Month: July 2011

News Of World: Sideshows And Political Opportunism

The News of the World phone hacking scandal has spiralled out in a dozen different directions.

No wonder. It’s fun to talk about Rupert Murdoch. And for the British Labour Party, it’s exciting to tie David Cameron to the News of the World.

But from a political economy perspective, it’s the role of the London Metropolitan Police in the hacking which should be the most concerning.

That’s because we expect politicians to be craven, and to coddle up to media proprietors. And we expect many journalists to be opportunistic and tasteless. As long ago as the 1730s, Montesquieu was complaining about the immorality of English newspapers.

But we expect – well, require – the police to be lily white.

In a free society, the police are not just any institution. Only they can use force against citizens. The purpose of the police is to prevent crime. There’s no clearer breach of the social contract than police being complicit in criminal activity.

Operation Elveden is the investigation of the Metropolitan Police into officers suspected of aiding the phone hacking. It was sparked by News International documents which mentioned payments to police.

Elveden is being conducted side-by-side with the investigation into the hacking itself, and given similar priority and prominence. Officers from both operations have conducted the few arrests so far.

Some survivors of the 2005 London bombings believe the only way their contact details would have been accessible to News of the World is if survivor lists – full of telephone numbers and addresses – had been leaked by Met officers.

If true, that would suggest some of this scandal’s most ethically egregious violations would not have been possible without the complicity of the Metropolitan Police.

And Operation Elveden has not been the only investigation into police corruption in recent years.

As Graeme McLagan, a former BBC home affairs correspondent, pointed out in The Guardian earlier this month, accusations of inappropriate and corrupt relationships between the police and journalists have been a regular feature of the last decade. In 2002, McLagan was documenting the existence of a private detective agency which funnelled information from corrupt police to News of the World and the Sunday Mirror.

Obscuring these serious issues are a number of sideshows.

The police commissioner Sir Paul Stephenson resigned last week because of the “embarrassing” fact he hired a former deputy News of the World editor as a public relations consultant. But, justified or unjustified, that seems to be just a matter of impropriety – the same sort of impropriety which David Cameron must regret for having hired Andy Coulson.

Impropriety may have political significance, but has little policy significance. Bad judgment is not a crime.

Much more important is the statement made by former Assistant Police Commissioner John Yates to the House of Commons committee that “I confidently predict that, as a result of News International disclosures, a very small number of police officers will go to prison for corruption.”

Then there are suggestions that the police failed to adequately pursue the hacking story when it first arose in 2005.

Focusing on the police does nothing to diminish the ethical and criminal seriousness of what News of the World did. Journalists, editors, private investigators, political advisors – anybody who has committed a crime should, and no doubt will, be prosecuted to the maximum extent of the law. That’s what a legal system is for.

But a legal system cannot function if its enforcement arm is anything less than scrupulously clean.

It’s not surprising that Australian commentators haven’t focused on police corruption. Scotland Yard doesn’t own two-thirds of our newspapers.

But accusations of phone hacking have spread well beyond News International. Thirty-one separate British newspapers are now under investigation. They’re not all Murdoch’s.

And there has been no serious suggestion anything remotely similar has happened in this country. (If you think The Australian’s antipathy to the Greens is at all like hacking the phones of terror victims, or even vaguely connected, your moral compass is way off.)

Yet Australian politicians and partisans have tried to make the scandal fit an existing set of hobbyhorses – anti-government hostility in News Limited papers, journalistic ethics, and media consolidation. Australia’s political class can be as opportunistic as any tabloid.

Australian commentators can wax lyrical about media ethics and regulation only because we don’t have to face the implications of law-breaking journalists working in tandem with law-breaking cops.

For the public and for the press, police corruption isn’t as thrilling as allegations of widespread criminality in their favourite newspapers.

And hauling the world’s biggest media mogul before a panel of politicians was great theatre.

But it wasn’t Rupert Murdoch’s evidence in front of the House of Commons committee which was most important. It was the police commissioner’s.

Too many economists in the carbon kitchen

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Values pervade questions about climate policy as well.

