Saturday’s good reading and listening for the weekend

What people in other forums are saying about public policy


The US election

For newcomers it’s hard to find a parking place in Washington

Beware of Trumps to come

“Unless Biden fights big money, he could pave the way for someone even worse than Trump”.

That’s how George Monbiot introduces his article Monster Makers – a warning that unless Biden confronts neoliberalism, which has so badly damaged his country, he will simply be paving the way for a monster worse than Trump.

Neoliberalism disenchants politics by sucking the power out of people’s votes. When governments abandon their ambition to change social outcomes or deliver social justice, politics become irrelevant to people’s lives. It is perceived as the chatter of a remote elite. Disenchantment becomes disempowerment.

Years of public policy based on neoliberalism, and on Democrats’ weakness in confronting the moneyed elites, created the conditions for Trump to storm into the resulting political vacuum.

His success was a product of the fake unity and fake healing of elite political agreement. When mainstream politics offered only humiliation and frustration, people turned to a virulent, demagogic anti-politics.

Monbiot calls for America’s left to assert itself against those who have appropriated the spoils of economic growth. But he is pessimistic, seeing Biden’s presidency as “an interregnum between something terrible and something much worse”.

Why do so many Americans vote against their class interests?

Perhaps those Trump voters in the “red” states – the people who were left behind by globalisation and technology – were voting in line with their class interests when they elected Trump four years ago, and again turned out to support him this year.

Liberals may understand the material needs of the “white” working class, but they don’t understand their emotional needs. They cannot empathise with their situation.  But Trump comes across as one who does understand their needs, and who respects their culture.

In a Jolly Swagman podcast Joe Walker interviews University of California sociologist Arlie Hochschild, who over five years came to know and befriend a community of Tea Party and Trump supporters in Louisiana –  Despair And Indignation Among The American White Working Class. They feel they have paid their way in society, but the benefits have accrued to others. Even though they are heavily dependent on government transfers, they support “small government” parties because they don’t see governments as attending to their needs. (71 minutes)

Hochschild is author of  Strangers in their own land: anger and mourning on the American right.


State budgets: compensating for Commonwealth neglect

Tax reform is possible: even a Coalition Government can do it if it wants to

The New South Wales budget contained a significant tax reform, one recommended by the Henry Review ten years ago.  Those who purchase property will have the opportunity to axe stamp duty at the point of purchase and to choose an annual property charge instead. Upfront stamp duties have been the time-honoured practice in all other states except for the ACT. It’s a reform that will benefit first home buyers, and those who change residences for family or work reasons.

Crispin Hull sings the praises of the Berejiklian Government’s reform: Fairer tax is possible, NSW shows. He goes beyond lauding this specific reform, arguing that there are many other tax reforms waiting to be implemented (death and gift taxes, a carbon tax, road user taxes) – and other taxes to be simplified or abolished (payroll tax for example).

The Berejiklian Government has achieved a significant tax reform without bringing the crowds on to the streets. Surely other governments can do tax reform.

Victoria provides a stimulus model: pity the Commonwealth doesn’t emulate it

The Victorian budget has a few tax cuts, (some payroll tax relief, and a 10 per cent tax credit for small firms that expand their payroll), but unlike the Commonwealth which sees government spending in terms of handouts, the Victorian government’s emphasis is on public investment. There are investments in physical infrastructure, particularly public housing and urban rail projects, in renewable energy, in early childhood, school and TAFE education, and in health care.

Danielle Wood and Tom Crowley of the Grattan Institute  summarise the Government’s budget as “targeting some of the most effective stimulus measures – measures which most economists support but the federal budget ignored” – Lifters not leaners: Victoria steps in where the federal budget did not.

The Australia Institute has drawn attention to the Victorian Government’s plan to make the state a renewable energy powerhouse – an initiative in line with the renewable energy initiatives of the New South Wales Government.  “We are seeing a growing pattern of state government leadership in the absence of a national climate and energy plan.”


