to freedom not only for the dependants but for those handle the problems created by this generation.

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42 Public Service or Political Service Les McCàrrQy

Within the Westminster system of government, the tradition has developed of an independent, professional administration responsible to the Ministry and charged with implementing government policy and adminis- tering the day-to-day affairs of State. It evolved of necessity from the past when patronage and nepotism were the order of the day-and preferred appointments of relatives and friends resulted in administration characterized by incompetence and favouritism. Today the wheel is in danger of turning a full circle with political patronage replacing the royal variety.

The rise of the new breed of Labor politician, well- politicization of the public. service. The architects educated, middle-class .rather than working-class, of the change can be heard to argue that it is no pragmatic rather than visibly ideological and more more than the process of evolution from the inhe- managerially-oriented than the old guard - it dis- rited Westminster style of government towards the placed in the 1970s, is bringing about revolutionary US system -where the elected Executive has greater changes to the form and machinery of government control over senior appointments and therefore in Australia.... • . over .the administration of government. Impatient and often scornful of the traditions But the direction we are taking in Australia is and constraints of the Westminster system of par- towards greater control by the party in power over liamentary government, Labor has set about all sectors of Government than is the case in the US expanding the power and authority of the Ministry where the outworking of the , balance of powers and making the administrative arm—the Public between the Executive, Congress and Senate Service—more subservient to party objectives and frequently cuts across party lines. control. This preoccupation with exercising tighter Whatever the position taken on this issue, it is party control over administration, personnel and undeniable that the changes made over the last few the sources of advice to government is most years in some States have , been far-reaching, apparent in Victoria and Western Australia but is frequently lacking regard for the rights and dignity not exclusive to those States. of the individual and destructive of management The roots of the change can be traced back to authority and effectiveness. the time of the Gorton Government. They spread They have generally been advanced under the rapidly under Whitlam, were nourished by Fraser, cloak of administrative reform and a much needed but have acquired wholly new dimensions in recent shake-up of the public service. However, - the years. "reforms" we have seen in recent years, though pre- The most disturbing aspect of this . unan- sented as such, seem to have done little to improve nounced revolution is that it is making fundamen- efficiency in public service management or in tal changes to the formal working relationships and delivery of services. The outward signs are easily the checks and balances between Parliament, recognizable: reshuffling and change of name of Executive Government and the administrative departments, removal of senior, experienced per- arm, the public service, with no prior indication of sonnel with their replacement in many cases by objectives or public debate of the issues involved. people regarded as more supportive of the govern- To some observers it is an undesirable trend ments aims. Ministerial offices have expanded to towards more authoritarian government through become mini-departments in their own right and the decline of the authority of Parliament and the party faithful appointed as "advisors".

Les McCarrey is Director of the IPA States Policy Unit in Perth and held senior posts in the public service for 25 years, rising to serve as Under Treasurer in Western Australia between 1975 and 1983.

43 IPA Review, August-October 1987 PUBLIC SERVICE OR POLITICAL SERVICE

The first objective of the "reforms" is appar- between Ministers and senior public servants? ently to replace public service input to Ministers by Peter Henderson, a career public servant for advice from people regarded as more politically in 33 years, former head of the Department of Foreign tune and more likely to give palatable advice. Affairs in Canberra from 1980 to 1985 and There can be no valid objection to govern- "involuntarily resigned" under new regulations ments obtaining advice on the working of todays introduced by the Hawke Government in 1984, complex world from wherever they can. Indeed expressed his concerns about politicization of the Ministers have an obligation to seek broadly-based Commonwealth Public Service recently when he advice if they are to arrive at informed and said, "If preferment is increasingly given to syco- balanced decisions. Also there can be little argu- phants and yes men—the professionalism and ment against the appointment by Ministers of a quality of the public service as a whole can only limited number of advisors of the same political suffer." convictions if their activities are restricted to The worst feature of this trend in both the advice that is openly given and exposed to com- Commonwealth and State administration is that ment and criticism from those in the public service the public servant who sticks to his/her principles and elsewhere with a knowledge of the subject. But and provides frank and honest advice becomes out that does not seem to be the case today with the of favour and isolated. At best further promotion is new generation of advisors who tend to surround unlikely; at worst his job is at risk. As a result, their activities and advice with secrecy and middle-level executives now have real doubts together constitute a type of closed-shop against whether experience, competence and diligence are the public service. enough for them to be able to aspire to the highest An advisor with executive authority is a con- positions in public administration. Popularity with tradiction of terms but many have substantial the Minister and being assessed as sympathetic and executive authority and mediate between the Min- reliable are likely to carry greater weight in deter- ister and senior administrative staff who can find it mining their career prospects. difficult to penetrate to the Minister and are some- times unsure of whose views they are hearing. Management To the public and the business community the advisors become gatekeepers to the Minister, tak- The second objective of the Labor "reforms" ing over in part his/her role and seemingly assum- has been to extend the role of the Minister from ing the Ministers authority. In many cases they are policy director to department and personnel better informed of government policy and, in prac- manager. tice, exercise more real power than a head of John Cain made no bones about it. In an department. address to the Royal Australian Institute of Public Professor Laffin, who conducted an extensive Administration, Mr. Cain said "The principle of survey of politician—public service relationships distancing the politicians from management of per- in Victoria quotes a senior public servant as saying sonnel tended to extend to the idea that civil ser- that in many ways the chief administrator had vants, not Ministers, should be responsible for become "a glorified personal assistant". administration generally." In his Government, Mr. It is significant that some advisors have Cain said, Ministers would reject any notion that moved from that role to senior public service posi- Ministers are responsible for policy and public tions by Ministerial influence. Just how their close servants for administration. political connections and means of accession to Just how far Ministers should involve them- office can be reconciled with their responsibility as selves in the day-to-day direction of administra- public servants to serve a subsequent government tion and how they are to obtain the capacity to of different political persuasion has never been exercise administrative and managerial control explained. Certainly a new government could not over several departments in addition to their be expected to tolerate them in positions of trust or Cabinet, Parliamentary and electorate respon- respect their advice. Does the whole process begin sibilities was not made clear. again and what are the consequences for effective Few Ministers come to Parliament and thence continuity of administration and confidence to the Ministry with any experience in manage-

1. Martin Laffin: "No Permanent Head" a paper presented to the Annual Conference of the Australasian Political Studies Association, Brisbane 1986.

44 PUBLIC SERVICE OR POLITICAL SERVICE ment of even a small office let alone of a large cies of the government of the day within the law. organization containing a multiplicity of profes- But traditionally it needs to have a high degree of sional skills and with, in many cases, a complex independence of thought and advice and, most range of responsibilities. It is also rare to find a importantly, in the responsibility of providing ser- Minister appointed to a portfolio in which he/she vices to the public within the policy guidelines has any relevant qualifications or experience. without bias, discrimination or favouritism. The danger of Ministers being surrounded by a Sir Paul Hasluck, one time public servant, coterie of politically active advisors with lines of Minister of the Crown, politician, academic and communication back into the party is that the latter Governor-General of Australia put this very well are in reality non-elected politicians, unknown to in a recent article in Quadrant2. and not responsible to the public, but frequently "If there is to be any discussion of the theory of with more power and influence than backbench Government, close attention would also have to be Members of Parliament. given to the principles on which a career public ser- This trend is just another manifestation of the vice has been developed in Australia. The advo- downgrading of the role of Parliament. Executive cates of changes have been concerned chiefly with Government is of the Parliament and responsible the relationship between public servants and min- to the Parliament but increasingly we see Parlia- isters and have given scant attention to the rela- ment treated with contempt by Ministers whose tionship of the public service to the community. own authority stems solely from their party having, For the past hundred years at least, Australians for the time being, a majority of seats in the have taken it for granted that the public servant House. acts with probity and is incorruptible and impar- Question time, the traditional means by which tial. The citizen does not expect that there will be elected members obtain information on the deci- favouritism or prejudice at the post office counter, sions and actions of government and the adminis- the police station, customs barrier, permit office or tration, has become farcical in many Australian at any desk where he can make a complaint or seek Parliaments. Information on important issues is an entitlement. One does not expect better service denied Parliament by Ministers not answering from telling the clerk that one voted for the party in questions or providing deliberately irrelevant power. answers. Even questions on the use or misuse of The ideal for which we have striven is a public public money can be rejected by the absurd claim service which can serve the public without bias and that the information is commercially confidential which does not have to curry favour, fear reprisals notwithstanding the long-established convention or solicit benefits for itself. By and large we have that governments cannot deny the public informa- achieved that in Australia and the achievement tion on the use of their money. This requirement is was founded on the idea that appointments to the fundamental to the democratic process, but its service and promotion within the service was open demise has been accompanied by little resistance and competitive without political patronage or from Speakers who should be the watchdogs of class favouritism." Parliamentary rules. With the weakening of the role and authority Governments have been able to adopt these of Parliament, governments have become increas- tactics with little concern or remark from com- ingly autocratic in style. This impatience with the pliant press galleries which seem to accept and even forms and traditions of government has been admire the triumph of politics over Parliament. Or coupled in the case of recent Labor governments is it that todays journalists simply do not under- with a suspicion and distrust of the public service stand how thin the line of defence is against corrup- and an impatience with advice that might; based tion of the democratic process and that they are the on knowledge and experience, differ from views forward scouts for the forces of truth and open gov- formulated in the party room. ernment? To the extent that governments are The danger that arises from subsequent moves increasingly able to deal in disinformation or pro- to `get control of the public service and ensure vide no information at all with little protest from appointment of amenable people in key positions the media, the journalists are failing Australia. is that a compliant and muzzled public service The public service is, of course, subject to gov- combined with an emasculated Parliament puts ernment direction and must implement the poli- the government in a position to exercise autocratic

2. "Politics in tire Public Service" Sir Paul Hasluck, Quadrant, March 1986.

