Author: Chris Berg

Why Cling On To An Outdated Refugee Convention?

The United Nations 1951 Convention Relating to the Status of Refugees is not fit for purpose.

The 60-year-old convention was designed for an era we no longer live in; an era where the causes and trajectories of global migration were quite different to today.

Yet the convention still dominates our understanding of migration, with its archaic and artificial distinction between legitimate and illegitimate irregular migrants.

The problems go deeper than historical quirks of drafting. The convention deeply distorts our understanding of 21st-century immigration. It makes humanitarian approaches to refugees harder, not easier. Australia should withdraw from it.

The refugee convention was developed in response to the World War II refugee crisis. Between 20 to 30 million people were displaced in Europe alone – “one of the greatest population movements of history” as one US State Department report described it at the end of the war.

But that was in 1945. Six years later, the idea of coordinated global action on those refugees was already anachronistic. Half a billion (mostly American) dollars had been spent resettling the majority of those who had been displaced, save a problematic ‘hard core’ of 400,000. The United States did not want sole responsibility for all refugees in the future, so the convention placed the burden on countries which the refugees themselves approached.

And by this time, refugee questions had already been subsumed into Cold War politics. The new wave of European migrants was mostly comprised of those fleeing communism. The Soviet Bloc did not help draft the refugee convention. It did not want to help “traitors who are refusing to return home to serve their country”.

As a consequence, the convention defined a “refugee” as someone who had a “well-founded fear of being persecuted”. This is the formula our Immigration Department and Refugee Review Tribunal apply to contemporary asylum cases in 2011. But it’s clearly a formula specifically designed for the Cold War. Communist states actively persecuted returning citizens. The consequences of sending such refugees back across the Iron Curtain was unambiguous.

While convention was designed to handle those who could not return home for political reasons, our contemporary requirements are vastly different. The bulk of today’s refugees are displaced not because of politics, but because of economic hardship or conflict. They do not flee totalitarianism but poverty and insecurity.

By any layperson’s definition, virtually all those who reside in 21st-century refugee camps would be considered “refugees” but it has been estimated the bulk would not fit the convention’s “well-founded fear of being persecuted” standard.

The decisions of Australia’s Refugee Review Tribunal record the often farcical attempts by migration lawyers and judges to shoehorn the complex reasons someone may migrate into this frame.

The convention did not even work as intended during the Cold War. Gil Loescher’s The UNHCR And World Politics documents how the USA sidelined the United Nations High Commission on Refugees and built a parallel system to attract refugees from the Soviet bloc.

Of the 233,436 refugees admitted into the United States between 1956 and 1968, only 925 were from non-communist countries. They were accepted into the West not because of the dictates of international law but as part of the great geopolitical game. Contrast America’s embrace of Cuban refugees with its relatively cold shoulder to those from Haiti.

The end of the Cold War undermined the political foundations of the refugee framework. We have now almost no genuinely totalitarian dictatorships persecuting their citizens, but we also have more refugees than at any time in the last half century. The distinction the Refugee Convention makes between political refugees and the rest no longer makes any sense.

In fact, it’s worse than that. Today even people fleeing totalitarianism typically believe they are doing so for economic reasons, not political ones.

North Korea is the most politically repressive state in the modern world. Yet according to a survey of refugees in the recent book Witness To Transformation: Refugee Insights Into North Korea, fully 95 per cent of North Koreans said they left the Hermit Kingdom because of poverty. Only 2 per cent cited political persecution. Absolutely, if a Korean refugee turned up in Australia, they’d change their views after five minutes with a refugee lawyer. But their initial beliefs are indicative.

The convention’s archaic distinction badly distorts the popular understanding of refugee issues.

The denigration of “economic refugees” – so widespread in the Australian press – is particularly absurd. Few realise the concept of legitimate refugee they rely on was formulated primarily to embarrass Joseph Stalin.

Our views on what is a moral approach to refugees also diverge sharply from those implied by the convention.

