Pearls and Irritations

What people in other forums are saying about public policy

Change in format

To date we had been publishing the program schedule for the ABC’s Saturday Extra.  It was perhaps unrealistic to believe that Pearls and Irritations readers would be starting their Saturdays with a one-and-a-half-hour commitment to a radio program starting at 730. Also, simply listing the program segments didn’t necessarily do justice to their content.  This week, for example, we link to two of last Saturday’s Saturday Extrasegments in a broader context. Also we link to other programs in the ABC and other media.

No doubt many Pearls and Irritations readers start their weekends with Saturday Extra as they enjoy their smashed avocado/eggs benedict/marmalade on toast. Others will choose to catch up on the program’s website.

That virus

There is an abundance of media cover of coronavirus, and a great deal of speculation about its economic consequences (they will be significant). There will also be political consequences in terms of people’s reactions and responses to the way their governments handle the epidemic.

On the ABC’s Saturday Extra, Geraldine Doogue interviews Richard McGregor of the Lowy Institute and Graeme Smith of the ANU about how China is handling the virus. Its title – Chinese leadership jitters – hints at overstatement, but the virus presents challenges to a government that has achieved its legitimacy through rising material living standards and economic efficiency. How will China’s political elites cope with an inevitable fall in the country’s economic growth and exposure of weaknesses in its health system? Will China’s response be towards more authoritarianism or to more openness?

In Foreign Affairs Benjamin Cowling, Co-director of the WHO Collaborating Centre for Infectious Disease Epidemiology and Control, writes Controlling coronavirus will mean keeping people apart.  He describes China’s smartphone app that tracks people’s movements and serves as a passport with grades of travel restrictions and requirements for isolation. Would such measures be acceptable in other countries?

The threat of right-wing extremism

“Intolerance based on race, gender and identity, and the extreme political views that intolerance inspires, is on the rise across the western world in particular.”  That’s a quote from Mike Burgess, ASIO’s Director General, who delivered that agency’s Annual threat assessment on Monday:

In Australia, the extreme right wing threat is real and it is growing. In suburbs around Australia, small cells regularly meet to salute Nazi flags, inspect weapons, train in combat and share their hateful ideology.

His speech pointed out that “violent Islamic extremism of the type embodied by the Islamic State and al’Qaida and their off-shoots” remains ASIO’s main concern.

In a weird twist of logic Home Affairs Minister Peter Dutton managed to represent ASIO’s assessment as a warning about left-wing terrorism. He ignores the fact that authoritarian theocratic movements such as IS and al’Qaida, have much in common with fascism and Nazism, particularly in their justification of violence to achieve their ends. By any reasonable classification they belong on the “right” of the political spectrum. Their ideology of hatred and violence is poles apart from that of contemporary “left” movements such as Extinction Rebellion, which Dutton’s office claims to be a terrorist group.

Although the Morrison-Dutton Government has been accommodating of far-right political movements, particularly One Nation, there is at least one voice in the Federal Liberal Party condemning far-right extremism. The ABC’s Andrew Green reports on Treasurer Josh Frydenberg’s short speech at the opening of the new Australian War Memorial exhibition dedicated to the Holocaust. Frydenberg warned about the rise of the far right, worldwide and in parts of Australia, and about the risk that we may forget the lesson from this “evil, dark period in world history”. He concludes with the reminder that “we all have a collective duty to say ‘never again’”.

In that same article, Green points out that Frydenberg has praised the Victorian Government for its initiative in strengthening Holocaust education in that state’s schools. Frydenberg’s website has a short video clip of his involvement in a ceremony on January 27, the 75^th anniversary of the liberation of Auschwitz-Birkenau. The clip shows Auschwitz survivor David Prince, who now spends his time talking to students about the Holocaust.  David’s message, endorsed by Frydenberg, is “don’t be silent; don’t be silent” – a reminder that Hitler’s rise to power was aided by the acquiescence of “quiet Germans”.

