Category: Articles

Abbott Lines Up With Left-Wing Union On Protectionism

The Coalition’s position on anti-dumping laws is part of a worrying trend.
Rarely does the federal opposition line up with the Australian Workers’ Union on economic policy but that’s where they are on free trade. Unfortunately, the nominally market-orientated Coalition is playing fast and loose with one of its core philosophies.
This matters because as the world faces a second round of financial crises, there’s been a surge in protectionism, and it’s a fair bet Tony Abbott will be the next prime minister.
In his ”forgotten families” speech in May, the Opposition Leader made tougher anti-dumping laws a centrepiece of his economic policy.
These laws purport to prevent foreign imports being ”dumped” so cheaply in domestic markets they threaten the existence of Australian companies. The theory suggests that the foreigners will jack up prices once local companies have gone out of business.
But it’s a theory that everybody from the Productivity Commission to Nobel-winning anti-free market economist Joseph Stiglitz thinks is nonsense. Pursuing that pricing strategy would be expensive and risky. It’s hard to find an example of any company ever having done so successfully.
Anti-dumping laws are pure protectionism. They benefit a few companies at the expense of consumers. No surprise that the AWU has been campaigning to beef up anti-dumping laws for months. But a big surprise that a Liberal leader has been as well.
The government made some changes to the anti-dumping regime in June. The AWU was satisfied. The Coalition was not. Labor, they said, had ”thumbed its nose” at manufacturers. That makes the federal opposition less supportive of free trade in this case than the union movement and the government. It could be dismissed as an anomaly if it wasn’t so clearly part of a trend.
And it isn’t an argument between free-market Liberals and agrarian socialists in the National Party. Last month Liberal industry spokeswoman Sophie Mirabella said departments should buy equipment and clothing from local companies.
Doing so she came up against the Victorian government – a Coalition government. Victorian Police Minister Peter Ryan was sourcing fabric for police uniforms from a company that uses Chinese labour. Protect local jobs, or try to get the best deal for taxpayers on the competitive, international market? The federal opposition went with the former. Ryan – who is a National – went with the latter. It’s the old battle between major benefits for a few or minor benefits for all.
It goes on. The opposition has concerns about foreign investment in Australia. The bogey-man here is Chinese and Middle Eastern companies ”buying up” Australian farms. That practice is also known as ”investing”.
And investment is something you’d think a growing, capital-hungry country like Australia might embrace. Nevertheless, the Coalition has a working group to scrutinise whether it is in Australia’s national interest.
The Coalition is not alone when it wavers on free trade. The past few years of downturn has seen a resurgence in anti-trade sentiment and protectionism around the world. According to the British-based Centre for Economic Policy Research, the 20 countries in the G20 have enacted 155 trade restrictions or tariffs since November 2010.
Austerity has left politicians with a restricted set of tools to please domestic rent seekers and trade unions. When governments cannot spend, they regulate.
Protectionism is easy to sell. Who wouldn’t want the government to protect domestic jobs and industries? By contrast, the benefits of trade – cheaper goods and services for everybody and an expanding economy fuelled by engagement with the rest of the world – are more diffuse.
Yet every one of the new restrictions on trade damages economic growth and punishes consumers. Australia has largely avoided joining the wave of protectionism. That’s what makes the Coalition’s growing antipathy to free trade so concerning.
Tony Abbott has been right to oppose many proposed tax increases. But tax is only one side of the economic coin. You can’t have a strong economy without free trade. If the Coalition cannot confront this principle in opposition, it will definitely have to confront it in government.

