IPA Review Editorial, March 2010

‘People have been saying for a while now that what we need is a book industry plan’, said the Minister for Innovation, Industry, Science and Research Kim Carr in a speech in mid-February. ‘No one is going to ghost it for you-the industry will have to tell its own story-but I will do everything in my power to facilitate the process.’

Carr was launching a ‘Book Industry Strategy Group’ to ‘map the way forward’ for the Australia publishing industry in an era of digitisation.

So we can add ‘save books from the internet’ to the long list of ambitions of the federal government.

We talk a lot about how over-regulation is burdening the Australian economy. But more perverse is the way that state and federal governments want to pull entrepreneurs into their loving, bureaucratic arms.

The government offers a bewildering array of subsidies and grant programs to do so. We have the ‘Australian Tourism Development Program’, the ‘Automotive Competitiveness and Investment Scheme’, the ‘Biofuels Capital Grants Program’, ‘Building Entrepreneurship in Small Business’, and the ‘Certain Inputs to Manufacture Program’.

There’s ‘Clean Business Australia’ (that one gets $240 million to work with), the ‘Climate Ready Program’, ‘Commercial Ready’ ($200 million), Commercialising Emerging Technologies (proudly described as ‘merit-based’, implying that the marketplace wouldn’t know merit if it stepped on its head), and the ‘Early Stage Venture Capital Limited Partnership Program’.

And about forty others. Hop on to the government’s AusIndustry website: you might be eligible for a grant.

In her review of Ron Manners’ book, Heroic Misadventures, in this edition, Julie Novak points out that entrepreneurs are still the fuel with which the Australian economy moves forward. The entrepreneurial drive harnesses the potent combination of risk and creativity – without it we would not have an economy, let alone the technology and living standards we enjoy today.

Do we really want Australia’s budding innovators spending their time filling out paperwork for the ‘R&D Start’ program, instead of scrimping for capital and pitching to potential investors?

In fact, the very idea that we have an ‘innovation’ minister is extraordinary. Innovation is at the very centre of a capitalist economy – companies innovate in order to compete with each other. They don’t – or shouldn’t – need the advice and coordination of a Commonwealth minister to do so.

So it is with the book industry. The digital revolution is a potent challenge to Australia’s publishing industry. Amazon’s ebook reader Kindle and Apple’s soon-to-be-released iPad has emphasised the extent of that challenge. But industries meet challenges by experimenting with business models, and developing better products. Not by looking to government for a ‘Book Industry Plan’.

The drive to fully socialise vast swathes of the economy disappeared some years ago. But the drive to control the economy – to direct it, to subsidise it, to coordinate it – is just as strong as ever.

Climategate: What we’ve learned so far

With Sinclair Davidson

The exposure of thousands of emails and documents from the Climatic Research Unit (CRU) at the University of East Anglia is one of the biggest developments in the climate change debate for the last ten years.

The emails-now dubbed ‘Climategate’-reveal a pattern of behaviour. These emails describe attempts to subvert the peer-review process, refusal to make data available to journals, attempts to manipulate the editorial stance of journals, attempts to avoid releasing data following freedom of information requests, rejoicing at the deaths of opponents, and manipulation of results.

But more than anything this illustrates how politicised, manipulated and ultimately uncertain much of the global warming science is.

Statements suggesting ‘the science is settled’ can no longer be sustained. In an email from Mick Kelly (a reader with the CRU) to Phil Jones (director of the CRU) dated October 26, 2008, we find this gem, ‘I’ll maybe cut the last few points off the filtered curve before I give the talk again as that’s trending down as a result of the end effects and the recent cold-ish years.’ While on July 5, 2005, Phil Jones wrote: ‘The scientific community would come down on me in no uncertain terms if I said the world had cooled from 1998. OK it has but it is only seven years of data and it isn’t statistically significant.’ Kevin Trenberth, head of climate analysis at the National Center for Atmospheric Research (and a lead author of the IPCC’s 2001 and 2007 Scientific Assessment of Climate Change), writes on 12 October 2009 that ‘we can’t account for the lack of warming at the moment and it is a travesty that we can’t.’ Trenberth went on to argue in a 2009 paper in Current Opinion in Environmental Sustainability that it is not enough to claim that natural variability accounts for the lack of warming in recent years – something specific must cause the decline.

Much has been made of an email by Jones where he says: ‘I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years (i.e. from 1981 onwards) and from 1961 for Keith’s to hide the decline.’ (emphasis added) The word ‘trick’ doesn’t suggest anything untoward, rather being somewhat clever about some technique. But ‘hide’ is a problem.

Similarly concerning is the apparent destruction of data. The CRU has argued that a lot of their early raw data was destroyed because they couldn’t store it. That explanation is, unfortunately, all too plausible. We live in a world where as recently as 20 years ago, data would have been thrown away for want of storage space. But why then find a 2005 email from Phil Jones, which states: ‘If they ever hear there is a Freedom of Information Act now in the UK, I think I’ll delete the file rather than send to anyone’?

The latest development is that the CRU have promised to make their data available-but we know that a lot of the historical raw data has been thrown away. This makes reconstruction and audit of the CRU research much more difficult. It is going to be impossible to reconstruct an unbiased temperature record based on instrumental observations.

There are numerous emails trying to alter the editorial line of peer-reviewed climate journals. This would be trivial, if it weren’t for the fact that peer-review is treated by the IPCC as the gold standard for academic neutrality. Attempts to subvert the peer-review process show the politicisation of the supposedly unbiased IPCC.

But the most concerning revelations aren’t contained in the emails. They’re in the files detailing the complexity and uncertainty of climate modelling. The contortions which CRU programmers have had to make to force their data into what appears to be a predetermined conclusion underlines just how little we actually know about past and present global climate.

Some of the comments made by programmers contained within the released files (see accompanying box) reveal how unstable the CRU model actually is. It is clear that the data underpinning the CRU’s model has been manipulated, manually altered and patched together. The data is incomplete, inconsistent, and-too often-contradicts observed temperatures.

This is not a trivial problem. It goes to the heart of the international debate about climate change. The CRU model is one of the foundations of the IPCC’s entire climate framework. If the IPCC is no longer able to rely on the CRU, it will be substantially less assured.

With what we have so far learnt from the CRU emails and documents, we can no longer be as confident in the IPCC-or, indeed, the popular view that there is a ‘consensus’ on climate change.

But these are just the early revelations from Climategate. What we will learn once the CRU releases its raw data-or at least, what data hasn’t already been destroyed-may completely reshape the global debate.

Climatologist (and target of many of the CRU’s most vociferous internal emails) Pat Michaels has said that ‘This is not a smoking gun, this is a mushroom cloud.’ We haven’t yet seen how far the fallout from that cloud will reach.

IPA Review Editorial, December 2009

You don’t need an opinion about climate science – nor any opinion about the ‘need’ for action on carbon dioxide emissions – to observe that political action on a national or global scale will be totally futile to achieve the ambitious decarbonisation goals that activists claim are necessary to stop the world from boiling over.

Australian greenhouse gas emissions are 1.5 per cent of the global total. Our carbon dioxide emissions less again. The distorted, costly, lumbering emissions trading scheme which the government has failed to get through the parliament twice, could only reduce emissions at an extraordinary cost. The success of an emissions trading scheme relies on governments ramping up the price of carbon incrementally, and doing so for the next half century. But are future governments going to be eager to do so once the cost of emissions reductions becomes obvious?

A serious global deal is just as unlikely. Compare the international negotiations over carbon emissions to the international negotiations over free trade. Free trade is unquestionably in each individual country’s national interest, yet negotiations have dragged on for fifty years. Emissions reduction is manifestly not in any individual country’s interest, at least in the absence of a consistent, globally applied and enforceable agreement.

Air pollution is either a massive or a trivial failure to allocate property rights, depending on whether you are a climate change believer or a climate change sceptic; it is a failure regardless. But-taking for a moment the worst case climate scenarios endlessly publicised by Greenpeace, Tim Flannery, and the Climate Institute-even when action is necessary, effective action is not necessarily possible.

The idea that we could get anything resembling coherent action on climate change out of self-interested horse-trading that characterises the typical treaty negotiation is as naive as Ross Garnaut’s recent disappointment that the Rudd government didn’t adopt the ideal emissions trading scheme he recommended in 2008.

But there are great reasons for optimism. Free market environmentalists have long urged adaptation to climate change to be prioritised over attempts at mitigating or resisting climate change. The practical impossibility of global decarbonisation makes mitigation a white elephant. It’s just not going to happen.