As Michael Pearce pointed out in The Age in September, Australians feel obligation to those in the far away refugee camp “queue” more than those who arrive in our country. The Malaysia Solution pivoted on this feeling. But that is an almost exact reversal of the convention’s approach, which is silent on the queue, and concerns only those who land on our doorstep.

One argument for the convention is that it acts to restrain the political response to asylum seekers – keeping things at least reasonably humane. Yet it’s not clear it does. Other signatory countries are no more rigorous than Australia at complying with the convention. Non-signatory countries host the majority of refugees. Here, as around the world, domestic policy is set by domestic politics, not international law.

Yet the biggest problem is not merely how it defines “refugee”, but how the refugee convention distorts our understanding of the entire immigration issue.

Rather than viewing refugees as a subset of general global migration, the convention requires us to see them as a separate thing entirely.

It’s a false dichotomy. Migration is not either forced or unforced. There are many degrees of voluntariness in modern migration. But it’s a dichotomy on which our political parties rely. The Greens support asylum seekers but wish to limit skilled migrants. The Coalition and now Labor want to stop the boats yet invite more foreign workers.

Immigration is shaping up to be the big issue of the 21st-century, in the way that trade was the big issue of the 20th. There’s nothing wrong with trying to migrate to find work and a better life. We should, indeed, encourage that. However, we will not be able to come to terms with the age of migration if our policymakers cling to the obsolete refugee convention.

What’s The Crisis In The Cuban Missile Crisis?

Fifty years ago, on the morning of October 16, 1962, the CIA delivered to John F Kennedy aerial reconnaissance photos revealing Soviet missile sites in Cuba.

Shortly after the CIA briefing, Kennedy showed the photos to his advisor Kenneth O’Donnell.

The president was alarmed. “You’d better believe it,” he told O’Donnell, coming to terms with the missiles’ significance. “We’ve just elected Capehart in Indiana and Ken Keating will probably be the next president of the United States”.

The Cuban Missile Crisis has become an icon of 20th century history: the closest the Cold War came to a hot war, two great superpowers playing a game of brinkmanship that could have slipped into Armageddon.

But it was more a domestic crisis than a foreign policy crisis. Fear of the November 1962 midterm elections loomed larger than fear of nuclear war.

There’s a lot of mythology about those 13 days in October. It didn’t take long for the tale of an heroic president pulling the world back from the precipice to take root. But that mythology massively overstates the severity of the Cuban Missile Crisis, and, as a consequence, the likelihood of apocalyptic nuclear war at any time in the 20th century.

Put simply, the world never came to “the brink”.

In his excellent 2010 book, Atomic Obsessions, the political scientist John Mueller demonstrates neither Kennedy nor Nikita Khrushchev had any intention of escalating to nuclear hostilities.
The Soviet premier, for all his bluster, was scarred by his experience of World War II. One of the cables he sent Kennedy wrote of his fear of the “death and destruction” of total war.

Explaining himself later, Khrushchev said “I’m not a Czarist officer who has to kill himself if I fart at a masked ball. It’s better to back down than to go to war.”

It’s now clear Khrushchev placed the missiles in Cuba to deter an American invasion – that is, not in an offensive capacity. But even then, some historians have suggested there was agreement in the Soviet leadership to withdraw the weapons if the US responded with military force.

The USSR never even went on a general alert.

The Americans were even less eager for conflict. Put aside the warmongering General Curtis LeMay, who was nowhere near the decision-making team and exasperated Kennedy. David Welch and James Blight, two historians who have worked closest with the tapes of White House meetings, say the odds the Americans would have escalated hostilities were “next to zero”.

And the gambit that ended the crisis – Kennedy’s secret promise to Khrushchev that he would remove American missiles from Turkey – wasn’t much of a gambit at all. The tapes reveal the president vowing “I don’t want to go to war anyhow, but I am certainly not going to war over worthless missiles in Turkey”.

Keeping the deal secret was just good domestic politics.

Of course, neither side knew of the other’s true position. But half a dozen times during October each side made missteps which, had the world been truly on the brink, would have pushed them off. A U-2 was shot down trying to get a closer look at the missile sites. Neither superpower budged. Another U-2 strayed into Russian territory and was chased out by Soviet fighters. Neither superpower budged.