Free Speech: Hicks Should Keep His Memoir Profits

David Hicks should be able to keep the profits from his memoir.
The law which confiscates literary proceeds of crime is a bad law.
It’s a bad law because it tends towards arbitrariness. It’s a bad law on free speech grounds.
And it’s a bad law because it is based not on any philosophy of crime and punishment, but merely on a feeling that it would be a bad thing if bad people became rich off their infamy.
Those observations have nothing to do with the rights and wrongs of the David Hicks case.
After all, the law was not originally conceived with convicted terrorists in mind.
Between 1976 and 1977 David Berkowitz killed at least six people in New York, signing off on the murders as “Son of Sam”. By the time Berkowitz was arrested, the case had gathered so much public interest the daily sales of the New York Post doubled.
It’s not unusual for the public to be fascinated by serial killers, but Berkowitz took advantage and got a $US75,000 book deal.
The revulsion about the book deal led to New York’s Son of Sam law, which prevented criminals making a profit off the back of their crime before all victims had been compensated.
Variations of this law were quickly replicated across 40 American states and Australia. Over the decades, they’ve largely dropped their link to victim compensation. Now they just tend to ban profit. Our federal Proceeds of Crime Act doesn’t even require a person be convicted of a crime, only that on the balances of probabilities they have done so.
According to one New York State senator at the time, a “sense of justice and decency” compelled the introduction of the original Son of Sam law.
But it’s hard to pin down the rationale for confiscating literary proceeds any more concretely than that.
There’s absolutely no question if a court convicts a bank robber they shouldn’t be able to keep the loot as a nest egg for when they get out of jail. In that case, the stolen money is a direct result of the crime.
By contrast, literary proceeds of crime aren’t really “proceeds of crime” at all. Trading off the notoriety you gain from robbing a bank is not the same as living large on the bank’s money once you get out of jail.
In fact it’s quite the opposite: writing a book is an entirely legal endeavour. In fact, it’s an admirable one. Any profits gained are gained honestly – writing a book is a lot of work. And if the book sells, it implies consumers have gained something from it. A profitable book is a net benefit to society, regardless of the history of the author.
No surprise: people like reading about the crooked lives of others.
When the Attorney General’s Department looked at the proceeds of crime law in the late 1990s, it sensibly pointed out confiscating literary profits provides no deterrent against committing crime in the first place. It would be a very farsighted criminal who broke the law in order to write a successful book about it decades later.
Instead the department argued a more convincing basis for the measure was unjust enrichment.
Yes, it seems somewhat unfair a criminal might get a heftier book deal than the victim of their crime perhaps would.
But that sense of unfairness is not a stable enough foundation on which to limit free speech.
It’s been claimed that in David Hicks’s case confiscating his commercial gains has nothing to do with free speech – while there is a human right to free speech there is no similar right to speak profitably.
That this argument has come from many conservatives is disappointing. Because the literary proceeds of crime laws are a neat example of the inextricably intertwined relationship between human rights and economic rights.
Speech requires finance. To pretend the former is unharmed if you ban the latter is nonsensical.
If a government was to ban a newspaper from making a profit but otherwise leave its material uncensored we would not hesitate to condemn it as a violation of freedom of expression.
There is no right to profit from speech – not all books or newspapers find markets and audiences – but without a right to try to profit, the liberty to speak is severely crippled. Writing, publishing and distributing is an entrepreneurial enterprise. We cannot detach the economic motive from speech.
No matter how you slice it, confiscation of the proceeds of someone’s memoirs is a restraint on free expression.
On The Drum in February, one of David Hicks’s legal advisors Ben Saul argued literary proceeds of crime restrictions should be extended to crimes against international law – that way the profits from John Howard’s memoirs would be similarly up for confiscation.
Saul’s trite idea obviously will never happen. But such reasoning encapsulates one big problem with laws such as these. Rather than contesting the usefulness or justice of the law, partisans wield them like a weapon against their opponents. Indeed, the Howard government amended the Proceeds of Crime Act in 2004 specifically to stop Hicks and Mamdouh Habib profiting from their stories.
Because in Australia this law has been rarely used and is largely untested – and many, many Australian criminals have written books – it is hard to avoid the impression the pursuit of Hicks’s profits is more about the man than the just application of the law.
That’s pretty much the definition of arbitrariness.
Ultimately, the David Hicks case suggests that the pursuit of the literary profits of convicted criminals comes down more to taste than justice.

‘Carbon Cops’ Destined To Join Mega-Regulators Club

The powers which the Gillard Government intends to give the Clean Energy Regulator are unquestionably illiberal.

The climate body will be able to enter and search workplaces and compel people to provide self-incriminating evidence – a clear breach of the basic right to silence.

Those powers are counter to the Western liberal legal tradition, which should provide protection against self-incrimination, and defend the sanctity of private property against state intrusion.

But, that said, the Clean Energy Regulator’s powers are not at all surprising. They’re not even unusual.

It’s a feature of Australia’s regulatory state that government regulators are granted extraordinary powers – often more substantial powers than the police hold.

The Australian Securities and Investments Commission can compel people to give evidence in private hearings, under oath, entirely separate from the court system.

ASIC uses its suite of coercive information-gathering powers around 26 times every single working day, a Senate committee hearing revealed last year. The standard rules of evidence and privilege against self-incrimination do not apply at ASIC hearings.

ASIC’s powers are still being bolstered. In 2010 they had their wire-tapping and phone records access powers increased.

Then there’s the Australian Building and Construction Commission (ABCC), which can bring anyone in for questioning, in secret, and force them to hand over documents, or report on private conversations.

In the Sydney Morning Herald last year, George Williams reported one person was pulled in front of the ABCC because they simply walked by a dispute between a union representative and a building manager.

Last week the ABCC admitted it had issued 203 summonses defectively: the same failure which last year led to the acquittal of Ark Tribe, a building worker who refused to give evidence to the commission.

The Australian Taxation Office has the capacity to ban people from leaving the country if they are in a dispute over tax owed. Paul Hogan learned this first hand. And the ATO can enter and search premises for documents without having requested those documents first.

The Australian Prudential Regulatory Authority and the Australian Competition and Consumer Commission also have substantial coercive powers. They round out Australia’s mega-regulators, a club the Gillard Government’s climate body is destined to join.

Unfortunately the illiberalism of all these powers is obscured by politics.

Conservatives suggest the ABCC’s powers are a necessary evil because they restrain union thugs. Progressives suggest the extraordinary coercive powers of bodies like ASIC are necessary because cartels and corporate fraud and insider trading are endemic.

That’s how the basic principles of the liberal rule of law gets chipped away: through an endless list of exceptions.

