Inside this Issue Volume 49 • Number16 4 The • July Links 1997 between Economic Freedom and Social Cohesion Enemies of economic freedom argue that it damages the ARTICLES REGULAR FEATURES fabric of society, as the rich get richer and the poor get poorer. But what holds society together? And do the poor 1 Editorial really get poorer? Winton Bates The Government s policy-free zone is not only bad policy, 19 Economic Freedom as a Good in Itself but bad politics too Tony Rutherford Classical political freedom and economic freedom tend 3 From the Executive Director to go hand in hand. Not surprisingly, they have a lot in Globalization is not just a buzzword. It s a real and growing force common—not least their subversive tendencies Padraic that might just help rein in the excesses of government spending McGuinness Mike Nahan 4 Muddying the Waters... Most of us gain our information about the natural environment 21 The `R Files from the media. But what happens when they don t get it right? A close examination of the recent dealings of the WA A Perth-based geological consultant examines a recent case in Government over the proposed sale of its major gas pipeline The West Australian Peter Purcell shows just why governments shouldn t get involved in 6 The Pyrrhonist commerce Alan Moran Much as he appreciates Aunty . Brian Tucker has suffered the 23 Black and White slings and arrows of outrageous ABC misrepresentation at first Not many of us have read the Independent Member for hand. Perhaps fair reporting for fair resourcing might hold the Oxley s utterances on Aboriginal cannibalism. But it would answer Brian Tucker appear that many academics have difficulty in trusting us to 10 Bonus of Full Employment for United States cope with the truth of the matter Ron Brunton The US economy seems close to attaining what the rest of the 24 Freedom in the New Zealand Labour Market world only dreams abot—f employment. If they can do it, Six years after the NZ Employment Contracts Act was introduced, why can t Europe? (And why can t we?) David Hale the results are fairly clear. On the whole, the story is good, but 11 Don t Mention the Waterfront there is still room for improvement. In this extract from a So you think here have been great gains on the waterfront major speech, the head of the New Zealand Business lately? Think again! As a nation for whom exports are vital, Roundtable reviews the evidence and points to some of the our performance in shipping is abysmal—and everyone remaining obstacles to full employment Roger Kerr seems content to sit on their hands rather than do something 27 Free_Enterprise.com about it Robert Skeffington WWW for the (computer) workers of the world! In this issue, Spamming (read it and find out), Laissez Faire books, Project Gutenberg. an email mailing list devoted to Friedrich Hayek, SPECIAL FEATURES and Friedman the Younger s home page Stephen Dawson
Focus on Economic Freedom BOOK REVIEWS 13 Economic Freedom and the Wealth of Nations 29 • More Equal Than Others • Mad Feminism The Fraser Institute (with the help of numerous think-tanks across Roger Kimball reviews Bruce Frohnen s The New the world, including the IPA) has recently released its latest global Communitarionism and the Crisis of Modern Liberalism and notes assessment of economic freedom. How well did Australia do and that many communitarians yearn for the fruits of old-fashioned what are the implications for the future? Mike Nahan morals and religion—but without their tedious commitments: Antonia Lehn parades some truly loopy gynocentric feminist 15 Economic Freedom of the World: International utterances and looks at their implications for our important Rankings social and educational institutions in her review of Christina The league ladder is out. Hong Kong is still top of the table Hoff Sommers Who State Feminism? How Women Have Betrayed (although who knows for how long). But where is Australia? Women And who came 115th? 000000 Editor: Tony Rutherford. Publisher Executive Director: Mike Nahan. Production Manager: Chris Ulyatt. Editorial and Production Office•. 2nd Floor, 46 King s Park Road, West Perth WA 6005. Phone: (08) 9321 1420. Fax: (08) 9321 1479. Email: [email protected] m.au Designed by: Colin Norris, Kingdom Artruom. Printed by: Print Hotline, 47 Milligan Street, Perth, WA 6000. Published by: The Institute of Public Affairs Ltd (Incorporated in the ACT) ACN 008 627 727. 128. 136 Jolimont Road, Jolimonr, VIC 3002. Phone: (03) 9654 7499. Fax: (03) 9650 7627. Email: ipahayek@o:online.cotn.au Cover Photograph: Bureau of Meteorology imagery from the Japan Meteorological Agency geostationary satellite. Unsolicited manuscripts welcomed. However, p S Roger Kerr points out All of this begins to explain our in his article later in this focus in this issue of the IPA Review. issue, economic reforms economic freedom. Our three pass through three stages: authors—Padraic McGuinness, resistance, grudging acknowledgement Winton Bates and Mike Nahan- and final acceptance. That is, I think, concentrate sharply on three central true of individual economic reforms; issues: on how economic freedom and but is it true of economic reform as a the classical freedom of the individual general phenomenon? are intimately related; on how economic freedom makes for a better PERCEPTIONS OF ECONOMIC society; and on the relationship REFORM between economic freedom and The evidence from Australia is mixed prosperity. All three make an and at best anecdotal. Reform fatigue irrefutable case for freedom. is an ailment commonly diagnosed in This is, after all, the positive side of voters and politicians alike. The the continued existence of the welfare reform, the side that gets lost in the lower-middle-class swing to John state as we know it is clearly thought doom-laden discussion accompanying Howard in the last election is—rightly to be in doubt. And, of course, there each step forward in the micro- or wrongly—now commonly ascribed is the simple desire for a quiet life to economic reform agenda which now to just that sort of fatigue. be taken into account. characterises so many polities. In the Many factors play a role in this. Whatever the reasons, economic long run, indeed, and tritely enough, Simple fear of losing one s job is a reform in the broad sense has largely the silver lining turns out to be powerful one—even though, had a bad press in Australia. considerably bigger and more statistically speaking. the fear is more Each successive reform comes important and durable than the cloud. significant than the reality. In post- with a cloud of potential bad news— Thatcher Britain, for instance, despite loss of income, loss of benefit, loss of A POLICY-FREE ZONE? all the reform, job tenure tended to job security, the simple necessity of With that in mind, we can tentatively be more, not less, secure than before. having to compete where competition propose a rough-and-ready law of Simple statistical fallacy is never prevailed—which hangs around reform: To the extent that reforming important here: with the help of the even after the reform in question is politicians believe that economic media, we register the loss of 5,000 completed and accepted. freedom is an important good in itself, jobs if a single large enterprise closes, Hypothetical gains—X per cent then the task of reform will be both but not the creation of 5,000 increase in exports or in GDP lower more easily and more thoroughly individual jobs in thousands of inflation, better allocation of scarce carried out. With Ronald Reagan, individual enterprises in the rest of resources, better investment patterns, Margaret Thatcher and Roger Douglas the economy. A residual sense of even lower levels of taxation—are as star witnesses for the proposition, economic nationalism is also an rarely of a kind that most people can we can nearly rest our case for the important factor: thus the very real perceive. This is, after all, what we validity of the dictum. gains from the progressive integration would expect from public choice The proposition may, in any case, of our economy into the global theory: the political process enable us to try putting our finger on economy are accompanied by a great traditionally yields significant gains to just what is wrong with the Howard deal of out-and-out chauvinism the concentrated few, while the Government. Although some mingled with curiously defeatist diffused many will reap only individual ministers—David Kemp, conspiracy theory. imperceptible gains. McLachlan, Newman and Vanstone, for A good deal of anxiety is focused It has to be observed, too, that instance—are clearly doing their best on life after work: a secure and much of the actual pain of reform in to do the right thing (and deserve all relatively early retirement is a highly Australia has been borne by members support for that), they are in a valued goal in most lives, and the of former elites--especially minority, and their efforts suffer the knowledge that, for whatever reason, bureaucrats and formerly powerful more for that. that may soon be a thing of the past is unions—who still tend to have ready In the sense of having a compelling a powerful unsettling agent. Indeed, access to the media. underlying mission, of making sure 0©OQ©© JULY 1997 that all policy initiatives point the right many useful public supporters left. essay-review on the subject of way, of believing, indeed, in just one or And the second: Never give comfort communitarianism we find a two good and very important things, to the enemy. In the most cynical convincing critique of the reaction of the Howard Government gives the sense, the car tariff decision simply the elites to the apparent costs of impression of being a policy-free lent comfort to the ALP, and lent growing freedom. US communi- zone. strength to its own cynical populism. tarianism is the ostensible subject, but All governments face acid tests How much better it would have been his remarks could just as well have from time to time, tests of resolve or to have left the ALP s populism been directed at any of the illiberal courage or leadership. The Howard exposed for what it is. But there are forces in the Australian elites, from Government faced one of the really more serious things at stake here. Eva Cox to B.A. Santamaria, including important tests last month with the The Howard Government has now the Quadrant squad on the way. decision on future protection for the twice given quite substantial comfort Most importantly, however, we passenger motor vehicle industry, and to Pauline Hanson and her tribe: first look at the state of the labour market failed so completely as to provoke with the car decision, and secondly by in New Zealand and in the US. In something like complete promoting the dubious belief that those countries—and we could have astonishment. immigration causes unemployment. In included the United Kingdom as The serious press—notably the both arguments the only right and well—the labour market is now Financial Review, and Alan Wood in The moral course of action was to tell the considerably less regulated (or more Australian—treated the economic truth and to act accordingly. Once free) than in Australia. And despite aspects of the decision as it deserved. again, Hanson can assure her own various economic ups and downs, the There is, indeed, relatively little left to true believers that she has flushed out difference tells. It seems clear to say. Others—notably Paul Kelly— the elites and forced them to admit most intelligent observers that the have dealt with the implications for the truth. That Howard should give in official Australian policy of relying on our trade and foreign policy. The in this way merely shows his economic growth to solve the economic arguments about protection misreading of the relevant electoral unemployment problem is futile. This are embarrassingly well-known, and calculus: it is he who has been is a subject to which we will be need no repetition here. What one weakened and she who is now the returning in future issues. cannot forget, of course, is that all stronger. Curiously, Mr Howard seems these arguments must have been well Few mistakes in politics are happy to accept that the level of known to Cabinet, not least to John absolutely fatal; even these can be unemployment in Australia is indeed Howard himself, whose leadership on recovered. But something has to fill the government s responsibility. most aspects of economic reform was the soulless and mindless vacuum at This—as Thatcher understood very so indispensable to the Hawke and the heart of the Howard clearly—is nobility above and beyond Keating governments while he was in administration. A dose of economic the call of duty. He should quite opposition. freedom might help. simply sheet the blame to where it Two aspects of the decision, belongs: the Democrats and Greens however, might still bear some FREEDOM TO WORK? in the Senate, who watered down comment, perhaps by way of two Some of the ways in which economic what was already not very liberal IR more impromptu dicta. freedom can be important appear in legislation last year; legislation which, The first: Bad policy is bad politics. other articles in this issue. however, might have started to make a At times, the Howard Government Mike Nahan, for instance, in the difference to our unemployment seems to think that the operation of a article on the following page, points to problem. policy-free zone is actually a good the difficulty of distinguishing between After all, it is not as if Mr Howard thing. The less it does in a determined the spread of economic freedom and and his colleagues don t understand policy sense, the better; for the less it the rise of economic globalization . A the arguments. He and Mr Reith does, the less it will antagonize the precise instance of this can be found understood them perfectly well ten reform-fatigued battlers. But even in his comments about taxation. years ago. But then, they also battlers don t elect governments to sit While globalization will be a understood the arguments about on their hands. Given time, they are constraint on domestic tax policy, industry protection ten years ago... as acute as the most seasoned political tending to produce lower levels of Collective amnesia is a disturbing columnist in perceiving lack of taxation, lower taxation itself, by diagnosis, but it seems morally direction and want of leadership. The returning resources to individuals, preferable to some of the other seasoned political columnists have increases their freedom to make their possibilities. now been lost, so too have most of own economic decisions. This is an the thinking end of the business aspect of the new Australian tax community, and the State Premiers debate—so far dominated by the GST are mostly off-side. (The chattering question—which must increase in classes, who do form opinions, were, importance. of course, already lost.) There aren t And in Roger Kimball s penetrating U1310 IRIEIVIIIEIW1 JULY 1997 From the Executive Director Three Cheers for fare and unable to take advantage of op- portunities. Australia—once the `lucky Globalization country —with a third of children in fami- lies largely dependent on welfare and around 25 per cent of youth unemployed, Globalization is proving to be one of the is probably no exception. great liberating forces in human history. Big government, however, is the cause It has already contributed greatly to of, not the solution to, these problems. the unprecedented improvement in The solution lies with a substantial meas- wealth and human well-being experienced ure of economic freedom—smaller gov- since World War II. It was a key ingredi- ernment, lower taxes, greater reliance on ent in the Asian Miracle , which liber- markets and individual choice. ated more than a billion people from ab- The babyboomers may be flaky but ject poverty. And it is one of the main rea- they are rational. They do not save enough sons for the world s current rosy economic because it does not pay to. Taxes on sav- outlook—the most positive outlook the ings and investment are simply too high world has faced since the 1960s. and now by itself accounts for 37 per cent in too many countries, and government Its greatest contribution, however, of GDP. This, although small by Euro- has always been ready and willing to take may well prove to be the taming of Levia- pean standards, is still too large. on all of life s risks. than. The rapid integration of the world s Despite the already excessive size of This is particularly the case in Aus- economies together with advances in elec- government, many countries, including tralia, where investors face among the tronic commerce are beginning seriously Australia, face growing pressure for even highest tax rates in the world (see Figure to limit the ability of government to tax bigger government. 1). For example, a person who pays income and spend without restraint. We have seen First, the baby boomers are finally be- tax at the average rate (35.4 per cent) con- this process under way for decades, but ginning to reflect on their own mortality fronts an effective marginal tax rate on now it is about to be a defining force— and retirement and are doing so with trepi- investment income of 52 per cent. A per- and a force for the betterment of mankind. dation. They have characteristically saved son on the top income tax rate faces a crip- Since the war, governments of the so- little to date and face a mounting health pling effective tax rate on investment in- called industrialized countries have more and income-security bill. They confront come of around 85 per cent. These tax than doubled the share of economic ac- two choices: they can start rapidly saving rates are the second highest in the OECD tivity undertaken by their public sector. for themselves (and work longer), or get and about two-and-a-half times the rates In 1950, the government sector in the taxpayers to foot the bill. Coming of age imposed in Asia. OECD countries accounted for about 21 in the welfare state has conditioned many The solution to low saving lies with per cent of GDP; by 1995, this had blown to look to government first. lower taxes and a less comprehensive so- out to 47 per cent. Governments have Second, unemployment is breeding an cial safety net. This is exactly what during the last decade or so increasingly underclass increasingly dependent on wel- globalization will force on governments privatized businesses and contracted-out continued on page 32... ► services. But despite these efficiency meas- ures, the public sector has continued to expand in most OECD countries. Although the optimum size of govern- ment is not known with any precision, there is enough research to say with con- fidence that the public sector has in most developed nations gone beyond the point of positive return. Indeed, research re- cently undertaken at the World Bank in- dicates that the optimal size of govern- ment is around 30 per cent of GDP, which means that the public sector in the OECD is 50 per cent larger than it should be. Even though Australia has, through the privatization of government enter- prises, reduced the size of its total public sector over the last decade, the budget sec- tor—the tax-dependent part of the pub- lic sector—has trended steadily upward, 10©L!1H ©© JULY 1997 Muddying theWaters, 0 . (Less than `Good Oil from The West Australian) PETER PURCELL Most of us see environmental matters through the window of the media—but are they always trustworthy? Peter Purcell looks at a typical example HE public s right to know review, rejected the appeal against the The message it sent to the public was is a prominent item in the project by the Conservation Council. that the Conservation Council had journalists credo, and de- Part of the reasoning was the fact that been correct in its opposition to the servedly so. When a journal- 40 oil-wells have been drilled previously drilling. The Alston cartoon is another ist provides a clear and concise state- on the Cape (see map), apparently matter. Running such an inaccurate and ment of all the relevant facts, the reader without any significant damage to the misleading cartoon on the op-ed pages is able to understand the world better, environment, given the claims of the raises serious questions about editorial and to make more informed decisions Cape s ongoing high conservation val- policy that need to he examined and about community and national matters. ues. answered. The converse, of course, is that the How does such a legitimate govern- On 5 March, the same West Aus- journalist who does not report all the ment process come to be categorised in tralian editorial policy sponsored a car- facts, or actually misrepresents them, the press as riding roughshod ? toon showing dead dolphins floating can do a considerable public disservice. Otherwise, the article was reason- near a drilling rig in Shark Bay, and a That has been the case recently with ably balanced. The Minister came forest of oil-wells, all blowing out oil, The West Australian on several stories across as being very much off-balance, in the Pinnacles national park, north about the environmental significance of but that was of her own making; when of Perth. oil exploration activity in that State s contacted by the journalist, the Minis- The underlying issue on that occa- northwest. ter should have stood her ground and sion was the front-page report that the A cartoon in the 7 February 1997 explained the reasons for the decision Court Government had given the go- West Australian showed an offshore drill- clearly and carefully. The announce- ahead for oil and gas exploration in ing rig, with a whale-shark and several ment that she had changed her mind World Heritage-listed areas of pristine people impaled on the drilling pipe, and decided that a formal environmen- Shark Bay . Green groups, the Federal their blood flowing into the water and tal assessment of the proposed drilling opposition, the Democrats and even gushing out of the top of the well; WA was necessary, may not have been a Federal Environment Minister Robert Environment Minister Cheryl Edwardes spur-of-the-moment, panicked re- Hill were said to be furious that the per- and drillers on the rig floor are being sponse, but that is how it looked and mit had been granted in November splattered by the blood, and the Minis- how it was reported internationally. 