Pearls and Irritations

What people in other forums are saying about public policy

The Australian economy

We’ll be back on cruise ships before there’s an economic recovery

Peter Martin has collated the (informed) views of 22 leading economists on prospects for the Australian economy:  No big bounce: 2020-21 economic survey points to a weak recovery getting weaker, amid declining living standards, published in The Conversation.

It would be misleading to refer to a consensus, because they offer a wide range of estimates for economic growth, unemployment and income, but on all of these three indicators they are generally much less optimistic than the government. The only glimmer of optimism is that all but one of them expect inflation to be less than two per cent, but that’s offset by their expectation for wage growth to be even lower. Also, it should be remembered that without inflation there is no diminution of the real value of debt – our burden of personal debt will hang around a long time.

If you want to use their forecasts as a guide to the stock exchange you’d be better advised to go to the races. Their estimates for the stock exchange by the end of 2022 range from a fall of ten percent to a rise of ten per cent.

An economic history of Australia – how we have come to suffer the resource curse

How is it that Australia has come to have an economic structure based on extraction of raw materials, where about all that’s left of our once-significant and advanced manufacturing sector are a few plants making biscuits, bread, beer and bricks, and where we have let the export coal sector frustrate any aspiration to modernise our industrial base and take advantage of our opportunities to become a renewable energy superpower?

Judith Brett’s Quarterly Essay The coal curse: resources, climate and Australia’s future offers an explanation. It’s a concise economic and political history of Australia’s economic development, neatly presented in 75 pages. She writes a story about lost opportunities – lost largely because the Coalition has become the pawn of the fossil fuel industry. She asks if we can use our emergence from the Covid-19 crisis as an opportunity to re-structure our economy to generate wealth and meaningful work, or will we slowly slip into a South American style of poverty as other countries move forward?

On the ABC Saturday Extra in a half-hour interview with Geraldine Doogue, Brett provides a concise summary of the essay. It’s a neat summary, but it shouldn’t substitute for the essay itself, written in the style of a historian rather than the style of an economist.

Universities

Commercial and liberal viewpoints

Last Sunday’s “Roundtable” on the ABC’s Sunday Extra was a 29-minute session Universities forced to innovate or potentially face financial ruin.  On one level the session was about how universities have to adapt to technological change, an adaptation hastened by the need to present on-line content in response to the pandemic’s restrictions. (Strange how slow some universities are – some Australian universities were offering comprehensive on-line content 15 years ago.)  On another level it was about competitive pressure and the unsustainability of certain cross-subsidies in universities – particularly the use of profits from foreign students to support research and postgraduate teaching.

These issues dominated the session, until Tamson Peitsch of UTS, and host of The New Social Contract podcast, raised the crucial question of the role of universities in building a sustainable and just society – how universities bring young people together in a community of learning. It’s hard for the traditional liberal case for learning to be heard when all the din is about technology and markets.

Other panellists were John Fischetti of the University of Newcastle and author of The government’s funding changes are meddling with the purpose of universities in The Conversation and Michael Smith of Carnegie Mellon University, author of Are universities going the way of CDs and cable TV? in The Atlantic. Smith’s perspective was clearly a commercial one.

The Morrison Government accidentally supports liberal arts

Dan Tehan BA (Melbourne), M Foreign Affairs (Monash) seems be providing incarnate evidence that our universities are falling short in providing graduates who can think clearly. Or maybe it’s that the culture of the Coalition cabinet is one that creates its own economic reality – a reality that dispenses even with Adam Smith’s laws of supply and demand.

Ross Gittins seems to opt for the second proposition as an explanation to explain the Morrison Government’s re-arrangement of public funding – what’s left of it – for our universities: Morrison moves the deck chairs on the hulk of our universities.  Perhaps the only redeeming feature of the package is that unintended incentives in the package may actually encourage universities to provide more liberal arts courses, not fewer as Tehan and his philistine colleagues proposed.