The Coalition’s war on renewable energy

Missed opportunities, but it’s not too late

On Late Night Live Phillip Adams interviews Tim Flannery on solving the climate emergency. In his usual way he puts the science and politics of climate change into plain language.

He draws our attention to the way in 2009 the Greens thwarted our opportunity to have a climate change policy, by siding with Abbott to defeat Rudd’s Carbon Pollution Reduction Scheme – a modest scheme that would have provided the basis for a more enduring set of policies taking advantage of our tremendous renewable energy resources. Instead we are left with an economy based on dying industries – oil and gas.

The situation is urgent, but it’s not too late. He points to Germany’s Coal Compromise as a model for Australia – a deal that ensured that as Germany closed coal mines there were guarantees that no jobs would be lost, and where possible those jobs would make use of miners’ existing skills.

Flannery’s latest book is The Climate Cure: Solving the Climate Emergency in the Era of COVID-19.

The coal industry should fund a natural disaster levy

The Australia Institute outlines a plan for a climate levy on fossil fuel exports, to provide a fund to pay for the damage inflicted by climate-induced disasters such as last summer’s fires, which cost the economy $50 million.

Their proposal at $1 per tonne of embodied carbon is modest. Of course it has little hope of getting up in the present political environment, but it does help to remind us that the use of coal has costs that are not covered in its market price – negative externalities in the language of economists. It’s a reminder that a price on carbon, which its opponents conveniently call a “tax”, is actually a payment for its full cost of production, and the failure of our government to impose a price on carbon is actually a massive subsidy to that industry. Why should we not make the coal industry pay for the economic damage to which it contributes? The answer to that question should be a straightforward issue in accounting, rather than one involving “left/right” ideology, or identity politics, as Taylor and Morrison would like to frame it.

Morrison and Taylor have to deal with a new administration in Washington

Biden’s pre-election talk about climate change as an existential threat and “the number one issue facing humanity” could be seen as typical political rhetoric in a message to his political base, but an article in Foreign AffairsA climate-first foreign policy – stresses the sincerity of this commitment, noting his appointment of former Secretary of State, John Kerry, as his cabinet-level envoy.

The authors point out that Biden could follow Europe’s lead in using the threats of countervailing duties against countries without carbon-reduction plans to press China to drop its support for coal plants – a possibility that will bring no joy to our “carbon club” and its supporters in the Coalition.


Other economics

Australia is on track to closing the gender pay gap – in 2050

A report by the Workforce Gender Equality Agency – a Commonwealth statutory agency charged with promoting and improving gender equality in workplaces – finds that over 2019-20 the gender pay gap dropped by 0.7 percentage points, to 20.1 per cent. (At that rate it will be 2050 before the gap is closed.)

Unfortunately the media has given the report superficial coverage, without explaining what the pay gap is.

It is different from gaps in men’s and women’s pay when they are performing the same work (covered by legal equal pay requirements). Rather it is “the difference between the average earnings of women and men, expressed as a percentage of men’s earnings. It is the difference between the pay of women and men, on average, across organisations, industries and the workforce as a whole”.  The gap therefore is influenced by factors such as women occupying more junior jobs than men in many (most) industries, or working shorter hours than men.  The WGEA points out that it is an indicator of women’s overall position in the workforce.

WGEA’s press release – New WGEA data shows employer action on gender equality has stalled – covers some of the key points, but in a disjointed form. A more rigorous presentation of findings, with disaggregation by industry, is in the agency’s key results document. Unsurprisingly the greatest gap is found in the financial sector, and the lowest gaps are in industries dominated by the public sector.

Among its positive findings are a strong increase in employer action on family and domestic violence and more availability of flexible work arrangements for men and women.

Australia remains a safe country for old men

A quick read of Treasury’s Retirement Income Review  may leave one with the impression that all is basically well with our retirement income arrangements, with no more than a few policy tweaks needed to fix pockets of inequity.