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

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

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

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

War To End War Drugs Gains Allies On Right Flank

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brown’s Global Parliament: Scary Proposition

Bob Brown’s call for a global parliament isn’t crazy. That’s the problem.

Speaking at the National Press Club in late June, the Greens leader asked “Why shouldn’t we now join vigorous moves in Europe and at the United Nations for a global people’s assembly based on one person, one vote, one value?”

Brown gave this future parliament a wide range of responsibilities – from financial policy to defence to wealth redistribution and third world development.

He’s hardly alone. Woodrow Wilson, Jeremy Bentham, H.G. Wells, and Albert Einstein all proclaimed their desire for a parliament of the world. Nominal conservatives too: in 1947, Winston Churchill claimed “unless some effective world super-government can be set up and brought into action, the prospects for peace and human progress are dark and doubtful.”

Sure, there are lots of reasons why a future world parliament is unlikely; reasons which were quickly cited after Brown’s speech. (And one wonders why he chose to explore this fantasy in a major forum just days before the Greens took the Senate.)

But to understand why a world parliament is undesirable, we have to ask why the Greens leader would want a world parliament in the first place.

Such a parliament would not be a forum for diplomacy. We already have one of those. Instead, its purpose would be to impose binding legislation on every corner of the globe.

A carbon price enacted by a global parliament would remove the potential for firms to simply shift across national borders to avoid the cost increases. And the parliament would be able to impose a “Robin Hood” tax without fear that finance simply goes elsewhere. There would be nowhere else to go.

But Brown might discover such a parliament might pass laws he doesn’t like. One cannot assume a global legislative structure will always share the policy preferences of a minor antipodean political party.

And whatever legislation it did pass would be binding for the entire world, no matter how misguided or illiberal.

It should be needless to say, but there are advantages having lots of jurisdictions – countries, states, provinces – with lots of different legislative bodies.

We frequently look to other countries for policy ideas to adopt. Or avoid.

A few weeks ago I argued the only reason gay and lesbian people in New York are now able to marry is because legal power over marriage is held by New York State, not Washington DC. A small jurisdiction is able to be more progressive than a large one.

A global parliament – with an inevitably expanding mandate – would slowly erode the possibility of policy experimentation.

(This is an expanded version of the Australian argument between those who would like Canberra to assume more power and those who think decentralised government is better government.)

The idea that democratic power should be as close to the people it governs is an old one.

A global parliament is one of the most liberty-threatening proposals ever suggested by a mainstream Australian politician.

The most important and most undervalued insight of liberal philosophy is the concept of “exit”.

David Hume said “every man ought to be supposed a knave”. We ought to suppose governments, parliaments, corporations, societies, and communities are knaves as well. Through brute force or just subtle social coercion, each can oppress us, limit our individual freedom, or just make life tougher than it should be. Not that they always will. But that they could.

So our most important freedom is freedom of exit. People should be able to escape the clutches of one group, if they have to, and move to a more desirable one.

In a competitive marketplace, this means shifting from one firm to another if we’re unhappy with their service – or starting a competing firm. And in the social sphere, it means having the freedom to build our own relationships and communities.

If a government is oppressive – if it taxes too much, if it limits our civil liberties, if it provides insufficient protection or quality services – we’re stuck. Democracy is little comfort to those suffering under the tyranny of the majority.

Yet we still have a limited, emergency power of exit – we can emigrate. If we don’t like a new law, we can move to another jurisdiction.

So exit still restrains government. If government gets too coercive or unreasonable, people and businesses will leave.

When the British government imposed its income “supertax” – levied at a whopping 95 per cent – high earners like the Rolling Stones jumped ship.

Even if freedom of exit is rarely exercised, its possibility is a vital check on government power.

The purpose of a world parliament is to eliminate the possibility of exit. You couldn’t migrate away from the parliament’s jurisdiction. No matter how onerous its laws.

That’s what makes it so appealing to those who want to expand the power of the state.

And that’s what makes a global parliament such a scary proposition to those who do not believe legislative power is always benevolent.

Giving Up On National Classification

There’s an air of unreality about the Senate’s review of the National Classification Scheme.