1996 without public consultation . ter asks, confused, Red oil? Such a graphic and gory image cer- tainly gave the public a very clear edi- torial comment on the dangers of off- shore oil exploration. The public, in turn, might well expect there to be good and factual reasons for such an emotion- ally-charged message. It is alarming, therefore, to realise that the oil-well being accused of mur- der, albeit metaphorically, wasn t even offshore: it was onshore Cape Range, near Exmouth in northern Western Australia, and over a kilometre from the ocean (see map on the next page). The related front page story said that the Minister had ridden roughshod over conservationists and opened the way for drilling on Cape Range . What the Minister had done was ac- cept the advice of the regulatory author- ity, the Environmental Protection Act Appeals Convener, who had, after due Cartoon reproduced with the kind permission of Dean Alston and The West Australian 0©!1HE JULY 1997 Notwithstanding that, the 5 March at each stage of exploration to ensure Proposed , s` article by West Australian journalists, that the environment is properly pro- Melanie-i Well f• Tony Barrass and Geraldine Capp, was tected. Her comments appear to have oa wells reasonably fair, given the material they been fairly reported. Oil 8 Gas Fields ; Exmouth had to work with—a mix of misjudge- What remains unclear is the intent ^^arout , ment and misinformation from the of The R, Gulf West Australian in its editorial political leadership on environmental policy. The headline, the first paragraph matters, including both the State and and a vitriolic cartoon communicate a Federal ministers. very sharp anti-petroleum message that Opposition environment spokes- will get the attention of far more peo- Ningaloo ,-•ç- Marine Park woman Carmen Lawrence took the ple than the article as a whole, regard- conspiracy route and accused the WA less of efforts by the journalists to be Government of being deceptive and balanced in their reporting. sneaky . Democrat Senator Meg Lees Is it a coincidence that The West bemoaned the fact that a World Herit- Australian ran an article on 10 March, age area on our coast is opened up to announcing that the Australian Con- oil and gas exploration —which means 24 S servation Foundation and the Wilder- she doesn t know, or doesn t want the ness Society were so appalled at the Shark Bay public to know, that the area has been State government s environmental World Heritage open for exploration for decades. There record that they have put WA at the Area has been little work because the explo- top of their agendas and are planning ration in the 1960s suggested that the major campaigns here this year ? And Cemarvon area had low prospectivity. that both have mining (including pe- Exploration The flurry of comment from Federal troleum exploration) in national parks Permit 406 W A Environment Minister Robert Hill, par- as a main issue? ticularly the references to possible Fed- is The West Australian s editorial Shark say Pedh eral intervention, would also have done policy to promote the agendas of these little to reassure the public that there groups? That is their prerogative, of was no need for undue concern. Quite course, but they have a duty of truth to 26,5 the opposite, in fact: it suggested a fun- the public to make that clear. damental conflict between petroleum Whatever the motivation, The West 0 Skm exploration and conservation values, Australian is not presenting a balanced 1131 E 115`E particularly of the World Heritage cat- view of the significance of petroleum egory. exploration and development activity It might have been more useful for in WA, be it the major economic im- The fact is that the 1988 Shark Bay the Federal Minister to remind the pub- pact or the minimal and carefully- Region Plan, on which World Heritage lic that it was in recognition of the ex- managed environmental impact. listing for Shark Bay was based, explic- cellent environmental record of the The 1995-96 Annual Report by the itly acknowledges petroleum explora- petroleum exploration and production Australian Maritime Safety Authority tion and production interests and notes industry in Australia and world-wide, on the National Plan to Combat Pol- that exploration may continue there. that the previous Federal Government lution of the Sea by Oil endorsed the The subsequent Plan of Management signed Agenda 21 at estimate by the US for the Shark Bay Marine Park, devel- the 1992 United Academy of Sci- oped by the State Government with ex- Nations Conference The fact is that the ence that only 2 per tensive public consultation, specifically on the Environ- cent of oil that en- provides for the possibility of future ex- ment and Develop- I Shark Bay ters the ocean has ploration and production. The WA merit in Rio de Ja- Plan, on which any connection Minister s granting of Exploration Per- neiro. Among other world heritage listing with the petroleum mir 406 in November 1996 over an area things, Agenda 21 exploration and between Bernier Island and the coast, states that offshore for Shark Bay was production indus- including part of the Shark Bay Marine oil exploration and based, explicitly try, whereas 50 per Park, was entirely consistent with the production activi- cent comes from ur- World Heritage plans for the area. ties generally ac- acknowledges ban run-off. Of the The fact that the media did not pick count for a very petroleum explora- 349 reports of oil up the story until Democrat Senator small portion of ma- discharged into Meg Lees exposed the matter during rine pollution . tion and production Australian waters question time in March 1997 led some WA Minister interests and notes during the year, 74 journalists to imply there had been a Edwardes played a per cent were in conspiracy of silence between Govern- more useful role on that exploration may ports; most other ment and the companies. What there this occasion, point- continue there sightings were asso- had been, in fact, was a lack of atten- ing out that the per- ciated with ships, tion by journalists to publicly-available mrt grants the com- with fishing boats industry maps, journals and newsletters, panies only the right to explore, and being the main single source of oil-dis- which had been reporting the matter that formal WA environmental impact charge sightings. None was from off- throughout much of 1996. assessment procedures will be required shore oil and gas operations. t1©0il ©© JULY 1997 These figures suggest that the main threat from oil pollution to the EP 406 area of Shark Bay would came from the The Pyrrhonist town of Carnarvon, which is within it, and from the extensive use of that port by boats, including a large fishing fleet. There is also the fact that oil tankers pass close to Shark Bay regularly, and also to Ningaloo Reef. Tankers actu- ally enter Exmouth Gulf several times a year to deliver fuel to the Exmouth The Incorrigible ABC military base. None of this seems to attract alarmed editorial comment, confess to being a regular despite the fact that spillage from tank- listener to ABC radio and ers during routine operations is a large television, especially news component of the vessel-related pollu- and current affairs pro- tion. flgrammes. Its commercial counterparts are (This shouldn t be a surprise, really: difficult to take: I find the advertisements the considerable alarm in 1970 when inane and intrusive, and the intellectual the oil tanker Oceanic Grandeur ran content much inferior. aground in Torres Strait led ultimately Bias is said to be in the eye of the be- to the establishment of the Great Bar- holder. Nevertheless my enjoyment of the rier Reef Marine Park, in which oil ex- ABC has been spoiled by what appears to ploration was banned, but through and me to be a left-wing bias. This perception near which oil tankers have continued is shared by many. Despite protestations entirely appropriate that government to sail ever since! Over 200 vessels per by those who disagree, it is difficult to find should allocate funding in support of year bring fuel supplies to Brisbane and anyone who asserts that it shows any right- propagandists who are working to subvert other cities. A study conducted several wing prejudice. The bias is evident in sev- that government. Others in the same years ago reported one minor spill per eral aspects of programming: selection of mould are somewhat less obvious in at- week in the park, mainly from fishing topics, selection of interviewees and se- tempting to persuade listeners and view- boats, with a larger spill every three lection of material. ers to their political perspectives. Of course months, from operational discharge by There are obvious difficulties in justi- there are many broadcasters who do ap- commercial vessels.) fying this perception. A carefully con- pear to strive for objectivity and balance Misleading statements by pro-envi- structed and comprehensive survey would notwithstanding their personal opinions ronment people, be they journalists or be required, and even then the classifica- but—in a spirit of corporate solidarity politicians, can have a major influence tions can only be subjective. An approach which seems to exist quite independently on community opinion, and the politi- to some of the broad policy considerations of the Board—they are naturally reluctant cal and economic decisions which was made by Keith Mackriell in Redefin- to indict the true believers among their those opinions dictate through the ing the ABC in the IPA Review, Vol. 49/ colleagues. political process. The irony is that, 2, 1996, where he proposes both a require- Characteristically the ABC seems to however well-intentioned the person, ment fairly to reflect contesting views and adopt causes and, by constant repetition, if they promote policies and regulations a re-examination of corporate sponsorship. to promote selectively one side of a con- based on fallacies rather than facts, He argues that to ensure an honest reflec- troversy. The aboriginal predicament in then their actions are unlikely to be in tion of controversies there needs to be ref- Australia is one obvious example. The fre- the best interests of the ecosystem they erence to this in a new ABC Charter and quency with which exposure is given to are trying to protect. a connection between this charter and the indigenous activists and their sympathis- code of practice. He cites some examples ers, rarely critical, far exceeds time allo- which extend to autumn 1996. Little has cated to issues concerning any other eth- changed in the following twelve months nic group. It is somewhat more than might despite the spotlight focused on the ABC; be expected to be devoted to less than 2 indeed the attitude of some staffers is petu- per cent of Australia s population. An- lant and resembles defiant intransigence. other example is the pejorative treatment A few ABC performers do not pretend given to those described as `economic ra- to he other than left-wing advocates. tionalists , characterised as callous and Phillip Adams works hard at being the hard-hearted: only one side of politics paramount example, whereas others are cares about people, the other is entirely more devious in attempting to persuade motivated by self-interest. A third exam- listeners to their perspective. His argu- ple is the demonising of Pauline Hanson. ment, that left-wing ABC bias is justified Whatever one thinks of her, it is difficult. as a response to the overwhelming not to allocate some blame to the ABC in bombast and bigotry that s pouring out of causing the erroneous perception in Peter Purcell is a Perth -based geological consultant commercial radio , might be expected from South-East Asia of rampant racism in Aus- who has wri(een widely on resource development an advertising man who regards the air tralia. What other national public broad- and aboriginal and environmental masters waves as a polemical battleground: he who caster so eagerly solicits adverse opinions nab shouts loudest wins. He seems to think it of its country from neighbouring nations L©L!40©© JULY 1997 and cries crocodile tears at the way its own tor, Kerry O Brien, as the basis for an ill- tated by examples of biased reporting, one- misrepresentations are believed? But per- informed attack on Senator Robert Hill, eyed argument and stacked panels, I re- haps the most unfair and subversive trait Minister for the Environment, for what main a dedicated ABC listener. But it is is the disparaging treatment of Prime Min- O Brien inaccurately described as Austral- disappointing that a significant portion of ister John Howard and the eager way some ia s isolated and misguided policy at inter- reports and commentaries resort to such ABC reporters seek any adverse comment national negotiation meetings dealing stratagems; it reduces programme credibil- about him. There is no acknowledgement with the Greenhouse issue. ity on all politically relevant issues, when that he, more than perhaps anyone else, In a lively and informative monograph many may have been quite fairly treated. earnestly seeks fair solutions to some of Normal Services won t be Resumed (Allen A statement of intent from the ABC Australia s most intractable problems. and Unwin, 1996), the radio producer and Board to persuade staffers not to use the There are other ways of putting a spin presenter Robyn Williams laments the service to advance their own political per- on issues; ways which are difficult for lis- reduction in funding already experienced ceptions might just turn the eroding tide teners to detect. I record below one such by the ABC and by similar agencies over- in its favour. For, as infuriating as some of example in which I was personally in- seas. He anticipates future funding threats the personalities may be, and as close to volved; it does nothing to ameliorate my but also considers a variety of issues that the wind of subversion as they may sail, perceptions of ABC attempts to under- need to be faced by the ABC, including there can be little doubt that the main mine the considered policies of our cur- management, regional broadcasting, spe- source of intellectual debate for many rent elected government. cialist broadcasting, music, technical re- Australians would be severely affected if On 17 April, I was telephoned at home forms etc. Yet nowhere does he confront there were to be further depletion of ABC by Justin Murphy, an ABC Television re- the widespread perceptions of political resources. As part of the Charter and statu- porter. He was preparing a short piece on bias. He is obviously aware of them from tory changes suggested by Keith Mackreill, Greenhouse for The 7.30 Report. comments like `the well of spite , plenty perhaps there could be a new vision : fair After soliciting my views on global of ultra-dries who have been trying to hag reporting for fair resourcing. warming in general and Greenhouse gas the ABC , splenetic editorials and Tory emission reduction policy in particular, we swipes and even the policy of punish- Dr Brian Tucker is a Senior Fellow of the IPA andi arranged that he should visit my home the ment . Concerning the latter, it would be D rector of its Environment Unit following day with a camera crew to record interesting to know what Robyn Williams nin an interview. Readers of the IPA Review feels the ABC might be being punished may be familiar with these views—out- for, if nor political bias? lined for example in The Greenhouse He quotes David Attenborough s tes- Panic , IPA Review Vol. 48/I, 1995. Briefly, timony that for the good of the nation, they are that likely climate change has public broadcasting should be an intel- been exaggerated and that emission reduc- lectual force . It is interesting to set this tion sufficient to affect significantly either alongside the opinion of the conservative global gas concentrations or possible cli- commentator Robert Manne, stated in mate change are unlikely to be achievable The Public Intellectual (ABC Radio ^ t^ e.tm t^tr. tnst: 4 for several centuries—until world popu- National, 27 April 1997), that the basis ^w.YSI^M!l^.ctixY.Jlr4r ^^ lation and associated expectations of de- of intellectualism is the ability to debate veloping countries have stabilised. In fact all sides of a contentious issue in an in- I argue that we have more to fear from the formed and rational way. But too often consequences of draconian policy re- ABC reporters and commentators seem to sponses to environmental alarmism than regard their role as being to provide a plat- from climate change itself. form for those who protest against the pro- In reply to a direct question from posals or policies of the current elected Murphy, I commended the policy of the government; and not to air the arguments present Government: its refusal to accept for, as well as against, these policies. This internationally-proposed unrealistic re- is not to say that balanced discussion of duction targets or to compromise Austral- opposing views is never featured; the first ia s economy in a vain attempt to achieve examples to spring to mind are, on 3LO the impossible, and its intention to con- radio, a fascinating discussion between Realism, Human Existence tinue to faster research aimed at reducing Terry Lane, John Faine and Bob uncertainties on all fronts. What was Santamaria; and, on television, the enjoy- and the Environment eventually broadcast on The 7.30 Report able and informative non-polemical style This monograph, based on an address on Thursday 25 April was quite different. of the Victorian Stateline series, ably by IPA Senior Fellow Dr Brian Tucker at the 1997 World Meteorological Day, A severe selection of my interview had compered by Ian Henderson. It may be no argues that current global strategies to been made and a few short segments, taken coincidence that both these examples are reduce greenhouse emissions are out of context, had been tied in with doc- drawn from State rather than national probably unnecessary, draconian, and trinaire environmental criticisms of Co y programmes. certainly act as a counter to economic -eminent policy from another interviewee, I earlier referred to the argument of development. He argues that the most recorded elsewhere a few days later. I had Phillip Adams that the ABC should be realistic policy would be one of planned made it clear off-camera that I strongly supported precisely because it is politically adaptation, which fits with the more disagreed with these views. The whole biased. The obverse, argued by the disen- scientifically-based approach of sequence appeared to have been devised chanted, is that the ABC should be dis- assessing the policy change, not the current contradictory notion of and prepared in an underhand way by The solved for the very same reason. My view sustainable development. 