The inequities it exposes are significant however, but its authors have done little to draw them to our attention. It has a chapter devoted to equity, showing that superannuation tax concessions, particularly the tax-free treatment of superannuation earnings in the retirement phase, are highly regressive. But it fails to point out the gross inequity in concessions on superannuation earnings – the fact that a retired couple enjoying a $200 000 annual income from $4 million in assets, with a little simple planning, would pay no tax, while a  working couple would pay $50 000 a year in income tax.

The report points out that “By 2047, the [budgetary] cost of superannuation tax concessions is projected to be greater than the cost of the Age Pension as a percentage of GDP, and that most of this increase will result from superannuation earnings tax concessions”, but it makes no suggestion that these concessions need to be withdrawn.

Conveniently for the financial sector, the study does not consider the effect of fees on superannuation incomes (other than a passing mention on Page 202).

The report is strongly in favour of maintaining the superannuation guarantee at its current 9.5 per cent rate, rather than lifting it to the already-legislated 12 per cent. Their argument is convincing, but that’s only because it is built around a hypothetical “median income earner” who remains in employment over his or her working life.  A male public servant employed by Treasury perhaps? Otherwise surely an endangered species?

Writing in The Guardian Amy Remeikis does what the report fails to do – she brings to our attention some of the main inequities that are buried in the report’s 650 pages, particularly the gross difference in fortunes between those who do and do not own their homes: Bet your house on it: three things to know from Australia’s retirement income review.

In view of two long-term trends – people’s increasing life expectancy and the disappearance of lifetime full-time jobs – there should be a thorough public engagement around policies to spread lifetime income. Such a process would involve interactive on-line models into which people could vary assumptions, rather than accepting the assumptions given from on-high, and could consider the effects of different employment patterns for example. But it’s clear from the way the government has gone about this exercise that it has no intention to address these difficult issues.

Without redistribution, pushing more money into the economy is futile

Writing in The Conversation Mike Keating points out that stimulating the economy through low interest rates and tax cuts won’t work: From here on our recovery will need more than fiscal policy, it’ll need redistribution. For various reasons, which he outlines, funds made available through such measures are unlikely to be spent on either consumption or investment. Fiscal policy should be directed at provision of public goods, particularly health care and education, and at redistributing income towards those who can make use of it to improve their lot and to keep the economy functioning.

The stock market has little relationship with the real economy

The price of shares as measured by the S&P/ASX 200 index hit an all-time high in February this year.  The index dropped sharply in March, but since then has been clawing its way back towards its high point.

What has been driving this rise in share prices, over a short term when Covid-19 has been tearing through the economy, and over a longer term as productivity, per-capita GDP and wages have all been showing unimpressive performance?

Robert Reich has a five-minute video describing how the stock market works – The stock market is not the economy.  Over the period 1952 to 1988, almost all the gain in US stock market prices resulted from economic growth. Over that period we could say that within the limits of economic indicators (GDP in particular) share prices tracked the real economy. But from 1989 to 2017, more than half the gain in stock prices comes from suppression of wages, and only a quarter from economic growth.

Reich’s explanation draws on US experience. A similar analysis of Australian share prices may reveal less stark figures, but the same dynamics are in play here: the benefits of economic growth are accruing disproportionately to those holding financial assets, at the expense of wage and salary earners.


Australia in the world

Australia in a world no longer run by America – back to multilateralism

Delivering a lecture at the ANU Security College Foreign Affairs Secretary Frances Adamson spoke about Australia’s security landscape, and what needs to be done to promote our national interest.

A world in which China is displacing the US as the world’s largest economy, and in which neither country will have unbridled hegemonic power, is different to the postwar world that has shaped our approaches to security and diplomacy.

She stressed the need for strengthening international institutions, and pointed out that although China is powerful economically and militarily in its own right, it is still in its interests to support institutions that sustain a peaceful and cooperative world order.  It will want “to lead, rather than simply join international institutions”.