Polls and surveys

Newspoll – Labor still stuck in the slow lane

William Bowe’s Poll Bludger reports on the latest Newspoll result, which has reduced Labor’s 2PP lead back to 51-49.

Falling support for Morrison and the Coalition is not translating into benefits for Labor. The Coalition’s primary vote is 38 per cent (41 per cent at the 2019 election), while Labor’s is 34 per cent (33 per cent at the 2019 election).  Albanese holds only a slim lead over Morrison as preferred prime minister.

The same poll also asks people about causes of the bushfires – global warming or a failure by state governments to undertake hazard-reduction burning. It seems that Morrison has helped shift blame to the latter explanation. But public opinion has not gone all Morrison’s way: there is growing support for an energy policy directed to lowering emissions rather than keeping energy prices down and preventing blackouts.

Essential – no one loves coal and older Australians aren’t too worried about coronavirus

The Essential Report for 25 February finds little support (only 21 per cent) for subsidies for coal-fired power stations. A pair of responses suggests that some Australians are less than fully-informed about our choices, however: 64 per cent of respondents believe that we should “get out of coal as soon as possible”, while 61 per cent believe we should “still export coal for steel production”.  A clear majority (75 per cent) support a zero-carbon pollution target for 2050: even among Coalition supporters a zero-carbon 2050 target commands 68 per cent support.

Other questions relate to volunteering and to actions taken since the coronavirus outbreak. Unsurprisingly we believe there should be more government support to cover volunteers’ out-of-pocket expenses. Surprisingly perhaps, while only a fifth of Australians have taken any action about the coronavirus (avoiding town centres, restaurants and shopping centres, and cancelling travel), younger people are taking more such precautions than older people.

States’ report cards on social progress

The Centre for Social Impact, a collaboration between the University of New South Wales, Swinburne University of Technology, and the University of Western Australia, has released the Australian social progress index (SPI). Its description:

The SPI is a free online resource that provides governments and organisations with the ability to measure their state or territory’s progress towards meeting people’s basic needs, foundations for wellbeing, and opportunity for all individuals to reach their full potential. It measures indicators key to wellbeing, such as ‘personal rights’, ‘nutrition and basic medical care’, and ‘access to higher education’.

The press release, linked above, has a link to the interactive tool, which opens with a map displaying gross scores and state rankings, but rather than accepting the researchers’ weightings it’s worthwhile drilling down to the details, where 12 dimensions of social wellbeing are scored. The very purpose of such metrics is to develop richer indicators than headline figures such as GDP.

(Earlier this century the ABS developed a set of indicators titled Measures of Australia’s progress, addressing the question “Is life in Australia getting better”.  It was building up a time series of 27 indicators of wellbeing. MAP involved a significant investment by the ABS in developing expertise and establishing a well-acknowledged international reputation in this venture.  It was killed in the Coalition’s budget cuts in 2014.)

Our infrastructure shopping list

Infrastructure Australia has released its Infrastructure priority list 2020, listing a number of projects – advanced proposals with a full business case – and initiatives – proposals that Infrastructure Australia itself assesses to have potential to address significant problems or opportunities. Priority projects are almost all in the eastern mainland states, and are dominated by road and rail projects. Many of the priority initiatives relate to needs arising from the acknowledged effects of climate change, including protection of water resources, protecting against coastal inundation and improving the interconnectivity of the electricity grid.

Infrastructure Australia’s report is a guide for a government willing to strengthen the national balance sheet by investing in assets to improve the nation’s productive capacity. The present Commonwealth Government, however, sees economic policy only in terms of striving for a fiscal cash surplus. At best, in line with its track record, it may cherry-pick a few projects in marginal electorates, regardless of Infrastructure Australia’s assessments.