Partisans on each side can point to their opponent’s hypocrisies. Hopefully the union movement, which has been rightly vocal defending the rule of law against the ABCC, will be able to recognise the problems inherent in vesting yet another regulator with coercive powers.

After all, does anybody believe the Clean Energy Regulator won’t have its powers extended over time? Every regulator pesters Parliament to have its jurisdiction expanded, its funds increased, and its scope widened. This is the inexorable logic of the regulatory state.

Yes, the creeping thicket of regulation demands growing regulatory powers. If you’re going to impose a regulation you’ll want mechanisms to make sure the regulated comply.

But those powers are being steadily augmented to give independent regulatory agencies an increasing degree of unchecked power.

Typically the powers held by regulatory agencies lack oversight. Richard Gilbert, of the Rule of Law Institute of Australia, has pointed out these regulators are reluctant to disclose data on the use of their coercive powers. And without reliable data, Parliament and the public are unable to assess whether those powers are being used judiciously.

That’s a particular problem because the entire purpose of making a regulatory agency “independent” is to deliberately separate them from the traditional ministerial and parliamentary lines of responsibility. By definition, they lack accountability.

This causes a very real governance problem. Each of these agencies are little fiefdoms, with reputations they feel they need to defend, particular interests, ideological preferences, and obsessions.

This is no more evident than ASIC’s behaviour in recent years.

In one of the most celebrated recent cases, ASIC pursued the mining company Fortescue with such fervour the judges started questioning the regulator’s motives – because there’d been no suggestion anyone lost money out of Fortescue’s actions.

And ASIC’s attempt to have the activity of “rumourtage” (spreading false rumours for profit) penalised failed, after the only rumours ASIC could identify which had altered market outcomes turned out to have been, in retrospect, true.

ASIC seeks more power and influence. It’s an independent body, so it acts independently.

While it eagerly sought its new wiretapping abilities, in June ASIC admitted it had not even used them since they were granted late last year.

We can infer the need for those extra coercive powers may not have been as pressing as originally made out. But it must feel nice to have them on the shelf.

ABCC, ASIC, APRA, ATO, ACCC, and now the CER: it’s rarefied company which the Clean Energy Regulator joins.

No doubt the partisan fluffery will die down and the political roadshow will move on from this week’s debate about ‘carbon cops’.

But we will be left with just another mega-regulator, desperate to expand its domain, and gathering more and more powers.

News Of World: Sideshows And Political Opportunism

The News of the World phone hacking scandal has spiralled out in a dozen different directions.
No wonder. It’s fun to talk about Rupert Murdoch. And for the British Labour Party, it’s exciting to tie David Cameron to the News of the World.
But from a political economy perspective, it’s the role of the London Metropolitan Police in the hacking which should be the most concerning.
That’s because we expect politicians to be craven, and to coddle up to media proprietors. And we expect many journalists to be opportunistic and tasteless. As long ago as the 1730s, Montesquieu was complaining about the immorality of English newspapers.
But we expect – well, require – the police to be lily white.
In a free society, the police are not just any institution. Only they can use force against citizens. The purpose of the police is to prevent crime. There’s no clearer breach of the social contract than police being complicit in criminal activity.
Operation Elveden is the investigation of the Metropolitan Police into officers suspected of aiding the phone hacking. It was sparked by News International documents which mentioned payments to police.
Elveden is being conducted side-by-side with the investigation into the hacking itself, and given similar priority and prominence. Officers from both operations have conducted the few arrests so far.
Some survivors of the 2005 London bombings believe the only way their contact details would have been accessible to News of the World is if survivor lists – full of telephone numbers and addresses – had been leaked by Met officers.
If true, that would suggest some of this scandal’s most ethically egregious violations would not have been possible without the complicity of the Metropolitan Police.
And Operation Elveden has not been the only investigation into police corruption in recent years.
As Graeme McLagan, a former BBC home affairs correspondent, pointed out in The Guardian earlier this month, accusations of inappropriate and corrupt relationships between the police and journalists have been a regular feature of the last decade. In 2002, McLagan was documenting the existence of a private detective agency which funnelled information from corrupt police to News of the World and the Sunday Mirror.
Obscuring these serious issues are a number of sideshows.
The police commissioner Sir Paul Stephenson resigned last week because of the “embarrassing” fact he hired a former deputy News of the World editor as a public relations consultant. But, justified or unjustified, that seems to be just a matter of impropriety – the same sort of impropriety which David Cameron must regret for having hired Andy Coulson.
Impropriety may have political significance, but has little policy significance. Bad judgment is not a crime.
Much more important is the statement made by former Assistant Police Commissioner John Yates to the House of Commons committee that “I confidently predict that, as a result of News International disclosures, a very small number of police officers will go to prison for corruption.”
Then there are suggestions that the police failed to adequately pursue the hacking story when it first arose in 2005.
Focusing on the police does nothing to diminish the ethical and criminal seriousness of what News of the World did. Journalists, editors, private investigators, political advisors – anybody who has committed a crime should, and no doubt will, be prosecuted to the maximum extent of the law. That’s what a legal system is for.
But a legal system cannot function if its enforcement arm is anything less than scrupulously clean.
It’s not surprising that Australian commentators haven’t focused on police corruption. Scotland Yard doesn’t own two-thirds of our newspapers.
But accusations of phone hacking have spread well beyond News International. Thirty-one separate British newspapers are now under investigation. They’re not all Murdoch’s.
And there has been no serious suggestion anything remotely similar has happened in this country. (If you think The Australian’s antipathy to the Greens is at all like hacking the phones of terror victims, or even vaguely connected, your moral compass is way off.)
Yet Australian politicians and partisans have tried to make the scandal fit an existing set of hobbyhorses – anti-government hostility in News Limited papers, journalistic ethics, and media consolidation. Australia’s political class can be as opportunistic as any tabloid.
Australian commentators can wax lyrical about media ethics and regulation only because we don’t have to face the implications of law-breaking journalists working in tandem with law-breaking cops.
For the public and for the press, police corruption isn’t as thrilling as allegations of widespread criminality in their favourite newspapers.
And hauling the world’s biggest media mogul before a panel of politicians was great theatre.
But it wasn’t Rupert Murdoch’s evidence in front of the House of Commons committee which was most important. It was the police commissioner’s.