It’s fairly clear that Tehan, Morrison and their colleagues don’t understand the complementarity – indeed the inseparability – of liberal and technical education. An engineer unable to think creatively and critically is of no more use economically than a graduate in postmodernist transgender hermeneutics from the University of the Age of Aquarius.

Gittins sees these changes as yet another attack on Morrison’s imagined enemies – the educated elites. Perhaps its wider context is the fear small-minded and unimaginative people harbour against enlightenment and excellence.

Tehan, and those who throw around the term “STEM” with little understanding of the sciences and disciplines covered by that acronym, would do well to listen to  Eleanor Huntington, Dean of Engineering and Computer Science at ANU on the ABC’s “The year that made me”. She describes both the community’s stereotype of engineering (all about “crankshafts and gearboxes”) and the reality of the discipline: engineering is a fundamentally creative process directed to solving human problems, using math and other sciences. The humanities/sciences distinction is a false dichotomy. (16 minutes)

(This “two-cultures” debate seems to be glossing over the main issue. That is whether our education system, generally, enables people to think critically and creatively.)

Tax reform

Media coverage of the NSW Review of Federal Financial Relations (draft report) has been mainly about its recommendation to broaden and deepen the GST.

In fact, like the 2008 Henry Review, it’s about much more: it’s broad-ranging.  Among its recommendations are a land tax to replace stamp duties, reform of insurance taxes (which, in their present form are inequitable and inefficient), and a fairer and more efficient way to fund roads. Perhaps its most significant recommendation is that, in view of the declining revenue base of the GST, states should be assured a proportion of income tax collected by the Commonwealth, “with revenue distributed to the state in which it is generated”.  (Victoria and the ACT would easily endorse this one, but not other states.)

Refreshingly its authors do not join the chorus of self-interest calling for lower taxes. It clearly shows that, compared with the OECD average of 34.5 per cent, Australia’s taxes (combined Commonwealth, state and local) are only 28.5 per cent of GDP. But our tax mix is very different from that of other “developed” countries.

There is much in the report that those who have studied and researched Australian taxes can criticise, but as its author David Thodey points out it is a draft.  It raises many issues that need airing – issues to do with the way we fund the government services of health, education, policing and transport, which are all important aspects of the social wage. The media’s focus on the GST is unfortunate, because while tax reform should always be considered as a package, undue attention to individual elements is likely to lead to political rejection of the whole process – a process starting with journalists asking ministers “can you rule out  X?”, where X is but one part of the package.

The pandemic’s progress

Victoria

All the news is about Victoria. There is a certain irony when a Coalition opposition leader criticises a Labor premier for privatising a service that should have been handled by government employees.

The graph below shows all locally-acquired cases (i.e. excluding those returning travellers in hotel quarantine) for NSW and Victoria over the four weeks to 3 July. If you’re finding it hard to read the NSW cases that’s because they have had only 10 cases over the period, the latest of which is a person who was in hotel isolation in Melbourne, before returning to work in Sydney’s densely populated suburb Balmain. Over the same period Victoria has had 643 locally-acquired cases, some of which can be traced, but others that cannot – there is a dangerously high rate of community transmission.

In other states there has been only one locally-acquired case in Queensland on 6 June and one in the Northern Territory on 2 July, again from a traveller returning from Victoria. That one case has broken the Territory’s two-month run of zero locally-acquired cases, a run that has allowed the Territory to enjoy only a light level of restrictions.

One problem confronted in Victoria, particularly in Melbourne’s northern and western suburbs, is that many people have refused to be tested – even by the comparatively simple saliva test. On Norman Swan’s Coronacast is a short discussion of their reasons – Why are some people refusing to get tested?. Some of the refusal is explained by conspiracy theories and misinformation on websites (5G, Big Brother government), some by misunderstandings (the meaning of “genomic” tests, language difficulties, “it’s only the flu”), and some by having poorly-briefed people working on the campaign.

One could sarcastically point out that the gods have punished Victoria for being smug about NSW’s mishandling of the Ruby Princess, but all state premiers have been cautious about claiming to be on top of the virus. The common lessons from both NSW and Victoria, as well as from New Zealand’s small outbreak, is that it is crucial to maintain strict control over external borders.