45 PUBLIC SERVICE OR POLITICAL SERVICE power with no effective checks or balances. There in the operations and in the efficiency of Australian is a consequent temptation to ride rough-shod over public services, but that will not be achieved by proper forms and conventions and even circum- politicization. What needs to be acknowledged is vent the spirit of the law. that in general Australia has been well served by its In the United States the powers of Congress public servants over the years and that on the and the Senate and their right to call on and ques- whole their record for integrity and straight dealing tion the administration through a well-developed has been somewhat better than that of our politi- committee system stands as a strong counter- cians. balance to an Executive which seeks to exceed its The empires need to be pruned (although not traditional or constitutional authority. Events in all are public service creations) and management recent years have demonstrated the effectiveness of tightened. That is unlikely to occur in conditions of that balancing mechanism for which we have no weakened and confused leadership, low morale effective counterpart. and uncertainty as to the role required of public The Westminster system is a fragile one resting servants. as it does on respect for and observance of the con- But at bottom what is at stake is the carefully ventions and traditions developed over the cen- constructed balance and probity of our system of turies and upon the integrity of those elevated to government. As Sir Paul Hasluck put it, "The only power within it. An important part of that system is sure and certain protection against authoritarian an independent, professional public service with rule in Australian government is a professional, appointments and promotion based on merit and competent career public service independent of the free from nepotism and political influence. favour, of ministers and conscious of its own There is a great deal of room for improvement specialized role in the conduct of public affairs."

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46 PHILOSOPHERS FOR FREEDOM

Ten Conservative Principles Russell Kirk

Russell Kirk is one of the great intellectual figures of post-World War!! America. His best known book, The Conservative Mind (now in its seventh edition) on the nature and historical sources of conservatism, is acclaimed for the subtlety and breadth of its analysis. He is also author of Roots of the American Order, Eliot and his Age and editor of The Portable Conservative Reader. For twenty-five years he wrote a column, "From the Academy", for National Review, and founded two journals, Modern Age and The University Bookman. His intellectual inspiration clearly owes more to the great scholars of old than the cultural winds which have prevailed over recent decades. He has been called "The American Cicero". This paper was delivered at The Heritage Foundation in Washington D.C., at which Dr. Kirk is now a Distinguished Scholar.

Being neither a religion nor an ideology, the body of following ten articles of belief reflect the emphases opinion termed conservatism possesses no Holy of conservatives nowadays. Writ and no Das Kapital to provide dogmata. So First, the conservative believes that there exists far as it is possible to determine what conservatives an enduring moral order. That order is made for believe, the first principles of the conservative per- man, and man is made for it: human nature is con- suasion are derived from what leading conserva- stant, and moral truths are permanent. tive writers and public men have professed during the past two centuries. Perhaps it would be well, most of the time, to use this word "conservative" chiefly as an adjec- tive. For there exists no Model Conservative, and conservatism is the negation of ideology: it is a state of mind, a type of character, a way of looking at the civil social order. In essence, the conservative person is simply one who finds the permanent things more pleasing than Chaos and Old Night. (Yet conservatives know, with Burke, that healthy "change is the means of our preservation.") A peoples historic continuity of experience, says the conservative, offers a guide to policy far better than the abstract designs of coffee-house philosophers. But of course there is more to the conservative persuasion than this general attitude. It is not possible to draw up a neat catalogue of conservatives convictions; nevertheless, I offer you, summarily, ten general principles. It seems safe to say that most conservatives would subscribe to most of these maxims, although the diversity of ways in which conservative views may find expres- sion is itself proof that conservatism is no fixed ideology. What particular principles conservatives emphasize during any given time will vary with the circumstances and necessities of that era. The

47 IPA Review, August-October 1987 TEN CONSERVATIVE PRINCIPLES

This world order signifies harmony. There are the artificial products of a long social experience, two aspects or types of order: the inner order of the the result of centuries of trial and reflection and soul and the outer order of the commonwealth. sacrifice. Thus the body social is a kind of spiritual Twenty-five centuries ago, Plato taught this doc- corporation, comparable to the church; it may even trine, but even the educated nowadays find it diffi- be called a community of souls. Human society is cult to understand. The problem of order has been no machine to be treated mechanically. The con- a principal concern of conservatives ever since tinuity, the life-blood, of a society must not be conservative became a term of politics. interrupted. Burkes reminder of the necessity for Our twentieth century world has experienced prudent change is in the mind of the conservative. the hideous consequences of the collapse of belief But necessary change, conservatives argue, ought in a moral order. Like the atrocities and disasters of to be gradual and discriminatory, never unfixing Greece in the fifth century before Christ, the ruin of old interests at once. great nations in our century shows us the pit into Third, conservatives believe in what may be which fall societies that mistake clever self-interest, called the principle of prescription. Conservatives or ingenious social controls, for pleasing alterna- sense that modern people are dwarfs on the should- tives to an old-fangled moral order. ers of giants, able to see farther than their ancestors It has been said by liberal intellectuals that the only because of the great stature of those who have conservative believes all social questions, at heart, preceded us in time. Therefore conservatives very to be questions of private morality. Properly under- often emphasize the importance of prescription— stood, this statement is .quite true. A society in that is, of things established by immemorial usage, which men and women are governed by belief in an so that the mind of man runneth not to the con- enduring moral order, by a strong sense of right and trary. There exist rights of which the chief sanction wrong, by personal convictions about justice and is their antiquity—including rights to property, honour, will be a good society—whatever political often. Similarly, our morals are prescriptive in machinery it may utilize; while a society in which great part. Conservatives argue that we are men and women are morally adrift, ignorant of unlikely, we moderns, to make any brave new dis- norms, and intent chiefly upon gratification of coveries in morals or politics or taste. It is perilous appetites, will be a bad society—no matter how to weigh every passing issue on the basis of private many people vote and no matter how liberal its judgment and private rationality. The individual is formal constitution may be. foolish, but the species is wise, Burke declared. In Second, the conservative adheres to custom, politics we do well to abide by precedent and pre- convention and continuity. It is old custom that cept and even prejudice, for the great mysterious enables people to live together peaceably; the des- incorporation of the human race has acquired a troyers of custom demolish more than they know prescriptive wisdom far greater than any mans or desire. It is through convention—a word much petty private rationality. abused in our time—that we contrive to avoid per- Fourth, conservatives are guided by their prin- petual disputes about rights and duties: law at base ciple of prudence. Burke agrees with Plato that in is a body of conventions. Continuity is the means the statesman, prudence is chief among virtues. of linking generation to generation; it matters as Any public measure ought to be judged by its prob- much for society as it does for the individual; with- ably long-run consequences, not merely by tem- out it, life is meaningless. When successful revolu- porary advantage or popularity. Liberals and radi- tionaries have effaced old customs, derided old cals, the conservative says, are imprudent: for they conventions, and broken the continuity of social dash at their objectives without giving much heed institutions—why, presently they discover the to the risk of new abuses worse than the evils they necessity of establishing fresh customs, conven- hope to sweep away. As John Randolph of tions, and continuity; but that process is painful Roanoke put it, Providence moves slowly, but the and slow; and the new social order that eventually devil always hurries. Human society being com- emerges may be much inferior to the old order that plex, remedies cannot be simple if they are to be radicals overthrew in their zeal for the Earthly efficacious. The conservative declares that he acts Paradise. only after sufficient reflection, having weighed the Conservatives are champions of custom, con- consequences. Sudden and slashing reforms are as vention and continuity because they prefer the perilous as sudden and slashing surgery. devil they know to the devil they do not know. Fifth, conservatives pay attention to the Order and justice and freedom, they believe, are principle of variety. They feel affection for the