Hence adaptation. We know that the biggest costs of climate change fall disproportionately on the poor. So the solution to climate change-or at least the problems caused by climate change-is economic growth. At the Institute of Public Affairs climate change conference in November, Richard Tol and the IPA’s Alan Moran examined the economic costs of a warmer globe against projected economic growth. It should come as no surprise that the latter dwarfs the former. In this IPA Review, Louise Staley looks at some of the technologies by which the developing world could rapidly grow.

Science can only be one input into policy-making. When formulating policy, there is much more to consider-politics, economics, and morality, to name just a few. We are retrospectively horrified by the progressive eugenics movement not because their science was incorrect, although it was, but by the values of those who adapted it into a political program. Climate change is not eugenics, but the idea that democracy has failed because it has not immediately enacted the policy recommendation of scientists should be treated with the disrespect it deserves. And, as Henry Ergas argues in this issue, this vulgar-authoritarianism isn’t just limited to climate change – it has sadly become a regular feature of policy debate in Australia.

Personal tragedies under Stalin

A review of The Whisperers: Private Life in Stalin’s Russia by Orlando Figes (Metropolitan Books, 2008, 740 pages)

It has taken historians in both Russia and the West a long time to get their minds around Stalinism. Anne Applebaum’s 2003 Gulag: A History went a long way to shedding some of the misconceptions about the Stalinist system of repression-most obviously on the left, where the history of the gulag has been shamefully minimised. In The Whisperers: Private Life in Stalin’s Russia, Orlando Figes steps into the lives of individuals and families to expose the personal tragedies which are hidden behind the statistics behind Stalinist repression.

The tragedy of the individual under a dictatorship has been a common theme in the history of 20th century totalitarianism for more than fifty years. But as Figes points out in his introduction, our understanding of the individual in Stalin’s Russia has been shaped by the outpouring of memoirs by émigrés and intellectuals who have been eager to represent their deep yearning for liberty-and the resilience of individualism-under totalitarianism. Autobiographies like Victor Kravchenko’s I Chose Freedom contained many revelations but were extremely atypical of the average Russian. Yet, for lack of better alternatives, during the Cold War the West treated high-profile intellectuals like Kravchenko or Solzhenitsyn as ‘the authentic voice’ of repressed individuals under communism.

This has been compounded by a historiographical fashion to focus on resistance to authority, however isolated and atypical. Since the opening up of many Soviet archives post-1991, historians treating the era have enthusiastically depicted the Stalinist period as a continuous duel between repressors and dissenters, seizing upon the examples of defiance against Soviet rule or stubbornly brave individuals. Certainly this approach is an improvement on Cold War era historical investigation-when the academic focus was on either Politburo politicking or the broad sociological studies of the Soviet ‘masses’-but it has had the effect of understating the total-ness of Stalinist totalitarianism.

Resistance and dissent was not a viable option for individuals living in the early Soviet Union. Almost everybody faced the stark choice between arrest and collaboration. That choice, and the dual way of life it created-between the fear of arrest and mutual denunciation-is the source of The Whisperers’ title.

There are two words for ‘whisper’ in Russian. Shepchushchii means whispering out of fear of being heard. As many urban Russians lived in communal apartments-either buildings specially designed for collective living, or in large houses confiscated from their owners and subdivided into cramped living quarters-there was an ever-present fear of being overheard saying critical things about the Soviet regime. And the word sheptun refers to whispering or informing to the authorities. In the cramped communal apartment, which often housed dozens of residents, it was easy for petty grudges to escalate into letters to a local party chief.

To tell his stories of private life under Stalin, Figes has amassed an impressive amount of unpublished memoirs and archival evidence. But the true star of The Whisperers is the enormous amount of oral testimony he was able to accumulate-more than one thousand individuals who lived under Stalin were interviewed.

And it is all the more important because this is a generation rapidly disappearing. Figes notes that almost six per cent of the total sample died before the book was published.

In The Whisperers, the dominant unit is the family. Idealistic Bolshevik activists envisioned the 1917 seizure of power as a revolution in not just economic and political terms, but as a revolution in family relations as well. As Maxim Gorky wrote, ‘the new structure of political life demands from us a new structure of the soul’. While ideologists maintained that Soviet children were to be raised collectively, rather than in the now outdated family unit, the less appealing flip side of this was that it gave dedicated Bolshevik parents almost carte blanche to ignore their children. If it takes a village, then parents are almost redundant.

One of the most striking illustrations of Soviet life is the Figes’ discussion of the communal living arrangements and how they were so central to the communist experience. Our modern image of the Soviet Union may be those lifeless identical and symmetrical apartment complexes rising up out of the Russia flats. But in the Stalinist period, Russian accommodation was forged out of the existing, prerevolutionary housing stock. In the mid-1930s, three-quarters of the population of Leningrad and Moscow were living communally in former apartments-dozens of families squeezed into single dwellings, whole families living in single rooms.

One typical arrangement described by Figes consisted of an apartment revamped to consist of thirty-six rooms, each housing an extended family in a space of 12.5 square metres. In one of those rooms, a former inhabitant related,

There was a table in the room, on which my grandmother slept. My brother, who was six, slept in a cot underneath the table. My parents slept in the bed by the door. My other grandmother slept on the divan. My aunt slept on a feather mattress on the floor with her cousin on one side, while my sister (who was then aged sixteen), my cousin (ten), and I (eleven) somehow squeezed in between them-I don’t remember how. We children loved sleeping on the floor: we could slide our bodies underneath our parents’ bed and have a lot of fun. I don’t imagine that it was fun for the adults.

Kitchens, laundry facilities and bathrooms could be shared or allocated by individual families depending on the layout of the apartment but would always be utilised as more places to sleep. These communal living arrangements were originally just to resolve a housing crisis created by the rapid industrialisation of the soviet economy (and the rural refugees created by collectivisation) but they quickly embedded themselves in the Soviet surveillance apparatus.

With 30 or more families living virtually on top of each other and with often paper-thin walls, denunciations-justified or not-could be easily borne out of petty domestic disputes.

Work provided little relief. One factory manager, in a letter to the Soviet president, described the perverse outcome of the Soviet bureaucratic system:

The problem with Soviet power is the fact that it gives rise to the vilest type of official-one that scrupulously carries out the general designs of the supreme authority… This official never tells the truth, because he doesn’t want to distress the leadership. He gloats about famine and pestilence in the district or ward controlled by his rival. He won’t lift a finger to protect a neighbour… All I see around me is loathsome politicizing, dirty tricks and people being destroyed for slips of the tongue. There’s no end to the denunciations. You can’t spit without hitting some revolting denouncer or liar. What have we come to? It’s impossible to breathe. The less gifted a bastard, the meaner his slander. Of course, the purge of your party is none of my business, but I think that as a result of it, decent elements still remaining will be cleaned out.

The most harrowing sections of the book when Figes looks at what he describes as ‘the great break’, when the semi-liberal period of the New Economic Plan gave way to Stalinist five year plans, collectivisation and rapid coerced industrialisation.

The Whisperers reads at times like a catalogue of family tragedy, as the voluntary ideological family breakdown common in the first few years of the Soviet Union, quickly gives way into the now-familiar Stalinist pattern of arrest, imprisonment, release and rearrest.

While not for the most part an interpretative history, The Whisperers is not totally disengaged from contemporary historiographical debates. Figes disputes Robert Conquest’s characterisation of the famine of 1932-33 as a ‘deliberately inflicted… massacre of men, women and children.’ As Figes argues, while the policy of collectivisation was undoubtedly the culprit of rural Russian suffering in this period, the scale of the famine itself took the Moscow government by surprise, and it had no reserves of grain ready to account for the shortfall.

But whether famine was a weapon of terror or just its consequence is surely beside the point. If we cannot go so far to describe this period as a genocidal ‘terror-famine’ as some historians have done, we can still agree that genocide did occur against the ‘kulak’ population. It was a deliberate policy of genocide which brought about the famines of the 1930s, even if the linkage between famine and genocide was not as deliberate as Conquest makes out.

Figes quotes one Komsomol activist describing the kulaks as ‘bloodsuckers’ and ‘parasites’: ‘We were trained to see the Kulaks, not as human beings, but as vermin, lice, which had to be destroyed’. Ten million kulaks were expelled from their home between 1929 and 1932. And this figure obscures the countless individual horrors which accompanied collectivisation.