7.30 Report. It was used by the interroga- accords with neither. Despite being irri- 0©L!A0©© JULY 1997 Bonus of Full Employment for US DAVID HALE The US labour market is so tight that even those once marginalised are now employable HE 1990s has been a time of Because of structural economic changes its chairman, fears that low unemployment extraordinary corporate re- and racial divisions, however, the share of will erode the labour insecurity that helped structuring and, not surpris- long-term unemployed—more than 26 to restrain wage growth during the mid- ingly, the dominant concerns weeks—has increased from between 4 per 1990s. But corporations have such limited of economic policymakers in most indus- cent and 5 per cent in the late 1960s to 15 ability to raise prices that even labour- trial countries have been job security and per cent recently. Such a ratio of long-term intensive companies, such as McDonald s, unemployment. unemployment is half that of Europe, but is have recently been forced to cut prices to American policymakers, by contrast, unusually high for a US business cycle in protect their market share. confront a different challenge—how to sus- which the unemployment rate has fallen so It will be difficult for the world to tain expansion in an economy which has sharply. accept that America s rough-and-ready ap- achieved full employment. The US has The unemployment rate is above 10 per proach to the marketplace could produce been presented with unusual social oppor- cent for blacks and 8 per cent for Hispanics, more benign social outcomes than the wel- tunities as a result of the private sector s compared with 4.6 per cent for whites. Tight fare states of Canada and Europe. Ameri- increasing need to employ the most mar- labour markets could do more to correct ca s large prison population and its 20 per ginal people in its society. problems with structural unemployment cent poverty rate for children are symptoms There is no precise definition of full and racial inequality than any phenomena of the extraordinary tolerance for inequal- employment, but there is little doubt that since the economic boom of the Vietnam ity developed , in response to racial and cul- the US has the tightest labour market in war era. Tight labour markets will also im- tural diversity. the industrial world. The unemployment prove the job prospects of the 2 million America has learned to live with in- rate has dropped to 5.2 per cent nation- so-called welfare mothers, who now have equality in return for labour market flex- wide, and is below 4 per cent in nearly half to seek employment because of last year s ibility and employment growth. Europe has of all metropolitan regions. The level of federal welfare reforms. if the new welfare failed to create jobs because its tax and regu- labour force participation is more than 77.5 law had been enacted in the Reagan years, latory policies boost labour costs and make per cent compared with 69 per cent in Ger- it would probably have been regarded as it so expensive for companies to restructure many, 59 per cent in Italy and 74 per cent cruel, but in the current labour market it is that they are reluctant to hire new work- in Britain. Finally, the growth rate of the greatly shrinking the welfare rolls. ers. European governments have protected US labour force is projected to fall to be- American companies would not usually middle-aged people with jobs at the expense tween 1 per cent and 1.5 per cent in the be enthusiastic about hiring people from the of those seeking employment, especially the next few years from between 2.5 per cent welfare rolls. Their low skills are a baffler young and immigrants. and 3 per cent in the 1970s. to productivity, they require a heavy invest- Because of their inability to accept the The US has long had an outstanding menr in training—and the US does not policy implications of America s employ- performance in job creation compared with have a tradition of apprenticeship. The gov- ment success, European leaders often say Europe. Since 1980, it has created more ernment spends far less on worker training that the great US triumph of the 1990s is than 32 million jobs in a labour force which programmes than other industrial countries. Mr Bill Gates and the high-technology is now 134 million, while Europe has pro- But, given the current tightness of the revolution. They have not recognised or duced only 14 million new jobs in a labour labour market, companies have little choice acknowledged the increasing need of force of 192 million. Since 1989, two-thirds but to hire people they would once have America s private sector to offer jobs to of America s job growth has been concen- shunned. In Chicago, Milwaukee and other everyone irrespective of nationality, race, trated in private-sector managerial and of- mid-western cities, businesses are being religion, sex, age, education or trade union fice support occupations. Nearly all Europe s forced to recruit untrained workers, with the status. But America s tight labour market is job growth has been in the public sector. help of inner-city high school principals and now producing visible evidence of rising European leaders have long tried to church pastors, because there is no one else real wages and job opportunities for most downplay US employment growth by attrib- to hire. of its most disadvantaged people. uting it to the country s tolerance for high It is difficult to predict how long the When this development is well publi- inequality. But the US labour market is now US will benefit from this benign combina- cised, even French politicians will have to so tight that wage growth is accelerating. tion of full employment and low inflation. admit that full employment is a better Businesses are being forced to recruit work- Politicians have not yet started to acknowl- solution to the problems of inequality and ers from the most disadvantaged groups and edge the need for new policies to boost la- poverty than restrictive labour laws, gener- incur the cost of training them. bour force growth, such as reducing high ous welfare benefits and large budget defi- In the post-war era, most unemploy- marginal income tax rates, increasing im- cits. ment in the US has been transitional. migration or refocusing federal training pro- Reproduced with the authors perniissiun from About 20 million workers change jobs every grammes on the people with serious work the Fincuicial Times, 14 April 1997. year and 70 per cent of those currently un- impediments, such as drug addiction. 1)aa id HUH is global chief economist at Zurich Kemper Investments. employed have been without a job for less The Federal Reserve has started raising than 15 weeks. interest rates because Mr Alan Greenspan, 0130 L1©k!1il©© 10 JULY 1997 Don t Mention theWaterfront ROBERT SKEFFINGTON Shipping is still our principal means of getting Australia s exports to the rest of the world. So the effi- ciency of the waterfront is still vital. But what has happened to waterfront reform recently? ITH apologies to Mark Authority (WIRA) which aimed at fun- • ease of access for firms to enter into Cwain, reports that the Aus- damental reform of the industry by in- the stevedoring market, including tralian waterfront has been jecting over four hundred million dol- ease of access to facilities at ports. fixed are greatly exagger- lars levied on the industry and ulti- Although these structural problems ated. Waterfront productivity in Aus- mately paid for by users. warrant individual attention, there is a tralia still lags well behind our interna- At times, productivity in the indus- threshold issue which holds the key to tional competitors and if we do not un- try can assume farcical proportions. For all of them. This gatekeeper issue is dertake meaningful reform, that poor example, recently the much-vaunted industrial relations. performance will continue. Productivity Employment Programme Industrial relations considerations Failure to reform directly impacts on (PEP) scheme, which P O heralded as permeate every aspect of the industry. the viability of other sectors of the the way of the future, resulted in per- A militant union (the Maritime Union economy, including our ability to im- formance dramatically falling to levels of Australia) combines with poor man- prove Australia s high unemployment achieved prior to WIRA. agement to produce restrictive work levels. The low productivity and high lev- practices, communication problems, The chronic problems associated els of waterfront charges reduce the overmanning, strikes and other dispu- with the waterfront continue despite competitiveness of industries which tation. regular government inquiries. Accord- interact with the sector. For example, Industrial matters can take as much ing to industry sources, on average there waterfront services account for over four as 70 per cent of management time, with has been a waterfront inquiry in Aus- per cent of the export price of agricul- labour costs accounting for 67 per cent tralia every four years for the last 50 tural and mining commodities and 2.7 of the total costs of a stevedoring firm. years. per cent of the export value of inanu- Put simply, the opponents of water- Reports and inquiries are not the factures. front reform will attempt to frustrate the answer. What is required is for the According to studies undertaken for process via industrial relations. industry to adopt a truly competitive the Economic Planning Advisory Coun- It is not surprising that the union structure. Allowing free and competi- cil, wider reform in stevedoring could does not want to disturb the closed shop tive markets for stevedoring, employee amount to savings in the vicinity of $400 and jobs-for-life culture on the water- coverage, port management and services million per year. This is, of course, only front. The average waterside worker is such as tugs, would allow the industry the tip of the iceberg: because the cost in an extremely privileged position, to solve its own problems. of inefficiency impacts upon almost all earning up to $100,000 per year. Given Competition would result in the re- imported and exported goods, the mul- the MUA s objection to productivity moval of `waterfront reform from the tiplier effect of achieving these savings improvements, one may have thought lexicon—because free markets reform would have a fundamental effect on the the working conditions of waterside themselves on a perpetual basis. entire Australian economy. workers would be Spartan. However, the Although the performance of the The waterfront is characterised by a typical waterside worker: Australian waterfront goes through a union monopoly, effectively a cycle of improvement and decline, when stevedoring duopoly, and port au- compared internationally we hardly thorities who still impose charges have an exemplary track record. at monopoly rates. It is therefore A comprehensive international not surprising that our efficiency benchmarking study by the Bureau of is so poor. In order to achieve the Industry Economics (1995) found that economic benefits available, the crane rates at the best performing Aus- Australian waterfront should strive tralian container terminal are equiva- for the following: lent to some of the poorest performances • competition between and in Europe: Australian crane rates are 25-- within ports; 50 per cent behind the better perform- • optimum levels of investment ing ports; in terms of timeliness and re- and utilisation of capital equip- liability we also lag well behind compa- men t; rable ports; and waterfront charges are • flexible and productive 162 per cent higher than international workplaces; best practice. • port authorities acting as trade This is despite the establishment in facilitators, not revenue raisers; 1989 of the Waterfront Industry Reform and ©©L!2U©© JULY 1997 • has a standard working week of 35 This is not the time to put our heads time for industry to wake up to the bene- hours; in the sand. Australia is in dire need of fits of reform and send a clear message • is paid a 50 per cent loading for waterfront reform. If in response the to Government to implement its elec- working a standard evening shift, union movement threatens industrial tion commitment to bring the Austral- and 100 per cent for working a mid- disputation, this proves there is some- ian waterfront up to world s best prac- night shift; thing seriously wrong which needs to be tice. • receives at least double time and up addressed. to 3.5 times the base rate of pay for The strike is the only weapon avail- work additional to the seven-hour able to the MUA. Once the fear of its normal shift; unfettered use is removed, both the un- • receives five weeks annual leave ion and the stevedores will be forced to with loading at 27.5 per cent; deal with their problems construc- • enjoys a superannuation scheme tively—not just ignore them and at- with the maximum allowable ben- tempt to buy short-term solutions. efit for a standard personal contri- The union and stevedores are not bution; solely to blame for the state of the in- • enjoys an employer-subsidised can- dustry—waterfront users need to take teen in a number of ports; some responsibility as well. Although • receives in addition to normal pro- circumstances and vested interests con- tective clothing, an annual issue of spire to exclude users, they have gener- items such as sunglasses, towels, ally not taken sufficient interest in the socks and gloves; transportation of their own products. • is likely to have a gymnasium, sauna This is a tragedy because users truly Robert Skefjington is an Assistant Director ai the and even a tennis court available for benefit from improved efficiency, and it National Furntcrs Federation use in major container facilities; is in their interest to push reform. In Blain • drives equipment which is usually contrast, the incentives for unions and air-conditioned, and the most ex- the stevedoring firms to reform is less pensively maintained in the coun- clear. try by another union member in the Industry organisations such as the site garage; Australian Chamber of Commerce and • enjoys security of employment un- Industry and the National Farmers Fed- paralleled in any other industry; eration have started this process by es- • has an early retirement scheme tablishing the Shipping and Waterfront which, at the employee s option, can Reform Group. The aim of this group is be triggered at age 55. to promote reform and act as a pressure It does not pay to make generalisa- group on industry and government. A rions about employees remuneration cohesive voice for waterfront users is still and conditions, but it is clear that these in its infancy, but this should not deter generous conditions are not commen- businesses from becoming more in- surate with the rate of productivity. volved in the transport chain and rec- When the issue of dealing with the ognising the importance of a resolute waterfront arises, the reaction is often stance on the waterfront. one of caution. Some believe reform As users become more involved, the may lead to major industrial disputation. Federal Government s position is still Clearly, no one wants massive disrup- unclear. The legacy of previous water- tions to the Australian waterfront, but front disputes continues—industry and this reflex response can be a convenient users are reluctant to take decisive form of denial. action without assured Government It is often argued that the cost of a support, and the Government is equally major dispute far outweighs the benefits reluctant to become involved if the par- of reform. However, this ignores the ties themselves are ambivalent. current high levels of industrial dispu- The answer is for business and the tation. According to the international Government to send a clear message to shipping industry, Australia has the each other that waterfront reform is a Economic Freedom of the highest level of strike claims world- vitally important economic issue and World wide-23 per cent of all waterfront that a robust strategy is required to fix The second in a series of reports by strikes in the world occur in Australia. the problems once and for all. Ironically, Canada s Fraser Institute that provides The Australian waterfront has had failure to do this will result in further the most extensive data-set yet produced, a disastrous strike record with no corre- industrial action over a longer period of confirming the relationship between sponding reform benefits. Even when time. economic freedom and prosperity. useful reform is not at issue, there is high Given the importance of this issue, Published in Australia by the IPA, this is a strike activity, so there are real incen- the Government has been surprisingly global project involving 46 free-market tives to press on and actually do some- quiet, despite waterfront reform being a think tanks and data on 115 countries. thing. long-held Coalition policy. It is now E©L!A0©© I2 JULY 1997 FOCUS ON ECONOMIC FREEDOM Economic Freedom and the Wealth of Nations HY do some countries prosper 1995 and throughout the last twenty years. Economic Freedom and grow rich while others do not? Singapore, New Zealand, the United States and of. the 1i orld: 1997 In the view of most economists, the Mauritius round out the top five. Australia tied Annual Report by .Ionics Gwartnev key to prosperity is freedom for tenth place along with Malaysia, the Philip- and Robert Lawson economic freedom. pines, and Panama. At the other end of the When people have economic freedom—to spectrum Algeria, Croatia, Syria, Burundi, Haiti `This nteusuirernent of go into business and occupations of their own and Nigeria were the world s least free. Economnic Freedom choosing, to reap profit (and suffer losses) from Australia s economic freedom rating has is are ellorntous their activities, to save and invest in productive registered modest but steady improvement improvement over projects, to enjoy full property rights, and to join during the last decade, from 5 in 1975 to 7 in every thing; that huts in voluntary exchange with each other—they 1995. Its world ranking has also risen from so far up pen red produce more.With time, these more produc- twenty-fourth in 1975 to tenth in 1995 (Chart —ProfessorMilton tive societies will, for lack of a better word, l^ riedintin become rich. Several factors have contributed to the 1976 Nobel Laureate Freedom is also, of course, a valuable thing in improvement in Australia s rating.Tariffs have in Economics itself. Restrictions on the freedom to choose and been reduced and other trade barriers relaxed. to engage in voluntary exchange deny human The size of the trade sector has expanded from beings something they value—something that is 14 per cent of GDP in 1975 to 20 per cent in an integral part of their humanity. 