Its final report was released in late June. On the face of it, many of its recommendations are overdue.

For instance: classification should be consistently applied to all mediums of delivery. The same classification system should apply to TV, radio, videogames, mobile devices, and so on. Better that than our current odd and incoherent array of government and self-regulatory codes, which seem to have been developed entirely from scratch for each individual medium.

Then there’s lots of recommended tweaks to the classification system, and a call for more funding for classification bodies. All this is standard for a Senate committee report.

But, meanwhile, the entire foundation of Australia’s classification system has collapsed.

As the committee’s report acknowledges, “the committee would prefer that the National Classification Scheme treat all content equally, regardless of the means used to access it. However, the scale and borderless nature of the internet complicates the practicality of this preferred approach.”

The word “complicates” seems to understate the problem somewhat.

Under no circumstances could an Australian classification agency even begin to categorise online content against any rating scheme. In 2008, Google was indexing 1 trillion separate webpages. YouTube claims its users upload the equivalent of 150,000 full-length movies every week, and it would take 1,700 years for one person to watch all of its content already online.

And under no circumstances could the Australian Government apply the principles which animate our classification system to online material – one of which is “everyone should be protected from exposure to unsolicited material that they find offensive”. Even if you thought protection against offence was a worthy goal of public policy, there’s simply no way to do so.

The committee just gave up, writing in its report it “did not receive enough evidence to make specific findings on this issue”, presumably hoping other government inquiries might be able to sort it out where they could not.

This was the first major inquiry into the National Classification Scheme since it was introduced more than a decade ago. And they squibbed it.

The internet challenge should be an opportunity to rethink the purpose of the government classification programs as a whole.

The committee’s failure is all the more acute considering potentially classifiable film and television is increasingly being distributed online, aided by consumer plug-in interfaces which allow Australians to connect their television to the internet.

Media consumption is rapidly moving out of the reach of government classifiers.

As a consequence, attempts to quarantine film, television, or computer games from the Australian market do little but encourage piracy.

Take videogames, whose censorship has been so thoroughly circumvented that reform seems more formality than necessity. Yes, it would have been nice if gamers were able to purchase adult-only games at retail stores. But with online shopping, international shipping, and, of course, downloading, there are few serious barriers to getting hold of banned games like Mortal Kombat or Left 4 Dead 2.

And for online and mobile videogames, classification is in practice voluntary.

It took five years for World of Warcraft – one of the most popular games in history – to be classified by Australian regulators, because, it was an online game.

It’s easy to forecast similar situations occurring with film and television, once a) Australians become more comfortable downloading or streaming film and television from overseas, and b) entertainment business models adjust to a world where most media consumption is online.

That’s not a question of if, but when.

The inevitable slide of government media classification into irrelevancy does not mean classification will disappear entirely. It’ll just go private.

Non-profit groups which rate films according to ethical or religious criteria have been around for a long time. There’s a cottage industry of conservative Christians in the United States judging Hollywood films for nudity and swearing and unethical behaviour. Sites like www.commonsensemedia.org provide far more information and greater detail than the Australian Government. Parents looking for kids films or games in the new media world have a wealth of resources to assess appropriateness.

And, of course, there are the wide range of filters one can install on a home computer that’s used by children to control their internet use. Parents have had to take matters into their own hands already.

The Senate committee’s air of unreality is most dense when it discusses the location of adult magazines and films being displayed in retail outlets near products which appeal to children.

Pornographic magazines and over-the-counter DVDs are almost the definition of an industry in decline. They are not the classification system’s biggest issue right now.

It seems clear the purpose of the Senate review was not simply to assess the efficacy of classification, but to dredge up the usual claims that the media is ignoring community standards.

This is a Senate hobby. In the past few years, the Upper House has solemnly investigated issues like swearing on TV after some people complained about Gordon Ramsey and Big Brother.

Many politicians use discussion about classification as no more than opportunity for moral grandstanding.

But that’s not the real game. If our classification system cannot deal with the fact that entertainment is moving online, then its long-term viability must be seriously in doubt.