This piece on the Rudd Government’s relationship with lobbyists and industry bodies says a lot about politics in Australia. As Katherine Murphy points out, Labor came to government with a desire to make lobbyists more transparent (which, presumably, would lead to their influence being less, or at least less pernicious).

But while they have made some moves in the direction of transparency (and will perhaps make further moves with the Faulkner Inquiry into electoral reform), by its policy actions and policy development processes, the new government has made lobbying vastly more important and more desirable than it was a year ago. As I wrote in a article early in December,

Big Australian companies will be quickly learning how important their Canberra lobbyists are under the Rudd Government: with a resurgent industry policy, an emissions trading scheme with more exceptions than consistencies, and a steady program of commercial bail-outs, it has been a long time since having the ear of a minister has been so important.

The Government can’t claim to be concerned about the influence of lobbyists in the halls of Parliament while making it impossible for companies to do business without them.

It isn’t the capacity to donate anonymously that encourages lobbying and money in politics. Corporations and special interest groups will only donate and lobby when they perceive a benefit from doing so. While such opportunities, money will flow into political parties by any means possible.

And by instituting the sort of policies above - the emissions trading scheme, elaborate industry policy, and corporate bailouts - the Rudd Government has only increased the opportunities firms have to gain from politics.

The end result is to make government more arbitrary. There is no consistent rule governing what sectors will be the recipients of government largess - “too big to fail” does not work with childcare organisations, and “too important to fail” surely does not apply to car dealers, no matter how elaborate their leasing arrangements might be. And the structure and exemptions of the ETS seems to be entirely without any rhyme or reason.

In the absence of such general rules, what benefits firms might be able to get from the government are governed instead by the particularities of the case - and it is lobbyists and donors who are there to argue those particularities.

Now, obviously, governance which is more particular than general is obviously not the invention of the Labor Party - there is absolutely no consistency that governs the regulation of the media sector, for example. But it is notable that the Howard Government often did decline to make “exceptions” - the Commonwealth never did bail out Ansett, for example, despite what was no doubt intense pressure to do so.

One wonders what the Rudd Government would have done when faced by the collapse of Australia’s second airline. (The Labor Party at the time was a bit confused.) It is that sort of wondering that makes lobbyists so important - the new government is arbitrary enough to make it worth opening a Canberra office and trying your luck.

No changes to the electoral act will be able to mitigate this incentive to donate and lobby political parties.

The article below was written last week but did not go to print due to circumstances beyond my control. So rather than leaving it to rot and eventually disappear into rarely visited regions of my hard drive, I might as well put it up here instead.

Cartoons aren’t people. It seems weird to have to say this, but that simple fact seems to have eluded Australia’s legal system.

Last week, a man was convicted in NSW of seeking out and possessing child pornography simply for the fact that he was found to have a set of satirical cartoons featuring of Bart, Lisa and Maggie Simpson having sex. The characters are, at least for the purposes of the Crimes Act, minors. After all, Bart is ten - as he has been since the TV series began in 1987. He also has just four fingers, he has gigantic, freakishly bulbous eyes, and he has hair that appears to be made out of skin. Oh, and he’s bright yellow.

In fact, last week was a week notably absent of legal common sense. Read the rest of this entry »

This pub promotion - “No Undies Sundie”, where women get free drink cards for removing underwear - makes the pub sound grotesquely bogan, but is that any reason for it to be banned by the government? Moral suasion - as was being applied by the Australian Hotels Association - is a far better way to deal with tasteless promotions like these.

And, let’s be frank, a lot of people like bogan pubs and their cringe-inducing gimmicks - does anybody really believe Sue Mclellan’s claim that they had to ban the promotion merely because it was “encouraging irresponsible drinking”? This is transparently a regulatory decision made on moral grounds, not health grounds.

But Victoria’s liquor regulators are desperately looking to score some runs on the board, so it’s no surprise they swung at this when they read about it in the papers today.

