IPA REVIEW ESTABLISHED IN 1947 BY CHARLES KEMP, FOUNDING DIRECTOR OF THE INSTITUTE OF PUBLIC AFFAIRS Vol. 45 No. 4,1992 Business Must Defend Itself 6 Australia, Vanuatu and the British Connection 48 Richard Craig Mark Uhlmann The current campaign against foreign-owned The view that Australia has been the pawn of British companies in Australia is misguided. foreign policy in the South Pacific is false. Bounties or Tariffs, Someone Pays 12 Millennium: Getting Tribal Rites Wrong 51 Bert Kelly Ron Brunton The cost of protection — whatever its form — must A lavish production, with a vacuous message. be borne by somebody. Menzies and the Middle Class 53 The New Constitutionalism 13 C.D. Kemp Kenneth Minogue Menzies embodied the best and the worst of his Changing constitutions is a fashionable, but `forgotten people. unreliable way of achieving political objectives. Catholicisms Condition 56 The Constitution and its Confused Critics 15 T.C. de Lacey S.E.K Hulme All is not well in the Catholic Church, but Paul Calls to update The Constitution are ill-informed. Collinss `remedies would only make things worse. Blowing the Police Whistle 20 Eric Home Whistleblowers need legislative protection. Genesis Revisited 26 From the Editor Brian J. OBrien Revolution and restraint in capitalism. In the beginning the earth was formless — then there were forms in triplicate. Moore Economics 4 Des Moore Reforming Public Sector Enterprises 30 How Victoria found itself in such a mess. Bill Scales Why its urgent and how to approach it. IPA Indicators 8 Social class figures hardly at all in Australians Delivery Postponed ^" J 34 definition of themselves. Nick Renton ^,;tt^^ r Australia Posts customers deserve better than a Debate 10 money-back guarantee. Should prostitution be legal? A Revolution in the Public Service 35 Strange Times 24 Derek Parker Ken Baker Party policy now extends deep into the machinery of "World opinion" looks to Labor. 1 government. Down to Earth 27 Third-Born Children: The New Scapegoats 37 Ron Brunton Rita M. Joseph No risk, no gain. Senator Coulter has stepped onto a slippery path with IPA News and Directors Report 61 his advocacy of population control. Supply-Side Demography 39 Karl Zinsmeister Editor: Ken Baker Population control policies assume that people only Design: Bob Calwell Associates. Production Assistant: Tracey Seto. Editorial Assistant: Robert Stove. Advertising: Rod Tremain Media consume and pollute. Ph: (02) 955 3545; Fx (02) 955 3646. Printing: Wilke Color, 37 Browns Road, Clayton, 3168. Updating Family Values 43 Brian Trainor Published by the Institute of Public Affairs Ltd (Incorporated in the ACT). ACN 008 627 727. ISSN: 1030 4177. Family policy needs to reflect the experiences and Editorial and Production Office: Ground Floor, 128-136 Jolimont aspirations of real women. Road, Jolimont, Vic, 3002. Ph: (03) 654 7499; Fx: (03) 650 7627. Letter from America 45 Subscriptions: $40 per annum (includes quarterly Facts). Harry Gelber Unsolicited manuscripts are welcomed. However, potential cc,a- tributors are advised to discuss proposals for articles with the Editor. The US election result reveals curious underlying Views expressed in the publications of the IPA are those of the trends. authors and do not necessarily reflect the views of the Institute. FRO M THE E D I T O R Enterprise and Virtue once received a letter from a lady, in were closed, selfishness would equation moral qualms, ennui, or the Iresponse to an article I had written diminish. In fact, self-interest would work ethic , but that their influence is on politics and the churches, rebuking find another, almost certainly less hard to quantify or predict is no excuse me for having been critical of the social productive, outlet (in the seeking of for failing to take adequate account of justice statements of certain church political power, for example). Egoism is them. commissions. "After all," she wrote, universal; prosperity is not. The market Perhaps this criticism is unfair. "its not the churches fault if God is a system does not create avarice; it merely We cannot expect economists to be socialist." Socialism may have fallen recognizes the role of egoism in human psychologists or moral philosophers, from grace since then but, in the wake motivation and harnesses it to produc- any more than we are justified in finding of the turbulent 1980s, the moral status tive purposes, from which the whole fault with engineers because they are of private enterprise in the eyes of the society benefits. As Adam Smith ob- not also poets. An engineer does not public has not improved as a conse- served, the butcher does not supply his need poetry to build a sturdy bridge: all quence. Church commissions are not customers with meat because he loves he needs to understand are the proper- alone in their view that the free market, them, but because he profits from the ties of inert matter and the laws of whatever its practical merits, is a moral- transaction. The transaction is entered physics. But the subject matter of an