48 TEN CONSERVATIVE PRINCIPLES

proliferating intricacy of long-established social economic progress. Getting and spending are not institutions and modes of life, as distinguished the chief aims of human existence; but a sound eco- from the narrowing uniformity and deadening nomic basis for the person, the family and the com- egalitarianism of radical systems. For the preserva- monwealth is much to be desired. tion of a healthy diversity in any civilization, there Sir Henry Maine, in his Village Communities, must survive orders and classes, differences in strongly puts the case for private property: material condition, and many sorts of inequality. "Nobody is at liberty to attack several property and The only true forms of equality are equality at the to say at the same time that he values civilization. Last Judgment and equality before a just court of The history of the two cannot be disentangled." For law; all other attempts at levelling must lead, at the institution of several property—that is, private best, to social stagnation. Society requires honest property—has been a powerful instrument for and able leadership; and if natural and institutional teaching men and women responsibility, for pro- differences are destroyed, presently some tyrant or viding motives to integrity, for supporting general host of squalid oligarchs will create new forms of culture, for raising mankind above the level of inequality. mere drudgery, for affording leisure to think and freedom to act. To be able to retain the fruits of ones labour; to be able to see ones work made per- Man being imperfect, no perfect social order manent; to be able to bequeath ones property to ever can be created. Because of human ones posterity; to be able to rise from the natural restlessness, mankind would grow rebellious condition of grinding poverty to the security of under any utopian domination, and would enduring accomplishment; to have something that break out once more in violent discontent--or is really ones own—these are advantages difficult else expire of boredom. to deny. The conservative acknowledges that the possession of property fixes certain duties upon the Sixth, conservatives are chastened by their possessor, he accepts those moral and legal obliga- principle of imperfectibility. Human nature suffers tions cheerfully. irremediably from certain grave faults, the conser- Eighth, conservatives uphold voluntary com- vatives know. Man being imperfect, no perfect munity, as they oppose involuntary collectivism. In social order ever can be created. Because of human a genuine community, the decisions most directly restlessness, mankind would grow rebellious under affecting the lives of citizens are made locally and any utopian domination, and would break out once voluntarily. Some of these functions are carried out more in violent discontent—or else expire of bore- by local political bodies, others by private associa- dom. To seek for utopia is to end in disaster, the tions: so long as they are kept local, and are marked conservative says: we are not made for perfect by the general agreement of those affected, they things. All that we reasonably can expect is a toler- constitute healthy community. But when these able, ordered, just and free society, in which some functions pass by default or usurpation to central- evils, maladjustments, and suffering will continue ized authority, then community is in serious dan- to lurk. By proper attention to prudent reform, we ger. Whatever is beneficent and prudent in modem may preserve and improve this tolerable order. But democracy is made possible through co-operative if the old institutional and moral safeguards of a volition. If, then, in the name of an abstract demo- nation are neglected, then the anarchic impulse in cracy, the functions of community are transferred humankind breaks loose: "the ceremony of inno- to distant political direction—why, real govern- cence is drowned." The ideologues who promise ment by the consent of the governed gives way to a the perfection of man and society have converted a standardizing process hostile to freedom and great part of the twentieth century world into a human dignity. terrestrial hell. For a nation is no stronger than the numerous Seventh, conservatives are persuaded that free- little communities of which it is composed. A cen- dom and property are closely linked. Separate pro- tral administration, or a corps of select managers perty from private possession, and Leviathan and civil servants, however well-intentioned and becomes master of all. Upon the foundation of pri- well-trained, cannot confer justice and prosperity vate property, great civilizations are built. The more and tranquility upon a mass of men and women widespread is the possession of private property, the deprived of their old responsibilities. That experi- more stable and productive is a commonwealth. ment has been made before; and it has been Economic levelling, conservatives maintain, is not disastrous. It is the performance of our duties in

49 TEN CONSERVATIVE PRINCIPLES community that teaches us prudence and efficiency those enduring interests and convictions that give and charity. us stability and continuity; without that Perma- Ninth, the conservative perceives the need for nence, the fountains of the great deep are broken prudent restraints upon power and upon human up, society slipping into anarchy. The Progression passions. Politically speaking, power is the ability in a society is that spirit and that body of talents to do as one likes, regardless of the wills of ones which urge us on to prudent reforms and improve- fellows. A state in which an individual or a small ment; without that Progression, a people stagnate. group are able to dominate the wills of their fellows Therefore the intelligent conservative endea- without check is a despotism, whether it is called vours to reconcile the claims of Permanence and monarchical or aristocratic or democratic. When the claims of Progression. He thinks that the liberal every person claims to be a power unto himself, and the radical, blind to the just claims of Perma- then society falls into anarchy. Anarchy never lasts nence, would endanger the heritage bequeathed to long, being intolerable for everyone and contrary to us, in an endeavour to hurry us into some dubious the ineluctable fact that some persons are more Terrestrial Paradise. The conservative, in short, strong and more clever than their neighbours. To favours reasoned and temperate progress; he is anarchy there succeeds tyranny or oligarchy, in opposed to the cult of Progress, whose votaries which power is monopolized by a very few. believe that everything new necessarily is superior The conservative endeavours to so limit and to everything old. balance political power that anarchy or tyranny Change is essential to the body social, the con- may not arise. In every age, nevertheless, men and servative reasons, just as it is essential to the women are tempted to overthrow the limitations human body. A body that has ceased to renew itself upon power, for the sake of some fancied tem- has begun to die. But if that body is to be vigorous, porary advantage. It is characteristic of the radical the change must occur in a regular manner, har- that he thinks of power as a force for goodso long monizing with the form and nature of that body; as the power falls into his hands. In the name of otherwise change produces a monstrous growth, a liberty, the French and Russian revolutionaries cancer, which devours its host. The conservative abolished the old restraints upon power; but power takes care that nothing in a society should ever be cannot be abolished; it always finds its way into wholly old, and that nothing should ever be wholly someones hands. That power which the revolu- new. This is the means of the conservation of a tionaries had thought oppressive in the hands of nation, quite as it is the means of conservation of a the old regime became many times as tyrannical in living organism. Just how much change a society the hands of the radical new masters of the state. requires, and what sort of change, depends upon Knowing human nature for a mixture of good the circumstances of an age and a nation. and evil, the conservative does not put his trust in mere benevolence. Constitutional restrictions, Who are todays Conservatives? political checks and balances, adequate enforce- ment of the laws, the old intricate web of restraints Who affirms those ten conservative principles upon will and appetitethese the conservative nowadays? In practical politics, a body of general approves as instruments of freedom and order. A convictions is commonly linked with a body of just government maintains a healthy tension interests. Marxists argue, indeed, that professed between the claims of authority and the claims of political principle is a mere veil for advancement of liberty. the economic interests of a class or faction: that is, Tenth, the thinking conservative understands no real principle existsmerely ideology. Such is that permanence and change must be recognized not my view: but we ought to recognize connec- and reconciled in a vigorous society. The conserva- tions between political doctrines and social or eco- tive is not opposed to social improvement, nomic interest groups, when such connections although he doubts whether there is any such force exist; they may be innocent enough, or they may as a mystical Progress, with a Roman P, at work in make headway at the expense of the general public the world. When a society is progressing in some interest. What interest or group of interests back respects, usually it is declining in other respects. the conservative element in politics? The conservative knows that any healthy society is That question is not readily answered. Many influenced by two forces, which Samuel Taylor rich people endorse liberal or radical causes, Coleridge called its Permanence and its Pro- affluent suburbs frequently vote for liberal men gression. The Permanence of a society is formed by and measures; attachment to conservative

50 TEN CONSERVATIVE PRINCIPLES sentiments does not follow the line that Maixist conservatives. Silly anarchistic tracts, under the analysts of politics expect to find. The owners of label libertarian, are represented in some quarters small properties, as a class, tend to be more conser- as conservative publications—this in the -United vative than do the .possessors of much property States of America, whose Constitution is described (this, latter often in the abstract form of stocks and by Sir Henry Maine as the most successful device bonds). One may remark that most conservatives in,the history of politics! Even after more than hold. religious convictions; yet .the officers of main- three decades of the renewal of conservative line Protestant churches, together with church bur- thought in this land, it remains necessary to make it eaucracies, frequently ally themselves with radical clear to the public that conservatives are not organizations; while some curious political affir- merely folk content with the dominations and mations have been . heard recently among the powers of the moment; nor anarchists in disguise Catholic hierarchy. Half a century agd, it might who would pull down, if they could, both the politi- have been said that niost college professors _were cal and the moral order; nor persons for whom the conservative; that could not be said truthfully whole of life is the accumulation of money, like so today; yet physicians, lawyers, dentists, and other many Midases. professional people—or most of them—subscribe Therefore it is of importance to know whereof to conservative journals and generally vote for one speaks, and not to mistake the conservative persons they take to be.conservative candidates. impulse for some narrow and impractical ideology. In short, the conservative interest appears to If the trumpet give an uncertain sound who shall go transcend the usual classification of most voting forth to battle? For intellectual development, the blocs according to wealth, age, ethnic origin, reli- first necessity is to define ones terms. If we can gion, occupation, education, and the like. If we niay enlarge the understanding of conservatisms first speak of a conservative interest, this appears to be principles, we will have begun a reinvigoration of the interest bloc of,people concerned for stability: the conservative imagination. those citizens who find the pace ofchange too swift, The great line of demarcation in modern poli- the loss of continuity and permanence too painful, tics, Eric Voegelin used to point out, is not a divi- the break with the past too brutal, and inhumane. sion between liberals on one side and totalitarians Certain material interests are bound up with this on the other. No, on one side of that line are all resistance to insensate. change: nobody relishes those men and women who fancy that the temporal having his savings reduced to insignificance by order is the only order, and that material needs are inflation of the currency. But the moving power their only needs, and that they may do as they like behind the renewed conservatism of the American with the human patrimony. On the other side of public is not some scheme of personal or corporate that line are all those people who recognize an aggrandizement; rather, it is the impulse for survi- enduring moral order in the universe, a. constant val of a culture that wakes to its peril near the end human ,nature and high duties toward the order of the twentieth century.. We might well call mili- spiritual and the order temporal. tant conservatives the Party of the Permanent Conservatives cannot offer the fancied Terres- Things. trial Paradise that always, in reality, has turned out Perhaps no words have been more abused, to be an Earthly Hell. What they can offer is politics both in the popular press and within the Academy, as the art of the possible; and an opportunity to than conservatism and conservative. The . New stand up for thatold lovable human nature; and York Times, not without malice prepense, now and conscious participation in the defence of order and again refers to Stalinists within the Soviet Union as justice and freedom.