As an experienced public servant she has carefully avoided upsetting her political bosses, but her speech can be read as a re-assertion of Australia’s interests in multilateralism – a stance Australia has taken over most of the last seventy years, but which recent Coalition governments have tended to dismiss in favour of bilateral relations.

Australia through Chinese eyes

One basic rule in any negotiation is that in preparing our approach we should try to see the situation from the perspective of the other party. That doesn’t mean we should agree with that other party, but we should try to understand where they are coming from. In fact the stronger the disagreement the more important it is to gain that perspective.

Writing on the ABC website Stan Grant has done what Scott Morrison and Marise Payne didn’t do before unnecessarily provoking China about the origins of Covid-19. He has put together an account of what Australia’s gauche attempts at diplomacy would look like from China’s perspective: Australia’s trade clash with China is a lesson in what Beijing’s power really means. Whether we like it or not we have to respect China’s position in the world.

The art of disagreeing while maintaining respect for the other side is the essence of diplomacy.

The SAS – our bearded and secretive soldiers

Ian McPhedran is an experienced war correspondent, and author of the book The Amazing SAS: the inside story of Australia’s special forces.  On the ABC’s Saturday Extra he describes the developments that led to the disgraceful events described in the Afghanistan Inquiry Report. He describes how some SAS sergeants and corporals became bullying, killing demi-gods.  The SAS operates in tiny and cohesive units (5-6 soldiers directed by NCOs in the field), almost entirely separated from other soldiers (the only bearded men in the army). The SAS developed as a highly skilled and respected counter-terrorism and reconnaissance operation. But through a series of bad decisions at the top, in Afghanistan it was deployed in a “search and destroy” role – a role usually performed by infantry.  Ian McPhedran on the SAS.  (13 minutes)

McPhedran understands that because SAS units operated with autonomy, with little involvement by officers, it is unsurprising that incidents of atrocious behaviour did not come to the attention of senior officers. He does not advocate disbanding the SAS, but he does believe its culture can be changed.

James Wolfensohn’s death

To its credit, The Australian seems to be the only Australian paper to note the death of James Wolfensohn, an Australian who, after his success as an Olympic sportsperson, went on to become head of the World Bank – a position he achieved without the assistance of a government-funded VIP airplane.  (He was nominated by then-president Bill Clinton.) He helped shift the focus of the World Bank towards being concerned about poverty and corruption.

The Australian’s obituary is behind its paywall. The ABC has a short obituary pointing out his proficiency as a cellist as well as his other achievements.

Wolfensohn’s death has been reported by many world media – an example is this obituary by Deutsche Welle. But here his life and achievements have commanded far less attention from our media than the death of an Argentinian sportsperson. On the ABC Breakfast website is a short (9 minute) account of Maradona’s importance to Argentina, explaining in terms of political economy why his death has prompted the government to announce three days of national mourning.


World safety

Where children thrive, and where they don’t

Singapore tops the list among countries in Save The Children’s ranking of child-friendly countries, followed by Slovenia in second place and then the Nordic countries. Their index is a weighted score based on indicators related to child health, education, labor participation, early marriage, childbirth and violence.  We come in at #16 in their list of 180 countries.   The USA comes in at #43, just behind China and Russia. All of the 20 lowest-scoring countries are in Africa.

Terrorism – on the wane?

In 2019 worldwide deaths from terrorism fell for the fifth consecutive year, to 14 000, having hit a peak of 33 000 in 2014.  That’s the main finding of the Global Terrorism Index 2020, published by the Institute for Economics and Peace. Afghanistan continues to account for a large proportion (40 per cent) of deaths.

It’s not good news all around. In North America, Western Europe and in our region far-right political terrorism has been growing.  The attack in Christchurch by an Australian fanatic accounts for much of last year’s increase in far-right terrorism, but there is also an underlying trend of increasing terrorism attributable to the far right.  It appears that political violence may be becoming more publicly acceptable, particularly in strongly polarised societies.