Too many economists in the carbon kitchen

There’s a lot of interesting material in the survey of Australian economists released last week.

But the results are not much use as a guide for developing public policy. Few political issues can be reduced to technocratic questions of policy design.

Conducted by the Economics Society of Australia, nearly 600 economists were quizzed about an array of policies.

The one which gathered all the attention asked whether they agreed “price-based mechanisms” (clearly the Government’s carbon tax and emissions trading scheme) were better than “direct regulation” (Tony Abbott’s direct action plan). Only 11 per cent did not.

It should have come as no surprise. Abbott has been unable to find any economists which back his plan, because direct action is obviously a bad idea.

That the overwhelming majority of economists support a price mechanism over direct action probably has as much to do with the clear deficiencies of the latter as opposed to the virtues of the former.

But does that mean emissions trading is the right thing to do? Not quite.

Economists are often ridiculed for making unrealistic assumptions in order to model human behaviour. But the first assumption policy designers make is the most crucial one: assume your policy is enacted wholesale, uncompromised by the brutish political process.

When asked how to tackle climate change caused by pollution, most economists would likely recommend a trading scheme or tax. Price the externality and move on.

But as a 2007 paper in the Natural Resources Journal concluded, “the introduction and implementation of [emissions trading] policies is explicitly political and should be recognised and analysed as such.”

Politics, not economics, decides how much pollution will be allowed. Politics decides who will be allowed to pollute. Politics decides the conditions under which the pollution permits will be traded.

In an unguarded moment in December 2008, Ross Garnaut complained that Kevin Rudd’s interpretation of his emissions trading scheme had been captured by “vested interests”, and wondered about the “wisdom of how far it’s gone”. Rudd’s legislation had deviated from his policy ideal. But what did he expect would happen? Economists must not assume that their ideas will be implemented untarnished by political calculus.

So while there is an economists’ consensus the ideal price mechanism is better than the ideal regulatory approach, its existence doesn’t take us very far. Policy is all about implementation.

The academic study of policy implementation – as opposed to policy design – only goes back a few decades. The title of the 1973 book which sparked this field is succinct – Implementation: how great expectations in Washington are dashed in Oakland: or, why it’s amazing that federal programs work at all.

As the authors argue, “The separation of policy design from implementation is fatal”. No matter how well designed and elegant a policy may be it will be useless, even counterproductive, if it is implemented ineffectively, inconsistently, or has been whittled down by the political process.

For the ideal model of emissions trading to achieve its goals, international action is the difference between successful implementation and failure.

You can’t resolve a commons problem simply by taking independent action. The tragedy of the commons is a tragedy for a reason. Perhaps global action is imminent. Nevertheless, that’s a question for diplomats, not for economists.

The results of last week’s survey are less useful than they appear in other ways.

The economists were asked if aid spending should be reduced, if jail sentences were an appropriate punishment for those convicted of price fixing, if corporate boards should have gender quotas, if non-government schools should receive funding, and so forth. Some they were for, some they were against.

These questions have their economic aspects. But most of all they involve questions about morality, liberty, equality, and social justice.

The discipline of economics can have insight into the effectiveness of policy, but it cannot define our values.

Should – as another question asked – governments “provide greater economic incentives to improve diet”? If we decide that as a society we want governments to make our eating habits a question of high public policy, the design of those incentives will be important. Yet it is far from obvious that’s the case.

Values pervade questions about climate policy as well.

Public choice economists (a sub-branch of economics which studies incentives in the political arena) have long recognised voters tend to prefer command-and-control approaches like Tony Abbott’s direct action. Economists protest regulation is less efficient than pricing mechanisms, as they should. But for many voters, regulation still seems “fairer”.

This accounts for the fact that regulation has always been more prominent in environmental policy than pricing. It may also explain the great political oddity of 2011: the extremely popular Coalition has an inferior policy for a problem the public believes is real and should be tackled. It’s just that, given the option, voters prefer regulations to price signals. Even when price signals are less costly overall.

In the 20th century, many economists and politicians thought technocrats were only limited by the amount of data or computing power they could muster. If we could assemble enough information, experts would be able to design perfect policy and run an economy to its maximum efficiency.