51 The Capture of the Welfare State

Delia Hendrie and Michael Porter

The main object of any welfare system is to improve the well-being of those who are particularly disadvan- taged, or suffer misfortune. But as our experience with the welfare state shows, those who benefit from the system are often not those most in need.

One major source of the welfare states problems is beyond issues of delivery of welfare services, and to the fact that the process of democratic government reassess the strategic issues related to why, despite is one readily captured by interest groups. Success- our affluence, the number of persons in disadvan- ful groups are typically articulate, narrowly focused taged situations has grown out of all proportion, in electoral terms, keen on rhetoric regarding the despite growth in community income and the benefits to the needy, but far from poor them- imposition of high minimum incomes for those in selves. employment. Because the costs of individual government Finally, the welfare state is undermined by the programs are spread thinly, through taxes and gov- growth of transfers to persons who are not disad- ernment borrowing (future taxes), or through cross- vantaged, in forms such as family allowances, subsidies via state enterprise, while the benefits are dependent spouse rebates, tax-free thresholds, concentrated on particular interest groups, the compulsory medicare arrangements and subsi- public at large rarely has any capacity or indeed dized education. All of these have created a sizable incentive to attempt to undo a government pro- expansion of "middle-class welfare" and an asso- gram. Over time, a wide range of projects gains ciated escalation of marginal tax rates. The higher approval, with the size of government growing and marginal tax rates resulting from universal benefits with the government becoming increasingly are counter-productive, in part because they beholden to narrow interest groups, all in the name impose high marginal tax rates on the people of redistribution and the "welfare state". But the receiving the benefits. welfare which is being enhanced is rarely the wel- fare of those with real disadvantage. What is more, The Persistence of Welfare Problems the tax burden of redistribution to the powerful deters the very activity which is capable of employ- Despite the fact that per capita real expendi- ing and benefiting the disadvantaged. tures (1986 dollars) on social security have risen A second process which often undermines the from $514 in 1970/71 to $1,300 in 1986/87, and good intentions of the welfare state is that many of with similar escalations in spending on health and those requiring support are in difficulties largely education, serious problems for disadvantaged because of the operation of other policies of gov- groups have persisted. A number of major and ernment, not least in the area of labour markets, loosely related causes seem relevant. education and training, and because of the struc- • The very growth of government spurred on by ture of benefit levels relative to award wages. Poli- the capacity of interest groups to exploit the cies which impose artificial minimum standards democratic process has left little room for have the effect of precluding others from compet- manoeuvre in government, with the relatively ing for jobs, in particular those with less skills and powerless and less influential members of the experience. Thus any package which looks at the community simply failing to gain a hold owing to fundamentals of welfare reform needs also to look the escalation of all the other claims on govern-

Delia Hendrie is Research Assistant at the Centre of Policy Studies. Michael Porter is Professor of Economics at Alonash Universit y and Director of the Centre of Policy Studies.

IPA Review August-October 1987 52 THE CAPTURE OF THE WELFARE STATE

ment. Furthermore, governments are increas- to the levels of both real minimum wages and ingly preoccupied in fighting powerful interest single parent benefits. groups whenever they do try to cut ineffective • Government is increasingly taxing Peter to pay and largely wasteful items of government spend- Peter, not Paul. When we tax $1 away, the econo- ing. They thus have little time or resources for mics of the process are such that we are forced to those who really do need help, or who would raise marginal tax rates and generate a loss of respond to greater incentives. economic efficiency—with the effect that, as a • It is now essentially illegal to employ and train community, we only have a net 70c-80c of young persons on terms they would accept. This income to give back, once we allow.for the direct is the outcome of the imposition of wage minima and indirect effects, at the margin, of such taxes and conditions which create costs of employing on effort, investment and savings and the result- young persons far in excess of those which ing loss of community income.z applied when youth unemployment was not a problem. As a result, young people do not get a Interest Groups and Middle-Class Welfare "toe in the door" and fail to accumulate one of the most valuable assets—work experience. The above problems reduce to (1) interest Instead, they accumulate the quite distorting and group capture of government process; and (2) the dispiriting experience of life on welfare. The les- connected point, the growth of middle-class wel- son of Hong Kong, which, despite the absence of fare, or the "churning" of taxation and social secur- a welfare state, has greatly enriched the standard ity payments throughout the community, such that of living for millions of (initially) unskilled we are taking dollars out of one pocket of (low Chinese peasants, without the assistance of income) workers and putting in the other pocket unions, or minimum wages, is a reminder that access to services and allowances, thresholds, we do not have a monopoly of wisdom when it rebates, subsidized education and health, which are comes to devices for looking after low income typically worth far less than the taxes extracted. A groups. consequence of such widespread policies is the high • Those allegedly caring for the interests of the probability of such a worker spending most of his unemployed, including groups such as the or her working life paying marginal tax rates in the ACTU, typically focus on raising minimum con- 40 per cent to 50 per cent bracket, and an even ditions which preclude the less skilled, and then higher probability that he or she will be dis- advocate increased welfare spending on those couraged from productive activity by the burden of displaced. When they do focus on reasons for having to support similar people in similar situa- unemployment they often emphasize "red tions. herrings", such as technological change, failing to The vast bulk of well-intentioned transfers for note that there is no significant connection unemployment benefits, education, health insur- between unemployment trends and technologi- ance and other areas of policy are made necessary cal change—with new technology simply allow- by the malfunctioning of the system, indeed by the ing us, if we invest, to obtain higher incomes and operation of government and regulatory rules so meet more of our essentially insatiable wants. regarding employment and education and training. There is no evidence of"demand failure" to prop We are probably spending over $5 billion per up notions of the inevitability of persistent annum compensating for the consequences of an unemployment. Arbitration Commission process and a labour • The design and level of welfare benefits have market and training "system" which put huge made it less unattractive to be a single parent or barriers in the way ofyoung people wishing to work unemployed, and have created an apathetic atti- and train. And when we realize that the same ten- tude on the part of many individuals towards dency to churn taxes through the welfare system productive employment. Bernstam and Swan and to redistribute to those paying such taxes, had have argued that in the USA there is a marked before July 1 pushed top marginal tax rates to positive responsiveness of both unemployment around 55 per cent or 60 per cent, when they need and the numbers on supporting parents benefit only be around 25-30 per cent, it becomes clear that

1.Bernstam, M. and Swan, P. (1986) "The State as Marriage Partner of Last Resort: A Labour Market Approach to Illegiti- macv in the United States: 1960-1980, mimeograph. See also "Brides of the State" IPA Review, May-July 1987. 2. Findlay, C. and Jones, R. (1982), "The Marginal Cost of Australian Income Taxation, Economic Record, 58,162,253- 262.

53 THE CAPTURE OF THE WELFARE STATE

the system is indeed . in need of fundamental Parent and student discretion exercised in choosing reform. A society in which the average industrious courses, and more accountability on the part of worker faces 50 per cent to 60 per cent (direct and teachers and researchers, mean that costs of fee- indirect) tax rates at their earnings peak is one in charging and competitive tertiary will be which such persons are encouraged to become less than current costs, just as private schools in creative in precisely the wrong ways, that is to Australia cost significantly less than government avoid and evade taxes (often by not doing the pro- schools. ductive things they would otherwise do), resulting We should also stress that the general point in a smaller pie and a greater difficulty in achieving regarding the capacity of interest groups to capture desirable distributional goals. the governmental process does not stop with areas such as education, but extends into the whole range of state enterprises, enterprises which are largely The more government is caught up in actual there because oftheir capacity to disguise the cross- production and distribution, the more it subsidies which they facilitate. If state enterprise becomes beholden to interest groups. The were not simply about the desire to disguise and resulting inefficiencies of state provision are conceal cross-subsidies from the taxpayers at large such that there will be less capacity to help to narrow groups, then by and large they would be those that most of us really wish to help. replaced by private enterprises subject to the usual private incentive structures and takeover possibili- There is a need to move away from middle- ties, tending to make them more efficient. Such pri- class welfare towards withdrawal of the govern- vate enterprises could still receive (explicit) subsid- ment from the production and management of ies and transfers from the government in order to most goods and services (activities at which it has a help those deemed worthy of subsidy or privileged proven disadvantage in providing efficient ser- access, but the key advantage is that there would vice), so that government may concentrate in now be a management structure with an incentive administering a more generous and targeted wel- to keep the value of services up and costs down. fare system which is capable of looking after the Airlines are another example of capture of the disadvantaged without discouraging the efforts of welfare state in the interests of the privileged. If the both the disadvantaged and the rest of the com- consumers who face excessive air fares, and who munity. We believe that the major implication of are offered very limited access to airline schedules most research on state enterprises and other ulti- and innovative packages, had the opportunity to mately politically controlled corporations is that understand the extent to which they cross-subsid- government should not be running school systems, ize groups of aviation workers, none of whom are airlines, electricity or even communications, but in particular need or suffering deprivation, then rather should use its taxing and subsidy powers to they would have contempt for the current regula- tilt the terms on which some individuals may gain tion of airlines, including by means of state owner- access both to key services and to income. The ship of Australian Airlines and Qantas. Similarly, if more government is caught up in actual production the taxpayers of Victoria were aware of the extent and distribution, the more it becomes beholden to ($40 million in 1986/87) to which their govern- interest groups. The resulting inefficiencies of state ment is currently redistributing towards the State provision are such that there will be less capacity to Electricity Commission and selected customers, help those that most of us really wish to help. - and if they were aware of the extent to which cer- If taxpayers did not have to fund whatever tain unions captured the profitability of power gen- education package is chosen by students in the eration by delaying the construction of Loy Yang artificial world of unpriced and bureaucratically and so almost doubling its capital cost (see studies run tertiary education, they, like their parents, by Hartley and Rheinbraun), then they too would would have far greater post-tax income than higher be fairly indignant. It follows that if one is quality education would cost. (Those who enjoy genuinely concerned in Australia to increase the not paying for the education services they use, capacity to look after low income persons, one should realize that the subsidy increases, on aver- almost certainly wishes to reduce the capacity of age, the total cost they pay for everyone else!) government to look after privileged lobby groups,