Underemployment and underutilisation: we have a problem with young men

When the ABS released labour force data for January, media attention was on the  unemployment rate, which rose, in seasonally-adjusted terms, from 5.1 per cent to 5.3 per cent. Less attention is given to the underemployment rate, as measured by the proportion of people who prefer to work longer hours if available. At the turn of the century the underemployment rate was 6.3 per cent; by January this year it has risen to 8.6 per cent. The graph below shows the total labour force underutilisation rate – the sum of unemployment plus underemployment.  Underutilisation remains stubbornly high at about 14 per cent: among Australians aged 20 to 24 it is around 14 per cent for women and 24 per cent for men.

 At last some clear thinking on regional policy

In Australia the word “regional” has taken on a meaning to refer to anything beyond the boundaries of our capital cities, as if these cities themselves do not have distinct regions within them, and as if non-metropolitan Australia is some homogeneous expanse of backwardness and disadvantage.

The Productivity Commission has released a study Remote area tax concessions and payments, revealing the complexity of disadvantage (and in some cases advantage) in non-metropolitan Australia. For example, non-indigenous Australians living in remote regions are more geographically mobile and have higher incomes than their urban counterparts, while the reverse holds for indigenous Australians. On the concessions themselves, it points out that many are a legacy of Australia’s 1945 settlement pattern. Some concessions have been eroded into insignificance by inflation, while fringe-benefit tax exemption for employer-provided housing (one of the more significant concessions) has produced inequities and distortions.

Clear thinking on coal

Germany’s industrial strength once rested on its coal and steel industries, but in 2007 it embarked on a program, now complete, to shut down its black coal industry in the Ruhr Valley. Now it is embarked on an 18-year program to shut down its lignite (brown coal) industry, located mainly in the poorer East Germany, where, as in Victoria, coal is burned in situ as fuel for power stations.

The issue is not whether coal should be phased out; rather it’s whether it should shut down now or by 2030 (“der Kompromiss”). On the ABC website Eric Campbell has an article Why Germans all agree on shutting down the coal industry, with links to his related Foreign Correspondent report (27 minutes). Germany has many of the same regional and intergenerational conflicts as we have in Australia, and many of the same emotions, but by any measure they are dealing with them much better than we are.

One factor possibly explaining Germany’s progress in closing down coal mining is that Germany’s dominant centre-right party, Angela Merkel’s Christlich Demokratische Union Deutschlands (Christian Democrats or CDU) unlike Morrison’s Liberal Party, works with other centrist parties to develop policies in line with Germany’s economic interests, rather than forming alliances with the far right in order to deny legitimacy to policies promoted by centre-left parties.

A voice more in tune with Merkel’s is Malcolm Turnbull’s. David Crowe of The Age reports that he warns of a “catastrophic” future if we don’t move to net zero.  (But why, when he was prime minister, did he not dump the National Party climate change deniers and form an agreement with Labor, as Merkel has done in Germany’s Große Koalition?)

Germany’s political problems

On the ABC’s Saturday Extra Geraldine Doogue interviews Andreas Kluth of Bloomberg, about problems in Angela Merkel’s CDU. Merkel’s chosen successor Annegret Kramp-Karrenbauer has been losing support in the polls, and fell on her sword after the CDU in Thüringen (one of the states of the former East Germany) defied her by doing a deal with Germany’s far-right Alternative für Deutschland (AFD) to help another centre-right party form government. Kluth and Doogue explain how politics in the old East Germany has become polarised between the AFD and the Die Linke (the old GDR Communist Party), leaving an empty centre. They have some observations on gender politics since German re-unification. (13 minutes)

In response to the crisis the Thüringen state parliament has voted to hold fresh elections next March. Four parties, including the CDU, have agreed to a stability pact to prevent the AFD from acting as kingmaker in the next government. (It is telling that in Germany the CDU’s brief flirtation with the AFD has had such consequences, while In Australia the Liberal Party has meekly formed a coalition with the National Party which, in the 2019 election did preference deals with One Nation.)