But we know better. The technocratic dream has very real limits. No matter how many specialists and experts agree on the way forward, effective policy may still be far out of reach.

War To End War Drugs Gains Allies On Right Flank

In 2011, the war to end the war on drugs is now being led by conservative voices, not radical ones. In March, three federal Liberal backbenchers – Mal Washer, Judi Moylan, and the Victorian Russell Broadbent – came out against the criminal status of drug use, going so far as to argue that heroin and cocaine should be legalised. Dr Washer described the war on drugs as a “crime against humanity”.

Indeed, those Liberals have been more vocal than the apparently radical Greens, who abandoned their support for drug decriminalisation after they found it brought more controversy than was comfortable.

And the backbenchers join a global phenomenon – conservative voices coming out against the drug war.

Last month the Global Commission on Drug Policy concluded that drug prohibition has been an abject failure. The panel includes Sir Richard Branson and Nobel laureate in literature Mario Vargas Llosa. Both hold right-of-centre economic views.

Two commission members, one a former US Secretary of State, the other a Federal Reserve chairman, had their argument featured on the conservative Wall Street Journal opinion page.

Little has changed in a practical sense, only that the pointlessness of the approach to drugs has become even more obvious over time.

Julia Gillard and Tony Abbott have admitted using marijuana when they were young. So have Malcolm Turnbull, Wayne Swan and Peter Garrett.

This would all be harmless fun but for one thing. Last financial year, according to the Australian Crime Commission, 57,170 people were arrested in Australia on marijuana-related charges – a drug that Australia’s most senior politicians happily admit to having used.

Their confessions are typically made with a sheepish grin, followed quickly by a stern parental admonition – “It was a mistake to do so,” said Malcolm Turnbull. Julia Gillard: “Tried it, didn’t like it. I think many Australian adults would be able to make the same statement, so I don’t think it matters one way or the other.”

Well, it would matter if you were one of the almost 60,000 Australians arrested for holding, consuming, or supplying cannabis to aspiring politicians last year.

In Australia, marijuana is treated with a degree of leniency, at least compared to other drugs.

Nevertheless, Australian police made more drug-related arrests last year than at any time in the past decade. And about 20 per cent of Australians report having used an illegal drug. These are not the typical indications of policy triumph.

Outright prohibition has been no more a success at reducing the harm caused by drug use in the 21st century than alcohol prohibition was in the 20th.

Melbourne’s cycle of gang warfare has been fuelled by the illegal industries that have grown up around prohibition. In 2001, Portugal decriminalised everything from marijuana to heroin. Drug trafficking remained a crime, but possession and use became nothing more than administrative violations. Providing drugs to minors remained illegal, as did providing drugs to people with a mental illness.

According to a study by the Cato Institute, an American free-market think tank, the results of this experiment have been positive. Drug use didn’t go up, contrary to the nightmare scenarios predicted – particularly among 13 to 18-year-olds.

This is unsurprising. As a product comes out of the illegal underground, it is easier to regulate, control and manage. Cato found that almost every single measure of progress – HIV rates, drug-related mortality – had gone down since 2001.

Obviously decriminalisation is very different from full legalisation. The latter would be an understanding that individuals had the right to ingest whatever they liked. The former balances the criminal and the individual responsibility approaches.

Portugal chose to decriminalise because they didn’t intend to normalise or encourage drug use. And none of the conservative voices who have joined the chorus against the drug war are pro-drugs.

But Portugal’s strategic retreat has done more good in its 10 short years than 30 years of criminalisation. The United States, which has the harshest penalties for drug possession, also has the highest levels of cannabis and cocaine consumption.

Portugal’s model is one Australia could – and should – adopt.

Unfortunately, governments get easy political mileage out of looking tough on drugs. Ted Baillieu wants to crack down on the sale of the bongs – an entirely symbolic gesture – but one that apparently resonates with a certain type of voter.

And social reform can take a long time. One of the intellectual heroes of the free-market movement, Milton Friedman, called for an end to the war on drugs way back in 1972.

Yet conservative scepticism about the criminal approach to drug use is spreading.

If both sides of politics are starting to doubt the wisdom of the drug war, there’s a chance – a chance – we may eventually take Portugal’s lead and call a ceasefire.