3. See the chapter by Parish in Freebairn, J. W., Porter, M.G. and Walsh, C. (eds) (1987) Spending and Taxing: Australian Reform Options, Allen and Unwln/Centre of Policy Studies/National Priorities Project.

54 THE CAPTURE OF THE WELFARE STATE and this implies far less state enterprise, far less and opportunities to those whose favour they seek. regulation by government and its agencies, and a State enterprises fit nicely into this scheme of far more open and competitive market process in things, as all political parties demonstrate. It is only Australia. The point here is that while market out- when budgetary times are tough, as in New Zealand comes may not be perfect, they are intrinsically and Australia at present, that we tend to see the open, and not conducted behind regulatory doors. more courageous finance ministers become willing If market outcomes do not conform to politi- to face facts and attempt to undo the capture of the cal preferences, government can, through taxing welfare state. and subsidy mechanisms, make sure that even It should also be accepted that where there is under full private ownership of various organiza- actual "redistribution", much of it is received by tions and institutions they can achieve a large the same persons complaining about high taxes, yet measure of change in the distribution of benefits receiving education subsidies, family allowances, and costs, but openly in the full gaze of Parliament. large tax exempt thresholds for husband and wife, However, it is a major point that interest groups compulsory health insurance and so forth. A key typically do not wish such an open process, and nor question in 1987 is whether it is possible to restruc- do most politicians. Politicians are not rewarded, ture this system before the excess of government electorally, for their cost-saving efficiency in meet- spending, and the resulting external deficits and ing social objectives, but for handing out benefits debts, convert us into a third-rate nation.

Two Handbooks for Smaller GovernmentMichael James (continued from page 34) long-term effect on the upward trend of govern- allowances, abolishing the Community Employ- ment spending. Their answer is to package cuts in ment Program, and raising eligibility for the dole to taxes and spending so as to deliver the lasting gains age 18 (all recommended by one or both hand- of lower public spending along with the temporary books) it began the slaughter of sacred cows that losses. The reasoning runs like this: the only way to must continue if public spending is ever to be get taxes down is to cut spending, but the only way brought under control and targeted to appropriate to make spending cuts acceptable to welfare reci- groups of beneficiaries. Australias economic con- pients is to compensate them with substantial tax dition is such that politicians have no option but to cuts. Most taxpayers would find themselves with proceed in the direction indicated by Mandate to more after-tax income; they would have to spend Govern and Spending and Taxing; but how far and much of this on services like health and education how fast they go depends very largely on the imagi- that the state used to provide `free for everyone; nation they display in appealing for popular sup- but they would appreciate the greater scope for port and focusing public opinion against the consumer choice allowed by higher incomes and by tyranny of special interests. greater competition between producers. Whatever the strengths and weaknesses of Mandate to Govern has already been criticized their respective strategies, these books contribute for demanding less, and Spending and Taxing for greatly to the indispensable task of informing pub- demanding more, than the political system can lic opinion about the often self-defeating and deliver. Which of the two strategies is likely to be illusory nature of many of the `benefits of big more successful? Treasurer Paul Keatings Expen- government. By helping to articulate the public diture Statement of last May leaves the question demand for a more rational and discriminating open. As an exercise in minimal change, it was not public sector, they reduce the risks politicians face large enough even to eliminate the budget deficit, in trying to deliver one. In a democracy, detailed let alone finance a tax cut. It was accompanied by agenda for reform may have a greater effect no revised trilogy-style promise that overall spend- through their long-run influence on public opinion ing would not be allowed to creep up again to pre- than through their immediate impact on the politi- vious levels. Yet it was more than just an across- cians to whom they are addressed in the first the-board exercise. By means testing family instance.

55 Privatization a la Francaise

Since the time of Louis XIV the French have made a virtue of the State regulating and controlling industry, Under Prime Minister Chirac, according to this report by a special European correspondent, all this has changed.

Jean-Baptiste Colbert, the illustrious French be subject to the law of those who, under the pre- statesman, is reported to have muttered on his text of market forces, exercise a dictatorship: mon- deathbed in 1683: "Si j avais fail pour Dieu ce que opolies, multinational corporations and bankers". jai fait pour cel homme, je serais sauve dix fois". The Plan referred to by President Mitterrand ("If I had done for God what I have done for this (which still exists, but deprived of its operational man, my soul would have been redeemed ten times significance) is an obvious, but not unique, mani- over"). festation of this tradition. The movement of top "This man" was Louis XIV, the Sun King, and French public servants, typically the products of Colbert may not have been exaggerating. From the elite tertiary educational establishments ("grandes various strategic posts which he occupied at one ecoles) and moulded in a civil servant interven- time or another in Louis administration, including tionist attitude, into top business positions is a not that of intendant of finances, Colbert devoted him- unusual phenomenon. self single-mindedly to fostering a strong French Right-wing Governments have lived happily industrial and commercial presence. The countrys with this heritage. General de Gaulle himself insti- colonial resources were harnessed and, where gated a wave of nationalizations in the immediate necessary, resort made to skilled foreign artisans to post-war period, although he was inspired by a found royal manufactures. The entire undertaking desire not only to increase control over the alloca- was pursued within a framework of strict govern- tion of resources (via major banks and insurance ment regulation. companies) but also to punish wartime collabora- Although Colbert was scarcely a pioneer— tion (Renault). The Socialists nationalized 47 Louis XIs royal backing for the creation of a silk enterprises in 1982 at an estimated cost (share- industry in the fifteenth century could be cited as holder compensation plus interest accrued on the an earlier example—he remains a symbol of State debt thereby incurred) of close to FFr 35 milliards, dirigism and his spirit has permeated French offi- bringing close to 90 per cent of banking and impor- cial attitudes toward economic management ever tant sections of industry under State control. Dur- since. Laurent Fabius, the then Prime Minister, ing 1981-84 a further FFr 49 milliards of equity was asserted in late 1983: "In this context I hear that injected into the nationalized sector. Belief in the some people would like to denationalize what was omniscient States ability to allocate resources for nationalized not only in 1981, but carried away by the greatest good of its citizens reached a high point their enthusiasm, even in 1945—poor General de in the industry plans devised within the Ministry of Gaulle—and even under Colbert—poor Colbert! Industry and Research under its Socialist Minister That conflicts with both economic reality in our Jean-Pierre Chevenement in which the national- country and French economic tradition". ized industries were allocated a key role. Industry Francois Mitterrand himself had earlier con- was rationalized into neatly drawn vertically-inte- firmed in 1977: "We believe in the superiority of grated industrial groupings (filieres"). "Untidy" the Plan over the market. This is not merely a diversification was not tolerated. pledge or a wish, but a fact. ...we think that funda- Prime Minister Chiracs Governments pro- mental decisions concerning the well-being of our gram of privatization consequently represents a nation should be made on the basis of knowledge radical break with tradition. Yet, timid privatiza- and the confrontation of interests, needs and aspi- tion straws were already in the wind during the rations democratically debated at all levels, and not later stages of the Socialist administration which

1. This is not to imply that the French enjoy a monopoly of infatuation with the States mystical omniscience and superiority Lord Stockton, formerly Prime Minister Macmillan, as an old man, deplored Margaret Thatchers selling offof (somewhat tarnished) family silver".