1995. Inflation has, during the last six years, been Over the last twenty years, this view has relatively low and stable.The government share steadily gained acceptance around the world, of total consumption has declined.The top including in Australia. It has been one of the core marginal tax rate on personal income has been beliefs of the many reform movements- reduced from the high levels of the 1975-85 includingThatcherism, Reaganomics, period. Rogemomics, economic rationalism and the Asian Miracle—that have transformed our lives. It is a basic tenet of the policy processes, including the WTO,APEC and the National Competition Policy, which will guide reform into the future. Although widely accepted by most econo- mists, the idea that freedom and prosperity are not only mutually reinforcing but even compat- ible, continues to be disputed by many, including the Hansonites, the Quadrant clique, the Greens and the Democrats. Despite its pivotal role, the notion of eco- nomic freedom has received surprisingly little explicit, systematic attention. Without a measure The major weakness of the Australian of economic freedom over time, it is difficult economy is its large and growing welfare sector. definitively to rebut the critics. Total government expenditure rose from 30 per To address this gap, the Fraser Institute in cent of GDP in 1975 to 37 per cent in 1995.The Canada, with the assistance of the IPA and 45 growth in transfer payments accounts for the other similar organizations from around the growth of government during this period. In world, has pubished the Economic Freedom of 1995, 15 per cent of GDP was transferred from the World Report 1997. one citizen to another, up from 8.5 per cent of The Report rates 115 countries on a zero- GDP in 1975. to-ten scale (with ten being the most economi- The central question remains: Is economic cally free) over the 1975-1995 period. By a wide freedom linked with faster growth and higher O®®u®® margin, the economic freedom index indicates levels of income? The accompanying charts JULY 1997 that Hong Kong had the most free economy in illustrate that this is indeed the case. 13 FOCUS ON ECONOMIC FREEDOM Chart 2 shows the correlation of per capita achieved a positive growth rate while 25 per GDP in 1996 with economic freedom.The most cent of the countries in the second quintile free countries (the top quintile) have GDP per experienced negative growth.This increased to capita of US$14,829 on average.The figure for over 50 per cent for the least free quintile. the next quintile was US$12,369 and it declined Thus, both per capita GDP and its growth for each quintile down to US$2,541 for coun- rate are positively linked to economic freedom. tries comprising the least free quintile. Rather than look at the relationship between growth and economic freedom at one point in Per capita GDP Growth of Rea! Income time, it is revealing to consider the linkage by Quintile Ratings of Economic Free- between changes in economic freedom and growth over time. If economic freedom, and Chart 2: Per capita GDP (1995 US dollars) therefore market-based reform, matter, then 30 changes in freedom should be positively related Vote for Charts 2 to growth—perhaps with a time lag. Countries a n(I .i: with substantial increases in economic freedom The mnninar 20 should achieve impressive growth rates while ratings of the five 14829 those becoming less free should experience (fUintilC3 were: top 0 12369 stagnation. quintile = (.5 and `^ 10 This is what the results showThe ten above: 6385 second countries that registered the largest increases in highest quintile = 2yi1 3as7 economic freedom (New Zealand, Chile, 5.9 to 6.4: third highest = 4.7 to 5.8: Mauritius, Iceland, Portugal, Argentina, Uganda, 5 4 3 2 1 the Philippines. Norway and Jamaica) all experi- fourth highest = .3.9 1995 Economic Freedom Quintile to 4.6: lowest enced significant growth in per capita GDP over quintile = .1.,5 and the 1985-96 period, averaging 2.4 per cent. In lower. The per Chart 3: Growth of Real GDP per capita, 1985-1996 contrast, the ten countries with the largest eaj1ita GDI data 6 decline in economic freedom experienced an ire Updates of the 5 average decline in per capita GDP of 2.4 per Penn World Ta ides 4 cent. Only one of these countries achieved data off Robert 3 2.9 positive economic growth. Summers and Alan 2 1.8 1.1 Reston which were Are changes in economic freedom only 0.1 linked at the extremes, or is the positive relation- derived b the 0 purchasing power ship present throughout? Chart 4 illustrates the parity method. impact of a one-unit change in economic -2 1.9 freedom on growth between 1985 and 1996. -3 5 4 3 2 1 Countries with most change (3 points on a ten 1995 Economic Freedom Quintile point scale) such as New Zealand, achieved growth of 2.7 per cent. Those with increases of dom between 2 and 3 points, such as Australia, Chart 3 shows the relationship between the achieved per capita growth of 2.1 per cent. growth in GDP over the 1985-96 period and Smaller and smaller increases in economic economic freedom.The top quintile registered freedom are associated with slower growth. per capita growth of 2.9 per cent.The figure for When economic freedom declined, so too did the next quintile fell to I.8 per cent and it the growth of per capita GDP. continues to decline by approximately I per The robust positive relationship between cent as one moves down each quintile. Every both the level and change in economic freedom one of the countries in the most free quintile on the one hand, and growth of GDP on the other provides powerful evidence that Adam Smith was right more than 200 years ago. Countries that follow policies more consist- ent with economic freedom reap a payoff in the form of rapid economic growth which, in turn, leads to higher Mike Nahatn is Executive Director of the Institute living standards. Freer of Public 4f foirs countries provide the structure for individuals to be more productive and ©^0©© achieve higher incomes more rapidly. JULY 1997 14 nFI51 FOCUS ON ECONOMIC FREEDOM Economic Freedom of the World: International Rankings Summary Rating Summary Rating This table is repro- duced fro rn Ecv- nonric Freedom of Hong Kong 1 9.3 Trinidad/Tab. 5 5.4 the 11 orlcl: 1997 Singapore 2 8.2 Jordan 59 5.4 Annual Report, by New Zealand 3 8.0 Kenya 61 5.3 .lames D. Gwartnc^_+ United States 4 7.9 Czech Rep 62 5.2 and Robert A. Mauritius 5 7.6 Hungary 63 5.1 L wson, Fraser Switzerland 6 7.4 Cyprus 64 5.0 Institute, U K. 7 7.3 Greece 64 5.0 Vancouver, 1997. Thailand 8 7.2 Slovakia 66 4.9 Costa Rica 9 7.1 Chad 67 4.7 ,Vote that the Malaysia 10 7.0 Tunisia 67 4.7 rankings cire for the Latvia 67 4.7 Philippines 10 7.0 year 1995. Australia 10 7.0 Tanzania 70 4.6 Panama 10 7.0 Israel 70 4.6 Canada 14 6.9 Morocco 70 4.6 El Salvador 14 6.9 Pakistan 70 4.6 Taiwan 16 6.8 Nicaragua 70 4.6 Paraguay 16 6.8 Gabon 75 4.5 South Korea 18 6.7 Malawi 75 4.5 Japan 18 6.7 Turkey 75 4.5 Bahrain 18 6.7 Madagascar 78 4.4 4.4 Netherlands 21 6.5 Ghana 78 Guatemala 21 6.5 India 78 4.4 Ireland 21 6.5 Uganda 81 4.3 Iceland 21 6.5 Poland 81 4.3 Bolivia 25 6.4 China 81 4.3 Argentina 25 6.4 Bangladesh 84 4.2 4.2 Chile 25 6.4 Mali 84 Germany 25 6.4 Sierra Leone 84 4.2 Oman 29 6.3 Benin 87 4.1 4.1 Belize 29 6.3 Bulgaria 87 Uruguay 29 6.3 Zambia 87 4.1 Indonesia 29 6.3 Togo 87 4.1 4.0 Peru 29 6.3 Egypt 91 3.9 Belgium 29 6.3 Cameroon 92 Bahamas 35 6.2 Venezuela 92 3.9 Mexico 35 6.1 Rwanda 94 3.8 Finland 36 6.1 Nepal 94 3.8 France 36 6.1 Slovenia 94 3.8 3.8 Fiji 36 6.1 Senegal 94 Norway 36 6.1 Niger 98 3.7 Austria 36 6.0 Brazil 98 3.7 3.7 Portugal 42 5.9 Congo Rep 98 3.6 Jamaica 42 5.9 Zimbabwe 101 Denmark 42 5.9 Cote d Ivoire 1 3.6 Honduras 42 5.9 C African Rep 1 3.6 3.6 Spain 42 5.9 Romania 101 3.5 Sweden 42 5.9 Russia 105 3.4 Botswana 48 5.8 Albania 106 3.4 Malta 48 5.8 Ukraine 106 3.3 South Africa 50 5.7 Zaire 108 3.0 Barbados 50 5.7 Nigeria 109 Sri Lanka 52 5.6 Iran 110 2.9 Dom. Rep. 52 5.6 Haiti 110 2.9 2.7 Estonia 52 5.6 Burundi 112 2.7 Colombia 55 5.5 Syria 112 2.4 Lithuania 55 5.5 Croatia 114 Italy 55 5.5 Algeria 115 1.9 0©I!A0 ©© Ecuador 55 5.5 JULY 1997 15 FOCUS ON ECONOMIC FREEDOM The Links between Economic Freedom and Social Cohesion WINTON BATES HE first reaction that some What is economic freedom? James readers will have when they see Gwartney and Robert Lawson suggest that the title of this article will be to the central elements of economic freedom are wonder whether links is an appro- personal choice, freedom of exchange and priate word to use in this context. Economic protection of private property. Their index of freedom is usually thought of as having to do economic freedom enables objective interna- with promoting economic efficiency. Social tional comparisons to be made of the extent cohesion, on the other hand, is usually thought to which the policies of individual countries of in the context of distributional equality— provide; the idea that large and widening disparities in • low and stable inflation (freedom from the Improvements in incomes between rich and poor may be inflation tax); economic freedom socially divisive. This could suggest that it • freedom of citizens to decide for them- may tend to re- might be more appropriate to think in terms selves what is produced and consumed; inforce social cohe- of tradeoffs between economic freedom and • freedom of exchange with foreigners; and sion than rather social cohesion, rather than in terms of finks. • freedom of citizens to keep what they damage it I think we should break out of this earn. tradeoff mentality and consider the possibility Social cohesion can mean different things that improvements in economic freedom may to different people, but there is general tend to reinforce social cohesion rather than agreement that it is lacking when large num- damage it. The idea of a trade-off between bers of people display extreme discontent- efficiency and equality was popularised in the ment with aspects of the society in which they I970s by an eminent macro-economist, live. In my view, important characteristics of a Arthur Okun, who had specialised throughout cohesive society include: his career on the tradeoff between inflation • voluntary commitment to constitutional and unemployment. In my view, the parallels processes and the peaceful coexistence of between these ideas are indeed quite strong. all groups (reinforced by a sense of belong- Neither idea is entirely without merit, but ing and respect for others); when either idea dominates economic policy • a high degree of personal security for all it results in poor outcomes. (protection of children and others unable Politicians are captured by a tradeoff to fend for themselves, low levels of crime, Per capita incomes mentality when they argue that social cohe- protection against the arbitrary use of of the poor tend to sion can be protected by avoiding the short- power by those in authority); and be higher in coun- term disruption associated with economic • widespread opportunities to participate in tries with high reforms. This idea, which appears to have and share in the benefits of economic level~ (If economic become increasingly popular in Australia over activity and widespread involvement in freedom the last couple of years, has a lot in common other forms of voluntary social interaction with a notion that was popular 30 years ago: including membership of community that lax policies toward inflation were helping organisations. to keep unemployment low. Governments Since redistribution of income by govern- subsequently learned the hard way that by ment reduces economic freedom, it might be allowing inflationary expectations to develop, thought that a high level of economic freedom they made unemployment worse, not better. would result in the rich getting richer while By adopting lax policies toward economic the poor get poorer . If this occurred as a reform, governments discourage anticipatory general tendency, it would be reasonable to adjustment and make the adjustment process argue that high levels of economic freedom more, rather than less, disruptive. Firms and are not consistent with widespread sharing in their employees have an incentive to delay or the benefits of economic activity and hence resist adjustment when they believe that not consistent with social cohesion. I R^UM111IE^W interest groups are likely to be successful in So, what are the facts? Is there a general JULY 1997 having tariff protection and other restrictions tendency for those at the bottom of the 16 on economic freedom maintained, income distribution to be worse off in coun- FOCUS ON ECONOMIC FREEDOM How does economic freedom affect the poor? 1400 1200 c ^ 1000 a-6 3 A 800 600 400 E.-. 200 LU 4 0 0 1 2 3 4 5 6 7 Average freedom rating 1975-95 tries with high levels of economic freedom which, in turn, provides widespread opportu- than in countries with low levels of economic nities for members of the population to freedom? improve their lot. Gwartney and Lawson show Low-income earners The World Bank has published, in its World that there is a strong positive relationship tend to be better off Development Report (1996), information on between economic freedom and economic in countries with income distribution (based on household growth. They ranked the I 15 countries in high levels of eco- income and expenditure surveys) from which their study from highest to lowest in terms of no►nic freedom it is possible to estimate the average per capita economic freedom rating and divided them income of the poorest 20 per cent of the into quintiles. The average economic growth population for 23 countries. (The surveys in rates over the period 1985-1996 of each different countries cover different years quintile (ranked from highest to lowest) is ranging from 1985 to 1992.) In the accompa- reproduced below: nying chart this information is matched with the average freedom rating (Gwartney and % per annum Lawson estimates) of these countries over the period 1975 to 1995. The data set is far from 1st Quintile 2.9 ideal, but if there has been any clear tendency 2nd Quintile 1.8 for the poor to be worse off in countries with 3rd Quintile 1.1 high levels of economic freedom this should 4th Quintile 0.1 nevertheless show up in the chart 5th Quintile -1.9 If anything, the chart shows that per capita incomes of the poor tend to be higher in Source: J Gwartney and R Lawson, Economic Freedom of the World 1997, The Fraser countries with high levels of economic free- Institute, Canada, 1997. dom. This is obviously no more than a tendency—there are five countries identified There is also a positive relationship between There is ab;o a (in the bottom right-hand corner) with overall rates of economic growth and the positive relationship relatively high economic freedom ratings in growth rates of average incomes in the bet een overall rates which the poor have very low per capita bottom 60 per cent and lowest 20 per cent of of economic growth income levels. However, the average incomes income distributions. This is evident in the and the growth rates of the whole population in each of these five following table (based on the income distribu- of flower] incon►es countries is also low. Moreover, in three of tion data compiled by the World Bank) which these countries (Malaysia, Indonesia and was prepared by ranking countries by per Thailand) incomes of the poor have been capita income growth: rising rapidly the rate of increase in average incomes of the poorest 20 per cent of the Average income growth population was greater than 6 per cent per per bottom lowest annum in each of these countries. capita 60% 20% How can we explain why low-income % earners tend to be better off in countries with 1st Quartile 4.9 5.7 6.4 high levels of economic freedom? The most 2nd Quartile 2.4 3.4 3.4 0©MUM likely explanation is that high levels of eco- 3rd Quartile 1.7 1.2 0.5 JULY 1997 nomic freedom foster economic growth 4th Quartile 0.2 1.0 2.7 17 FOCUS ON ECONOMIC FREEDOM The experience of the countries in the fourth The proliferation of such entitlements quartile appears anomalous, but may be appeared to make Australia more cohesive in attributable to the existence of substantial the past than it is at present In reality, it was redistribution of income by the governments damaging the economy and, hence, undermin- The proliferation of some of the countries in this group (for ing the basis for social cohesion. of ... entitlements example. Hungary and Kenya) during the The discontent that inevitably arises when appeared to make period covered. It is likely that redistribution governments fail to deliver on promised Australia ►norc entitlements is compounded by the fact that cohesive it: the was actually an important factor contributing past .... fit reality . to the low overall rates of economic growth many people have come to rely on these it was damaging experienced in some of these countries. entitlements as a major source of their the economy and. This leads to an important point that is income, In Australia, as in many other coun- hence. undenuming often missed by those who argue that heavy tries, there has been a substantial transfer of the basis for social government involvement in income redistribu- responsibility for the elderly, the ill and chil- cohesion tion contributes to social cohesion. When dren from the family to government, and governments encourage people to believe governments have largely displaced friendly that they are entitled to protection against all societies in the provision of social insurance. sources of insecurity they provide them with Fortunately, various governments in incentives to act in ways which reduce the size Australia have made efforts to dismantle some of the national cake from which promised of the entitlements that have been damaging entitlements have to be met. The granting of economic growth before the whole ram- excessive entitlements thus sows the seeds of shackle edifice of entitlements collapsed upon the discontent that is inevitable if the entitle- itself. These reforms have enabled major ments become unaffordable. social trauma to be avoided, but have never- Every additional entitlement that any group theless left a significant proportion of the is granted to protect against any kind of population confused and resentful, yearning to misfortune creates additional discontent not turn the clock back to a time when govern- only among those who have to pay for the ments appeared able to guarantee ever- provision of this entitlement—for example, greater security, The challenge that faces the through higher taxes—but also among other present Government, then, is to promote groups who perceive that they should also be more widespread understanding of two simple entitled to protection against the particular propositions: misfortunes that confront them, This can • first, that improved social cohesion de- easily result in an explosion of entitlements: pends on a healthy economy, and ,Vinton Blues is an industry protection all round, price controls, • second, that to promote a more healthy economic consultant award wages and a host of other restrictions economy further economic reform is based in Canberra. on economic freedom. required. REM Australia—The Verdict in Full Australia s economic freedom rating has ment expenditures rose from 30% of GDP in registered modest but steady increases during 1975 to 37% in 1995.The growth of transfer the last two decades. Its ranking has also risen. payments fully accounts for the growth of In 1995 the Australian economy ranked 10th, government during this period. In 1995, 15% of compared to 24th in 1975 and 15th in 1985. GDP was transferred from one citizen to Several factors have contributed to the another, up from 8.5% of GDP in 1975. improvement in Australia s economic freedom Generally, the growth of transfers leads to large rating. Tariffs have been reduced and other budget deficits, reductions in investment (as a trade barriers relaxed.The size of the trade share of GDP) and high rates of unemploy- sector has expanded from 14% of GDP in 1975 mentAll of these factors have plagued the to 20% in 1995 and 1996. During the last six Australian economy during the i 990s. Since years, the inflation rate has averaged 2.3%, and 1990, the budget deficits of the central govern- it has been relatively stable. While government ment have averaged 3% of GDP the investment consumption accounted for 21.9% of total rate has declined, and the rate of unemploy- consumption (government plus private) in ment has hovered around 10% of the labor 1995, even this figure has declined slightly force. Like several other high-income industrial during the last decade.The top marginal tax nations, Australia must reduce the size of its rate on personal income has been reduced income transfers and provide citizens with modestly from the high levels of the 1975- private sector options that will encourage saving 1985 period. and investment if it wants to achieve strong 12© u ©® The major weakness of this economy is its growth and continued prosperity in the future. large and growing