The Victorian outbreak will prove to be costly: it could result in 5 – 10 deaths and an equal number of people enduring bad health consequences. It will result in a large disruption to people’s lives, not just in the locked-down suburbs, but throughout the nation, in view of its effect on people’s personal and commercial behaviour.

Victoria’s outbreak is unfortunate when seven of our eight states and territories have virtually eliminated the virus, allowing for a reasonably light level of social control. In fact sewerage tests in the ACT have found no trace of the virus over all of May. Yet the Prime Minister is petulantly calling for those states to rip down their state borders, thereby allowing the virus to spread. He suggests he is comfortable with the occasional outbreak, on the strange logic that this sort of outbreak is preferable, on economic grounds, to the easier situation that could prevail with elimination (with specific and rapid attention to the odd case that slips through). Is it that, having claimed from the outset that we had to settle for “suppression” rather than elimination, he cannot bear the loss of face in seeing a return to near normality in Western Australia, Tasmania, the Northern Territory and South Australia?

Country curves

Another weekly update confirms that different countries are on different paths. We have to keep extending the Y axis to accommodate Brazil and the USA.

A glance at the curve for the USA suggests that it is experiencing a “second wave”, but it’s more plausible that the upturn is revealing the virus’s impact on large southern and inland states where its arrival has been slow. Texas and Florida both have roughly the same population as Australia (Texas 29 million, Florida 21 million). The Economist explains America’s dilemma: The US has too few cases for a total lockdown and too many to open up safely.

The EU still seems to be finding it difficult to get the case rate below 9 – 10 new cases per million per day – that green curve has been fairly flat for five weeks. Some small countries are doing well, but infection rates are still high in Portugal and Sweden (maybe coming down in Portugal but not in Sweden). We do not show Sweden’s trajectory on the chart: if we did it would be almost the same as the USA’s or possibly higher, because those who have watched this week’s ABC Foreign Correspondent –The Swedish model – would realise that the country is probably significantly understating both the incidence of the pandemic and its resulting  deaths. Even by these understated figures the virus has claimed 5300 lives in Sweden’s population of 10 million – not much bigger than NSW’s population of 8 million.

Information sources

We now have these on a separate website.

Polls and surveys

Newspoll and Morgan – not much happening

About all that can be inferred from the latest Newspoll and Roy Morgan poll on federal voting intention is that the two big parties are stuck around where they were 14 months ago at the federal election, in both primary and TPP vote. The polls report a small rise in both parties’ primary vote but this is probably an artefact of sampling method, because only larger parties are specifically measured. The TPP results slightly favour the Coalition, but anyone who knows even a little statistics would say the parties have been around 50:50 since the election. Both are reported (with a link to the Morgan poll) on William Bowe’s Poll Bludger.

In an uncharacteristically messy presentation, Bowe reports on a Newspoll which reports on voters’ assessment of their premiers and of the prime minister, by state. All premiers get positive approval ratings, with the WA and Tasmania premiers on top, while the Victorian premier has slipped to be level with his NSW counterpart, and the Queensland premier is further behind.  Morrison enjoys positive approval in all states surveyed – strongest in Queensland and weakest in Tasmania, but his approval has slipped in most states.

To the extent that we can infer much from polls where there is a small sample in each state, it appears that people are making separate assessments of their state premier and of the PM – there is no evidence of a spillover of party loyalty – and that people give their premiers a high approval if they have successfully gotten rid of the virus in their states.

Essential – a break from coronavirus

For the first time in many months the weekly Essential Report has no questions on Covid-19.

It starts with questions about our knowledge of history. What do we know about indigenous Australians and their right to vote and about those Pacific Islanders who were kidnapped and enslaved to work in Queensland? We don’t do better than a “pass” mark on these points of history: even Queenslanders don’t do much better than the rest of us on their knowledge of Australian slavery.

There is a question about whether we believe indigenous Australians are more likely to be harassed by the police than others, with clear and predictable partisan differences, and whether we think the Black Lives Matter protesters spread the virus (42 per cent of us think they did, which doesn’t align with public health advice).