IPA Review, August-October 1987 56 PRIVATIZATION A LA FRANCAISE

had begun to realise that centralized State control basis of this opinion, which is made public, the over virtually the entire financial sector and large Minister of Finance takes the final decision as to sections of industry was stifling the competitive the price, which may not be below the Commis- pressures which alone could ensure the necessary sions estimation. adaptation of French industry to rapidly-changing • A public information bulletin, prepared by the world markets. Furthermore, resort to , private company to be privatized and checked by the capital would ease the burden on the public purse Commission des Operations de Bourse (the at a time of burgeoning fiscal deficit. A law passed French Securities Exchange Commission), sets in January 1983 provided for nationalized com- out its activities, past and projected financial panies to issue non-voting, negotiable investment results, as well as the share offer conditions. certificates (certificats dinvestissement) and parti- • Generally speaking, the distribution of shares is cipatory titles (titres participatifs). However, the made according to the following pattern: present Governments program is of a quite differ- —70 per cent is subject to a public offer of sale ent order of magnitude, and represents a clear (offre public de vente—OPV), which sets out break with traditional attitudes, being inspired by the number and price of shares on offer as well reaction to the demonstrable failure of Socialism as the period of sale (about two weeks). French with which the more recent nationalizations and, citizens and residents are accorded certain more generally, State intervention were identified. privileges including priority allocation of up to Privatization is governed by two acts of the 10 shares per person and one free share (up to a French Parliament: limit of five) per 10 purchased if held for at Law 86-793 of 2nd July 1986 authorizes, in least 18 months. conformity with the Governments election plat- —Maximum 10 per cent is reserved for present form, the sale to the private sector by at latest 1st and former employees of the company, who March 1991 (that is, within the 5-year life of the also benefit from preferential terms—a reduc- present Parliament) of 65 groups in which the Gov- tion of up to 20 per cent on the announced ernment holds, either directly or indirectly, a OPV price (but where greater than 5 per cent, majority interest. These are distributed by sector as the shares must be held at least 2 years), up to 3 follows: 9 industrial, 13 insurance, 38 banks, 4 years to pay, and the attribution of one free finance companies and one communications. In share for-each purchased (subject to certain all, 1,454 companies (57 per cent of all firms in limitations) if held for at least a year. which the government has a majority sharehold- —Maximum 20 per cent (which may be reduced ing) with 755,000 employees are concerned. in the national interest) is allocated to foreigners. • The Finance Minister may set a 5 per cent limit However, the present Governments program on the acquisition by any single purchaser at the is of a quite different order of magnitude, and time of issue, and may also arrange for the pri- represents a clear break with traditional vate placement of shares. This latter provision attitudes, being inspired by reaction to the has been used in order to reduce the volatility of demonstrable failure of Socialism with which shareholding by selecting a small group of stable the more recent nationalizations and, more investors (groupe dactionnaires stable—GAS). generally, State intervention were identified. Furthermore, the State may acquire a "golden share" (action specifique) where such is deemed Legislation enacted on 6th August 1986 lays in the national interest, but this right has so far down the detailed procedures to be followed: been exercised only once. • A Privatization Commission (created in Sep- Share applications are transmitted to the tember 1986)—consisting of seven members Chambre syndicale des agents de change (Stock chosen for their economic, financial or legal Brokers Association) which, where demand competence and experience—evaluates the com- exceeds supply, makes a pro-rata allocation, sub- pany after audit of the latest accounts and ject to the priorities indicated above. evaluation by the bank retained as advisor to the The proceeds of issues are paid into a special Government. The criteria laid down are: stock Treasury account. The FFr 30 milliards of receipts market quotation of shares or investment certifi- budgeted for this year are allocated as follows: cates (where applicable), value of assets, profits, reduction of the debt incurred by the 1982 nation- subsidiary holdings and future prospects. On the alizations (FFr five milliards), capital injections to

57 PRIVATIZATION A LA FRANCAISE

public-sector enterprises (FFr nine milliards) and French public 72 per cent reduction of the Governments fiscal deficit (FFr Foreigners 18 16 milliards). In fact, after the privatization of the St. Gobain employees 10 Societe Generale in mid-1987 an estimated FFr 52 Paribas, the first of the financial institutions to milliards will already have been collected. be offered, was oversubscribed nearly 40 times and Choice of the first candidate was critical for now has 3.8 million shareholders. The Societe Gen- the success of such a major undertaking which is erale, a major retail bank, being brought to market variously evaluated at upwards of FFr 200 . mil- in June this year, is the first of the immediate post- liards over five years? The selection of Saint- war vintage nationalizations to be (re) privatized. Gobain for this role was based on sound technical The Government hopes to create a broadly- considerations (well-known, blue-chip, profitable based share-owning public. A survey ordered by a and in a relatively stable industry), but is not with- leading French business magazine, indicated that out historical irony since the company can trace its 55 per cent of persons interviewed approved of pri- very origin to Colberts desire to break the then vatization, and Socialist Party threats to renation- Venetian monopoly in glass making. In 1665 he alize have been limited to the TV station TF1. So installed four artisans in Paris after having smug- far, the program has been extremely successful, the gled them out of Venice and then proceeded to initial responses having far exceeded the Govern- close the frontier to Venetian glass in order to ments expectations. About one-half of Saint- ensure the success of his venture. From this hum- Gobain employees took up shares. In addition, ble beginning gradually emerged the Manufacture over one and one-half million individuals became de Saint-Gobain which subsequently survived the shareholders, about seven times the pre-national- vicissitudes of French history and in the process ization figure, of whom probably at least 300,000 assumed a multinational dimension. In 1982 it was had never before held shares either directly or via nationalized by the Socialist Government. mutual funds. Of domestic holdings, 85 per cent The Saint-Gobain privatization, the hitherto are in the hands of individuals and 15 per cent with largest single operation on the Paris Bourse, institutions. How enduring this pattern will prove entailed the offer during the period 24 November remains to be seen. As indicated above, incentives to 5 December 1986 of 28 million shares at a unit have been provided for retaining holdings for price of FFr 310 (net of costs). The French Treasury periods of up to two years and in the cases of Saint- retained Kleinwort-Benson, which has accumu- Gobain and Paribas studies indicate that about 15 lated considerable experience from the British pri- per cent of the issues changed hands rapidly. Hand- vatization program, as well as a French bank as some profits have been made in many cases; Saint- advisors. A special price reduction of five per cent Gobains price soared after its initial SE quotation was offered to employees without restriction as to of FFr 369, peaking at FFr 467.5; it has since slip- holding period or of 20 per cent if shares were held ped to FFr 416 (early June) which still represents a for at least two years. The 50-60 thousand certift- one-third gain over its offer price. But perhaps the cats dinvestissejnent issued in June 1986 could be first major market downturn must be awaited in exchanged for shares. The offer proved a great suc- order to better judge how profoundly mentalities cess, being 14 times oversubscribed. The percen- have changed. tage attributed to foreigners was reduced to 18, giv- ing the final distribution of holdings:

2. As at end-1986. the value ofall shares listed on the Paris Bourse amounted to FFr 1,150 milliards, and 7.6 per cent of French households owned shares.

58

Around the States

Les McCarrey

How the Money Comes and Goes

In shaping their budgets each year, State Gov- Constitution would have been very different. ernments have their room to manoeuvre confined Indeed it is possible that, faced with a future of bur- by the dominance of Commonwealth Grants over geoning expenditure demands and inadequate their revenue and the huge expenditure demands of revenue resources dooming the States to increasing education and health services which together dependence on the Commonwealth Government, account for about 45 per cent of recurrent the colonies would have gone their separate ways— expenditure. as did New Zealand—and the Australian nation Consolidated data on State budget revenue would not have been born. and expenditure are not available on a uniform basis. However the overall pattern does not vary Recurrent Revenue substantially from State to State and the New South Wales figure may be taken as representative, State Taxation at least for the larger States. 40.5% The followinggraphsgg P show the breakdown of recurrent rrevenue v andexpenditurea d , for the New Other South Wales 1986/87 budget. a RoyaltiesY 5.2 /o The demands of education, which weighed :.;<<>` " Land 2. / heavily on State budgets in the 1960s and 1970s, a s Dept Charges have eased with declining enrolments in State at^^oeese$ ome v Q .3 4L rik ;Fa h~ 111 5.2 /a schools (see below) but have been replaced by pres- }R Fines sures from health services and law and order (police and law courts) as crime escalates through- •out Australia. Cwealth Grants Although the Commonwealth takeover of 46.7% income taxation during World War II and High Court rulings on the nature of Excise Duty are the principal causes of the revenue imbalance, the Recurrent Expenditure dependence of the States on Commonwealth assis- tance has its roots in the division of powers between the Commonwealth and States at the time Debt Servicing Other 29.8% of Federation. Social services expenditure, particu- 13.8% (inc general admin) larly on education and- health, was a relatively minor aspect of colonial expenditure at the turn of Rail Urban the century and access to revenue sources between Transport the Commonwealth and the States was determined 6.5% Law, Order accordingly. ` Safety The founding fathers could not have foreseen 6.6% the enormous upsurge of spending on social ser- Education vices that has occurred in more recent years and the 21.3% way it would come to dominate State Government Health 22.0% spending and taxation. Had they been able to do so, it is certain the division of taxing powers in the

Les McCarrev is Director of the IPA States Policy Unit based in Perth.