transfer sector.Total govern- JULY 1997 Source: Economic Freedom of the World, page 4.5 18 FOCUS ON ECONOMIC FREEDOM Eco^^o^^ic Fr-ee^Ofl ^.s a Good on ftseDf PADRAIC P. MCGUINNESS CONOMIC freedom is a concept pulsory eradication or at least reduction of which is at the same time evoca- the economic inequalities which result from tive and provocative.To those who the combination of differing human endow- think of freedom in some sense as ments and economic freedom. It is thus The only way to have a good in itself it seems obviously attractive, inherently oppressive—libertarian socialism is a Soeiet s ill witieli even though others will see it as either a contradiction in terms. C gU( lttl (1Tid CunT- T7rn11 ownership ... inimical or irrelevant to some other good for It is inevitable that all societies which of properh is not the individual, the group or humanity. Not attempt to promote collectivism have to undert urued by everybody conceives of freedom in the invent the concept of an economic crime, and economic freedom is individual sense, according to any dimension, punish those who act in such a way as to to outlaw free as necessarily desirable; and there is a long accumulate individual capital or conduct ceunonric activity tradition of denial of the desirability even of market transactions based on individual self- and the pursuit of political freedom or liberty. interest and profit motivation.The strength of profit Economic freedom is clearly not a con- such transactions is such that they inevitably servative notion. corrode relations based on authority or The idea that economic activity should be common goals.The market is indeed deeply free of state direction and authority, that corrosive of human relationships if none but individuals should be at liberty to determine economic motives exist. the disposal of their own labour and assets, The only way to have a society in which and that considerations of social structure and equality and common ownership (that is, authority should take precedence over state ownership) of property is not under- individual decision-making is foreign to both mined by economic freedom is to outlaw free traditional and romantic conservatism, God economic activity and the pursuit of profit, or bless the squire and his relations/And keep us to so transmute human nature as to make in our proper stations is not a sentiment people seek other goals rather than personal compatible with the idea of economic free- benefit. Despite the deaths of hundreds of dom. Nor is the concept of noblesse oblige . millions of people in this century alone in the which presumes a relationship between those course of this endeavour, there is little The outlawing of with hereditary wealth and power and the prospect of such a transformation of human eco rl urn is freedouui rest of the community. nature. On the contrary, the outlawing of luediated through That is, economic freedom is directly at economic freedom mediated through mar- markets merely leads odds with the older, tribal notions of social kets merely leads to the pursuit of self- to the pursuit of self- solidarity which are so fundamental to much interest by other means the obtaining of interest l other of human biological and social evolution, and honours, status, government or ecclesiastical means—the obtain- for which all of us have some primitive position, military glory and the control of ing of honour~. hankerings. Nationalism in its extreme forms is resources through organisational means Statuus. government an expression of such tribalism, and is there- rather than direct ownership. Collectivist or ecclesiastical position, military fore at odds with relations mediated through societies produce phenomena like the Soviet ghn y ((lid the control the market and other non-human mecha- Union s nomenklatura, or the emergence of a of resources through nisms. new class of administrators and professionals. organ isationul Collectivism or socialism in its various There is always an element of primitive means rather than forms is essentially a reactionary notion, a religiosity in the opposition to economic direct ownership desire to return to conservative tribal bonds, freedom.The two models which contrast most a kind of feudalism, though characterised in its with it are the concept of the human family modern forms by the claims of an oppressed and the concept of the heavenly kingdom. In class as against an oppressing class.The aim of the human family personal relationships are at socialism is to restore the cosy solidarity of their warmest and strongest, altruism and feudalism in its ideal form but with a different collectivity at their clearest. Naturally, most structure of authority, and without the heredi- people like to think of the whole of society, or I R.11101►Vi uII IEiW , tary elements of conservatism. In its economic indeed the whole of humanity, as having some JULY 1997 prescriptions, collectivism involves the com- characteristics of this family relationship. 19 FOCUS ON ECONOMIC FREEDOM But the family becomes oppressive for Feudal and tribal structures are logically adult children, who have to throw off the and historically pre-market: once there is a Ultimately, the authority of the head of the family in order to mechanism for free exchange in honest and .Justification of realise their own adulthood and found their equal terms between individual responsible economic freedom own families. And while the idea of mutual adults then arbitrary allocation of prizes, food US (1 good in itself sharing as in a family is always attractive, it and shelter by a central authority becomes has to cortte ,fro m again requires an authority structure which obviously unjust. It is replaced by the concept the individual denies the difference between childhood of a safety net, that is implicitly a guarantee of that ,rudgemertt dependency on a loving parent on the one survival to those who by accident of fate or liberty of thought. hand, and mutually cooperative and respectful fortune are unable to look after themselves, conscience cool act relations between adults on the other. wi der the law is to be Ultimately, the justification of economic preferred to a system The idea of the Kingdom of Heaven, and freedom as a good in itself has to come from ill Which even+ the equality of every person before God, is an the individual judgement that liberty of good cold resource is attractive one and the basis for most forms of thought, conscience and act under the law is distributed by socialism; the equality of every soul before to be preferred to a system in which every collective or ranking God, their equal value in His eyes, becomes good and resource is distributed by collective authority confused, however, with the idea that every or ranking authority. Economic freedom person should be equal before Man.The involves the accidental and anonymous patent impossibility of this in terms of varying outcomes of markets which have no moral incidences of genetic endowment, beauty, significance, while its absence is more like a intelligence, strength, and so on, does not system of honours and awards, like the Order detract from the nobility of the concept of of Australia, in which gongs and titles involve equality before God. But to try to translate the recognition of moral worth and merit as this theological notion into the basis for a adjudged by the great and the good, by power society implies the belief in a theocratic family groups and by corruption. By contrast, and a theocratic society. Atheist theocracies through the market, rewards are distributed get the worst of both worlds. without any accompanying moral messages. There is not n single A more modern version of this is the and thus provide an area of freedom from example ()f a Society current talk about civil society .This was a collective judgement, fashion and authority. which enjoys politi- term which was used by the eighteenth- Economic freedom also has a strong cal libertt Without a century moral philosophers Adam Smith and libertarian dimension, as implied by the old considerable degree Adam Ferguson and others to distinguish the anarchist slogan ni dieu, ni made , or by of economic freedom voluntary or natural associations in a complex Bakunin s declaration that If God existed it community from the relations imposed by law would be necessary to abolish Him .That is, it and presided over by the central authority of is a denial of the right of God, State or person the state. It was developed by Hegel, and to allocate moral merit by direct judgement. revived in the last couple of decades by those While every viable polity must have an intellectuals who, in the throes of the decay of element of collective morality, its sphere is European communism, wanted to stress the limited by the right of people to conduct contrast between government and civil society themselves as they will to their own best and the importance of social institutions and advantage within the limits of the rule of law, relationships between individuals independent whether by making money or by refusing to of government and state. make money. Everyone is entitled to get her In Australia it has become debased into to a nunnery—economic freedom implies that talk of a civil society, which glorifies big it is a matter of free choice. government and interprets civil in the diction- As such it can be treated as a moral good ary sense of civility meaning politeness and in itself, and one which is held in high esteem courtesy, and then extends it to meaning by many people.Whether it is a necessary being nice to people by providing them with condition for political liberty also can be unpriced (but rationed by other means) strongly argued to be true; certainly as the goodies like child care for bourgeois ladies. example of Singapore shows it is not a Economic freedom in no way conflicts with sufficient condition. But there is not a single voluntary associations between individuals for example of a society which enjoys political non-economic or only partly economic liberty without a considerable degree of Pudrnrc I ea rse 11k Ci1it,nc xis U purposes, any more than it conflicts with the economic freedom. regular columnist for internal relationships of nuclear families. It is The Sydney Adorning independent of any fancy theorising about the Herold The Age in and stability or the existence of a theoretic equilib- A1elbottnie rium of a market, and is perfectly compatible with, indeed requires, the existence of a state [TE1 V I I 1 Lw] apparatus and the rule of law. uIx JULY 1997 20 The R Files ALAN MORAN record, unwarranted—confidence in Energy Policy in the abilities of a centrally-control- led authority to find low-cost ways Western Australia of meeting consumer needs. Again in the case of gas, an- nounced plans cover the release of THE WA ECONOMY only the very largest users from cap- At a steady annual 6 per cent, WA s tive customer status. rate of economic growth rivals the The enormous gas quantities Asian `Tiger economies. available at world prices from the Projected growth in WA s energy North-West Shelf offer WA an en- consumption, at 5 per cent a year, is ergy advantage over other Austral- over twice that of other States. ian States and potential competitors Growth is being propelled by a re- overseas. But the present gas price newed mineral development surge in WA is not particularly low, being and increased interest in processing. policy, only the largest twenty firms comparable with that in South Aus- But the energy growth projections will be free to choose their own sup- tralia and Victoria. There are sev- in Figure 1 will be stunted—as will plier by July 1999. By then, all but eral reasons for this: the associated increase in prosper- the smallest businesses and house- • the long distance that the gas is ity—if the price is not right. holds will have been freed up in transported adds 50 per cent to NSW and Victoria, with SA and the original costs by the time the OVERALL ENERGY POLICIES Queensland not far behind. gas is delivered to the Perth mar- The WA Government is opening up In electricity, Western Power has ket; some such cost penalty is in- the energy market to competition. failed to march the efficiency of evitable, but transport costs are Robust competition is one of the power producers in the Eastern considerably higher than those of keys to ensuring lower prices: com- States—and those producers in turn comparable pipelines as a result petition ensures that suppliers are have been far less efficient than of the high operating costs and constantly vigilant in seeking out many overseas counterparts. And the excessive initial costs of the cost savings in order to improve their though Western Power is involved Dampier to Bunbury Natural Gas position against rivals. But the open- in a vigorous Outsourcing exercise, (DBNG) Pipeline; ing of WA s market has been too this brings little competition within • the relatively high contract price slow, and so prices are higher than WA s market structure. There are, believed to have been agreed for they could be. moreover, no plans to have Western the gas contracted by the North- WA businesses are far less free to Power s generation plants disaggre- West Shelf Joint Venturers; choose their own supplier than those gated into competing sources. This • competition is constrained be- in other States. Under announced puts considerable—and on past cause the existing pipeline is Figure 1: Actual and Projected Energy Consumption Growth Table 1: Announced Plans for Deregulation of Customers 0.05 Threshold Type NSW Vic Old SA WA examples 0.05 40 GWh vast sites 1996 1994 1998 1998 1999 004 (5MW) 4 GWh large office 1997 1995 1999 1998 0.03 D Aust. blocks 0.02 • WA 750 MWh super- 1997 1996 2000 1999 — markets 0.01 1 160 MWh small 1998 1998 2000 2000 —office blocks 0 T growth growth growth remainder -- 1999 2001 2001 2001 1980-1996 1996-2003 1996-2010 OLD 160 MWh is above 200 MWh Source: Derived from ABARE, Energy 1997: Projections. E1©L!Ail©© JULY 1997 21 close to capacity, and there are would merely represent a tax im- APPROPRIATE POLICY very limited opportunities for posed on consumers and businesses APPROACHES end-users to contract directly by government regulation. Higher The appropriate approach to prob- with the suppliers; energy prices mean a likelihood of lems of sunk costs and stranded as- • moreover, shippers must supply thwarting some of the predicted ex- sets is to have the equity-owner carry LPG-rich gas or incur a penalty. pansion in energy usage, including the costs, unless the owner has in- some of the value-adding activities curred expenditures on the basis of THE NATIONAL REFORM that the government is seeking to government assurances, in which AGENDA foster in the South-West. case the government must incur The national competition reforms Although the government is some of the costs. The shareholder following the Hilmer Report have seeking to move the State s energy is in the risk-taking business and is lent increased urgency and an added and resources policies to a less-regu- motivated by the pursuit of high discipline on State governments to lated, privately-owned basis, energy profits and avoiding losses. Where open up markets to competition and policy in the State remains haunted the government is the shareholder, neutralise any commercial advan- by previous deals. The most impor- the taxpayer will make these gains tage enjoyed by State-owned busi- tant of these concern gas, which is or losses—and the superiority of pri- nesses. Not only are such measures the key to WA s energy future. vate enterprise partly stems from beneficial to the efficiency of State The government is seeking to en- governments being ill-equipped to economies, but the Commonwealth sure that its previous decisions do take on entrepreneurial roles. also agreed to share the benefits it not have an adverse effect on the Bygones should be treated as by- obtains in terms of higher income taxpayer. But if policies are followed gones and not to deny users lower taxes from more efficient, more prof- that artificially ramp up the price of prices. If some of the sunk costs are itable businesses. These payments assets or prevent competition from to be recouped directly froth custom- depend on each State s satisfying the ers rather than from shareholders/ National Competition Council that taxpayers, this is best achieved by it is taking appropriate action to means of a surcharge levied on all implement reform. By withholding users (other than those that have States therefore stand to make a contracted at a fixed price). Such dual gain from opening previously approval for a rival measures are applied in US jurisdic- closed markets to competition—the facility, the govern- tions and have been used in Victo- increased productivity of their sup- ria, where the excess costs of the Loy ply industries is augmented by spe- ment would achieve a Yang B power station are defrayed cial payments. WA s share of the $16 higher price for the by a customer uplift payment of $2 billion payments is about 10 per per megawatt hour. Measures like cent. existing pipeline. this are inferior to writing off the But that higher price costs, because prices are increased WA ENERGY POLICY would merely repre- and some worthwhile usage is The pivotal nature of gas in WA s en- choked off, but they are preferable ergy places pipeline policy at centre sent a tax imposed to denying the construction of a new stage, and the crucial pipeline is the on consumers and facility. DBNG line with a present capacity Policy that rejects preventing of about 500 terajoules per day. businesses by govern- new investment is also the basis on The growing demand for gas in ment regulation which our Hilmer-inspired compe- WA is creating an urgent need for tition policy is to be pursued. The the construction of increased capac- reforms were estimated by the Indus- ity from the North-West shelf. At try Commission to bring real annual issue is whether to add to, or even pushing prices down, the taxpayer s net gains in GDP of $23 billion. The double, the capacity of the existing gain is the customer s loss. Increased Commonwealth, in recognition that pipeline or whether to build one or prices for the existing pipeline and it gains a larger proportion of the tax more additional pipelines. protection of the Alinta and West- `dividends than State Governments, The issue has taken on major di- ern Power gas contracts can only be is to share $16 billion of this gain mensions with rival proposals. And engineered by denying users lower with the States over the next nine previous decisions are influencing prices that would otherwise be avail- years, providing that the States abide the government s own stance. able. by their competition reform obliga- A monopoly like the DBNG The government has announced tions. Withholding regulatory ap- pipeline facing competition in a pre- that it will sell the DBNG line. But proval is generally alien to good gov- viously sheltered market will auto- in doing so, it has also announced ernment, and has no place in a post- matically see some of its ostensible that no new pipeline will be ap- Hilmer world. value reduced. Retention of that proved before 1999. This means that value is only possible by maintain- a rival pipeline cannot commit to ing a price burden on customers. By supply some crucial contracts that withholding approval for a rival fa- were available and is likely to offer Dr Alaii Moran is Director of the I)ereg r^trion cility, the government would the DBNG line at least five years Unit within the IVA in Mcllwurnc achieve a higher price for the exist- continued monopoly. ing pipeline. But that: higher price UQD 0©0U©© 22 JULY 1997 Black and White RON BRUNTON to Howitt by Aborigines who had for- The Cannibalised merly participated in cannibalistic epi- sodes themselves. (In line with Academy AIATSIS s increasingly patronising policy towards Aborigines, however, the reprint comes with an additional section headed `Warning , which includes the HE vulgarian American following: If your circumstances and President Lyndon Johnson beliefs are such that you might find some used to say that President-to- of this material distressing you may wish be Gerald Ford was so dumb to seek advice from