The Whisperers is not a book of macro-level statistics, but of intimate family and personal histories. And at that level, terror and collectivisation were nearly indistinguishable from thuggery and murder. One focus of Figes’ narrative is the Golovin family from Obukhovo, a small town about 400 kilometers east of Leningrad. The local Komsomol were little more than a dozen violent teenagers armed with pistols, and the Golovins, having been branded as kulaks, were at their mercy. Ivan Golovin, visiting the family from a neighbouring town, was shot in the head when obviously drunk Komsomol activists started firing at the Golovin house during dinner. In a later confrontation on the family doorstep, the Komsomol ring leader yelled at Nikolai Golovin, ‘I shall shoot you, just as I murdered your brother, and no one shall punish me’. Nikolai escaped from that heated exchange without being but he was soon after denounced by the young activists, arrested, and sent to a White Sea Gulag.

The farms of Obukhovo were collectivised a few weeks later.

One important conclusion of The Whisperers is just how large the Second World War looms in the Russian memory. As Figes writes, for all the excesses, hardships and moral atrocities of the Stalinist years, for a certain generation the war was the defining event of their lives.

It was a time of comradeship, of shared responsibilities and suffering, when ‘people became better human beings’ because they had to help and trust one another; a time when their lives had greater purpose and meaning because, it seemed to them, their individual contributions to the war campaign had made a difference to the destiny of the nation. These veterans recalled the war as a period of great collective achievement, when people like themselves made enormous sacrifices for victory…

But for the regime, the memory of the war years was a double edged sword-on the one hand, Figes writes, ‘the commemoration of the Great Patriotic War served as a reminder of the success of the Soviet system’, but on the other hand, the war was a period of de facto de-Stalinisation, as the instruments of repression took a secondary role compared to the war effort.

By the 1960s, Victory Day was a tightly controlled state celebration of the war effort, carefully integrated in the government’s propaganda narrative. But to a large extent the memory of the Soviet war effort defined the attitude of many Russians towards their Stalinist past. This attitude was complemented by a tacit silence about what Vladimir Putin has coyly described as ‘some problematic pages’ of Russian history.

Figes is one of the strongest historians of the Soviet Union and the Russian psyche. His book on the Russian Revolution, A People’s Tragedy anticipated his Whisperers methodology by telling the story of the revolution through a series of tightly examined interconnected individual narratives. Both A People’s Tragedy and his cultural history of Russia, Natasha’s Dance won Figes a truckload of awards, and it is easy to understand why-Figes presents his often highly specific and interwoven material in a uniquely engaging fashion. While his earlier books are powerful and compelling, The Whisperers is undoubtly his largest achievement. Bringing together so many personal narratives, Figes is able to illuminate aspects of life under the Soviet regime which other historians, relying on more scattered testimony and the inherent biases of official archives, have not.

In the final pages of The Whisperers, Figes quotes a former prison guard who through a mixture of half-baked ideology and hard-learnt realism justified his own position in the Stalinist system:

What is Soviet power, I ask you? It is an organ of coercion! Understand? Say, for example, we are sitting here and talking, and two policemen knock at the door: ‘Come with us!’ they say. And that’s it! That’s Soviet power! They can take you away and put you in prison-for nothing. And whether you’re an enemy or not, you won’t persuade anybody of your innocence. That’s how it is. I get orders to guard prisoners. Should I believe these orders or should I believe you? When you kill a pig you don’t feel sorry for it when it squeals. And even if I did feel sorry for somebody, how could I help them?… In the camp I guarded mothers with sick children. They cried and cried. But what could I do? They were being punished for their husbands. But that was not my business. I had my work to do.

The tragedy of Stalinism was that these sorts of justifications were common. We might describe it as ‘Stalin’s’ Russia, but the totalitarianism of the early Soviet Union came from below, as individuals were forced to slot themselves into the system: to whisper, or be whispered about.

10 Worst Nanny State Policies

10: Plain packet cigarettes

The argument for plain cigarette packaging is one of the most stark examples of how Nanny State regulations treat individuals as childish automatons. Plain packaging involves the complete removal of any brand logos, special colours or fonts, pictures or any other unique packaging design, to be replaced by only the brand name in a mandatory font, complemented by health warnings.

But would it work? Supporters of plain packaging cite studies which suggest that consumers would find plain packaging boring and dull, and marginally reduce the positive connotations of smoking. This certainly makes sense. But cigarette packages are already plastered with images of rotten lungs and cancer-ridden body parts. How removing brand logos could significantly make these already extraordinarily distasteful packages less appealing is hard to imagine.

Mandatory plain packaging seems to be predicated on the belief that attractive packaging is enough to convince non-smokers to become smokers, or that for smokers trying to quit, a good-looking logo is just too much to bear. Undermining brand identity would no doubt change the attitude that smokers have towards cigarette brands-the public health research has convincingly demonstrated that-but, as to how this would effect the desirability of smoking itself, the evidence just isn’t there.

The National Preventative Health Taskforce’s discussion paper on tobacco was titled ‘Making Smoking History’. This is surely a new stage in the public health movement’s war against smoking-an open affirmation that the goal of the government should not be to reduce risk, or to inform consumers of risks they should be aware of, but to eliminate an otherwise totally legal product.

9: ‘Clarity in Pricing’

Believing that consumers are being duped into paying too much for goods and services because the market doesn’t provide them enough information, the Rudd government altered the Trade Practices Act in 2008 to compel retailers to display the total price of goods. That is, the law forces firms to add up those pesky ‘fees and charges’ and show a single, total price of products.

In the words of Consumer Affairs Minister Chris Bowen, the amendment was intended to ‘empower consumers to make the best decisions about what they buy.’

But this was easier imagined than implemented. In fact, in the case of car companies, it was nearly impossible to implement. The fees and charges added on the price of a new car include things like stamp duty, registration, luxury car taxes, and dealer delivery fees, all of which can vary depended on jurisdiction, dealer or purchaser.

As a consequence, many major car companies-Ford and Holden, for example-have concluded that they can not display any prices on their national websites at all.

Increasing the amount of information consumers can access seems like a no-brainer for many economists and policy-makers seeking to improve the market. But it is policies with these sorts of justifications that have led to financial product disclaimers which are so long and complex that almost no consumers read them-again, the totally counterproductive result of mandatory information disclosure is that consumers are less informed, rather than more informed.

8: The internet filter

Few Nanny State initiatives have had such bipartisan opposition as internet filtering. Both the Coalition and the Greens Party oppose the Federal Government’s scheme, and the Institute of Public Affairs is joined by organisations such as Electronic Frontiers Australia and Get Up! in arguing that the filter will be costly, ineffective, and a breach of basic principles of free speech.

The primary justification for the internet filter, like so many Nanny State measures, is the protection of children-protecting children from ‘inappropriate’ internet content, like legal pornography or violent websites, as well as the policing of child pornography. But these are two totally separate issues, demanding two separate approaches. Protecting children against inappropriate content is the sort of task parents can easily perform-apart from basic supervision of what children look at online, there is an extremely wide variety of filtering software that can be installed on computers which children may access. Child pornography is however an issue for police. Because child pornography is not generally trafficked on openly accessible websites, a filter will do nothing to disrupt child pornography networks.

Nevertheless, the government has deliberately fudged the distinction between the two issues. Indeed, Communications Minister Stephen Conroy argues that ‘if people equate freedom of speech with watching child pornography, then the Rudd Labor Government is going to disagree.’

The dangers of the internet have long been an electorally potent issue-the 2007 election saw the Coalition rest a lot of their electoral hopes on a campaign for internet safety. But while many parents may be concerned about what their children come across online, the capacity for those parents to monitor and control internet access has never been greater.

7: Banning junk food ads

There are literally dozens of proposals to deal with Australia’s love of junk food. The National Preventative Health Taskforce has recommended everything from subsidies for gym memberships to subsidising fresh fruit. But the most prominent proposal-and one which has had the longest running support from the public health community-is a ban on junk food ads targeting children, or a ban on junk food ads broadcast during childrens’ programming.

Would this materially shrink our children? The lead editorial of a 2004 edition of the Journal of the Royal Society of Medicine argued ‘there is no good evidence that advertising has a substantial influence on children’s food consumption and, consequently, no reason to believe that a complete ban on advertising would have any useful impact on childhood obesity rates.’ It continued: ‘the claim that food advertising is a major contributor to children’s food choices and the rising tide of childhood obesity has obvious appeal, but as an argument it does not stand up to scrutiny.’

But inevitably, public health criticisms of junk food ads eventually reduce to vague claims about ‘pester-power’, which perhaps says more about parenting than it does about advertising.