Nobody wanted war. And as Henry Kissinger once said, “despite popular myths, large military units do not fight by accident.”

So what was the crisis in the Cuban Missile Crisis?

As usual, domestic politics drove foreign policy.

Kennedy had beaten Richard Nixon in 1960 by outflanking him as a hawk – charging that the Republicans had no plan to topple Fidel Castro and stoking fears of Soviet nuclear superiority.

But after the 1961 Bay of Pigs debacle – where US backed Cuban exiles were routed in an invasion attempt – Cuba suddenly became Kennedy’s political problem. Cuba looked like it was going to be a big issue in November, and maybe even in the 1964 presidential race.

Two Republican senators in particular attacked him furiously over Cuba: Ken Keating, a New Yorker with White House ambitions, and Homer Capehart, from Indiana.

These attacks had hurt. Kennedy wanted to reassert his hawkish credentials. The most fateful event of the Cuban Missile Crisis occurred, not in October, but in a press conference a month earlier. On September 13 Kennedy declared bombastically that “if Cuba should possess a capacity to carry out offensive action against the United States … the United States would act.”

Kennedy didn’t know missiles were already on their way. This September ultimatum was for a domestic audience – to counter Republican claims he was soft on communism – but it seriously constrained his choices in October. He’d promised action.

Throughout the crisis, Kennedy regretted his September chest-beating: “I should have said that we don’t care”. But it was too late. He’d ruled diplomacy out. Blockading Cuba was the least warlike thing the administration could think of.

Kennedy famously declared on television that the missiles were an explicit threat to American security.

Privately however the administration thought different. “It is generally agreed,” said Kennedy’s advisor Ted Sorensen on October 17, “that these missiles, even when fully operational, do not significantly alter the balance of power – that is, they do not significantly increase the potential mega-tonnage capable of being unleashed on American soil.”

Defense secretary Robert McNamara was more direct. “I don’t think there is a military problem here.”

The successful resolution of the crisis on October 28 blunted the Republican attacks. The midterm election was only a week away. The Democrats picked up four seats in the Senate, one of which was Homer Capehart’s.

October 1962 has become central to the JFK mystique. It was quickly integrated into the legend of Camelot.

Not only that, but the episode defined how we think of nuclear politics; as if we are, at all times, minutes away from global war.

But if the Cuban Missile Crisis is the closest the world has ever come to a nuclear exchange, then we’ve never come very close at all.

Rose-Coloured Glasses Make For Sentimental Fools

TLabor used to say John Howard had a shameful nostalgia for the 1950s. The ALP is sentimental, too. But Labor’s nostalgia is entirely about itself.

That’s the lesson from two recent books: Politics with Purpose by former finance minister Lindsay Tanner and Speechless: A Year in my Father’s Business by James Button (a former Age journalist and son of John Button, a minister in the Hawke and Keating governments).

Tanner writes of the end of ”labourism”, a pragmatic, union-centred philosophy that dominated the 20th century. Labourism had broad community appeal. Labourism, Tanner argues, is gone now.
Button writes of his failure to recapture what drew his father to the ALP: a world of political combat and idealism and Trades Hall.

Labor’s soul-searching about whether the party has values, a base, a purpose, is essentially about the past. It’s odd for a progressive party to be so weighed down by its own sense of history. Yet it is. Just before Gough Whitlam staked his own claim to Labor mythology, he, too, was rueing the ALP’s decline. Even in the 1890s there were Labor people certain that their movement had abandoned its earlier principles.

You can understand why. The Light on the Hill, the Tree of Knowledge, the turn-of-the-century strikes – how could anybody live up to these poetic legends? They’ve been so built up they’re weaknesses, not strengths.

Liberals fret about their history, too. Malcolm Fraser’s ghost haunted the Howard years. No Coalition government wants to squib market reform like the Fraser government did.