Brown’s Global Parliament: Scary Proposition

Bob Brown’s call for a global parliament isn’t crazy. That’s the problem.
Speaking at the National Press Club in late June, the Greens leader asked “Why shouldn’t we now join vigorous moves in Europe and at the United Nations for a global people’s assembly based on one person, one vote, one value?”
Brown gave this future parliament a wide range of responsibilities – from financial policy to defence to wealth redistribution and third world development.
He’s hardly alone. Woodrow Wilson, Jeremy Bentham, H.G. Wells, and Albert Einstein all proclaimed their desire for a parliament of the world. Nominal conservatives too: in 1947, Winston Churchill claimed “unless some effective world super-government can be set up and brought into action, the prospects for peace and human progress are dark and doubtful.”
Sure, there are lots of reasons why a future world parliament is unlikely; reasons which were quickly cited after Brown’s speech. (And one wonders why he chose to explore this fantasy in a major forum just days before the Greens took the Senate.)
But to understand why a world parliament is undesirable, we have to ask why the Greens leader would want a world parliament in the first place.
Such a parliament would not be a forum for diplomacy. We already have one of those. Instead, its purpose would be to impose binding legislation on every corner of the globe.
A carbon price enacted by a global parliament would remove the potential for firms to simply shift across national borders to avoid the cost increases. And the parliament would be able to impose a “Robin Hood” tax without fear that finance simply goes elsewhere. There would be nowhere else to go.
But Brown might discover such a parliament might pass laws he doesn’t like. One cannot assume a global legislative structure will always share the policy preferences of a minor antipodean political party.
And whatever legislation it did pass would be binding for the entire world, no matter how misguided or illiberal.
It should be needless to say, but there are advantages having lots of jurisdictions – countries, states, provinces – with lots of different legislative bodies.
We frequently look to other countries for policy ideas to adopt. Or avoid.
A few weeks ago I argued the only reason gay and lesbian people in New York are now able to marry is because legal power over marriage is held by New York State, not Washington DC. A small jurisdiction is able to be more progressive than a large one.
A global parliament – with an inevitably expanding mandate – would slowly erode the possibility of policy experimentation.
(This is an expanded version of the Australian argument between those who would like Canberra to assume more power and those who think decentralised government is better government.)
The idea that democratic power should be as close to the people it governs is an old one.
A global parliament is one of the most liberty-threatening proposals ever suggested by a mainstream Australian politician.
The most important and most undervalued insight of liberal philosophy is the concept of “exit”.
David Hume said “every man ought to be supposed a knave”. We ought to suppose governments, parliaments, corporations, societies, and communities are knaves as well. Through brute force or just subtle social coercion, each can oppress us, limit our individual freedom, or just make life tougher than it should be. Not that they always will. But that they could.
So our most important freedom is freedom of exit. People should be able to escape the clutches of one group, if they have to, and move to a more desirable one.
In a competitive marketplace, this means shifting from one firm to another if we’re unhappy with their service – or starting a competing firm. And in the social sphere, it means having the freedom to build our own relationships and communities.
If a government is oppressive – if it taxes too much, if it limits our civil liberties, if it provides insufficient protection or quality services – we’re stuck. Democracy is little comfort to those suffering under the tyranny of the majority.
Yet we still have a limited, emergency power of exit – we can emigrate. If we don’t like a new law, we can move to another jurisdiction.
So exit still restrains government. If government gets too coercive or unreasonable, people and businesses will leave.
When the British government imposed its income “supertax” – levied at a whopping 95 per cent – high earners like the Rolling Stones jumped ship.
Even if freedom of exit is rarely exercised, its possibility is a vital check on government power.
The purpose of a world parliament is to eliminate the possibility of exit. You couldn’t migrate away from the parliament’s jurisdiction. No matter how onerous its laws.
That’s what makes it so appealing to those who want to expand the power of the state.
And that’s what makes a global parliament such a scary proposition to those who do not believe legislative power is always benevolent.