6: GroceryChoice

When the plug was finally pulled on GroceryChoice in June, it was the end of one of the biggest Nanny State failures in recent years. GroceryChoice purported to better inform shoppers about the relative price of their supermarket shops.

That was, at least, the theory. In practice, the website was grossly deficient. Totally unable to effectively monitor the price of individual goods, or even individual outlets, the GroceyChoice instead offered up ‘typical’ baskets of goods in a region.

Furthermore, it was never clear that there was a demand for the service. GroceryChoice revealed a supermarket industry that was actually highly competitive. And the information the website was able to provide was totally dwarfed by the information supermarkets provided as part of their advertising campaigns, and their individual websites.

While the concerns that led to the GroceryChoice project involved the apparent ‘duopoly’ of Coles and Woolworths over the supermarket industry, the results of GroceryChoice actually further encouraged shoppers to favour the big two. In any given region, either Coles or Woolworths may be cheapest option, but the nationally consistent result of GroceryChoice was that independent supermarkets such as Franklins or IGA were always significantly more expensive.

GroceryChoice may have been well-intentioned-who doesn’t want a market with better-informed customers?-but like so many Nanny State proposals, completely fell apart in its implementation.

5: Street parties

Nanny State regulations don’t just have negative economic consequences or erode personal liberty. The stock of regulations from federal, state and local governments that affect all aspects of public gatherings are critically eroding our capacity to form communities.

Take local street parties. Local government regulations are making it near impossible to hold a community gathering, and making it certainly impossible to hold an impromptu one. As the IPA Review pointed out last year, navigating the complex bureaucratic hurdles to hold a party takes a lot of work. Party organisers have to fill out safety plans-a typical one, from Stonnington Council in Victoria, is 25 pages long.

The safety plan makes event co-ordinators safety wardens, responsible for abiding by the safety plan and controlling the safety organisation, which comprises the safety warden and any additional wardens.

As a safety warden in Stonnington, you will have to complete a complicated seven-step risk-assessment process in accordance with joint Australian/New Zealand risk management standards. Fortunately, you will have five response guides to follow, ranging from vehicle accidents to electrical failures, and several prewritten emergency announcements to memorise.

The safety plan is just the beginning. In some councils, event co-ordinators need to undergo a police background check. Sound levels need to be monitored by qualified acoustic engineers. Lemonade stands need regulatory approval, as well as the payment of appropriate fees to the council.

Food handling regulations are particularly pernicious, especially for rural communities, which rely on volunteers to support the also-voluntary Country Fire Authority. The IPA’s Louise Staley found this out for herself when she tried to help the Red Cross feed firefighters during the 2006 bushfires.

She wrote in The Age:

When I was helping the local Red Cross make lunches for the firefighters, it all had to be done in a registered kitchen and a person who had done the food-handling supervisor’s course had to be there at all times. What that means in practice is nobody is allowed to make a slice or biscuits at home.

Governments are increasingly talking about the importance of social capital to alleviate the causes of poverty and isolation and strengthen civil society. Unfortunately, it is too often government regulations that act to undermine social capital-making it increasingly hard to connect with neighbours and build communities.

4: Kogarah’s fat planning

State and federal governments are not the only levels of government imposing the Nanny State. Local governments are using what little powers they have over urban planning to impose a disparate array of regulations. The most absurd example of local government Nanny Statism is the manner by which a number of councils in NSW are trying to manipulate individual food choice.

Three councils, Waverley, Gosford and Kogorah, are using their control over planning applications and development controls to introduce a ban on trans fats-fats artificially made by introducing hydrogen to vegetable oils. Trans fats are used in some foods to lengthen shelf life, enhance consistency and add flavour. The three councils have placed conditions on new commercial developments that they avoid using these sorts of fats.

Food regulation is hardly core business for councils, who are usually limited to hard rubbish collection and approving property developments. The trans fats ban is only the most extreme version of an tendancy for local governments to expand their purview into social issues. Local governments seem eager to become regional Nanny State fiefdoms.

Many councils have also weighed heavily into the debate over alcohol and public health, trying to use their surprisingly adaptable planning powers to enact social change. This, of course, has been encouraged by the historically ambitious nature of the urban planning community to cast their role as less about nominating places to put shopping centres, and more about manipulating society. When the bizarrely political urban planning activists and the strange collection of political trainees and community do-gooders that comprise local councils get together, the result is Australia’s lowest level of the Nanny State.

3: Moreland’s gaming rates

More than any other Nanny State issue, the attack on gambling exposes the long history of class antagonism that supports much paternalistic policy. As Richard Allsop writes in this issue of the IPA Review, the forms of gambling that attract the most adverse attention from the Nanny State’s great and good are those which appeal to lower socio-economic groups-the pokies and the races.

Pokies in particular have been targeted by every level of government with discriminator taxes and regulations-from the vitriol of South Australian Independent Senator Nick Xenaphon who told a gambling industry conference that he looks forward to a future were ‘common sense prevails and you are shut down for good’, to the discriminatory rate rises which many local governments are trying to place on gaming venues. Victoria’s Moreland Council is trying to double the rates of local pokies clubs, while leaving all other businesses in the area alone.

And Xenophon has expressed hope that the government’s proposed internet filter would target online gambling as well.

This is a lot of hate for a leisure activity which only creates a problem for 2 per cent of those who participate. And there are an extraordinary number of well-endowed and accessible resources to support those who have problems with their gambling. In Victoria alone, the Community Support Fund-which draws its revenue from a portion of the state tax on gaming machines alone-has an annual fund of more than $110 million. Every state has a wide variety of 24-hour hotlines, counselling services and support networks. But for those 98 per cent of individuals who have no problem with their gaming continue to be targeted by anti-gaming politicians and lobbyists who cannot bring themselves to admit that gaming can be enjoyable-and manageable-just like any other leisure activity.

2: Drinking in Sydney

Policymakers often have contradictory goals. Nowhere is this clearer than the regulatory back-and-forth surrounding Sydney’s liquor licences. In 2007, the NSW government announced changes to the existing licensing laws that favoured large licenced venues over smaller ones. This was explicitly an attempt to develop a ‘small bar’ and laneway culture which many Sydneysiders felt the city lacked in comparison to Melbourne. These changes lowered the price of licences to $500 for small venues, and allowed restaurants to serve alcohol without meals.

But the intention to develop the small bar culture was dramatically curtailed by a competing Nanny State philosophy-to reduce the amount of liquor consumed and alcohol related violence. In common with many other cities, Sydney has seen an array of early morning liquor lockouts (policies which restrict the entry of patrons into a licenced venue after a certain hour) and freezes on licence applications. These anti-alcohol policies are stopping the much-heralded 2007 changes from having any significant effect on Sydney’s drinking culture.

But these aren’t the only regulations holding back Sydney’s prospective laneway culture. One new bar in Darlinghurst was shut down after just two weeks because the local council decided it shouldn’t open onto a laneway at all, serving the owners with a $3000 fine and an instruction to open onto a main road.

1: Stay out of the playground

Many ‘public health’ problems which lead to Nanny State policies could actually be mitigated, at least in part, by the elimination of other Nanny State policies. One clear illustration of this is the burgeoning limits on what children can do at schools during their lunchbreak. As Christopher Murn pointed out in the November 2008 IPA Review, risk-averse education department bureaucrats are slowly but surely banning all the forms of physical exercise that previous generations enjoyed during their lunchbreaks. In NSW and Victoria, swings, see-saws, flying foxes and roundabouts have been banned. Monkey bars have been removed from many schools-when they were removed from a Townsville school recently, it made national headlines. Various schools across the country have banned competitive sport, games that are ‘too rough’ and cartwheels.

Those activities that haven’t been banned are being regulated out of existence. The NSW Department of Education and Training’s ‘Guidelines for Safe Conduct of Sport and Physical Activity in Schools’ reaches 284 pages, and describes elaborate restrictions for all physical activity. Finishing tape is banned from running races. Curve balls are banned in baseball until the children reach Year 9.

Like so many other Nanny State restrictions, the cost of these sort of restrictions is impossible to quantify. But the social costs are significant-what will happen to a generation of children who cannot compete in sport, or who have been taught to be so risk-averse to totally eliminate any possiblity of injury, no matter how unlikely? Nanny State paternalism will have profound effects on Australia’s social makeup unless there is a dramatic reversal in our attitude to health and risk.

Keeping up with Kevin: Kevin Rudd’s testosterone technocracy

From time to time in human history there occur events of a truly seismic significance, events that mark a turning point between one epoch and the next.