59 IPA Review August-October 1987 AROU NI) TILE STATES- LES MCCARREY

Education Exodus

A government-sponsored report recently illusionment and a sense of futility. The same cor- released in Western Australia claims that teachers respondent pointed to the injustice of teachers are suffering from severe stress because of long being sandwiched between the unrealistic demands working hours, isolation in the classroom and lack of the educational authority and the degeneration of support. Teachers in that State are also up in of society. arms over the confusion created by what they claim So there it is. Pity the dedicated teacher, of is the too rapid introduction of the State Govern- which there remain many, trying to teach kids in ments "Better Schools" program which among classrooms which have been turned into social other problems, has thrown a significant additional laboratories by the education trendoids (thanks to burden of curriculum development on to senior David Clark for that expressive word) and working teachers. in a sea of confusion as to educational aims and The WA `reforms and the resulting turmoil management with precious little support from seem to be direct transplants from Victoria where a above. recent Education Ministry project team reported That there is widespread concern among that, after four years of `reform and restructuring parents throughout Australia can no longer be of the State education system, "a managerial fog dismissed by the politicians and teachers union has settled over large sections of the educational trendies. Enrolments in State schools have been enterprise. Executives have become increasingly falling in recent years in all States except Queens- uncertain about their authority, decisions have land where they appear static. Although there has been deferred or not taken, delays have become been an overall drop in school enrolments due to institutionalized and a great deal of time and the demographic trough of school-aged children, a money has been wasted." key factor has been the swing to non-government It is also reported that in New South Wales, schools in all States as the following table shows. spelling bees are causing children to feel inferior and depressed because of competition in the class- Increase/(Decrease) in Enrolments room. To overcome this, the curriculum is to be Government vs Private Schools 1984-1986 amended to move the emphasis from spelling and Percentage Change grammar in teaching language to a more holistic approach—whatever that means. Govt Private Total In a recent national television program, a Schools Schools senior official of the NSW Education Department NSW (2.1) 5.1 (0.3) claimed that "we are not in the business of prepar- Vic (4.6) 3.6 (2.1) ing people for the work place." Qld -- 4.2 0.1 A curriculum consultant to the same depart- SA (4.4) 7.1 (2.1) ment is reported as saying "we live in a post-literate WA (1.0) 7.9 1.0 society—there is no need to teach spelling and Tas (2.6) 6.0 (1.0) grammar any more." Australia (a) (2.4) 4.8 (0.5) An ABC current affairs interviewer chides an (a) Includes ACT and NT. employer group spokesman by reminding him that education is about providing children with life Source: Commonwealth Department of Education skills rather than employment skills. National Schools Statistics Collection Australia 1986. David Clark, writing in the Financial Review reports a primary school teacher telling him "It While an elitist attitude no doubt contributes goes against the grain when I am told that I dont to some parents decision to enrol their child at a have to correct spelling and grammar any more." private school, a number of other reasons are In Western Australia, a teacher writing to a given. The private school system is seen as promot- daily newspaper claims that the main role of teach- ing competition and encouraging the children to ing is being eroded by enforced additional roles and achieve, although the cancer of a non-competitive. by a requirement to implement education policies academic environment is also permeating the pri- which fluctuate constantly, creating confusion, dis- vate school body. Discipline is tighter, imposed in

60 AROUND THE STATES—LES McCARREY part by the children themselves who are made per cent of school children now attending non-gov- aware of the monetary value placed on their educa- ernment schools and the potential for substantial tion by the household sacrifices required to meet budget savings if government schools are relieved high school fees. . of enrolment pressures. The debate on government funding of private Australia has an enormous investment and a schools waxes and wanes. Federal and State Gov- great deal of talent and integrity in the government ernment funding for private schools currently school system. Perhaps one answer to the per- amounts on average to about $1,580 per student ceived decline in education standards is to find and there is no doubt that if this funding were with- ways of enabling the voice of the experienced class- drawn many schools would be forced to close. But room teacher to be heard over the trendoids and the political reality is for even greater government social engineers. In the meantime, the exodus will support of the private school system with over 26 continue.

Is it Time for Another Niemeyer Statement?

In July 1930, faced with the crisis of the depression ciency in the compilation and reporting by State and a 19 per cent unemployment rate, the Federal Treasuries of total public sector receipts and out- Government invited the Governor of the Bank of lays in National Accounts format. It is a safe bet England, Sir Otto Niemeyer and his colleague T. E. that no State Cabinet has before it at budget time Gregory to Australia to advise on measures to even rough estimates of the net public sector bor- combat the crisis. rowing requirement (PSBR) resulting from Their principal recommendations for a planned expenditure programs, including those of balanced budget and an across-the-board wage cut its major statutory authorities. In the critical eco- of 10 per cent and the subsequent effects of those nomic circumstances of today, State Governments measures in the circumstances of the time are well- as members of the Loan Council, should subject known. Perhaps less well-known was a recommen- themselves to the discipline of at least knowing the dation for monitoring the financial position of the economic effect of their aggregate financial transac- States which led to production by each State on a tions and be prepared to pool that information. standardized basis ofa monthly statement of finan- To this end, Loan Council should call for a cial transactions on the public account. This state- return from State Treasurers of public sector ment, .known to this day as the Niemeyer State- receipts and outlays on the ABS format following ment, is supplied to the Federal Government to completion of State budgets and quarterly there- enable some limited monitoring of State finances. after. (No doubt the Bureau would be grateful for The Niemeyer Statement is restricted in scope the involvement and assistance of State Treasuries and is of little value in terms of providing an over- in tightening up the initial PSBR estimates). all assessment of the impact of the State sector on Admittedly that would seem to be locking the the economy. door after the horse is well down the road but it The controversy earlier this year over the should at least ensure that State Governments accuracy of ABS estimates of the net public sector make an attempt to look at a wider perspective of borrowings of the States points to a major defi- State public transactions than they do at present.

61 Disarming the Cynics "The cynics who one sex on the shortlist for the Staff Office to collate and forward to the Equal Opportunity Committee: think peace is passe, or that International Year of No prizes for guessing which is the line of Peace was just window dressing, should have been at least resistance. the Peace Education Resource Centre last week... the Big Brother—oops! Big Sibling—is watching. Journal was!" enthuses the Jou rnal of the Victorian (Please excuse the Claytons sexism.) Teachers Union. "A delegation of schoolchildren who had written to the leader of the Soviet Union pleading for peace received an official letter from the Class Oppression Despite efforts to reform Ambassador of the Soviet Union in Australia and a the system in recent times, the insidious practice of visit from the Secretary of the Soviet Embassy," the grading students according to merit apparently still VTU Journal continues. "The Secretary, Yuri persists in some classrooms. Michael Read, in The Velobrou, read out the letter which expressed Victorian Teacher, the journal of the Victorian understanding of the sentiments of the children and Secondary Teachers Association, hits out at the stated the Soviet Unions commitments to the cause of injustice of it all: peace and disarmament. " "Children under fifteen are compelled by law to The Journal also reprints a sample of the letters attend school. When they get there they may discover sent to Mr. Gorbachev by Victorian school children. that their efforts to master new disciplines, their "You should take notice of the International Year of productions and their creations are treated as Peace, " says one, "for in Australian schools, children performances subject to measurement and are making things for peace, things like paper crane classification. They may be compared with other making, peace posters and dancing and music for children and ranked in order of merit. Some may even peace. Peace is a different thing to war, a much be labelled as failures if their performance does not different thing." If only the teachers of the 1 930s had conform to certain criteria of which they may have taught their children how to dance for peace, make little or no ken. Such students must find school paper cranes and write nice letters to Mr. Hitler the profoundly alienating. My point here though is that it is Second World War might never have happened. unjust: compulsion to attend allied with grading is tantamount to double jeopardy." Big Sibling is Watching "Claytons You Cant Think When Youre - sexism is the sexism you practise when youre not Angry Angry Anderson, lead singer of the rock being sexist," according to The University of Melbournes "Guide to Gender-Neutral Speech and band "Rose Tattoo" and recipient of an Advance Writing," devised by a committee set up in response to Australia Award, reveals, in the glossy pages of New the Universitys Equal Opportunity Policy. Claytons Age magazine, Simply Living, his deep compassion sexism, the booklet informs us disapprovingly, "is for the victims of mans cruelty to animals. Not so, displayed by people who know what sexist usage is, apparently, the thousands of victims, including but dont think it a serious problem. Although reluctant refugees, of Cubas and Vietnams communist despots. to be seen as impenitent sexists, they reveal their "...some of my greatest heroes have been sexism nevertheless by mocking a caricature of revolutionaries; Angry says in the interview. "But non-sexist usage. For example: Hes very manly. before that they were visionaries. Ive stayed away Oops! Should I say personly?" from the Marxist-Leninists and gone for the more Meanwhile at La Trobe University official exotic and colourful characters like Che Guevara, Selection Procedures for the filling of academic staff Fidel Castro and Ho Chi Minh. " vacancies insist that a sex count be done of those "But; interrupts the interviewer, "they were all shortlisted, by a committee on which "both sexes Marxist-Leninists: should normally be represented". . "Yes says Angry, determined not to let reality "After the shortlist has been drawn up, the cloud his vision, "but not dogmatic; they liberated to meeting will consider whether both sexes are liberate, not to suppress. " represented on the shortlist. If one sex is not represented, the meeting will review the applicants and Present Education For the person who has take one of the following steps: everything Box Hill TAFE (Technical and Further a)the best-qualified applicant of the Education) in Melbourne offers a course in "Creative unrepresented sex will be included in the shortlist; OR Gift Giving" For the person who doesnt have b)document the reasons for the non-inclusion of everything, a course is run in "Assertiveness".