Giving Up On National Classification

There’s an air of unreality about the Senate’s review of the National Classification Scheme.
Its final report was released in late June. On the face of it, many of its recommendations are overdue.
For instance: classification should be consistently applied to all mediums of delivery. The same classification system should apply to TV, radio, videogames, mobile devices, and so on. Better that than our current odd and incoherent array of government and self-regulatory codes, which seem to have been developed entirely from scratch for each individual medium.
Then there’s lots of recommended tweaks to the classification system, and a call for more funding for classification bodies. All this is standard for a Senate committee report.
But, meanwhile, the entire foundation of Australia’s classification system has collapsed.
As the committee’s report acknowledges, “the committee would prefer that the National Classification Scheme treat all content equally, regardless of the means used to access it. However, the scale and borderless nature of the internet complicates the practicality of this preferred approach.”
The word “complicates” seems to understate the problem somewhat.
Under no circumstances could an Australian classification agency even begin to categorise online content against any rating scheme. In 2008, Google was indexing 1 trillion separate webpages. YouTube claims its users upload the equivalent of 150,000 full-length movies every week, and it would take 1,700 years for one person to watch all of its content already online.
And under no circumstances could the Australian Government apply the principles which animate our classification system to online material – one of which is “everyone should be protected from exposure to unsolicited material that they find offensive”. Even if you thought protection against offence was a worthy goal of public policy, there’s simply no way to do so.
The committee just gave up, writing in its report it “did not receive enough evidence to make specific findings on this issue”, presumably hoping other government inquiries might be able to sort it out where they could not.
This was the first major inquiry into the National Classification Scheme since it was introduced more than a decade ago. And they squibbed it.
The internet challenge should be an opportunity to rethink the purpose of the government classification programs as a whole.
The committee’s failure is all the more acute considering potentially classifiable film and television is increasingly being distributed online, aided by consumer plug-in interfaces which allow Australians to connect their television to the internet.
Media consumption is rapidly moving out of the reach of government classifiers.
As a consequence, attempts to quarantine film, television, or computer games from the Australian market do little but encourage piracy.
Take videogames, whose censorship has been so thoroughly circumvented that reform seems more formality than necessity. Yes, it would have been nice if gamers were able to purchase adult-only games at retail stores. But with online shopping, international shipping, and, of course, downloading, there are few serious barriers to getting hold of banned games like Mortal Kombat or Left 4 Dead 2.
And for online and mobile videogames, classification is in practice voluntary.
It took five years for World of Warcraft – one of the most popular games in history – to be classified by Australian regulators, because, it was an online game.
It’s easy to forecast similar situations occurring with film and television, once a) Australians become more comfortable downloading or streaming film and television from overseas, and b) entertainment business models adjust to a world where most media consumption is online.
That’s not a question of if, but when.
The inevitable slide of government media classification into irrelevancy does not mean classification will disappear entirely. It’ll just go private.
Non-profit groups which rate films according to ethical or religious criteria have been around for a long time. There’s a cottage industry of conservative Christians in the United States judging Hollywood films for nudity and swearing and unethical behaviour. Sites like www.commonsensemedia.org provide far more information and greater detail than the Australian Government. Parents looking for kids films or games in the new media world have a wealth of resources to assess appropriateness.
And, of course, there are the wide range of filters one can install on a home computer that’s used by children to control their internet use. Parents have had to take matters into their own hands already.
The Senate committee’s air of unreality is most dense when it discusses the location of adult magazines and films being displayed in retail outlets near products which appeal to children.
Pornographic magazines and over-the-counter DVDs are almost the definition of an industry in decline. They are not the classification system’s biggest issue right now.
It seems clear the purpose of the Senate review was not simply to assess the efficacy of classification, but to dredge up the usual claims that the media is ignoring community standards.
This is a Senate hobby. In the past few years, the Upper House has solemnly investigated issues like swearing on TV after some people complained about Gordon Ramsey and Big Brother.
Many politicians use discussion about classification as no more than opportunity for moral grandstanding.
But that’s not the real game. If our classification system cannot deal with the fact that entertainment is moving online, then its long-term viability must be seriously in doubt.

Conservatives Court The Same-Sex Marriage Lobby

New York now joins Massachusetts, New Hampshire, Iowa, Connecticut, Vermont and Washington DC in having legalised gay marriage. Internationally, the club also includes Argentina, Belgium, Canada, Iceland, the Netherlands, Norway, Portugal, South Africa, Spain, and Sweden.
 
So we should not pretend the decision of the New York legislature is ground-breaking. Once implemented in a jurisdiction, gay marriage fades into the background. While its introduction is controversial, its existence is mundane.
 
Yet there’s still a lot to learn from the New York decision for supporters of same-sex marriage reform.
 
One reason the New York decision is interesting has been the muted reaction of the conservative movement – varying from resigned acceptance to warm support. Nowhere was this clearer than on the website of the National Review.
 
The National Review is the rock on which the American intellectual conservative movement was built. Unambiguously conservative, its founder, William F Buckley, nevertheless described himself as a libertarian – his magazine can take large credit for melding the post-war conservative fusion between anti-communists, libertarians, and social conservatives.
 
The first thing the National Review published after the New York decision was an article which can only be described as warm and congratulatory. The columnist Michael Potemra wrote about the “sweetness of a symbolic victory”.
 
Certainly, Potemra’s wasn’t the only piece published on National Review Online immediately after the decision. A moderately hostile one – although focusing more on process than policy – was written by William C Duncan, chief of the Marriage Law Foundation, an anti-gay marriage lobby group.
 
Yet the comments on those articles are running about 50/50 for and against. That is itself a pretty big deal, considering the National Review’s position in the conservative world. It’s a sign the intellectual case against gay marriage is looking flimsier by the year.
 
If gay marriage is destined to undermine traditional marriage, there’s no evidence it has done so yet. In none of the jurisdictions which have made this change have key social indicators slid backwards.
 
As the conservative David Frum wrote on CNN.com on Monday: “The case against same-sex marriage has been tested against reality. The case has not passed its test.”
 
Frum was a prominent opponent of gay marriage in the 1990s. The energy has gone from the anti-gay marriage movement.
 
Of course, one can still have an objection to gay marriage on the grounds of religious faith. But without evidence that such a reform could harm society, there’s no reason for the non-religious (or those whose religious beliefs do not preclude same-sex marriage) to share that objection.
 
Well, except for one thing.
 
The critical issue for New York Republicans was ensuring those who have religious objections to gay marriage would not be penalised for refusing to marry a same-sex couple. After all, it would hardly be a step forward if an expansion of freedom for gay people required a reduction in religious freedom.
 
The final bill protected religious organisations from lawsuits or the withdrawal of state funding if they declined to participate in same-sex marriage ceremonies.
 
It proved to be a surmountable barrier in New York, but this religious freedom proviso should remind us that our wealth of anti-discrimination law could hold back liberal and progressive reform.
 
Supporters of gay marriage who do not sufficiently account for religious freedom do their cause a disservice. It’s likely anti-discrimination laws will be – deserve to be – a major sticking point when an Australian parliament inevitably deals with gay marriage legislation.
 