If the Prime Minister’s rhetoric is anything to go by, big things are brewing. He announced in February that he would ‘move heaven and earth’ to keep Australia out of recession. And in his highly-publicised essay in The Monthly that same month, Kevin Rudd declared that ‘the great neo-liberal experiment of the past 30 years has failed’ and ‘the challenge for social democrats today is to recast the role of the state… as a comprehensive philosophical framework for the future.’

These are strong words. Certainly, the Australian Prime Minister has an aggressive pen. HisMonthly essay reflects a desire to brand the Liberal Party as rabid ideologues – which he did very successfully during the 2007 campaign – as well as win back the Labor intelligensia that have been put off by the government’s embrace of internet filter, its strong words against Bill Henson, and its apparently weak stance on climate change. This may be good politics, although it is hard to imagine many swing voters being convinced by a 7,000 word treatise in a literary magazine.

The Prime Minister’s essay is an attempt to build an intellectual basis for centre-left government in Australia – a goal which has preoccupied large segments of the Labor Party for some time.

But in truth his essay only reveals that Rudd has a deep confusion about the nature and origin of the financial crisis, and promises to head the federal government in a very uncertain direction. His beliefs, as far as he is able to articulate them, will have major consequences for the operation of the Commonwealth Government for many years.

The Prime Minister may want to be a philosopher and revolutionary, but he is, at heart, a technocrat whose crude, pseudo-utilitarianism promises the expansion of government into all aspects of Australian life.

What neo-liberalism?

It comes as no shock that Rudd blames ‘neo-liberalism’ for the global financial crisis. But what on earth is it? As Andrew Norton of the Centre of Independent Studies has pointed out, ‘neo-liberal’ is not a term people ever use to describe themselves; it is a term used exclusively by its critics:

Using ‘neo-liberal’ is code for ‘I am a left-winger who does not like markets’. It is a leftist version of the secret handshake; a signal that the reader is with fellow travellers.

In many ways, the phrase ‘neo-liberalism’ is an anachronism. What could possibly be ‘neo’ about a philosophy of government that stretches back to well before Adam Smith? The core tenets of liberalism, ‘neo’ or otherwise, have a very long heritage – free trade, the primacy of individual rights over collective rights, an emphasis on individual responsibility, and governments providing physical security and the enforcement of contracts. Liberalism has been responsible for emancipating every part of the globe where it has had influence. Liberals, after all, abolished slavery, seeing it as both inhumane and contrary to their belief in human equality.

But if all Rudd means by ‘neo-liberalism’ is open economies and free market economics, then his own party has contributed far more to the cause of neo-liberalism over the last few decades than the Liberal Party ever has. It was Gough Whitlam who cut tariffs across the board by 25 per cent, and the Hawke and Keating Governments who made the most progress shifting Australia’s great government enterprises from public to private ownership. Rudd tries to resolve this apparent contradiction by arguing the ALP was ‘compassionate’ when it modernised the economy (and engaged in substantial deregulation of the financial sector.) The Prime Minister seems to believe that the Labor government’s privatisations of the Commonwealth Bank, Qantas, Australian National Rail, the Snowy Mountains Engineering Corporation, and CSL were compassionate and necessary, but the Liberal privatisation of Telstra was crude and dogmatic market fundamentalism.

Perhaps Rudd’s partisan contortions account for some of his more bizarre policy positions. He argues that his government strongly supports free trade. But free trade has been the central policy position of liberalism for centuries – apparently, Rudd’s crusade against neo-liberalism does not extend to an attack on its most basic and well-known doctrine.

The causes of the crisis

Rudd’s narrative of twentieth century history is a shallow but common one – the Great Depression and the New Deal abruptly shattered the laissez-faire doctrines and practices of the nineteenth century, but those doctrines were rejuvenated under the neo-liberal revolution of the late 1970s and 80s. According to Rudd, neo-liberalism has been the dominant ideology of the last thirty years, as market fundamentalists have pushed the state out of spheres of regulation and public ownership. And for the Prime Minister, the global financial crisis is the shock that allows for – and necessitates – the re-emergence of social democracy in Australia and across the world.

More specifically, Rudd claims that it has been the neo-liberal tolerance for innovation in the financial sector that has caused the crisis. ‘Unregulated’ financial instruments and trading entities-the middlemen of global finance like mortgage brokers, hedge funds and private-equity investors-operate outside the purview of state regulators. And one specific act of deregulation by the (unnamed in Rudd’s essay) Clinton administration, the repeal of the Roosevelt-era Glass-Steagall Act, led to the creation of mega-banks that governments judged were ‘too big to fail.’

This is a lovely and neat story. But neither the Prime Minister’s historical understanding, nor his analysis of the cause of the crisis hold up.

In Australia and around the world, the last thirty years have certainly seen some dramatic changes, most particularly in the areas of privatisation and trade liberalisation. But to describe these changes as an across the board deregulation and the retreat of the state is, simply, incorrect.

In those countries that have experienced the ‘neo-liberal’ revolution, the last few decades been ones of significant increases in government spending and even more significant increases in regulation. While the state may have largely rejected the direct ownership of public utilities, it is far from the Hayekian state Rudd seems to believe exists-governments have instead traded direct ownership for regulation and welfare.

In Australia, the Institute of Public Affairs has found that regulation and legislation has seen massive growth in the period that the Prime Minister describes as neo-liberal. The Whitlam government passed less than 2000 pages of legislation per year. But the neo-liberal Howard Government passed an average of 7000 pages.

And in the United States, the Competitive Enterprise Institute’s Clyde Wayne Crews has calculated that the government has added an extra 727,000 pages of regulation to its federal register since 2000. Compare this figure to the ‘social-democratic’ decade of the 1960s, when it only added 170,000. Just as in Australia, the ascent of neo-liberalism in the United States in the 1970s saw a sharp and dramatic spike in government regulation.

Obviously, these are not the actions of states in retreat.

And when we look at financial regulation specifically, the Prime Minister’s story is even less accurate. The sector which is in the most trouble – the banking sector – is in fact one of the most highly regulated sectors in both the United States, where the financial crisis originated, and here in Australia. Contrary to Rudd’s assertions, it is a sector which has seen little, if any, deregulatory activity. Indeed, the American Federal Deposit Insurance Scheme predates the Australian one introduced last year by nearly two decades, as it was instituted under a raft of regulatory increases following the Savings and Loans crisis of the late 1980s. The international regulatory environment that governs the banking sector is elaborate and extremely complex.

Two other critical instances of regulatory expansion deserve a mention. While the Prime Minister claims that the Basel II accords have been found to be inadequate, the simple fact that the international banking system was adopting a comprehensive global regulatory framework certainly seems to indicate that regulation was not contracting as Rudd believes, but dramatically expanding. And he also fails to recognise the extraordinary regulatory and direct government intervention in the US housing market. The existence of Fannie May and Freddie Mac, and the now-infamous Community Reinvestment Act – which encouraged banks to make the high-risk subprime loans that precipitated the financial crisis – are uncomfortable facts which his narrative is unable to accommodate.

Certainly, the crisis was borne of decisions made by actors and investors within a market framework, but those decisions were heavily distorted by competing and highly convoluted national and international regulations. The byzantine financial regulations provided investors with many opportunities to play regulations off against each other, to shift investments between different jurisdictions, and to invest in otherwise less profitable enterprises simply because they are less regulated. With all this dense and difficult regulation across the world, to describe the international finance market and banking sector as ‘unregulated’ is a gross caricature. And to extrapolate this misunderstanding of financial regulation into a belief that the Australian economy has never been less regulated is just wrong. One could plausibly claim that we could be better regulated – although that argument would still have to be taken with a grain of salt – but to claim that we are less regulated than in the past is exactly the opposite of the truth.

Unfortunately, the Prime Minister’s Monthly essay is not the only example of his shallow understanding of the nature of the crisis. His constant references to excessive ‘greed’ and his smug mention in November 2008 of the ‘greed is good’ attitude parodied in Oliver Stone’s film Wall Street, simply shows that he is trying to reduce the global financial crisis to a cheap moral lesson.

Labor and the search for the Third Way

And in the place of neo-liberalism, the Prime Minister proposes… well, it’s not clear.

Kevin Rudd has been, at various times since he came to national attention in the lead up to the 2006 leadership ballot, ‘an old-fashioned Christian socialist’, then ‘not a socialist’, and during the 2007 campaign, an ‘economic conservative.’ Unfortunately, in his new guise as ‘social democrat’ and scourge of neo-liberals, he is no closer to ideological clarity.