IPA Review, August--October 1987 62 Turn s

years and continues to be waged While in people for over 200 If You Cant Beat Them (1) in this country by the present Hawke Labor the left-wing weekly, The New Statesman, Britains Government. Both mean Aboriginal people die a socialists theorize on the possibilities of "market death less than human. " The terrorism of which the a socialism; Italy has seen the establishment of Hawke Government, indeed the whole country, is communist merchant bank. The bank called Finec is guilty, according to Rev. Harris, is "sophisticated 70 per cent owned by the Communist "Lego delta terrorism; whereas, presumably, Gadaffrs is gauche. Co-operative" (National Co-operative League), reports the Financial Times. And in the United States, Nuclear Free America has launched its own credit Australias Handicap "Here is a single card, the Working Assets Visa Card. Every time mother, who has a graduate diploma in outdoor someone new signs up for the card five dollars goes to studies, and experience in non-sexist teaching, Nuclear Free America and after then five cents every sending in a complaint to a government unit about time the card is used to make a purchase. The interest `discrimination because she cant get a job. The rate is not low, but then its only fair that card carrying reason could be many things: real wages may be too socialists should pay for their principal as well as for high, imposing structural unemployment, or as a their principles. person the single mother may be a pain in the neck. But she is certain that she is unemployed because shes a woman, and one who `took the trouble to be a If You Cant Beat Them (2) mother. She now asks the Government to Psychologist and spokesman for the Victorian compensate for these twin handicaps. And the Association of Mental Health, Stephen Wallace, has Government does compensate her. " (From The condemned what he claims is the continued use of Australians by Ross Terrill). corporal punishment in Victorian State schools. Referring to the teachers who use corporal punishment, Wallace said: "Our major concern is that Will They Ever Learn? in April 1970 these red-necked Rambos will produce yet another Current Affairs Bulletin introduced an article headed generation of violent, aggressive children, not just in "USSR—and the Indian Ocean" with this the classroom but outside the classroom." At the same extraordinary comment on the state of foreign policy time, according to the report in The Age, "Mr. at the time. `7n August fast year, Mr. Gordon Freeth, Wallace said corporal punishment was generally then Australian Minister for External Affairs, said that useless in stopping undesirable behaviour because the the Government would consider with close interest any punishments normally advocated, such as the strap, Soviet proposals that seemed to be in line with the were not painful enough. " collective security of the South-east Asian region. In the context of a Soviet naval presence in the Indian Ocean this was widely interpreted to mean that Workers on a building site near On the Nose Australia was perhaps ready to co-operate, in military having to work with Sydneys Chinatown objected to terms, with the Soviets in some form of regional the smell of Chinese cooking in the air. It was not that security system. " they did not like the aroma, but that it made them Awareness of the threat posed by a Soviet hungry for Chinese food. The employees presence in our region has come a long way since then demanded—and received—a `dim sim allowance for ... or has it? In June this year, our current Minister for Chinese food. (From the Liberal Party "Rort Report" Foreign Affairs, Mr. Hayden, was quoted in The on the Building Industry). Australian as describing Mr. Gorbachevs I986 Vladivostok speech heralding greater Soviet Terror Australis In the aftermath of involvement in the Pacific as "an extremely impo rtant Tasmanian Aboriginal lawyer Michael Mansells visit to and encouraging statement—my inclination would be Libya in April, the Rev. Charles Harris, leader of the to encourage the Soviets to be drawn more and more Uniting Aboriginal and Islander Christian Congress into productive and harmonious economic involvement reflects on the subtle differences which distinguish through the Pacific basin." Australia from Gadaffis Libya. `I am not sure which is Current Affairs Bulletin in its 1970 piece notes the worst, " ponders Rev. Harris in Land Rights that "subsequent election results ... suggest that Mr. News, "having to face Gadaffi style terrorism which Freeths speech was politically disastrous for him. " To gives instant death, or the kind of terror and this extent, times have changed. degradation which has been inflicted on the Aboriginal

63 An Economic "Bill of Rights"

Extracts from a speech by the President of the United States, Ronald Reagan, at Independence Day Celebration, The Jefferson Memorial, July 31987.

Freedom is not created by Govern- In the same vein, regulation of do what every family in America ment, nor is it a gift from those in an individuals business or property must do, and that is to live within its political power. It is, in fact, secured, can reach a degree where ownership means and balance its budget. more than anything else, by limita- is nullified, where value is taken. Raising taxes, should not be tions placed on those in Govern- Property rights are central to liberty done without a broad national con- ment authority. It is absence of the and they should never be trampled sensus. We propose that every Government censor in our news- upon. Americans paycheque be pro- papers, broadcast stations, and uni- It is time to protect our people tected —as part of a balanced budget versities. It is the lack of fear by and their livelihoods with restric- amendment—by requiring that tax those who gather in religious ser- tions on Government that will increases must be passed by both vices. It is the absence of official ensure the fundamental economic Houses of Congress by more than a abuse of those who speak up against freedom of the people, the equival- mere majority of their members. the policies of their Government. ent to an Economic Bill of Rights. I will, by Executive order, Inextricably linked to these The centrepiece of the Econo- establish a bipartisan Presidential political freedoms are protections mic Bill of Rights, the policy initia- Commission on Privatization to for the economic freedoms envi- tive we launch today, is a long over- determine what Federal assets and sioned by those Americans who due constitutional amendment to activities can and should be went before us. There are four require the Federal Government to returned to the citizenry. At the essential economic freedoms. same time, I will order the Execu- First is the freedom to work— tive Branch to find additional ways to pursue ones livelihood in ones for contracting outside of Govern- own way, to choose where one will ment to perform those tasks that locate and what one will do to sus- belong in the private economy. tain individual and family needs We must also re-examine and desires. Federal policies to ensure that they Secondly, the freedom to enjoy help, not hinder, all Americans to the fruits of ones labour—to keep participate fully in the opportunities for oneself and ones family the pro- of our free economy. We need to fit or gain earned by honest effort. Y replace a welfare system that des- Third is the freedom to own troys economic independence and and control ones property—to the family with one that creates trade or exchange it and not to have incentives for recipients to move up it taken through threat or coercion. and out of dependency. Fourth is the freedom to parti- We propose changes that will cipate in a free market—to contract ensure "Truth in Spending" by freely for goods and services, and to requiring every new program to achieve ones full potential without Thomas Jefferson: meet this.test: if congressional pas- Government limits on opportunity, "T wish it were possible to sage of a new program will require economic independence, and increased spending, it must be paid growth. obtain a single amendment to for at the same time, either with of Just as our political freedoms our Constitution, I would be setting reductions in other programs need protection by and from Gov- willing to depend on that or new revenues. ernment, our economic freedoms alone for the reduction of the Citizens have a right to be need similar recognition and pro- informed as to what Federal legisla- tection. administration of our Gov- tion will cost. Full disclosure of such We must insist, for example, ernment to the genuine prin- costs up front may well temper the that there be a limit to the level of ciples of its Constitution; I desire to over-regulate and over- taxation, not only because excessive mean an additional article legislate. taxation undermines the strength of Ours is a vision of limited Gov- the economy, but because taxation taking from the Federal ernment and unlimited opportun- beyond a certain level becomes Government the power of ity, of growth and progress beyond servitude. borrowing. " what anyone can see today.

64 You .c,ano throug gh anY of our, checkouts without handingover a cent. Of course you will pay. But not in cash. Instead, you will use the Electronic Fund Transfer (EFT) terminals at our checkouts. EFT terminals have now been installed across Australia in every Woolworths supermarket and BIG W store as well as selected stores in other divisions. Which means we have more EFT terminals than any other retailer in Australia. In fact, with terminals in more than 540 stores, we . have more than any other retailer in the world. And considering we turn over more than $100 million every week, its nice to know its not all floating around in cash. As seven million cardholders will no doubt testify, Electronic Fund Transfer is an efficient, foolproof system. And for us, its paying off. Even if we, dont see a cent. Woolworths Ltd. And you probably thought we were just a chain of supermarkets.

W LW H 0020 .44

10GIFT THE NATION

To celebrate Australias Bicentenary in 1988 The National Trust and AMATIL Limited are presenting a Gift to the Nation. This communing-based heritage program is amongst the largest of its kind ever undertaken in Australia and consists of thirteen individual projects. Each project in the Gift to the Nation will - present a different aspect of our heritage. Historic buildings of national significance will be restored and important museum and educational facilities will be developed to assist and encourage all Australians to better understand and enjoy the architecture, history and culture of our young nation. -■

Old Government House, George Street, Brisbane was constructed in 1860/62 as the residence for the first Got,erynor of Queensland. The exterior has been restored btu the Queensland GoLrrnnrent and through The Gift the interior will be returned to rte fo inerglor^!

AMATIL markets leading consumer brands in the tobacco, beverages, snack foods, poultry and packaging industries. Our activities cover all of Australia and extend to markets in the Pacific, South Last Asia and Europe. As well as serving consumers cif our products, AMATIL makes a significant contribution to community life. This takes the form of sponsorship of community activities and donations to voluntar y groups. For Australias Bicentenary AMATIL is pleased to be the sole sponsor of such an important heritage programme as A Gift to the Nation.