There is a set of questions about whether we think various tradespeople and professionals are paid enough. Most of us (54 per cent) think nurses are underpaid, but fewer than 50 per cent of us believe teachers are underpaid. There are unsurprising gender and partisan differences – men don’t think teachers are underpaid – and 6 per cent of Coalition voters believe bankers are underpaid!

There is also a set of questions on gender equality. A clear majority of us believe that equal pay for equal work should be enshrined in legislation. We are somewhat confused however: 71 percent of us believe “Although there has been significant progress on gender equality there is still a long way to go”; while 47 per cent of us believe “gender equality, meaning that men and women are equal, has come far enough already”, implying that 18 per cent of us are comfortable holding contradictory beliefs.  On all questions there are predictable gender and partisan differences.

Finally there are questions on whether we play musical instruments. Two thirds of us never play anything: of those who do pianos and guitars are the preferred instruments.

Eden-Monaro by-election – two bob each way

William Bowe’s Poll Bludger reports on an internal National Party poll, using a small sample, showing a surge in that party’s vote sufficient to get the Coalition over the line in the Eden-Monaro by-election.

He also provides a link to a uComms poll, pointing to a 52:48 TPP victory for Labor.  The sample is small – 643 – but what stands out is an extraordinary gender difference in Labor’s primary vote: female 45.5 per cent, male 30.5 per cent.  That difference is too large to be explained away by sampling error.  Also, in spite of the experience of the bushfires in this electorate, the poll shows only a weak Green vote.

How we adjusted to Covid-19 restrictions

The Australian Institute of Family Studies has published a report of a survey Life during Covid-19, on how people adjusted to various restrictions. Its survey period was mainly over May, when restrictions were only just starting to ease. Its strongest finding is that the proportion of people always working from home rose from 7 per cent to 60 per cent.

Elections

Poland – the next round may be more ideological

The election for Poland’s president last Saturday failed to result in a majority for any of the four candidates, meaning a runoff election between the two top candidates will be necessary.

Incumbent Andrzej Duda – independent but supportive of the country’s right-wing PiS (Law and Justice) Party won 44 per cent of the vote. He was followed by Rafal Trzaskowski –mayor of Warsaw and from the centre-right Civic Platform – with 20 per cent of the vote. An independent candidate, whose supporters are likely to support Trzaskowski in the final ballot, won 14 per cent of the vote, but a far-right candidate, whose supporters may go for Duda, won 7 percent of the vote. So it appears the odds favour Duda being re-elected.  The coronavirus did not seem to discourage people from voting – turnout was 64 per cent.

Alessio Dell’Amma and Alice Tidey, writing in Euronews, analyse the ideological aspects of the election.  Duda’s Law and Justice Party stands for “family, religion and patriotism”, while Trzaskowski’s party is more aligned with European secularist values. Watch out for the runoff election.

Poland’s president has some powers not normally enjoyed by heads-of-state. Poland’s president, like the US President, has the right to veto any law passed by parliament.

Iceland – a vote for stability

Iceland held its presidential election last Saturday.  The office is that of a constitutional head of state – largely symbolic but with certain functions in dealing with parliament. Nevertheless it was contested. Incumbent President Guðni Jóhannesson was challenged by businessperson Guðmundur Franklín Jónsson, a former Wall street broker and strong supporter of Donald Trump.  Jóhannesson was re-elected with 92 per cent of the vote, on a 67 per cent turnout.  Neither candidate was aligned with any of Iceland’s numerous political parties.

Other Australian public policy

Our updated defence policy: don’t mention China

On Wednesday the Department of Defence released two documents that update the 2016 Defence White Paper. The “Defence Strategic Update” notes that countries in the region have modernised their military capability and are expanding their cyber capabilities. The rules-based global order is being undermined, and major power competition has intensified. (We wonder what countries they are referring to?) It reports that “the prospect of high-intensity conflict in the Indo-Pacific, while still unlikely, is less remote than in the past.”  It acknowledges the influence of the pandemic: “Some countries are using the situation to seek greater influence, while countries that were expected to become more prosperous and stable may experience economic hardship and instability”.  Climate change gets only one short mention.