In the latest edition of Overland, Shane Cahill responds to my critiques (here and here) of his argument that the wartime Institute of Public Affairs was sympathetic to Japanese fascism. (His new piece is not, unfortunately, online, but it still deserves a response. The original piece is available here.)

Cahill appears to have ceded the first, most rhetorically powerful part of his argument - the anonymous letter breathlessly accusing the IPA of being a Japanese fifth column, and the subsequent CSS investigation in no way reflect any anti-Australian treachery or anything else on the part of the IPA. It is that letter’s screedish accusations that allows Cahill to bandy around the word “fascist”.

Nevertheless, let’s temporarily grant him his claim about the ideological context of the Japan-Australia Society. If David Lloyd Jones and William Aberdeen Mackay - who are counted among both the early members of the IPA and members of the Japan-Australia Society - were actually seeking to undermine Australian democracy and liberalism, those sorts of views are in no way reflected in the IPA’s views while they were involved. (If you are interested, an impression of the early views of the IPA are available in the back issues of the IPA Review, and from the CSS file which Cahill selectively describes - go to the National Archives and search for “Institute of Public Affairs”.)

So either Jones and Mackay were unable to convince their fellow businessmen that the IPA should pursue “pro-Japanese” fascist ends - and then Cahill’s story is at best trivia - or they were not fascists. I can’t help but repeat my earlier point:

If… the IPA council was trying to sow the seeds for Japanese-style fascism in Australia… condemn[ing] totalitarianism and centralised government seems to be a strange way to go about it.

Rather than try to thread elaborate conspiracy theories, the IPA’s left wing critics would do better to actually read what the IPA has had to say over the last 65 years. There’s enough in there to hate without resorting to fantasy.

Call me a cynic - and you certainly couldn’t call me a criminologist - but I’m not entirely convinced that the Victorian police’s acquisition of five rental hummers is going to have a huge impact on late night violence in the CBD.

According to today’s Garnaut Review release, the modeling of the impacts of the emissions trading scheme assumes absolutely no deadweight costs caused by political preferment and regulatory gamesmanship. As it states:

…a distorted Australian emissions trading system, diverting management effort from commercial activities into applying pressure for political preferment, could have large negative deadweight costs.

The modelling has assumed no net transactions and other deadweight costs of the mitigation regime. We will learn whether this was an optimistic or pessimistic assumption when the realities are revealed as history.

But as Alan Moran and I have shown in the latest IPA Review, this assumption is clearly a fantasy - the ETS will be a thick stew of exemptions and special treatments.

As Ross Garnaut is no doubt well aware, there is huge reason to be pessimistic about the political bargaining required to get the ETS implemented. Excluding politics from the modeling will give a highly distorted picture of the consequences of the ETS.

My fortnightly Sunday Age column this week opposes congestion taxes, characterising them as just another tax.

There is a strand of liberalism or libertarianism that is skeptical of, and sometimes even hostile to immigration. This piece in The Australian by Gaurav Sodhi is a good example, which appears to be a follow up of a 2006 paper that raised some of the cultural and social objections to immigration that are typical of this view.

Sodhi doesn’t quite go so far as outright opposing the scheme - he conspicuously avoids passing judgement, except to raise a rather peculiar objection. Surely nobody has claimed that a tiny guest worker program could single handedly resolve Pacific development problems alone? The scheme will be wonderful for the guest workers, wonderful for their families who will benefit from their comparatively high salaries, wonderful for the farmers who need the labour, and pretty good for consumers who like to eat cheap fruit. The dire situation of some Pacific economies is not sufficient reason to oppose such an exciting opportunity for everybody involved. And the less said about the implication that the potential Pacific island workers are criminals, the better.

I admit to being very uncomfortable with those supposedly free market advocates who oppose immigration, for whatever reason. Too often the objections are so strained as to be suspicious. The idea that we should stop an individual from searching for work beyond the national borders of their birthplace simply because we believe that their culture is somehow incompatable with ours is a deeply illiberal position to hold. Our existing skilled migration scheme discriminates on the basis of education, and, by implication, wealth. That is, to my mind, already unconscionable; ‘liberals’ who propose further group discrimination on the basis of culture are even more worrying.