While Rudd has peppered his rhetoric with words like ‘open-hearted’ and ‘compassionate’, these words are absolutely meaningless as ideological or policy descriptors. There is a peculiar strand of left-wing thought for which policy decisions should be as simple as making the most ‘kind’ choice-many columnists seemed to think that describing John Howard as ‘mean’ was the most damning indictment of his government.

On the policy front, Rudd’s lack of seriousness is clearly demonstrated by his inconsistent approach to the leaders he admires. He goes out of his way to critique the Institute of Public Affairs’ Alan Moran – the only living neo-liberal mentioned in the essay – who wrote in The Australian in January that public service salaries should not be immune to the sort of cost cutting and rationalisation that is occurring across the economy; in response, Rudd argues that ‘social democrats, by contrast, stress the central role of the state in maintaining aggregate demand, both for consumption and investment spending, at a time of faltering growth.’

But those very same social democratic American Presidents that he admires – Franklin Roosevelt and Barack Obama – contradict his case. One of FDR’s first acts upon entering the White House was to dramatically cut public service salaries by 15 per cent. And one of Obama’s first acts was to announce a public service wage freeze. If, as Rudd claims, ‘social democrats’ rely on the public service to spend their country out of recession, then the social democracy he is referring to is some peculiar regional variant cooked up in the Prime Minister’s department – not the worldwide ideological movement that he seems to believe it is.

But the deeper origin of Rudd’s ideological incoherence is one which is common to large swathes of the Labor Party itself-the centre-left doesn’t quite know what it believes in.

Australian party politics has long been out of sync with its Anglosphere cousins in the United States and Great Britain. The collapse of the Keynesian post-war economic settlement compelled all nations to pursue significant microeconomic reform in the 1980s. In the US and the UK, those reforms had a strong ideological flavour-the stirring anti-state rhetoric of Thatcher and Reagan left no question where the philosophical sources of the reforms lay-but in Australia, the privatisations and trade liberalisations of the 1980s were presented by Hawke and Keating simply as necessary modernisation, a jettisoning of economic structures unsuited to a late-twentieth century nation.

For American Democrats and British Labour, the 1980s were a long period in the political and philosophical wilderness. The loss of faith in old certainties led to the development of the Clintonian and Blairite ‘Third Way’ – the ideological amalgamation of economic policies that abandoned mid-century socialism, respected market dynamics and adopted social policies that are just as technocratic as they are ‘compassionate.’ Privatisation is pursued in order to achieve the government’s social goals; Third Way politics has no ideological or emotional reason to maintain state ownership. Education is emphasised less for its poverty-alleviating effects as its impact of national productivity. Market forces are not to be resisted, but regulated to achieve non-market outcomes.

However, being a decade out of sync with the Labour and Democratic political theorists who articulated the precepts of the Third Way has left the ALP uncomfortable with its intellectual basis. While the centre-left in the UK and US were theorising in the early 1990s, the ALP was an aging government. And when Clinton and Blair were enacting – and assessing – their Third Way policies, the ALP was floundering moribund in opposition.

Keating may have had a distinctive ‘Keating Project’-to position the ALP as the party of continuous reform, and the Liberal Party as the party of conservative stagnation-but the post-Keating era has shown just how shallow that project penetrated into the party which he led. (Certainly, there are instinctive reformers in the Keating mould within the modern ALP. But Lindsay Tanner must be a bit unsure what a Minister of Deregulation is supposed to now that deregulation is just the destructive dogma of neo-liberal ideologues.)

Only having managed to achieve government in 2007 – a decade after the Third Way-doyen Tony Blair achieved power in Britain, and fifteen years since Bill Clinton entered the White House – the ALP now faces not only significantly different challenges, but the intellectual movement which carried Blair-style government has largely dried up.

By now, the Third Way is looking a bit rusty. As one former Blair advisor commented on a recent tour in Australia:

It’s been more complex, double-edged and tricky than some would have thought. You look back at 11 years of uninterrupted Labour Government [in Britain] and the patterns of distribution of wealth and opportunity, and you see the Third Way was not the silver bullet that many thought it would be.

Nevertheless, it has been a long-standing project within some ALP circles to forge a long-term philosophical and intellectual basis for Labor governments of the future. And this has involved replicating the sort of institutional structures that the UK Labour Party used to develop and publicise their relatively coherent Third Way philosophy. A think tank, Per Capita, was set up in Australia in 2007 to explicitly replicate the success of UK think tanks Demos and the Institute for Public Policy Research. One of Per Capita’s research fellows, Dennis Glover, wrote that Rudd’s recent Monthly essay simply showed how important ‘ideas’ are to the new Prime Minister.

Indeed, the first policy director of Per Capita was a former staffer to Mark Latham – a Labor leader who genuinely thought deeply about the intellectual basis of centre-left government. Latham had the same sort of depth as Tony Blair, and the same sort of depth that Kevin Rudd is desperately trying to clone.

It is nearly impossible to imagine Rudd, or, for that manner, many people in his government, having the same sort of reflexive, self-critical approach that Tony Blair has repeatedly displayed in rethinking the tenets and effects of Third Way policy. Blair’s often-quoted speech to the Institute for Public Policy Research in May 2005 about the relationship between government, individual risk and regulation – made while he was still Prime Minister – was a candid reflection of the challenges of Third Way governance. It would be unthinkable for Rudd to be so honest in public as to draw public criticism from the national regulator, as Blair did from the Financial Services Authority after his IPPR address.

Instead, given the opportunity in his Monthly essay to describe, completely unfiltered, the direction of his government to a highly literate audience, the Australian Prime Minister could do little more than deal in vague caricatures, make broad, partisan accusations, and write empty ideological history. Rudd is more interested in trying to cast Hayek, Mises and the Liberal Party as screwballs than spelling out his plans for Australia. Rudd’s attempt to characterise his post-neo-liberal government ends up being more about what he opposes  – he makes it abundantly clear that his government is not one influenced by Hayek, and it’s not a Liberal government, but he can’t seem to get any further than that.

In fact, Mark Latham’s description of Rudd’s never-released foreign policy document during the 2004 campaign fits just as appropriately to Rudd’s Monthly essay: ‘wads of commentary about world events, but next to no policy… an empty vessel. He doesn’t write books or policy material, and he never will.’

Of the few policy proposals within his essay, most concern international policy rather than Australian policy. For example, Rudd claims that the failure of the Basel accords to prevent the crisis necessitates further global regulation. This may be an argument the Prime Minister can mount in an international forum (he followed it up in an opinion piece in the Wall Street Journal) but an Australian Prime Minister’s attention would probably be better kept at home. Australia is no more likely to single-handedly reform the global financial system than it is to shame China into reducing its greenhouse gas emissions or halt North Korean nuclear armament.

Testosterone and technocracy

One of the most striking things about Rudd’s essay is its tone-presented in an intellectual frame but actually remarkably breathless. The lines that open his essay (and this one) are the sort of stirring words that one would expect to accompany dramatic economic and social reform.

But even with the escalated sizes of the stimulus packages being pushed through parliament, it is not clear that there has been any fundamental shift in policy since Rudd became Prime Minister. If the Liberal Party had held power in 2007, it is likely the government’s response to the financial crisis would not have been that much different. Perhaps the size of the stimulus package would have been smaller, but its design could plausibly have been very similar (after all, transfer payments to favoured constituencies were a hallmark of the previous government) or perhaps the stimulus could have been delivered through the slightly different medium of targeted tax cuts.

Certainly, Kevin Rudd has big rhetoric, but, looking closely at his policy initiatives, not yet a huge amount to back it up. Policy for policy, the government still resembles the one which was elected in 2007. The big ticket items have either failed to emerge (the national broadband network) or have been dramatically watered down or delayed (the government’s emissions trading scheme.) The policies which have been or will be enacted could still be hugely costly and damaging, but nobody from either side of politics seems to want to admit that, as yet, not very much has actually happened under Rudd. As significant as it is, simply dropping the Commonwealth budget immediately into a deficit is not quite a revolution. Running a deficit is not a fundamental change in the philosophy of government.

When we clear away Rudd’s misunderstandings, errors and ideological confusion, we are left with not much more than machismo and bluster.

But there has been a discernable change in the government’s approach to policy. The hallmark of Kevin Rudd’s tenure so far has been his technocratic approach to government-that is, the belief that there are no problems which cannot be conceivably fixed by regulation or legislation designed by experts and implemented by an efficient bureaucracy. Rudd has the career bureaucrat’s conceit in the infinite possibilities of government action-now in a position to personally direct policy, there are no limits to what Canberra can achieve.