Neither major party looks as it did half a century ago. They’re no longer ”mass” parties at all. Membership is shrinking. Branches are closing. Nearly 200,000 people were members of the Liberal Party in 1950. It’s now less than half of that. Across the aisle, the 2010 review by John Faulkner, Bob Carr and Steve Bracks showed Labor membership had declined by a quarter since the 2007 election.

Only about 1 per cent of Australians are members of any party. Labor feels the pain strongest. It thinks of itself as a movement. A movement without people isn’t very impressive.

The conservatives are more stoic about their shrinking membership. A review by Peter Reith on Liberal Party reform was produced with much less fanfare than the Faulkner-Carr-Bracks attempt.

But both reviews came up with the same ideas. Parties have to give the rank and file more influence over policy. They should experiment with American-style primary elections. In his book, Tanner proposed expanding the ALP’s national conference to accommodate some of the lowly branch members.

Many people claim primaries will counter the rising power of party machines. Yet those machines have probably never been less powerful than now. In recent leadership ballots the ALP factions have split every which way. No longer is Australian politics controlled by anonymous warlords. The faceless men are now publicity hounds. They run internal campaigns on Sky News. They taunt their opponents on Twitter.

It isn’t lost values or machine politics or a desire for empowerment behind the decline of the mass-member party. It’s that the mass party doesn’t make a lot of sense.

In the 1950s, Australians didn’t have much choice: if they were interested in politics they would have to go to a local branch meeting. We are better off. We can watch Lateline and 24-hour news and argue forever on the internet. For political types, party gatherings were once the best entertainment around. Now, surely, they are the worst.

Parties are vehicles to shepherd politicians into seats and form governments. Why do they also have to be debating societies, ideas factories, or social movements?

But there’s a deeper issue. Sectarianism is passe. Choosing a political identity is not a matter of picking one side or another side. We prefer to join lots of causes rather than one team. We tend to take bits and pieces from everywhere, and resent parties that fail to live up to our highly specific preferences. This is healthy – Australia is a nation of individuals, not tribes – but it is a hostile environment for a mass political party.

When federal Transport Minister Anthony Albanese said earlier this year he just wanted to ”fight Tories” it struck a weird note. There is nobody who thinks of Australia in such sectarian terms – nobody outside the tiny, declining fraction of the population who are party members. But that’s the dead-end of political nostalgia. Pity those who still think like that.

Stay tuned for the red underpants theory of bad TV

Occasionally, usually by accident (sometimes if they think nobody is listening) politicians say what they really believe.

“I have unfettered legal power,” Communications Minister Stephen Conroy told an obscure conference in New York in September. “If I say to everyone in this room, ‘If you want to bid in our spectrum auction you’d better wear red underpants on your head’, I’ve got some news for you. You’ll be wearing them on your head.”

Conroy was clearly having a bit of fun. But he’s right. He has complete, arbitrary and absolute control over who broadcasts on the airwaves and the circumstances in which they broadcast, and that control has been disastrous for television consumers.

Let’s call this the ”red underpants” theory of why Australian TV is so bad. Australia seems to have completely missed the great television renaissance. In the US and Britain, audiences are being treated to some of the most brilliant high-quality television the world has ever seen – think of everything from Mad Men to Breaking Bad to The Thick of It.

But Australian commercial TV is languishing. The networks are producing nothing comparable to what’s being made overseas. Their biggest problem is how quickly they can show foreign programs before everybody downloads them. This week Channel Ten announced both a full-year loss and voluntary redundancies. Channel Nine is buried in debt and flirting with receivership.

It’s easy to feel sympathy for those whose livelihoods are threatened. It’s hard to feel sympathy for the networks. The television broadcasting industry is probably Australia’s last, greatest vestige of crony capitalism.

Mr Conroy’s unfettered red underpants power – and that of the communications ministers who’ve gone before him – has been used to protect broadcasters from competition, lock out new technologies and entrench tired business models.

Basic economics tells us that when you deliberately limit competition you lower quality. Basic politics tells us when governments and corporations get into bed, consumers lose.

Broadcasting was a protected industry from day one. In 1905 the Commonwealth government took absolute control over the airwaves with the Wireless Telegraphy Act. The government had delayed passing the legislation for a few years. It was worried that the new wireless technology would be a competitive threat to the existing telegraph cable companies.