How does the free movement of people differ in any significant way from the free movement of goods or services? Surely we have enough faith in the strength of liberal democracy - and the persuasiveness of liberal civil society - to withstand potential ‘clashes’ of culture? The only concrete thing we ask of migrants is that they obey existing laws - and in this concern we already have an elaborate mechanism to monitor and assure compliance of all those on Australian shores regardless of their birthplace.

This is not merely apologetics. I suggest that not only is immigration practically beneficial, but we have a moral obligation to accept into our borders those who want to come. For individuals born in under-developed countries, simply crossing into the developed world can dramatically increase their potential salary, as well as allow them to experience the historically unprecedented living standards that we already enjoy.

The objections to expanded immigration seem nationalistic or economically illiterate at best, and immoral at worst.

I have a piece in this month’s Quadrant: “Regulation and the Regulatory Burden”, as part of their ‘How Good Was Howard’ series. (It is not, unfortunately, online yet.)

At the editor’s request, the piece is for the most part drawn from my monograph published earlier this year, The Growth of Australia’s Regulatory State: Ideology, Accountability, and the Mega-Regulators, but also tries to tackle the question at stake - to what degree should we consider the government, or the prime minister, responsible for the growth in regulation? My argument in the book and the Quadrant article is that there are a number of engines of regulatory growth within the structure of government (not least regulatory agencies themselves) that exert underappreciated power over the total corpus of regulation. Therefore the degree to which we can blame governments and individuals for regulatory growth is limited, although not negligible.

I’m no fan of the Howard government, but I’m not convinced they deserve all the blame for the dramatic growth in regulation over the last decade.

Nicholas Gruen had an interesting piece in The Australian on Thursday which argued that Hayek’s theory of the distribution of knowledge in society could provide a guide to better regulation. (A longer version is at Club Troppo)

Gruen tries to resolve the assymetries of knowledge between the regulator and the regulated firm by reference to Hayek’s criticism of central planning. The biggest problem facing effective regulation is managing the flow of information from firm to regulator, and Gruen sees parallels here with the failure of socialist central planners to take account of local knowledge. His solution is deeper engagement with firms to draw out some of their specialised knowledge, as well as implementing extensive trials of new regulation to see how they perform.

It is hard to how these proposals differ in practice from extending mandatory disclosure regimes, as regulators burrow further and further into the internal operations of the firm. Of course, from a regulator’s perspective, this is an appealing suggestion. But regulation is antagonistic - regulators and firms rarely pursue the same goal. Gruen’s proposals would do little to reduce the cat and mouse games which characterise contemporary regulatory negotiation.

But in coming to this argument, Gruen has misread Hayek. As he rightly points out, Hayek was concerned with local knowledge being insufficiently distributed in a planned economy. But Hayek’s resolution wasn’t simply to develop a mechanism to distribute that knowledge better – his resolution was the price system. And the price system doesn’t inform a central body about how best to manage the economy, it informs an infinitely diverse array of producers and consumers, so that the economy manages itself.

Without reference to price, Hayek’s criticism of central planning would be just a lament about the Politburo being insufficiently informed about recent rainfall in Omsk.

Gruen’s proposals may have something to recommend them from the perspective of policy implementation – although some of them would, in my view, dramatically increase the power regulators have over firms. It is not always the case that businesses and regulators work together harmoniously, and not likely that increasing the amount of consultation would change that, except to add to the risk of regulatory capture or regulatory rent seeking.

But, nevertheless, Gruen’s proposals cannot be justified by reference to Hayekian theories of information. It wasn’t just local information that Hayek was concerned with, it was, very specifically, local knowledge embedded in prices. And it is not prices that define the relationship between firm and regulator, it is legal power.