That’s by way of background. More importantly it notes a policy shift:

The Government has decided that under this new framework, defence planning will focus on our immediate region: ranging from the north-eastern Indian Ocean, through maritime and mainland South East Asia to Papua New Guinea and the South West Pacific.

Note that there’s no mention of the Middle East. Our days of joining in US operations in that region may be over, for now, but in any case the US seems to have lost its appetite for military involvement in the region. That’s why the government can stress that Australia will “continue deepening our alliance with the United States”, while committing to a program of increased defence self-reliance, involving a commitment to spend $270 million on “new and upgraded Defence capabilities, including more potent and longer-range combat systems”.

Former defence Department Secretary Paul Barratt, writing in Inside Story, believes that the report has been too influenced by the Coalition’s constrained world view – a view  that sees defence purely through the lens of the US-Australia relationship – Australia’s soft-power gap.

We need to recognise that soft power — the ability to persuade rather than coerce — is an important part of our armoury, and accordingly, we need to strike a better balance between it and our hard (military) power by dramatically strengthening our diplomatic capabilities, including our representation in foreign capitals.

The exercise of soft power, he stresses, rests on our people building deep cultural and linguistic understanding – an understanding nurtured and developed in our universities’ much maligned humanities faculties.

Yelling at China doesn’t advance Australia’s interests

Allan Behm, former career diplomat and former chief of staff for Greg Combet, has an article  Managing Australia’s diplomatic relationship with China published on the Australia Institute website. He describes the relationship as “strident”, in which an “over-investment in emotion masks an under-investment in thinking”.

His essay analyses the stance taken by Foreign Minister Marise Payne, a stance echoing the muscular line coming from US Secretary of State Michael Pompeo, rather than the considered advice of professional diplomats and security analysts in our public service.  He goes on to provide an overview of university research centres and other bodies specialising in our relationship with China, but concludes that we suffer a poverty of China expertise.

Behm also gets a few minutes in Geraldine Doogue’s “A foreign affair” on Saturday Extra. China may be behaving as a bully, but there are cleverer ways of dealing with bullies than resorting to strident bloviation.

Vale Owen Harries

Michael Fullilove, Executive Director of the Lowy Institute for International Policy, has a short obituary in Theinterpreter to Owen Harries, founding editor of The National Interest and adviser to Prime Minister Malcolm Fraser. Harries was a foreign policy realist, whose thinking always revealed “self-control, discrimination and understatement”. His departure depletes the small ranks of articulate conservatives.

Life of a High Court associate: bonded servitude

We may ask why it has taken so long for the allegations that Dyson Heydon sexually harassed six High Court associates to emerge.

Writing in the Canberra Times – The risks and rewards of being a High Court Associate –Andrew Leigh provides an insight into the great power distance between associates and High Court judges. He was an associate himself to Michael Kirby, who treated him with “kindness and respect”. But not all associates have such good fortune: it’s a situation open to abuse of power by an unscrupulous judge.

Like a bonded temporary migrant whose visa conditions depend on keeping their employer happy, the career of a judge’s associate can be shaped by how their judge decides to treat them. Keep on good terms, and the judge will be happy to write you a reference letter for overseas study, work at a law firm, or becoming a barrister. But not having a reference would raise major questions in the eyes of future employers.

US politics

Is Trump a fascist?

When there are so many rich adjectives in the English language, it’s lazy to use the all-purpose insult “fascist” to describe right-wing, authoritarian, mendacious, narcissistic creeps like Donald Trump.  But is he a “fascist”?

On Phillip Adams’ Late Night Live, Sarah Churchwell of the University of East Anglia discusses the origins and characteristics of fascism. Fascism was well-established a long time before it arose in Germany or Italy. She describes fascism not so much in terms of an ideology – although racism and ultra-nationalism are common elements – as in terms of actions. It’s the nationalism that gives fascism its distinct national characteristics: when fascism comes to your country “it will be wrapped in the flag”. Her assessment of Trump comes towards the end of her 20-minute session.