ly impoverished system, an impression into voluntarily because both parties see economist is not inert matter: it is man. reinforced by depictions of the business benefits to themselves. Any system, As Hayek, an economist who under- world in films such as Wall Street and however noble its ideals, which does not stood this, said, an economist who is Pretty Woman and, occasionally, as take account of the egoism embedded only an economist is not a good Richard Craig notes in this IPA Review, in human nature is destined to fail. economist. Human motivation is far in television series such as Murphy more convoluted than the model of the Brown. `Greed is good is seen as the rational calculator allows. David Hume maxim of the market. The free-market Taking Morality out wrote that human life is governed more philosophy, concurs J.K. Galbraith, is of the Market by passion and fortune than by reason. merely a rationalization of selfishness. For a long time the best historians, That this view has currency has Nevertheless, there is more to the psychologists, philosophers and writers serious implications for business. It spirit of enterprise than enlightened have known that human action arises enables the opponents of business suc- self-interest. In this, Galbraith has a out of a complex interaction of rational cessfully to claim the high moral ground point: free-marketeers have too often and irrational, conscious and uncon- in their campaigns. Green groups and been guilty of divorcing morality from scious intentions and drives, often cul- radical consumerist organizations can markets. Some, such as Ayn Rand, have turally conditioned. Successful present themselves as defenders of the elevated egoism to a moral imperative advertisers seem often to comprehend public interest against companies which (one of her best-known tracts is The this better than do economists. pursue only narrow selfish interests. Virtue of Selfishness). Milton Friedman The poorer the moral reputation of expounds the view that the sole duty of business, the more conducive is the business managers is to maximize Liberation and Restraint political climate to the enactment of profits (albeit within the limits of the law hostile government regulation. and the ethical customs of society). If the spirit of enterprise is more It is true, of course, that the More generally, economists have than enlightened self-interest, of what enlightened pursuit of self-interest is tended to base their explanations on a does it consist? This is an important and central to the free-market philosophy. utilitarian model of man as the rational intriguing question to which there is no Where Galbraith and his supporters are calculator of costs and benefits. It might easy answer. It invites speculation. wrong is in assuming that if markets be difficult to factor in to an economic There seem to be two conflicting IPA Review, Vol. 45 No. 4, 1992 FROM THE EDITOR moral impulses which drive Western industries and new corporate images. Wall Street Journal), Johnson was capitalist economies: one liberating, the The other side to capitalism is prodigal, enormously ambitious and other restrainng. The former is sug- what, since the 19th century, has been perpetually unsettled. When Nabisco gested by the title of a book by the called — usually pejoratively — the merged with the leading tobacco com- American sociologist Peter Berger: The bourgeois ethos: the virtues of per- pany, RJ Reynolds, Johnson was Capitalist Revolution. Contrary to the sonal responsibility, sobriety, prudence, obliged to set up residence in Winston- left-wing view of capitalism as a reac- thrift, diligence, punctuality, honesty, Salem, North Carolina, which had tionary force, the free market has been civic pride and constancy. These are all housed RJ Reynolds Industries for over probably the most revolutionary force secular versions of the Protestant ethic 100 years. The entire city relied on the in human history. No other form of which Max Weber identified as pivotal industry; it was the towns lifeblood. But economic organization has so trans- to the spirit of capitalism. small town life bored Johnson. "You formed the societies which it has Both moral impulses — the revolu- keep running into the same people over touched. Marx saw this and wrote about tionary and the bourgeois — are essen- and over," he complained to his New it, in somewhat colourful terms, in his tial to the buoyancy of business activity York friends. Johnsons ostentation Communist Manifesto: and thus of the economy. Without the aroused suspicion among the locals and spirit of innovation and risk-taking in the speed at which he purged the ranks "The bourgeoisie, during its rule business, the economy stagnates. of Reynolds old guard unnerved them. of scarce one hundred years, has Most weekends he took the corporate created more massive and more jet to some distant golf club, or tended colossal productive forces than to his suntan in Florida, or roamed have all preceding generations Risk-taking untempered Manhattan.