The report lists the following as socio-economic factors associated with terrorism:

  • high levels of group grievances and a weak rule of law
  • in more “developed” countries, social disenfranchisement and exclusion
  • in other countries, religious or ethnic ruptures and corruption.

(It’s notable that they separate out “far-right” terrorism from the terrorism of groups such as Boko Haram, IS, Al-Shabaab and the Taliban, but surely there is little that distinguishes these groups from groups normally classified as “far-right”. By no stretch of the imagination could these groups, influenced by an authoritarian and misogynistic fringe cult of Islam, be classified as “left”.)

Oxfam’s guide to Christmas shopping

When we buy clothing how aware are we of the pay and conditions of those who have made it?

Oxfam is helping us in that job, with a report Shopping for a bargain: how the purchasing practices of clothing brands in Australia impact the women who make our clothes. In conjunction with researchers from Monash University and the University of Liberal Arts in Bangladesh they have investigated the purchasing practices of ten fashion retailers operating in Australia, and have found a wide range of practices. Some retailers score well, some badly; some retailers give themselves much higher ratings than justified by Oxfam’s research; and three of the retailers chose not to participate in the research.

Practices deleterious to the conditions of clothing workers identified by Oxfam include aggressive price negotiations, and ordering practices that disrupt the lives of those workers. Last-minute cancellations result in layoffs affecting women already living in poverty, and last-minute demands for extra supply can subject those same women to gruelling long hours.

Go to Part 5 (Page 17) for Oxfam’s findings, including lists of the brands used by retailers. For example the Just Group (one of the poorest performers by Oxfam’s ratings), operates under many different brands – Just Jeans, Jay Jays, Jacqui E, Peter Alexander, Portmans and Dotti.


The pandemic’s progress

Australia – can’t we learn from Victoria’s experience with hotel quarantine?

We were going to discontinue this graph of local transmission, but then came South Australia’s outbreak.

Their response has been effective – none of the indecisive shilly-shallying that allowed Victoria’s outbreak to become a disaster – but how did they let it happen in the first place? Why did they use a CBD hotel for quarantine? Why did they use private security firms with poorly-paid employees who must work in multiple jobs? Why were those found to have Covid-19 not shifted?

For months epidemiologists have been calling for more effective quarantine arrangements in appropriate facilities. That would be expensive, but nothing like the cost of dealing with quarantine outbreaks which may pop up at any time, making for caution in business and personal planning. That caution – business projects put on hold, holidays not planned, people’s irrational fear of exposing themselves to the virus when doing normal business – does not reveal itself as easily as the cost of a business closure, but it is a real cost. It’s an opportunity cost in economists’ terms, and is rarely considered by government decisionmakers who believe that it’s OK to allow a bit of virus to be circulating, and who criticise state governments for trying to eradicate the virus.

On the graph we have kept Victoria on the legend, but note that it does not appear over this four-week period, qualifying for the working definition of “effective elimination”. New South Wales might achieve the same by this time next week.

Other countries

Here’s the regular graph, with the Y axis once again extended, squashing Australia’s curve to look like no more than a couple of minor blips compared with the experiences of USA and Europe.

There are plenty of media stories coming out of America – we have picked this one from the Washington Post – and we are yet to see the inevitable Thanksgiving Day surge. (Thanksgiving was on Thursday.) The Atlantic has an article A tragic beginning to the holiday season from their Covid Tracking Project, showing Covid-related data. Its map of daily cases per million people (the same indicator as we use in the graph)  shows extraordinarily high rates in the Midwest, where most states show rates above 1000. North Dakota holds the record at 1546 daily cases per million.

Over the last week there has been a turnaround in Europe, where most countries are coming off their highs as governments re-impose restrictions on wearied populations. The only countries doing reasonably well (with fewer than 100 new cases a day per million) are Ireland and Finland, both of which enjoy a degree of geographic isolation.