Churchwell’s article in the New York Review of Books American Fascism: it has happened here takes us through the confronting history of American fascism, particularly its manifestation in the 1930s, revealing among other things that Hitler modelled his laws against the Jews on America’s race laws (although he thought Americans had gone too far), and reminding us that American fascism, besides being wrapped in the stars and stripes, also carried the Christian cross, and not just in “fundamentalist” religions but also in branches of American Catholicism.

Is Trump a stayer?

Donald Trump may lack the mechanisms that have allowed Vladimir Putin and Xi Jinping to become a lifelong Czar and Emperor respectively, but Robert Reich is able to list Trump’s 2020 election strategy in 25 steps, all designed to keep himself in office.

Public ideas

How great powers fall apart

Andrei Amalrik was a Soviet dissident, who, before his death in 1980, and while the Soviet Union was still seemingly strong, foretold its demise. He wasn’t the only intellectual to predict its collapse, but unlike intellectuals on the right who were obsessed with the weaknesses of communism, Amalrik’s prophecy was through a general theory of state collapse.

Charles King of Georgetown University, writing in Foreign Affairs – How a great power falls apart: decline is invisible from the inside – outlines Amalrik’s theory of how seemingly stable powers find it so hard to navigate between managing and resisting change:

He was concerned with how a great power handles multiple internal crises—the faltering of the institutions of domestic order, the craftiness of unmoored and venal politicians, the first tremors of systemic illegitimacy. He wanted to understand the dark logic of social dissolution and how discrete political choices sum up to apocalyptic outcomes.

How do states manage the tension between those portions of society most threatened by change and those who want to hasten change?  Governments may assert that they are managing this tension with an agenda for reform and change, but in reality governments, like other institutions, are mainly concerned about their own survival, and are oblivious to their own fragility. Amalrik warned that “great powers’ proclivity for self-delusion and self-isolation puts them at a particular disadvantage. They set themselves apart from the world, learning little from the accumulated stock of human experience.”

Keynes’ vision for our times – how much did he get right?

On the ABC’s Late Night Live Phillip Adams chats with John Quiggin about Keynes’s vision of the world in 2030. Keynes got a great deal right: for instance he realised that leisure time, once enjoyed only by the rich, could come to be enjoyed by all. But he did not foresee the rise of neoliberalism as an applied political philosophy, particularly in English-speaking countries, and its brutal suppression of the poorest. Nevertheless Quiggin is optimistic about Keynes’s vision for a world without material scarcity, but it will take many decades longer to achieve than Keynes envisaged.

Why do politicians believe they can never say sorry?

Whenever a government changes course, or abandons a failing program, journalists take delight in levelling the charge of committing a “backflip”, as if there is something unconscionably wrong in admitting failure. And no matter how badly governments screw things up, an apology is always out of the question.

Richard Holden of  UNSW has a compelling explanation for this established behaviour in a piece – Politics means never having to say you’re sorry – published on Open Forum. It has to do with our limited capacity to judge politicians’ competence, but we are able to apply a simple rule that incompetent people tend to make more mistakes (disregarding the Confucian aphorism that the person who never made a mistake never made anything).

Holden uses the context of Victoria’s virus outbreak, where we all know that the Victorian Government has screwed up, and that Berejiklian has tended to dig herself into a hard position about keeping the Victoria-NSW border open. As a contribution to fill this gap, The Age journalist Jon Faine has drafted an an apology from Victoria to the rest of Australia.  Who knows what in what state the next surge will occur?

The enchanting eloquence of politics

Hamish Thompson, keeper of the website Polifiller, has announced the Political Jargon of the Year Awards for 2020.  Although the site is British, the winning clichés have equivalents in Australian English: in fact we don’t think Thompson has given adequate credit to whoever has been drafting Mathias Cormann’s speaking notes: we’re going to miss him.

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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