The Howard Government may have been embarrassingly high-taxing and high-spending, but it at least had a certain modesty. It knew that it could not alone fix the problem of obesity, or protect all Australian minors from a dangerous internet, or reduce global greenhouse emissions.

And there is nothing more frustrating to a technocrat than ideological passion. Ideology – or any philosophical approach to political action – does nothing more than frustrate a technocrat, who, after all, is just trying to ‘get things done.’ But technocracy is an ideology, although its proponents would horrified to think so. Technocracy is inevitably a belief in the radical expansion of government power – after all, for a technocrat, there are no philosophical limits to government, and there are an infinite array of problems government can solve.

And just as intellectuals often want to be technocrats – deeply versed in the complexity and detail of public policy – technocrats often aspire to be intellectuals. And Rudd seems to think he is John Gray, assessing and critiquing the moral basis for the market economy.

Kevin Rudd’s philosophical musings may not reflect any deep intellectual thought, but they do show us the depths to which he wants to take his government.

IPA Review Editorial, March 2009

Is this the biggest financial crisis since 1987? Since the 1970s? Since the Second World War? Since the Great Depression? Since the word ‘finance’ was coined?

Who knows – my economist can beat up your economist. Like those American political commentators who try to predict the results of elections with absurd comparisons – ‘A two-term Senator from Texas who hasn’t ever been a three-term Governor has never taken the White House in a year divisible by 32′ – history too often distorts our understanding of contemporary events more than it enlightens.

What historical comparisons do show, however, is that the last three hundred years of liberal capitalism have been a never-ending series of crises and crashes. The economic history of the United States reads like a slapstick cartoon: there was the panic of 1797, the depression of 1807, panics in 1819, 1837, 1857 and 1873, the ‘Long Depression’ between 1873 and 1896, further panics in 1893 and 1907, a recession following the First World War, the Great Depression, recessions in 1953 and 1957, and an oil crisis in 1973. A recession has opened each decade since the 1980s.

In Australia, when the financial journalist Trevor Sykes documented the continuous corporate failures that have dominated our history, that experience led him to title his book on the topicTwo Centuries of Panic. More recently the former Reserve Bank Chairman Ian Macfarlane has described seven financial downturns since 1980.

When Walter Russell Mead delivered the 2008 CD Kemp Lecture for the Institute of Public Affairs in Melbourne in December, he made an important point: our long history of crashes, depressions, panics and recessions are an integral part of the system. When firms fail – even when entire market structures fail, as it appears they have for the more aggressive Wall Street trading firms – we discover better ways to manage risks, better ways to seek profit. Mead argued that the history of liberal capitalism is the history of markets gaining complexity until they were beyond our understanding, leading to a spectacular crash, followed by a recovery based on what we have learnt went wrong, and then another, inevitable building up of complexity. Mead pointed out that since the Dutch tulip mania of the 1630s, none of these crises had fundamentally shifted the West off its path of liberal economic development. Markets crash, and markets recover.

But this resilience of financial institutions and of individuals transacting within them is not the only factor to worry about. The other side of the equation is how governments respond to market panics and crashes. As Julie Novak points out in this issue, the financial crisis is exposing weaknesses in governments’ policy settings across the board, and bringing old ideological biases out of the political basement.

The risk is that, in its eagerness to respond to the crisis as forcefully and politically popular as possible, the government will subsidise, or regulate, or tax, or redistribute in a way that makes the recovery slower, or fundamentally redirects the economy off a path whereby individuals look to their own self-interest.

As Andrew B. Wilson writes in his article ‘5 Myths of Great Depression’, also in this issue of theIPA Review, there is good reason to believe that the Roosevelt administration’s New Deal did much to prevent the economy from recovering as it otherwise would have.

It seems indicative that while we don’t know whether Australia has yet gone into formal recession – although it seems highly likely – and unemployment is still at historical lows, the federal government has immediately plunged itself into a massive deficit.

Nobody can reliably predict the market. But nobody can predict the government either.

20 Years On: Western liberty and Soviet tyranny

2009 marks the 20th anniversary of the fall of the Berlin Wall – the moment which signalled the end of the short and brutal totalitarian 20th century.

The movement had actually begun much earlier. The disintegration of Communist rule in Hungary (which, during 1989, was bringing Hungarians freedom of the press and association, and by October, constitutional reform) meant that East and West Germans were reuniting for holidays in Hungary. Worse, from the perspective of East German officials however, low-level Hungarian border guards were letting many of those East Germans holiday makers slip in out of Hungary and into the West. Porous borders became Hungarian official policy when the liberal Communist regime in September explicitly annulled the migration restrictions formed as part of the East German-Hungarian treaty. Thousands of East Germans began pouring into Austria.

The events of November are well known. Czechoslovakia granted East Germans the same migration freedoms as Hungary had. And without the support traditionally expected from the leadership of the USSR, the East German government was forced to admit that its migration restrictions, which had supported its rule in the 28 years since the Berlin Wall had been erected, had effectively failed. On 9 November, an East German official mistakenly announced that travel to West German was permitted ‘immediately’, and confused, uninformed but thankfully restrained guards on the East allowed the massive stream of excited Germans into the West.

The story of November 1989 is a story of spontaneous and uncoordinated desire for liberty – depending on political confusion, the humanity of border guards in Hungary, Czechoslovakia and East Germany, and the bold excitement of a free future – but it would not have been possible without the world-historical leaders in Washington, Moscow and England. Mikhail Gorbachev declined to act to defend the solidarity of the Soviet Bloc at a very crucial moment. And the triumvirate of John Paul II, Margaret Thatcher and Ronald Reagan redefined the essential questions of the Cold War-the stark dichotomy between Western liberty and Soviet tyranny.

In this IPA Review, John Roskam looks at just what made Reagan tick-his attitude to the Soviet Union, Mikhail Gorbachev, and how that attitude played a central role in winning the Cold War and liberating those behind the Iron Curtain. As Roskam points out, Reagan meant every word of what he said. His description of the Soviet Union as an ‘evil empire’ may have been ridiculed in the left-wing press, but it resonated with those who had actually experienced the Communist system, and those who still were. If it wasn’t for the moral clarity Reagan, Thatcher and John Paul II brought to the Cold War stalemate, those migrants escaping across the Hungarian border, or those streams of East Germans flooding through Checkpoint Charlie would have had to stay at home.

In retrospect, it’s hard to imagine the Soviet Union lasting much into the 1990s. The liberating and democratising nature of the internet and the digital revolution might well have totally undermined the Soviet system if it had survived the events of 1989 – studies of Soviet computing show that the system was completely unable to handle the digital age, even before that era fully manifested itself with the internet.

We know now that the Soviet system was moribund and heading towards an inevitable collapse. But that it collapsed in 1989, not 1994, or 1998, is a testament to the leadership of these great figures.

IPA Review Editorial, November 2008

Isn’t it great when events confirm your political prejudices?

If Kevin Rudd’s widely reported speech in early October is any indication, then the Prime Minister sees in the financial crisis the seeds of a grand, epoch-defining work program for the Commonwealth Government. Having come to national prominence claiming his opposition to the ‘Brutopian’ philosophy of Friedrich Hayek – as muddled as his understanding of Hayek’s actual writing was – Rudd has announced that the financial crisis was all the fault of ‘neo-liberalism’, and ‘a political and economic ideology of extreme capitalism’:

this crisis bears the fingerprints of the extreme free-market ideologues who influence much of the neo-liberal economic elite, free-market ideologues who have a naive belief that unrestrained markets are always self-correcting and that markets left to themselves will always achieve optimum outcomes.

It is a bit odd to criticise the ‘naive belief’ that markets self-correct while we all watch the financial market self-correct in the most dramatic of fashions.

Nevertheless, will historians be able to neatly split Kevin Rudd’s first term as Australian Prime Minister as defined at first by deregulation – his government, after all, appointed the first Australian Minister for Deregulation, not that it’s done much good – and then by a period where pro-regulatory forces were in the offence?

One could be forgiven for believing that the era of small government is over, if only we could remember when it had started.

In his October speech, Rudd recalled the character Gordon Gekko in Oliver Stone’s 1987 film Wall Street. It is somewhat disconcerting that Kevin Rudd is trying to build his political narrative off the dramatic licence of Stone – someone who may be an extremely talented filmmaker, but is also an anti-capitalist of the most lunar left. Stone, after all, thinks the Cuban dictatorship is just swell, and that the US Government is competent enough to kill its own President and keep it a secret for nearly half a century.