elders of appropri- that he couldn t fart and chew gum at ate Aboriginal communities before read- the same time. The deceitful way in ing this book. ) which many in the media and academia But Maddock s honesty was the ex- reacted to accounts of Aboriginal can- ception. A succession of prominent his- nibalism in Pauline Hanson s ghost- torians and anthropologists were quoted written book shows that they have a or others for the specific purpose of eat- in the media as giving assurances that similar view about the Australian pub- ing them did nor seem to have occurred. Aborigines had not practised cannibal- lic: it is too stupid and beastly to hear He also pointed out that one of the ism, and that such allegations were lit- the truth and be tolerant at the same standard texts on Australian Aboriginal tle more than a means of denigrating the time. Their mendacious response, which culture, Ronald and Catherine Berndt s humanity of people who were perceived would be readily apparent to anyone The World of the First Australians, con- as utterly alien. Indeed, following in the who cares to check the anthropological tained an extended discussion of Abo- footsteps of a widely-read revisionist, but record, was also foolish, for it could only riginal cannibalism, and that it had re- demonstrably mistaken, book of the late feed the belief held by many of Hanson s cently been reissued by the Australian 1970s by William Arens, some suggested supporters that when it comes to Abo- Institute of Aboriginal and Torres Strait that claims that any indigenous people riginal issues, the elites tell lies. Islander Studies (AIATSIS). were cannibals were false. Henry It was those hetes-noires of all right- Even more recently, AIATSIS re- Reynolds told the nation that there is thinking intellectuals, Bill O Chee and issued A.W. Howitt s classic study, The no evidence whatsoever that Aborigi- Christopher Pearson, who offered the Native Tribes of South-East Australia, first nes were cannibalistic . Monash Univer- most sensible response to the outcry. published in 1904, which also contains sity anthropologist Michael Stevenson They noted that cannibalism did tradi- significant material on Aboriginal can- claimed that `there is very clear evidence tionally occur among many Aboriginal nibalism, including accounts provided that cannibalism is a social fantasy and groups, but that its relevance to moral blamed Christopher Columbus. evaluations of contemporary Aborigines Michael Allen, a former professor of is about the same as the relevance of The deceitful way in anthropology at Sydney University, was slavery or the burning of witches to the quoted as stating that it is "fantastically moral status of contemporary Western- which many in the difficult" to say with any certainty ers. Of course, this is not a particularly media and academia whether or not cannibalism occurred in attractive argument for some academ- the Pacific Islands 100 or 200 years ago , ics and Aboriginal politicians, because reacted to accounts of although he did believe that it may have they want to reach back to the Middle Aboriginal cannibalism happened sporadically in Vanuatu. "But Ages (and before) to obtain the cudgels in Pauline Hanson s only in a specific religious sacrifice". they can use to berate the Western cul- I found Professor Allen s comments ture that they loathe. Bur it is an argu- ghost-written book most surprising, and can only hope that menr that should be sufficient for the shows that they have a he had been misquoted. He was my rest of us. teacher at Sydney University, and it was The anthropologist Kenneth similar view about the at his instigation that I went to Vanuatu Maddock published a fine article in the Australian public: it is to carry out anthropological research in Sydney Morning Herald, pointing out the 1970s. Over the many years during that there were many well-attested ac- too stupid and beastly which we discussed the anthropology of counts of Aboriginal cannibalism. The to hear the truth and Vanuatu and other Pacific Islands I can- practice was undertaken for various not recall hearing him express such motives but, unlike the situation in be tolerant at the strange doubts. Indeed, the people with some Pacific Islands such as Fiji or New same time whom I worked on the Vanuatu island Zealand, the mass slaughter of enemies of Tanna freely admitted that cannibal- IR1EJVII1EIWl JULY 1997 23 ism had been a feature of their society in the days before Europeans put an end to warfare, although only certain lin- Freedom in the eages were permitted to engage in the practice. The people who spoke to me about these practices were pagans, who had no particular interest—as Christian converts might—in contrasting an ex- New Zealand aggeratedly sinful past with a virtuous present. The religious sacrifice aspect of can- nibalism is also rather interesting, and Labour Market it was repeated by others who could not bring themselves to deny the existence of indigenous cannibalism, but wished ROGER KERR to explain it away. It speaks volumes for the spiritual hunger of contemporary Western intelligentsia that the adjec- Six years after major reform of New Zealand s labour market tives religious or ritual or sacred are was implemented, the results are fairly clear. Roger Kerr increasingly thought to provide suffi- cient justification for any practices thus provides this assessment described. But the most singular academic con- There seems to be a natural life cycle to legislation, and indeed to address some tribution to the controversy came from most soundly-based economic reforms: of its weaknesses. In its negotiations one Dr Peter Kuch, senior lecturer in • first, a period of denial of the need with NZ First, Labour backed off its the School of English at the University for change, and fierce opposition to policy of repealing the ECA, and it will of NSW. Writing to the Sydney Morn- reform proposals; no longer he credible for Labour to re- ing Herald after the publication of • second, the build -tip of a political vert to that stance. Moreover, unlike the Maddock s article, Dr Kuch said that the consensus that the old ways were not situation under first-past-the-post, there `allegations of "cannibalism" will show working, and the implementation of seems little prospect under MMP of any more clearly than anything the peril of a policy change; coalition of parties committed to repeal not investing in education... Australia • third, a growing public acceptance of the ECA being able to form a gov- must invest in the teaching of literature, of the reform as the benefits show ernment. history and languages . His letter was not tip, to the point where it loses its Developments and debate interna- as lucid as one would hope for from controversial edge and fades from tionally have confirmed the correctness someone who could be engaged in this the political agenda. of New Zealand s decision to opt for a enlarged teaching programme, but it In New Zealand, this cycle has run its flexible, decentralised labour market. appeared that he had found a welcome course with the aboli- The Howard Govern- scapegoat for the most desperate ploy tion of import licens- ment in Australia has that these shocking allegations repre- ing, financial market Long-term unem- abandoned the cen- sented: `economic rationalism . This deregulation, GST, tralised Accord and it may provide yet another demonstration liberalisation of shop- ployment has fallen seems unlikely to be that an expansion of the higher educa- trading hours, port re- faster than the over- revived. Britain, the tion sector will not make Australia a form, the Reserve only OECD country clever country. Bank Act, corporatis- all unemployment besides New Zealand It is noteworthy that the academics ation and the great rate, and has to implement major do not apply the same degree of scepti- majority of other re- dropped by over 40 labour market reform cism towards the Hindmarsh Island fab- cent economic re- in recent years, now rication, which now appears to be forms. per cent in the last has an unemployment headed for the High Court. Where, for We seem to be in two years rate of 6.5 per cent instance, were the suggestions, so read- the third of these whereas unetnploy- ily bandied about in relation to wom- phases with the Em- ment in much of con- en s business , that cannibalism might ployment Contracts Act tinental Europe is have been hedged with such secrecy and 1991 (ECA). Two general elections af- around twice that level. The flexible US taboo that observers were not informed ter its implementation, one of them labour market has created a net 8 mil- about its existence? Perhaps the solution under new electoral rules, the ECA lion jobs since 1991, whereas the Euro- to the long-running Hindmarsh Island seems to be securely in place. Five years pean Union has lost 5 million. And the farce is to convince Ms Hanson to come ago, opponents of the ECA outnum- fast-growing Asian economics with the out in support of secret women s busi- bered supporters by nearly two to one; freest labour markets of all are cnntinu- ness . in recent polls more people have ap- ing to maintain high growth and low un- Dr Ron Brunton is Director of the proved of it than disapproved. At the employment. indigenous Issues Unit within last general election, 60 per cent of the We can now survey the record of the Institute of Public Affairs. electorate voted for parties which sup- nearly six years experience since the ported the ECA. This was reflected in ECA was enacted in May 1991 and coin- Dan the coalition agreement to retain the pare it with the predictions of collaps- o©oo©© 24 JULY 1997 ing wages, anarchy and exploitation ing the employment effects of the ECA should expect growth in average labour made by some at the time. Since the in a precise way with any analytical productivity to be sensational at a time recession ended in mid-1991, model is virtually intractable. One can when the economy has been absorbing • output has grown by nearly 20 per get a better feel for them by looking at thousands of unemployed workers, many cent, and the economy is into its the comparative experiences of New of them with low skills. This point not- sixth successive year of economic Zealand and Australia in recent years. withstanding, microeconomic data, growth; While economic growth in New Zea- such as firm-based surveys, point to sig- • employment has grown by over land and Australia has been similar since nificant productivity gains: the New 220,000 jobs (at an average annual mid-1991, employment growth was 15.1 Zealand Institute of Economic Research growth rate of 4.5 per cent in New Zea- found that 75 per cent of firms consid- per cent in the last and compared wtth ered the net impact of the ECA on pro- three years), and around 8 per cent in ductivity had been positive. Moreover, there have been The rate of employ- Australia. Unem- the best general study to date, by Pro- more jobs created ment growth has ployment has fallen fessor Viv Hall of Victoria University, than there were in New Zealand to shows no story of a slowdown even in unemployed in been higher for 5.9 per cent of the la- average labour productivity. Far from 1991; Maori and Pacific bour force, but it has being poor , labour productivity growth • the number of peo- fallen from a similar has held up at an average of 2.0 per cent ple working full- Islands people than peak in Australia to a year. time has increased for Europeans, and only around 8 .5 per More importantly, the post-ECA by 159,000, some cent. Moreover, vir- economic expansion shows much 72 per cent of the unemployment has tually all Australian greater capital productivity growth (2.7 new jobs; declined for all eth- observers expect un- per cent versus 0.0 per cent) and con- • the unemployment employment in Aus- siderably higher total factor productiv- rate has fallen from nic groups and tralia to remain stuck ity growth (2.3 per cent versus 1.3 per its peak of 10.9 per across the country at about that level cent) compared with the previous ex- cent (seasonally over the next few pansion phases. With the labour mar- adjusted) in the years because the ket tightening, future growth in output September quarter of 1991 to 5.9 per Howard Government has done too lit- will depend increasingly on productiv- cent in the December quarter of tle to create a genuinely free labour mar- ity growth driven by investment in 1996; ket, whereas in New Zealand unemploy- physical and human capital, continuing • long-term unemployment has fallen ment should continue falling. structural and technological change, faster than the overall unem- Thus there is little doubt that the and a sound structure of incentives in ployment rate, and has dropped by ECA has been a phenomenal job crea- all markets. over 40 per cent in the last two years; tion machine, whereas the previous re- In respect of income trends, the and gime was a machine for job destruction. Treasury pointed out in its post-election • the rate of employment growth has Under the Labour Government s unbal- briefing that some degree of wage dispar- been higher for Maori and Pacific anced economic framework, employ- ity between high- and low-skilled jobs is Islands people than for Europeans, ment actually fell (by 17,000 jobs) in needed to generate the dynamic proc- and unemployment has declined for New Zealand between 1984 and 1990. esses required to make human capital a all ethnic groups and across the The ECA has also brought about enor- more significant driver of productivity country. mous changes in enter- growth and, over Of course, not all of these improve- prise culture—in par- time, to reduce pov- ments can be attributed to the ECA. ticular, far greater trust erty and income dis- Separating out the effects of the ECA and co-operation in As the head of parities. The post- from other influences is a difficult, if not workplaces, less dispu- the Treasury in ECA period has seen impossible, task. The best attempt has tation and more job greater. rewards for been made by Tim Maloney of the Uni- security. Some critics, Australia has put skill, and the number versity of Auckland. His latest work sug- however, have still not it, unemploy- of industry trainees is gests that around 16 per cent of the given up: the patently ment is not at an all-time high. growth in employment—itself a large silly claims about the The ECA has also number—may be directly due to the Richardson recession inevitable—it is brought about a radi- ECA and an indeterminate amount (at and then jobless largely a matter cally changed rela- the limit 100 per cent) may be due to growth have given tionship between la- its direct and indirect effects combined. way to debates about of choice bour market insiders Maloney s results, however, are driven productivity and in- and outsiders, with largely by the postulated employment come trends. I am con- the unemployed hav- creation effects of the fall in unionisa- fident that events will show that the ing greater opportunities to compete for tion in different industries. While this critics views on these issues are equally jobs. The available data suggest that effect is plausible (since we have long mistaken. measures of poverty and inequality both known that unions and collective bar- On productivity, the argument is increased with rising unemployment in gaining in regulated labour markets are that productivity growth has been poor the late 1980s and early 1990s, due to bad for employment), it captures only since 1991. A forthcoming Business the Labour Government s failure to part of the job creation story. Roundtable study by Geoff Hogbin will tackle the problem of the rigid labour In my view, the problem of estimat- explore this claim in detail. No one market. From 1992-93, the trends appear 0©00 ©© JULY 1997 25 to have reversed, consistent with the been arguing that unemployment in some of the consequences of the Court s view that economic and employment New Zealand is an economic and social rulings in the area of dismissals. It con- growth are the key drivers of reducing scourge (there are still some lame-brains cluded that, on the basis of US experi• hardship. who think employers benefit from a ence, the results could include: Recent research also reported by the pool of unemployed ); that the levels • a loss of between 19,000 and 47,000 Treasury highlights the significant em- reached in the 1980s were a disgrace; jobs; ployment effects of the welfare system and that restoring full employment is a • a 7 per cent reduction in real wages reforms of 1991. This research shows wholly feasible objective. paid to workers; and that the widening of the gap between For much of that time our arguments • an 18 per cent decrease in the mean income from employment and benefits fell on deaf ears. Even Bill Birch, one of income received by households in increased labour force participation by the architects of the ECA, could not see the lowest income quintile. two percentage points; increased total the unemployment rate falling below 7- Whatever the precise magnitudes, employment by 2.5 percentage points; 8 per cent. The Department of Labour there is no question that unjustifiable reduced the unemploy- has been consistently dismissal laws are a tax on employment ment rate (as defined far too pessimistic and that they mostly hurt workers and in the Household La- New Zealand s experi- with its unemploy- the unemployed—not owners of capi- bour Force Survey) by tnent forecasts, and tal who, at least in the long run, can 0.7 of a percentage ence provides strong the latest drop in the redirect it elsewhere, including overseas. point; and induced confirmation of the unemployment rate New Zealand will continue to make more young adults to to 5.9 per cent again further inroads into unemployment only participate in educa- view that modern came as a surprise to if it maintains sound economic, labour tion and training. unemployment is most commentators. market and welfare policies, and im- Thus while some Lately we have been proves them where possible. It will not people were obviously largely attributable arguing that full em- do so if it gets diverted into palliatives worse-off immediately to regulations which ployment—which such as so-called job-creation or work- after the benefit cuts, probably means a for-the-dole schemes. Most of the ex- the longer-term results impede the function- measured unemploy- isting Department of Labour schemes do have clearly been posi- ing of labour markets ment rate of perhaps nothing to increase total employment tive for many. For most 1-2 per cent, because and, given today s much more favour- people, the best way people are always able labour market, they should be out of poverty is to get a job, even at a joining or leaving the labour force or scrapped. This is not to knock the think- low entry-level wage. Just over a quar- changing jobs—should be achievable by ing behind work-for-the-dole proposals: ter of people in the lowest 20 per cent the year 2000. I suspect that most peo- people should be strongly encouraged to of the wage and salary distribution move ple still do not take that proposition se- move from welfare into work, and those to a higher income group within a year. riously. Journalists seldom bother to re- receiving assistance from other taxpay- Moreover, the data suggest that people port our efforts to promote such goals; ers have a reciprocal obligation to be- on low wages and salaries tend on aver- they like to concentrate on issues that come self-supporting wherever possible, age to receive larger proportionate in- excite reaction. Yet, as the head of the whether they are on the dole or other creases in remuneration than those Treasury in Australia has put it, unem- benefits. It is simply that such thinking higher up the earnings distribution. ployment is not inevitable—it is largely should be refocused back towards more Thus New Zealand s experience pro- a matter of choice. fundamental labour market and welfare vides strong confirmation of the view Other factors, of course, influence policy issues. that modern unemployment is largely the operations of the labour market. The attributable to regulations which im- most important of these is the problem pede the functioning of labour markets of the Employment Court, or more pre- and poorly-structured welfare systems. cisely the tangle created by the combi- Note that since this speech use given, the iutem- jrloyment rate in New Zealand hits Europe, with both highly-regulated la- nation of the decisions taken in 1991 risen to 6.4 percent (Ist Q 1997). while Ai straf- bour markets and big welfare states, has to enact statutory personal grievance ia s has risen to 8.8 per cent (May 1997). endemic structural unemployment. The procedures and to retain a specialist la- high-income Asian countries have bour court. maintained open and competitive la- These provisions of the ECA were a bour markets and avoided large-scale great mistake, as many of us argued at state welfare, and have consequently the time. The court has come to be enjoyed low unemployment, rapid eco- known as the Unemployment Court, Roger Kerr is Executive Direc tor of the New nomic growth and a relatively even dis- because it has manifestly kept New Zea- Zealand Business Roundtable; this is an edited tribution of income. Naturally, general land s rate of unemployment higher than version of a speech given on 3 March 1997. economic growth also assists job crea- it would otherwise have been. 1 would The full text may he accessed at tion, and is in turn fostered by sound estimate conservatively that unemploy- htqs:/jwuw.nthr.org.nr labour market and welfare policies. ment would be below 5 per cent by now BBC It has been a matter of great frustra- were it not for these deficiencies in the tion that most New Zealand commen- ECA and the attitude of the courts to tators have missed the importance of its administration. these policy reforms in alleviating New A study by Charles Baird published Zealand s unemployment problem. For by the Business Roundtable and the Em- 10 years the Business Roundtable has ployers Federation last year documented Ilii!IHL 26 JULY 1997 In this issue we shall look at more sites ented perspective. It is from here P.nm-. Gu.en.n,u fl.OMs a,w 0fl )?oj.,,C w.r w.. SS .J tL r.0. of interest on the World Wide Web, that you can obtain the latest US »tc^ Cam” . 