American states have the power to decide whether to extend marriage. Australian states do not. The New York decision has shown how vital this difference is. Reform-minded states can do things a federal government can not.
 
Federalism has allowed American states to test and observe the effects of gay marriage, and roll it out in stages across the country. And federalism has prevented this reform being foisted on more conservative states against their wishes.
 
It’s indicative that Barack Obama has rejected gay marriage, because he held the opposite view while campaigning for State Senator back in 1995. Now on a national stage, politically Obama feels he cannot proclaim the views he held when his stage was smaller.
 
In Australia, marriage is a Commonwealth responsibility. This is a bad thing if you want marriage equality. Those on the left hostile to federalism and devolution of power might want to rethink their position because, as in the United States, Australian conservative opposition to this policy is less determined than it has been in the past.
 
In 2011, you’re more likely to hear a conservative or right-leaning commentator support same-sex marriage than oppose it. If only they had the power, now would be a great opportunity for an enterprising state or territory to introduce same-sex marriage.
 
Of course, a libertarian would insist the government get out of the marriage business altogether. But conservatives and libertarians should welcome the further expansion of legally-recognised same-sex marriage. For as long as the government has the power over marriage it is obligated to adjust that power to changing social circumstances.
 
And, clearly, gay marriage is a reform whose time has come.

One Hack Of A Crime Wave, Or So They Say

Keep calm and carry on: cyber crime is not the threat it’s made out to be. There is no better fodder for naked fearmongering than crime conducted online. You’ve about heard them all: Nigerian scams, 410 scams, and phishing scams. Banking fraud, credit card fraud, hackers, viruses and keystroke loggers. And there’s spam, zombies, malware, spoofing, scareware, worms, etc.
 
And there are the biggies: cyber crime, cyber terrorism, and full-blown cyber war. Typically these threats are all merged into each other, blurred by fearmongers to create a picture of a risky Wild West online. They feed into a fear that technology has somehow got out of control, a fear that our lives have become more dangerous as we’ve been sucked online.
 
On Tuesday, ABC’s 7.30 cited the usual mix, warning of everything from petty identity theft to the ”cyber crime underworld”. The show claimed proceeds of cyber crime were now more than proceeds from illicit drugs. The next day, the federal government announced it would sign the Council of Europe convention on cyber crime – a treaty for international co-operation.
 
The size of any illegal industry is hard to estimate. But the claim that cyber crime is now a bigger concern than the drug trade relies entirely on an off-the-cuff remark made by a consultant to the US Treasury Department in 2005: ”Last year was the first year that proceeds from cyber crime were greater than proceeds from the sale of illegal drugs, and that was, I believe, over $US105 billion.”
 
Last week’s 7.30 interviewed a US defence contractor saying cyber crime was now $US3 trillion. At that price, cyber crime is the fifth-biggest economy in the world, slightly below Germany. It doesn’t ring true. Cyber crime would be the biggest crime wave in human history – hackers stealing an entire German economy every single year. Of course, we mostly hear these gargantuan numbers from consultants (drumming up business from law enforcement) and internet security companies (trying to sell software).
 
A new paper by researchers from Microsoft – Sex, Lies, and Cyber crime Surveys – explains why estimates of cyber crime have become so absurdly large. The authors, Dinei Florencio and Cormac Herley, point out that the bulk of what we know comes from tiny surveys. The authors found at least 75 per cent of losses were extrapolated from just one or two unverified, cases.
 
In other words, one bloke falls for the old ”I’m a prince from Nigeria” scam, and it is reported that cyber crime is a $3 trillion industry. This is not to deny that criminals use the internet.
 
But crime is crime, whether it’s online or not. Many cyber crimes are just digital variations of old cons. The Nigerian scam was originally conducted by post.
 
And much cyber crime is just vandalism, hard to police, but not hard to protect against. Lock your gate, use complicated and varied passwords, make backups. Don’t trust foreign princes or popups. Accept the updates for your anti-virus software. Make sure internet companies you deal with are responsible.
 
These are all pretty simple, and they will protect you from 90 per cent of the danger. Education is more necessary here than legislation. The majority of online transactions are safe. And certainly no reason to give government a blank cheque for any new law it wants.
 
Some of the proposals to deal with the cyber crime ”epidemic” have serious civil liberties issues. The treaty the federal government intends to sign may mean Australian internet service providers have to store records of every website we visit, and every person we email, just in case the police need it later.
 
We like to complain about privacy and Facebook, but that will be nothing compared with the massive amount of data compulsorily stored by our internet provider. Apart from the privacy implications, that requirement itself could increase online risk. There’s little more attractive to criminals than large banks of data stored in one place.
 
All the hype about cyber crime is nothing compared with the noises made by defence contractors and American military commanders who have been stoking fears of ”cyber war” and ”cyber terrorism”. But even the most famous instances of cyber war – like the StuxNet virus, which damaged Iran’s nuclear program in 2010 – are more hype than reality. StuxNet was trotted into an Iranian enrichment facility on a USB stick. It was plain, old espionage. So, next time you read of the dangers online, consider: the seriousness of the threat is inversely proportional to the number of uses of the word ”cyber”. There are risks online. But they are manageable.