Trump’s ten steps to dictatorship

Writing in Foreign Policy, Harvard Professor of International Relations Stephen Walt outlines how since his impeachment Trump “has been passing most of the checkpoints on the way to authoritarianism”.  In his article ambiguously titled Trump is failing his dictatorship test he lists ten steps Trump has taken along the path to dictatorship, the most serious being politicisation of the civil service, military and security agencies, stacking the Supreme Court, and asymmetric enforcement of the law.

Healthy democracies don’t sicken and die overnight; they collapse gradually, from a thousand tiny cuts, each of which seems inconsequential at the time. That is what Donald Trump is doing, aided and abetted by the once proud Republican Party.

Trump meets his soulmate in India

India and the US are the world’s two largest democracies, and both have heads of government pushing their countries towards authoritarianism and xenophobia. Writing in Counterpunch, Kenneth Surin of Duke University provides context around Trump’s visit to India – Trump in Modi’s India – with particular reference to Modi’s Citizenship Amendment Act, which openly discriminates against Muslims.

Modi has provided the large Hindu majority with a Muslim enemy, thereby concealing his failure to deal with the abject poverty afflicting hundreds of millions of Indians …  Ordinary men and women are being instigated to blame Muslims and left-wingers for their economic predicament, while Modi and his crew of scoundrels are let off the hook.

Surin describes how Modi is feting Trump: “Trump and Modi, authoritarians both, get along like a house on fire”. He also describes how, behind the bromance, India has a long tradition of far-right extremism, which Modi has shamelessly nurtured.

Why are some house prices more sensitive to interest-rate changes than others?

When housing loan interest rates move in response to Reserve Bank changes in the cash rates, the effect on house prices and supply across the country is far from uniform.  A Reserve Bank staff paper by Calvin He and Gianna La Cava –  The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets – analyses the differences and tentatively suggests some drivers of difference. Housing prices are more sensitive to interest-rate changes where there are geographical constraints on land supply (think Sydney), and in areas where there is more mortgage debt, higher incomes and more housing “investors”.  This means that lowering interest rates tends to result in widening wealth inequality, at least in the short-to-medium term. (This suggests that a monetary response to the coronavirus disruption would probably worsen housing disadvantage.)

Boeing’s woes – a problem of corporate culture

After two fatal crashes Boeing’s 737 Max remains grounded. A reader of Pearls and Irritations has put us on to an article in Naked Capitalism by Gregory Tavis, analysing from both a technical and organisational perspective (he points out their relationship), the reason Boeing is in serious trouble –  Ship the airplane: The cultural, organizational and technical reasons why Boeing cannot recover.  The basic reason is penny-pinching, manifest in a business philosophy that “the best way of making money by making things was not to make things at all”.  Only ten per cent of the Boeing plane in which you travel has been made in the firm’s plant; the rest is made by subcontractors who have no bonds of trust with Boeing.

His analysis goes beyond the usual (generally valid) criticism of short-term-profit-obsessed managers disrespecting a firm’s human capital and shifting operations out of house to less committed subcontractors. In a technical analysis he describes how Boeing tried to do automation on the cheap, trying to use legacy autopilot systems on an old airframe, hoping that a few lines of software code would fix the problem. (They don’t work.) Travis sees Boeing’s problems as:

a symbol of the collapse of institutions in the United States.  We were once considered the world’s gold standard in everything from education to manufacturing to effective and productive public-sector regulation.  That is all going down the drain, flushed by a belief in things that just are not true.

If you live in or near Canberra

On the first Thursday of every month, writers to and readers of Pearls and Irritations get together for breakfast. We meet at Tilleys (corner of Brigalow and Wattle Streets Lyenham) at 8 am. Come along to the next gathering on Thursday 5 March if you’d like to get together with others interested in good public policy.

Relief from the heat of summer

Yes, there was waste in the government’s sports grants program, but at least some has gone to ensuring people sweltering in a hot outback summer can get to a swimming pool after a short drive.

Saturday’s Good Reading and Listening is compiled by Ian McAuley

Watch out tomorrow, Sunday, for Peter Sainsbury’s Sunday environment round up.

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