Unfortunately, the Prime Minister sees the financial crisis as a cheap morality play-greed caused the crisis, not bad regulations, or poor risk management, or bad decisions. According to his narrative, it is the role of the government (the good guys) to punish the finance industry (the bad guys). The same left-wingers who ridiculed the simplistic dichotomy of the War on Terror-remember George Bush’s apparently ‘inflammatory’ statement, ‘you are either with us or against us’?-are more than happy to jump aboard their own simplistic dichotomy when it comes to the evil and greedy traders on Wall Street.

Of course, we have to be careful seeing any hint of the future in a speech by this Prime Minister. If we could, then we would also be proud of our role as the founding members of the Asian franchise of the European Union, proud that it was our diplomacy that finally managed to enforce nuclear disarmament around the globe, and proud that our ‘moral leadership’ on climate change had managed to convince China and India to forego economic development and instead help fulfil Labor’s election commitment to save this fragile world.

In the middle of a financial crisis, it is particularly appropriate that this edition of the IPA Review leads with a piece on former Labor Prime Minister, Paul Keating. In many ways, the Labor Party is still a post-Keating party, and Kevin Rudd’s Government is a post-Keating Government. But as Greg Barns concludes, ‘Australia’s various and numerous challenges as a nation today require Keating boldness, not Rudd timidity’. The events of the last few weeks have shown us how true that really is.

The Dark Mind of the Copywriter

A review of Novels in Three Lines by Felix Fénéon (NYRB Classics, 2007,176 pages)

Ernest Hemingway once said that his best story was his shortest story, deliberately limited to just six words – ‘For sale: baby shoes, never used’ – an exercise in radical economy which manages to imply a lengthy and tragic back story, without being predictable or hackneyed. Hemingway’s ‘novel’, and the self-imposed restraint which inspired it, has been justly praised and imitated.

But eloquence under word limitations is a skill which has been practiced by working journalists almost since printing was invented. Félix Fénéon’s Novels in Three Lines demonstrates just how much literary power that can be achieved in an intimidatingly small space.

Novels in Three Lines – a play on the French title, Nouvelles en trios lignes, which can also be translated as ‘news in three lines’ – is a collection of 1,220 tiny dispatches published in the Parisian newspaper Le Matin, all during 1906. They were printed unsigned in an obscure corner of a Le Matin page. Their topics are mundane, covering crime, death, celebrations and local controversies which would not deserve any more space in the paper than Fénéon’s column would grant them.

Nevertheless when collected together, as Luc Sante has done in this appropriately thin volume, Fénéon’s skill as a literary compositor and the artistry of his dispatches becomes clear. Novels in Three Lines is a remarkable portrait of regional France in the first decade of the twentieth century, and a work of unacknowledged brilliance.

Félix Fénéon may have had a relatively anonymous job in 1906 when he wrote for Le Matin, but he occupied a central place in the artistic community of turn-of-the-century France. He was a prominent art critic, whose writing on Georges Seurat was partly responsible for the latter’s success – indeed, Fénéon was the first owner of Bathing at Asnières. He was a theorist of Pointillism, the post-impressionist movement for which Seurat has become the historical touchstone.

Fénéon was a serial magazine founder, writing journalism anonymously and criticism under his name. When Picasso once asked Fénéon his opinion on Les Demoiselles d’Avignon he responded dryly: ‘you should stick to caricature.’

He was imposingly tall and contemporaries described him as enigmatic. When Paul Signac, a follower of Seurat, painted Fénéon surrounded by garish proto-psychedelic abstraction, Fénéon was deeply unhappy with the portrait – the publishers of Novels in Three Lines have used a much more stoic-looking photograph of Fénéon taken from French police archives, a decision which presumably the author would have preferred.

Fénéon’s mug-shot is, anyway, more in keeping with the volume than Signac’s painting would have been. Novels in Three Lines is a collage of brutality and violence; the vast majority of Fénéon’s dispatches concern murders, suicides and accidents, punctuated by the occasional riot, theft, or crippling inquiry. One random-chosen page describes four separate homicides, five accidental deaths, at least six major injuries, one woman committed for insanity, as well as this piece of bad luck:

Too bad! Mentré of Longwy, who revealed to us that he was the winner of the 250,000 francs in the tuberculosis lottery, seems to have been hoaxed.

Fénéon works within the conventions of journalism. He is careful to record names, locations, and more often than not, ages and job descriptions-butchers, clerks, merchants, nurses and soldiers. His ‘novels’ describe early automobile accidents, they record otherwise parochial regional arguments for a national audience (Le Matin was a Parisian paper), outbreaks of disease and building collapses. It is one of the troubles of historical investigation that the underclass only enter history in times of tragedy – most of what we know of the lives of the non-elites in early modern England comes from the proceedings of the Old Bailey. Fénéon’s dispatches are the only time that Jourdain, of Mézières, or the engineer Mahuet, or Langon, of Sceaux, or M. Jégou de Laz, of Cleden, would penetrate the historical curtain.

So much of the artistry of Fénéon’s epigrammatic journalism rides on its elaborate construction, which constantly flirts with full-blown satire:

Napoléon, a peasant of Saint-Nabord, Vosges, drank a litre of alcohol; very well, but he had put in some phosphorous, hence his death.

Mme Fournier, M. Vouin, M. Septeuil, of Sucy, Tripleval, Septeuil, hanged themselves: neurasthenia, cancer, unemployment.

Often Fénéon delays the core of his story until the very last moment, or holds back a crucial piece of information which completely recasts that which preceded it:

To get back with Artémise Riso, of Les Lilas, was the wish of romantic Jean Voul. She remained inflexible. So he knifed her.

He smuggles slightly ambiguous moral commentary within his reportage, wavering between dispassion and irony:

What?! Children perched on his wall?! With eight rounds M. Olive, property owner in Toulon, forced them to scramble down all bloodied.

An unknown person painted the walls of Pantin cemetery yellow; Dujardin wandered naked through Saint-Ouen-l’Aumône. Crazy people, apparently.

In the London Review of Books, Julian Barnes points out that Fénéon had worked in this form before, but for explicitly political ends, in an anarchist journal in the 1890s, where his black sarcasm was deployed even more aggressively:

Dead sick of himself after reading the book by Samuel Smiles (Know Thyself), a judge just drowned himself at Coulange-la-Vineuse. If only this excellent book could be read throughout the magistracy.

But in his Le Matin column, he eschews politics. Luc Sante’s introduction nevertheless emphasises Fénéon’s complicity, if not outright responsibility for, some of the revolutionary anarchist terrorism that was common to western democracies in the pre-war period. Fénéon was arrested for a bombing in 1894, and, while detonators were found in his clerk’s office at the French War Department, and he was close friends with other convicted bombers, he was released for lack of evidence. Whether Fénéon was guilty or not is sort of beside the point-Sante points out that Fénéon was a true believer in the anarchist cause, even if his printed material (he wrote, all up, very little, and even less under his own name) does not obviously reflect it.

For the turn-of-the-century anarchists, politics was as much an aesthetic practice as it was political. In a twisted variation on the famous Robespierre/Lenin line that omelettes cannot be made without breaking eggs, the poet Laurent Tailhade once defended the bombing of civilians by asking: ‘Of what importance are a few vague people if the gesture is beautiful?’ Tailhade was the sole victim of a cafe bombing a few months later-he did not repudiate anarchism, but would not describe himself as ‘vague’ either.

In Novels in Three Lines, Fénéon shares Tailhade’s nihilism, if not his incredible anti-humanism. Fénéon seems to be obsessed with the artistic potential of mayhem-the book jacket draws comparisons with Andy Warhol’s ‘Death and Disaster’ series-stripping the emotional core out of individual tragedies and recording them either with extreme passivity, or filtered through a dark irony.

So can Novels in Three Lines – which Fénéon never meant to publish, are only available in a collated form never seen by the author, and were intended at the time to be nothing more than journalistic hackery – be considered in any way literature?

The Russian theorist Jan Mukarovsky spoke of a necessary ‘literariness’, where simple communication is pushed to the background, made subservient to expression, or as Mukarovsky put it, the emphasis is given to the ‘act of speech itself.’ Indeed, it is hard to avoid the impression that Fénéon was often much less interested in the subject matter of his dispatches than he was with toying with sentence structure and the ambiguities of language. For Fénéon, the drudgery of copywriting seems to have inspired literary experimentation – having to reformulate variations of the same misfortunes over and over would get very tedious.

Fénéon may have arrived at literariness out of nothing more than boredom, but he still arrived there. Novels in Three Lines is an often comic and always disturbing snapshot of European nihilists and the world they disdained.