4—RClrrRN including a bookshop where you can publications in such areas, as well purchase those hard-to-get free enter- as a wide selection of older works prise volumes, and another `bookshop that are difficult to obtain in Aus- u+^w • °rr°r- where the entire inventory is free. And tralia. .i l. Aa. o, 0997 we shall go beyond the Web into an area LFB is a bookshop that one , P •t cw.....a Cam.quLL• Vk Mrxba. ^f ^ Da1n6.n .nd Get Beeka rhh ^ka,^, ,,,. ,„,r„u.,yw•ry k bY 3 ,- a 00r9.1 w.flM w.{r: •Poxnx ,?th. where you don t merely sit and read, but would intuitively think inconven- •.nenw. u.lee.m.,_ ^^ R.wi.^^p.s^^ S...h4.Wu.pl•,.vwas L.6M.s,•••1 where you can offer your own opinions, ient for Australian shoppers. As it aw letlw aW e,rw W M ask questions and receive expert views happens, this isn t so. LFB provides 4 DG kew. q, 050 03.03 ., nar Ii.^]^,^_ on just about any subject. several means of ordering, includ- .: . m.lrtnra,. TT091 0all03.Yt,ai- ^: a.xent 199] ffia„^ ing a secure Internet linkage M1wxnnk, rwr.:[ tr e..`.. SPAM through its Web page at: AU r.w030+33 r ., 9+r..,.. a aw a.nus. No, I m not talking about the famous http://www.laissezfaire.org Monty Python theme song, nor the long since out of copyright. I m look- slightly less famous tinned product. The Most books are discounted below ing forward to the Orwell oeuvre ap- word Spam has a specific Internet their list price, and even with postage pearing in a couple of years. meaning: advertising, particularly of the the prices are competitive with prices Project Gutenberg is aiming to have unsolicited kind. in Australia. You will need a Visa or 10,000 books on line by the year 2000. There is an odd tension on the Mastercard. Internet between free enterprise and, And what has this to do with ANOTHER FRIEDMAN well, free enterprise. The proportion of spamming? To keep up to date with new Two influences brought me, at a tender regular Internet participants who are publications, send an email to: age, to a free-market view of the world. sympathetic to free enterprise appears [email protected] The first was a radically free-market to be markedly higher than in the gen- neighbour. The second was recom- eral population. Yet the most common About once a week you will receive a mended by the first: the writings of complaint is about spamming. brief book review from LFB on a new Milton Friedman. Nevertheless, I am here going to release. Milton Friedman swam against the suggest that you invite some regular intellectual tide of his time. His son, spamming. DEMOCRACY IN AMERICA ... David, has gone much further. David Laissez Faire Books is based in San AND OTHER CLASSIC WORKS Friedman is a leading theorist for what Francisco. A division of the US Center Have you ever had a hankering to read is known as the anarcho-capitalist for Independent Thought, LFB main- de Tocqueville s classic Democracy in strand of libertarianism. America? How about all of H.G. Wells s Hey, what s that? you ask. In the IaWdwd AM ,3.1W, 30.43M, Lt. Y.i.,r l.. . rL ..q work or Bellamy s Looking Backward United States, libertarianism is a fairly from 2000 to 1887? if you have, where large movement: the Libertarian Party LAISSEZ FARE BGDKS can you find them? presidential nominee in the most recent Electronic versions of these—and election, Harry Browne, received A more than eight hundred other works— around half a million votes. The major- 0 isb E-A.vaIM l,.aert,l.ard ul LdelaA.lma, Htw seudo:a:! are available at no cost from: ity of US libertarians favour a much smaller government, tightly constrained Why more orernmen[ inien en[ion In health rare means http://promo.netlpg ors ate., teridont, d„ra,e by the US Constitution s first ten First 5137 with „nioirnphed huokplxles! This is the address of Project amendments—the Bill of Rights. They Gutenberg, which commenced in 1971 are usually known as minarchists (for with the aim of making the text of clas- small government). A significant pro- ..b..0. 7...a.. w. e.ve.. •..ka. n— N.M[.. sic books available to everyone. It started portion of libertarians—the anarcho- .wth3.,,0•^t3. 020 M 334nb..0wlMmr r..ryk.vn. !Lr H..nn a wwrtl,u, aai am,i I,. .3.33 0. b,m.r ip o3.03 err p+AU,thmr n d. M.M,r, 3.9. 3 -304 fauw2,. pe.ttsy 0.M.o M,ema very slowly but its growth is now expo- capitalists (nogovernment)—argue that T rr1 Hrw Ins, re„«r,w ?.13 . Iwp.. m w nential, with 32 additional works be- all functions performed by government Lr,.r , 015101:1. ing made available every month. can be performed by private individu- The scanning, typing and format- als forming consensual relationships. ting is a voluntary effort by people all I m not here to argue the point. But tains a large inventory of books devoted over the world. The Project s bottleneck those interested in this thinking may to economics, the environment, history, is obtaining copyright clearances. care to check out David Friedman s philosophy, law and politics—almost all Copyright is the important word Web site at: from a free-market and freedom-ori- here. All but a handful of the books are http:llwww.best.com /--ddfr/ eading.File...Done_.._. . 0©0U©© JULY 1997 27 I RTE1VII VEl File View Go Bookmarks Options Directory Window Help David Friedman is a Professor of The list is for scholars and others There are many publicly accessible Law at the Santa Clara University, as interested the ideas of Friedrich A. mailing lists—thousands—covering well as being appointed to the Econom- Hayek ... land] welcomes contribu- every conceivable topic. If HAYEK-L ics Department. His most recent book tions on any aspect of the full range doesn t appeal to you, go to: of Hayek s contribution to contem- is Hidden Order: The Economics of Eve- http://www.neosok.com/ porary scholarship. ryday Life, published by HarperCollins; internet/pami other books include The Machinery of To participate in a mailing list, you Freedom (1971). Sample chapters from must subscribe to it. With all mailing lists which provides a comprehensive list of both, along with quite a number of in- I m aware of, this is free. To subscribe, mailing lists, and includes search facili- teresting articles, are available on his you send an email to the administrative ties to help you find something of in- page. address, in this case: terest. has around 275 subscrib- Interestingly, Professor Friedman s [email protected] HAYEK-L formal training is not in economics or ers from 35 countries, quite a few of law, but in chemistry and physics (PhD This is a computerised email address. them scholars with an interest in Hayek, from the University of Chicago). No person ever reads it. The computer including several authors of books on acts on the commands contained in the the man. The list is also used occasion- THE HAYEK-L MAILING LIST body of the message (in this case—but ally for forwarding announcements on Moving completely away from the with some `list servers the command international conferences on related World Wide Web, there are two must be in the subject of the message). subjects. Internet systems that much more inter- To subscribe to HAYEK-L, the body of The volume of email seems to vary active. And these are the oldest two sys- your message must contain just one line: between one or two items per clay, up to about twenty. tems: email mailing lists and Usenet SUBSCRIBE HAYEK-L news groups. your full name Because they are old (in Internet IPA Refl Article links terms, anyway), they are not pretty. Generally you will never \ L+ ° ) ce^mo.Fre ervyp..,e ,,9,. f- q" v`b jyi•..L 6e le.m^. N kkkk Aff.. There are generally no pictures or write to this address again, A— Ip .edAw.Tar,,,t.i o,..5, ^ r„wn mr.rcn.a rsnt,SS.,th be. sounds- But the wealth of information except perhaps to unsubscribe. 1(1 I kaAr<[ o, e1MrtfnkfaA. ,vtnin,r We6^Na^p wsle be, ..,.b available through these media can sur- Within the hour you will re- t AuvYw.Pkax .md nr bJlLi.,^ `S S pass the Web. I will cover news groups ceive an acknowledgement of Vnhunr e. Nanbn y , l7.r, . I94^ in the next issue of the IPA Review. your subscription and a note A mailing list is accessed using your on how to use the list. Doing so is straightforward. If you email program. It consists of two email ae - 1 addresses. One performs administrative wish to ask a question or ex- J press a view, you simply write functions, the other is the list itself. This tee..• rI a normal email and send it to ^ Ir a^^^ m e. Ih—d oa 6e ^k.b W.b adtren MOU p.pe,hu can be confusing, so let us walk through k ._ .-. Qun•d 5newe an example. the list address, in this case: HAYEK-L LiistServe.Corn @MAELSTROM.STJOHNS.EDU Internet Power Tool A SHORTCUT Publicly Accessible galling Lists e, This is another computerised email All these sites may be accessed from receiver. What it does is send your mes- links on my own Web page. Go to: intro sage to every other subscriber of the list. http:llwww.ozemail.com.au/ N. W..,.M,d. u.tb.,berdct . SI.. Le D,. Idea wi Conversely, you will receive the mail —scdawson I}u.aiWnaau.W/vJk.a 0X9911991 by `-><4br+. 4J Na4n cf.m+f be m.^trmb.-.tn.n.es:,wmceS d,u.Wkc. sent to this address by every other sub- scriber. and from there you can reach any of the 11... Mdu^e W r^N p4eh^w1^ i 1^+v. J tr VJ[f vned< A So-called netiquette is important above. The Internet being the dynamic spidS T.t..1kJm.nkc. .. .J.ni.M1. us.t Faly Sq W1.se •cl,, Saa, die Sm mwaeedmy b, aSaU,..d-St t.,pap environment that it is, addresses some- C.s.n d,e.d0zo-as Fa n.., dnJ. here. Whenever you subscribe to a mail- Ib de.^^.v.aed5 V.ed.E..1sd e!. U,. k. is s srw Wr, ing list it is considered good form sim- times change. If you find you can t ac- ..e... ]1e n...a-4a.^4<.g .n.®Hie.evll^.. ^.x. oe r. emai. ++.+. Th. nom.... ae.....,., -- r. ws ts..s ply to monitor it without participating cess one of the sites from the address ar d.,. eer. 7few,....,.• for a week or two. A mailing list is like printed in this column, try the link from a small community with its own mores my page, which I ll endeavour to keep and practices. It is an open community up to date. if that still doesn t work, A new mailing list called HAYEK- with new members welcome, but the email me on [email protected]. I L was launched in March this year with existing members will resent newcom- would welcome advice from readers on the following purpose: ers who don t fit in. any other treasures they have found. Reading File...Done I ( - I [ DI GS] 12©inu©© 28 JULY 1997 Book Reviews More Equal Than Cuomo, the former Governor of New Galston, a former adviser to President York and a model communitarian, tac- Clinton, is an important proponent of Others itly recognized this when he said that the communitarian ethos. Then there the most important thing in their lives is the sociologist Amitai Etzioni, whose Roger Kimball reviews will be their ability to believe in believ- book The Spirit of Community: Rights, re- ing . sponsibilities, and the communitarian The New Communitar- Communitarianism is hardly a agenda is one of communitarianisn s piv- household word. On first encountering otal documents. When it was published ianism and the Crisis the term, many people think that it has in 1993, Etzioni s book enjoyed a promi- of Modern Liberalism something to do with the communes of nent place on President Clinton s desk. the 1960s counter-culture. This is That many of Clinton s speeches have by Bruce Frohnen wrong, but not entirely wrong. Com- emphasized communitarian themes sug- University Press of Kansas munitarianism refers to a political gests that it also enjoyed a prominent theory as well as to a political move- place in his thinking. And Hillary At the end of his brief poem Flyer s Fall , ment. Both have intellectual and affec- Clinton s famous politics of meaning Wallace Stevens evokes a dimension in tive roots in the activism of the 1960s. speech, delivered at the University of which / We believe without belief, be- Egalitarianism, for example, a watch- Texas in 1993, offers both a good sum- yond belief . Bruce Frohnen, a political word of the 1960s, is also a prominent mary of communitarian attitudes and a speech-writer and former Senior Fellow feature of communitarianism; Frohnen classic sample of communitarian rheto- at the Heritage Foundation, does not tells us that Cuomo once summed up ric: We need , the First Lady said on that mention this poem by Stevens in his his political vision with the command- occasion, a new politics of meaning. We book about the intellectual and politi- need a new ethos of individual respon- cal movement known as communitar- sibility and caring. We need a new defi- ianism. But, in fact, the quoted snippet Communitarians ... nition of civil society which answers the could have served as the epigraph for unanswerable questions posed by both The New Communitarianism and the Cri- want the social the market forces and the governmen- sis of Modern Liberalism. Believing not fruits of traditional tal ones, as to how we can have a soci- only without belief but also beyond be- ety that fills us up again and makes us lief—as if belief were something that the moral and religious feel that we are part of something big- truly enlightened could simultaneously commitment with- ger than ourselves. entertain and yet transcend: some such Frohnen s task in this brief but am- aestheticizing attitude stands at the out the tedious and bitious book is twofold. He seeks first to heart of communitarianism. often un-liberal sketch the principal intellectual and Indeed, one thinker closely identi- content of those rhetorical features of communitar- fied with the communitarian move- ianism, showing above all how it rnent, the sociologist Robert Bellah, did commitments emerged as a distinctively progressive draw on Stevens s poem for the title of response to certain spiritual deficiencies his 1970 collection of essays, Beyond of liberalism. He does this by tracing Belief: Essays on religion in a post-tradi- ment Thou shalt not sin against equal- communitarian themes in the work of tional society. Ina traditional society, re- ity. Communitarianism also owes a lot writers and politicians from Etzioni, ligion, as the word s etymology suggests, to what we might call the emotional Bellah, Galston and Cuomo, to the his- aids in binding its adherents into a com- weather of the 1960s, its experiments torian Garry Wills, the Canadian social- munity of believers; commitment is not in living . Thus we find Robert Bellah ist Charles Taylor and (a slightly differ- an option , like a choice of lifestyle : it celebrating the counter-culture s search ent case) the legal scholar Mary Ann is the price of membership in the com- for harmony with nature and one s own Glendon. His second purpose is to criti- muni ty. In a post-traditional society- body, a more "feminine" and less domi- cize communitarianism, not so much for Bellah, of course, means our society— nating attitude toward one s self and its goals as for its methods and presup- we make do with something less de- others, an ability to accept feelings and positions—which, Frohnen argues, con- manding but also distinctly less fulfill- emotions , etc. sistently betray an arrogance and naive ing. Community depends on tradition; Communitarianism is more than a presumption that border on hubris. a post-traditional society achieves the minor intellectual curiosity, however: It is a tricky business, and Frohnen illusion of community, community in more than yet another neo-Rousseau- must be congratulated for negotiating quotation marks. Here religion no vian footnote in the long story of twen- skilfully in difficult and often muddy longer binds, it blinds: it demands the tieth-century utopianism. It is also a waters. Like many others, conservatives emotions, but not the substance, of be- political movement of considerable in- and liberals alike, communitarians are lief. In a speech to graduating college fluence, not least in upper echelons of aghast at the spectacle of moral decay seniors that Mr Frohnen quotes, Mario the Clinton Administration. William that American society presents: soaring 0©0D ©© JULY 1997 29 rates of divorce, illegitimacy, violence, leave for local citizens the appearance her best friend, Josh, play trucks, some- drug use and teenage suicide are some of community control, but it is a deriva- times they play mommy and daddy, and conspicuous tokens of our social disin- tive control, one that can be overruled Josh always puts the baby to bed and tegration. What Frohnen describes as at any time by the true wielder of power changes the diapers, just like his own the noble goal of communitarianism is and authority: the central government . dad does at home . At Thanksgiving, to restore the broken foundations of our It is tempting to see communitar- Renata s teacher will tell a story about way of life . To this end, communitarians ianism as a form of moral relativism, but, how people from Europe came to the attempt to reanimate the social virtues as Frohnen shows, this isn t quite accu- United States, where the Indians lived. of co-operation and community that lib- rate. Communitarians tend to be rela- She will say "lt was just the same as if eralism, with its emphasis on individual tivist only about other cultures: Charles someone had come into your yard and autonomy and self-reliance, tended to Taylor, for example, tirelessly invokes taken all your toys and told you they slight. In this sense, communitarianism, the liberal ideal of `the equal value of weren t yours anymore." aiming to resuscitate virtue, is an effort different ways of being —to the point, As Frohnen notes, Secretary Shalala to save liberalism from itself . in fact, where he wonders whether we acknowledged that the egalitarian para- It might seem hard to argue with have any right to criticize the Islamic dise that she conjured up here will not this; there is a sense, as Frohnen notes, demand that Salman Rushdie be assas- materialize of its own accord but will in which we are all coinmunitarians sinated for publishing The Satanic Verses. come into being only because we made now. The problem is that the rhetoric But at bottom communitarianism has a it our top priority in our communities of virtue does not always entail its