On the ABC’s Coronacast Norman Swan draws our attention to evidence that the virus may have a seasonal pattern with a natural peak followed by a tapering off, possibly to do with the virus’s response to ambient temperature, quite independent of human behaviour.

Are lockdowns and facemasks assaults on our civil liberties?

Nick Gruen has an article on Club Troppo –  How culture war is destroying public reason: COVID edition – berating those who call anti-Covid measures assaults on our civil liberties, and those who take a utilitarian view that the cost of suppressing (or eliminating) Covid-19 exceed the costs of letting it run without restriction. (The two arguments are often made by the same people, and they merge into a general criticism of state-imposed lockdowns, mask requirements and so on.)

His article pragmatically stresses that if we are to intervene to control Covid-19, we should do it properly: our measures to date seem to be inconsistent with any single policy objective.

The responses to his article are worth a glance, for they involve a lively debate between Nicholas Gruen and Paul Fritjers – basically an argument between pragmatism and utilitarianism. It’s a dispute that arises in several domains of public policy, and will almost certainly remain unresolved until some time in the future when vaccinated Australians put Covid-19 behind them.

Sources

Sources of generally reliable information and analysis about Covid-19 are on a separate web page. This week Norman Swan’s Coronacast is about the performance of vaccine candidates, and the crucial question of whether pizzas can be vectors of Covid-19. The Financial Times reports on a global survey of 16- to 30-year old people, which reveals a growing resentment against older people (who make public policy) as unemployment and restrictions bite.


Polls and surveys

Queensland’s post-election poll: pre-poll voting is here to stay

William Bowe’s Poll Bludger directs us to a post-election survey conducted by JWS research – 2020 Queensland post-election poll.

It confirms the generally-held belief that while Labor voters prioritised the government’s dealing with Covid-19 and health care, LNP voters prioritised “the economy” and jobs, and even less surprisingly it confirms that Greens voters prioritised the environment and climate change.  It also confirms the general belief that younger people tend to be more reliant on social media for political news than older voters. LNP voters were particularly reliant on free-to-air commercial TV.

As we already know, only 27 per cent pf voters cast their vote on election day. But Covid-19 was not a major issue in driving people to early voting: only 25 per cent of those who didn’t vote on election day nominated Covid-19 and social distancing as reasons for their decision. Rather, early voting was about convenience. It seems that early voting is here to stay, which means we may be losing democracy sausages and Anglican Ladies’ cake stalls.

When the election was called only 22 per cent of voters had already made their minds up about whom to vote for.  That means 78 per cent made their minds up during the campaign, at the same time as voting was spread out over a long period. Party strategists are going to have to deal with some complex timing issues in future elections.

Were the US elections fair?

The Pew Research Center finds sharp divisions between Biden and Trump voters on  questions about the election process and the accuracy of the vote count.  Only 21 per cent of Trump supporters have a positive view of the conduct of the elections, compared with 94 per cent of Biden voters who hold a positive view. And a clear majority of voters rate Biden’s post-election behaviour ahead if Trump’s.

Pew does not speculate on the reasons for these differences in perception of the voting process. In any contest there is a bias for the winners to have a more positive view of the process than the losers. But one particular feature of this election was that Trump supporters were more likely to vote on the day, while Biden supporters were more likely to vote early.  Because most states’ counting methods prioritised votes cast on the day, and because votes from some big urban areas were slow to be counted, figures generated until quite late in the evening of election day pointed to a Trump victory.

A counting process that produces clear signs of a win for one side, only to be reversed in later counts, is bound to lead to much more disappointment than one which is clearer from the start.  A little psychology applied to official vote counting may be in order.


Gender roles

A lollipop man in action

See what “family values” mean to one of our relatives.


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

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Ian McAuley is a retired lecturer in public finance at the University of Canberra and a Fellow of the Centre for Policy Development.

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