real- very definite social, moral and political and in our Congress . Thus it is that, ity. Sometimes, indeed, an abundance agenda. Just as it poaches on the author- soon after taking office, the Clinton of the former impedes the achievement ity of religion for essentially secular ends, Administration proposed legislation to of the latter. Communitarians are quite so it clothes itself in the emancipation- make sure that states and localities right that there has been a crisis of vir- ist rhetoric of relativism in order to put- adopted gender-equitable and tue in liberal society. The question is multicultural materials . One result is whether communitarian prescriptions the federal Goals 2000 Act, which are part of the solution or only different Re-education is by would provide national standards for aspects of the original problem. As nature inegalitarian. teaching history to encourage what Frohnen observes, `the central question Frohnen calls egalitarian character raised by the rediscovery of virtue may In any programme of transformation . Such legislation high- be whether social scientists and policy re-education, a self- lights an abiding paradox of communi- analysts are up to the job of pointing out tarianism. As Frohnen observes, how to regain it, or [whether] we must selected group of communitarians present themselves as return to older standards rooted in reli- intellectuals asserts defenders of equality, but this claim gious tradition . seems untenable in light of their desire Some wit once defined Unitarian- that it has the author- to re-educate all of society. Re-educa- ism as the belief that there is one God ity to decide what tion is by nature inegalitarian. In any at most. Communitarians are in an programme of re-education, a self-se- analogous position. They want the so- kind of character and lected group of intellectuals asserts that cial fruits of traditional moral and reli- beliefs everyone it has the authority to decide what kind gious commitment without the tedious should have of character and beliefs everyone should and often un-liberal content of those have. Everyone is equal, but some arc commitments. One name for this posi- more equal than others. tion is civil religion , a phrase that if sue a species of moral absolutism: the Communitarians adopt an instru- not actually invented by Robert Bellah, absolutism of someone convinced that mentalist attitude toward the values was certainly popularized by him. In a he has a privileged access to virtue. they seek to preserve—which is another few words, civil religion is religion with- We can get a hint of what communi- way of saying that they do not, at bot- out transcendence. As Frohnen shows, tarianism in action looks like from a tom, recognize the authority of those the communirarian project is tied inti- speech that President Clinton s Secre- values. They want the effects of tradi- mately to the liberal democratic civil tary of Health and Human Services, tional morality but nor its limitations. religion . Recognizing that liberalism Donna Shalala, delivered in 1991 when The result is a debilitating sense of without virtue is moribund, communi- she was chancellor of the University of arbitrariness. As Bruce Frohnen shows, tarians seek to bolster liberalism with a Wisconsin. Imagining what a typical lit- the irony of communitarianism is that dose of vitamin T: Traditional Religion tle girl named Renata would be think- its adherents, placing themselves be- and Morality. But their relation to tra- ing and learning in the year 2004, Sec- yond the beliefs they seek to foster, sap dition is purely functionalist , as retary Shalala reports that Renata the sources of the communal feelings William Galston puts it: one tradition doesn t know any moms who don t work, they crave . is as good as another, just so long as it but she knows lots of moms who are sin- has the pleasing effect of inducing feel- gle. She knows some children who only Roger Kimlwi! is Managing Editor of the New ings of community and virtue. Com- live with their dads, and children who Criterion and author of Tenured Radiealt: How munitarians want the social cohesion have two dads, or live with their moth- politics is corrupting our higher education, 1990. of small-town life without, in Bellah s ers and their grandmothers. In her f Reprinted from the Times Literary words, the dangerously narrow concep- school books, there are lots of different Supi)lcment, 17Januury 1997.1 tion of social justice that results from kinds of friends and families. After `committing oneself to small-town val- school, Renata goes to a city-run day ues. Accordingly, communitarians care centre where sometimes, she and n013 Q©LilE 30 JULY 1997 Against All Reason? vate sector, notably the Ford Founda- marginalising men was the 1995 Na- tion, has also been most generous. tional Women s Health Conference, Another shift has been the increase federally funded, and sponsored by the Antonia Lehn reviews in professional feminist job opportuni- ACT Government. While men were ties such as `sex equity expert , gender tolerated as delegates, they were ex- Who Stole Feminism? bias officer and harassment facilitator , cluded from presenting papers, despite How Women Have at a time when unskilled and low-skilled the fact that many reputable research- Betrayed Women jobs are declining. ers and practitioners in this field are The early feminists strove for equal- male. by Christina Sommers Hoff ity: equality before the law, at a time Sommers states that gynocentric Simon Schuster, $19.95 when married women lost the right to feminists claim superiority over males, property ownership. These pioneers of maintaining that the education system, Have you listened to Beethoven lately? feminism realised their relatively privi- together with philosophical theory and According to a feminist musicologist at leged position through their education scientific methodology, are patriarchal. the University of Minnesota, Professor and social class and aimed to be the She illustrates this through quotations Susan McClary, the first movement of voice for all women. By contrast, the of absurdities such as Knowledge was Beethoven s Ninth Symphony ... is one current generation of gender feminists created as an act of aggression (Eliza- of the most horrifying movements in consists largely of highly-educated, mid- beth Fee) and Newton s Principles of music ... damming tip energy which fi- dle-class white women, many of them Mechanics could just as aptly be called nally explodes in the throttling, murder- in academia. They have lost the distinc- Newton s Rape Manual (Sandra ous rage of a rapist incapable of attain- tion between education and indoctrina- Harding). ing release . tion and castigate any voice of dissent, If women were to develop their own This is one of many examples including those of equity feminists such methodologies, then apparently intel- Sommers quotes in her book. Although as Germaine Greer, Betty Friedan and lectual debate would alter significantly. there are chapters dealing with rape and Erica Jong. Ironically, they are placing themselves rape research, which, like many other in danger of being labelled as stereotypi- areas of feminist research, Sommers has cal females, who have limited capacity found to be subject to faulty research An example of for reason and logic, relying on feminine methodology and the misuse of statis- intuition instead. Logic and rationality tics, the book largely deals with the [rewriting history] is are considered phallocentric. Transfor- transformation and frightening changes a high school history mation feminist Elizabeth Minnich is feminists have effected in academia and text giving more quoted as stating that the conceptions in the bureaucracy. of rationality and intelligence are white, Christina Hoff Sommers is Associ- attention to a female male creations . ate Professor of Philosophy at Clark nineteenth-century Sommers presents extreme examples University and this work is of a high of this, including: scholarly standard. Well-argued and astronomer, Maria The warlike terminology of painstakingly referenced, it should be of Mitchell, who discov- immunology which focuses on interest to everyone as it expounds on competition , inhibition , and the serious cultural changes some femi- ered a comet, than to invasion as major theories of how nists work towards, with implications for Albert Einstein cells interact reflects a militaristic all members of society. view of the world; Sommers skilfully unravels the and, further: change that commenced in the 1960s Sommers quotes Simone de it becomes evident that the from splitting feminism from its origi- Beauvoir as an early advocate of such inclusion of a feminist perspective nal purpose of equity feminism to the now thoughts: leads to changes in models, militantly activist gender, or gynocentric, No woman should be authorised to experimental subjects, and feminism. The early American feminists stay at home to raise her children. interpretations of the data. These of the mid-1800s wanted equality; the Society should be totally different. changes entail more inclusive, current gender feminists have been in Women should not have that enriched theories compared to the the process of re-educating society choice, precisely because if there is traditional, restrictive, unicausal through re-writing history (or herstory such a choice, too many women will theories. (Sue Rosser) as some prefer to call it), by giving make that one. A substantial proportion of the book greater prominence to women (which From the original goals of equality, deals with gender feminist penetration the author calls filler feminism). An ex- the wheel has turned to one of misin- and, in many cases domination, of ample of this is a high school history text formation and seeking revenge. All too academia, the bureaucracy and the class- giving more attention to a female nine- often misandry goes hand-in-hand with room. According to Sommers, many teenth-century astronomer, Maria gender feminism, edging toward a world universities riow screen academic appli- Mitchell, who discovered a comet, than where men are seen as dispensable, and cants for their commitment to the femi- to Albert Einstein. romantic love is frowned upon by femi- nist agenda. This sets the scenario for Gender feminists refer to such peda- nist stalwarts such as Gloria Steinem. increasingly biased, anti-intellectual, gogical changes as the transformation. In This theme is all too present in Aus- pro-feminist curricula and pedagogy. these times of economic rationalism, tralia, as well. We see the evidence in A journalist, Karen Lehrman, at- they have in the US attracted federal David Williamson s controversial play tended almost thirty classes of women s funds in the tens of millions. The pri- Dead White Males. A local example of studies programmes at four universities IUi!IHI JULY 1997 31 and reported as follows in Mother Jones: women need equality and in the first Three Cheers for In many classes discussions alternate world countries have made tremendous between the personal and the progress toward achieving it. The world Globalization political, with mere pit stops at the does not need to be told that men are (continued from page 3) academic ... with the students waging a war against women: contem- feelings and experiences valued as porary gender feminists are waging a war and given the coming of age of the much as anything the professor or against men. babyboomers, the timing could not be texts have to offer. A hundred years If anyone is still in doubt that gen- better. ago women were fighting ... to be der feminists wish to deconstruct soci- Globalization provides firms and peo- educated like men; today, many ety and undermine long-standing moral, ple with much greater choice over where women are content to get their ethical and basic human spiritual val- they invest and save. High-tax nations, feelings heard, their personal ues, then the following passage Sommers such as Australia, will increasingly be problems aired, their instincts and provides should remove that doubt: the forced to choose between more competi- intuition respected. gender feminist utopia described by Uni- tive tax rates or watching business and There is only one blatant omission versity of Massachusetts philosopher savings go offshore. in this book: the concept of empower- Ann Ferguson: Globalization is also putting pressure ment, widely used within female con- With the elimination of sex roles, on governments to reduce taxes on per- sciousness-raising and assisting espe- and the disappearance, in an sonal income and goods and services. Peo- cially victims of domestic violence, es- overpopulated world, of any ple are increasingly able to choose where pecially in this country, fails to get a biological need for sex to he they work and receive their remuneration. mention. associated with procreation, there Although tax is not the only deciding fac- would be no reason why such a tor as to where people work, it is an im- society could not transcend sexual portant one. As people and jobs become Logic and rational- gender. It would no longer matter more mobile, countries with high personal what biological sex individuals had. taxes will increasingly find that they must ity are considered Love relationships, and the sexual either reduce taxes or watch their best and phallocentric. relationships developing out of brightest drift off-shore. Likewise, Transformation them, would he based on the cyberspace is increasingly allowing con- individual meshing together of sumers to go global, and for goods and serv- feminist Elizabeth androgynous human beings. ices to flow across borders undetected by Minnich is quoted Indeed a vision of a frightening new the taxman. world, where there are no longer distinct The net: result will be lower overall as stating that `the men and women, children conceived taxes, which will reduce the ability of gov- conceptions of out of love and raised in a family envi- ernment to force taxpayers to pick up the ronment; the biological, evolutionary tab for the babyboomers. rationality and nature of things upturned. Globalization will lead particularly to intelligence are Sommers book is long overdue. If lower taxes on savings, investment, ho- you do not believe that the education man capital and risk-taking, which will white, male system is androcentric, that scientific not only help the babyboomers and other creations theory and methodology are investors, but add to growth and jobs. phallocentric and that individuals The impact of globalization on the should be judged according to their gen- unemployed and the underclass is more Empowerment has many faces: one der, then do not bypass this important problematical and dependent on how their of them is the popular practice of sexual work. governments react. harassment charges for minor social If governments embrace globalization transgressions, often subsequently not and economic freedom and lead rather proven by the courts. The net effect is than follow the process, then, as shown surely a disempowerment as women by recent experience in the US and New have turned away from being powerful Zealand (see the articles by David Hale enough to handle such situations them- and Roger Kerr elsewhere in this issue), selves. They are now encouraged to use jobs will flourish and the underclass di- the whole bureaucracy which the tax- minish. If, however, governments, or more payer supports: sexual harassment offic- accurately nations, resist and in the end ers, the police, the courts, the list goes are forced to follow the process, then the on. The now infamous saga of two unskilled and less mobile will suffer. female students at Melbourne Univer- Globalization will nor lead to the de- sity laying charges against the Master of mise of government or of the nation-state. Ormond College (the subject of Helen Indeed, government will arguably be more Garner s The First Stone) is a classic case important under globalization. What in point. globalization is doing is giving people an- Most human beings on this planet, other means of fighting the excesses of Antonia I_ehn is a freelance writer, retiewer many in developing countries struggling and ira,Gslutor, with a background in government—and this can only be posi- for their survival, wish to live a life in Smtistics and Social Research tive. harmony with their fellow human be- ings. The early feminists got it right: DOE LJ©ku U©© 32 JULY 1997 U N I INSTIT PUBLIC Recent I PA o©o Publications SUBSCRIPT Please enrol me as a subscriber to: q IPA Review Annually_$28 and services represents a high share of the OR: income of the less well-off, but only a mod- I would like to become.a.member est share of that of the more affluent. Be- of IPA (tick appropriate box) cause the tax rates are high, the title Soaking U the Poor vividly describes their punishing ef- El General Member Annually $50 fects on low-income earners. This paper criti- Entitlements: IPA Review, regular cally examines the incidence and effects of newsletter (In Touch), membership card these taxes and concludes that they need to and notice of IPA events. be radically reformed, as part of a general re- form of the tax system. q Premier Member Annually 190 IPA Backgrounder (Tax Reform Project), Entitlenients:All IPA publications December 1996, $10.00. IPA Review, Current Issues, Backgrounder, In Touch)( membership card, notice of IPA-events, Restoring the Balance: Tax Reform for the plus discounts to all IPA functions. Australian Federation by Jeff Petchey, Tony Rutherford and Mike Nahan U Accepting the widely-held view that Aus- Name tralia s taxation system is in utter disrepair, I I the authors argue that tax reform cannot be Address f divorced from the reform of Federal–State O fiscal relations. On one hand, the Common- Whither Labor? wealth s dominance over most tax bases P by Gary Johns creates a tax cartel; on the other, the States °^ An examination by a former Labor minister are forced to rely on unsatisfactory and inef- Telephone: of where the ALP went wrong and, as a re- ficient bases for their tax needs. This book— the first in a new and important series—gives sult, what sorts of policies an opposition party Ram"le I______needs to offer in the late 1990s to keep the compelling reasons for allowing the States Australian democratic political system com- back into income or consumption taxes, and Payment Options petitive and healthy demonstrates the benefits this would bring. q I enclose my cheque for $ IPA Backgrounder, June 1997, $10.00. Current Issues (Tax Reform Project), Sep- made payable to the tember 1996, $16.95. Institute of Public Affairs. Charge my credit card $ The Human Wrongs of Indigenous Rights El q q q by Ron Brunton Black Suffering, White Guilt?: Aboriginal Bankcard Mastercard VISAI Disadvantage and the Royal Commission q AMEX q Diners The UN Draft Declaration on Indigenous bClu into Deaths in Custody by Ron Brunton Rights could have enormous implications for Australia. This Backgrouruler argues that the A critical examination of the currently fash- fundamental idea of indigenous rights is dan- ionable explanations of Aboriginal disadvan- gcrous and misguided, and is likely to under- tage that were given legitimacy by the Royal Commission into Aboriginal Deaths in Cus- mine the most powerful moral arguments Eepiry Date that can be used to defend equity and toler- tody. It is particularly critical of explanations ance. that attribute Aboriginal disadvantage to the `institutional racism of Australian society. Cardholder s 1PA Backgrounder, February 1997, $8.00. It argues that the ideas that underpin cur- rent approaches to Aboriginal policies are counterproductive. Soaking The Poor: Discriminatory Taxa• Current Issues (first published February 1993, tion of Tobacco, Alcohol and Gambling Return this form r by Alan Moran now re-issued in electronic form only, Win- dows-based), $15.00. Institute of Public Governments—in particular, State Govern- 128 Jolimont Road, ments—are heavily dependent upon the rev- enues generated by taxes on alcohol, tobacco Jolimont,VIC 3002 nom and gambling. Consumption of these goods Telephone: (03) 9654 7499 Facsimile:(03) 9650 7627" L Email: iaahayek(0)ozonline.com.au r^. III \ I 1\i ti w y t