From then on, anybody who wanted to broadcast had to apply to the government for permission.

Throughout the 20th century, politicians forged close relationships with media moguls. Each scratched the other’s back. Politicians who played ball were treated kindly by the broadcasters. In return, governments kept away competition and protected advertising revenue. As one broadcasting regulator said in the 1970s, all decisions about the airwaves were ”very substantially influenced by political considerations”.

The number of radio and television stations has been strictly limited. It is extraordinary that in 2012 we still do not have a fourth television network.

New technologies were deliberately held back. The US had FM radio in the 1940s. There were experiments with FM transmission in Australia in 1947. But AM broadcasters didn’t want the competition. The government only licensed FM stations in 1974.

The delayed introduction of pay television was just as scandalous. There were several proposals to offer Australians pay TV services in the 1970s, but it wasn’t until the early 1990s the government relented. Even then it banned pay-TV advertising for the first few years – just to keep existing free-to-air broadcasters happy. Free-to-air television is still protected by laws that give it first dibs on the best sporting content. Don’t imagine this is done for the public’s benefit.

When the government finally got around to introducing digital television – a technology that allows the broadcast of dozens more channels on the same limited spectrum – the spectrum was offered exclusively to the three existing commercial networks. This is effectively a gift of hundreds of millions of dollars to a broadcasting cartel.

In 1959, Nobel Prize winning economist Ronald Coase proposed a way to get politics out of the airwaves. Treat radio spectrum like property, he argued, and let broadcasters use and trade their property as they see fit.

Because a government with unfettered power to force people to wear underpants on their head also has unfettered power to make deals with its media mates against the interests of the public.

The Capitalist Heroes We Forget

The death of Steve Jobs has offered us a symbol which is surprisingly rare: the capitalist as a hero.

The tributes to the Apple co-founder have praised his vision, entrepreneurial drive, single-mindedness, how he defied convention, and developed a business model centred on innovation.

These attributes are not unique to Jobs. He is an icon because of our relationship to the products he developed. And Apple made a point of showcasing Jobs – he launched their new products personally.

But his death reveals a peculiar cultural blindness. We don’t often celebrate the achievements of capitalist entrepreneurs, in life or in death. Military leaders, political figures, religious and royal icons, yes, but not capitalists.

August this year saw the death of Keith Tantlinger, the American inventor and entrepreneur who, with his business partner Malcom McLean, developed, marketed and sold the modern shipping container beginning in the 1950s.

The standardised container sounds simple, but it was revolutionary.

Before the container, goods would be stuffed, manually and arbitrarily, into the irregular shaped holds of ships. This incurred enormous labour costs, theft and accidental losses. Armies of unionised longshoremen would load a ship by hand, unload it by hand, load the cargo onto trains and trucks by hand, and helped themselves to samples. The expense of all of this had to be factored into the price of consumer goods.

McLean and Tantlinger had to face down unions protecting their members from the threat of a standardised, secure, labour-saving container, and the automation those containers made possible. They had to face down regulators protecting the trucking industry from competition. Ports unsuited to the new containers confronted closure. Gone are the old ports of New York. The great ports of the world are now in Le Havre, Busan, Felixstowe and Tanjung Pelepas.

This largely unheralded story is told in a 2006 book The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson. It is not much exaggeration to say that we owe a great deal of the last half-century of globalisation to their big metal box. Thanks to the container, the cost of transporting goods is near zero. Markets which were local are now global. Manufacturing networks are spread across hemispheres.

It is that box which allows Apple to produce the iPhone and iPad at lowest cost in Shenzhen and Brazil. And that box which facilitates the production of the iPad’s competitors.

Not to diminish Steve Jobs, but there is no person on earth who hasn’t benefited from the entrepreneurial drive of Tantlinger and McLean.

Yet when these two died, they met with a tiny fraction of the acclaim we’ve seen for the Apple boss. No prime minister or president was asked to reflect on their achievements. No newspaper rejigged its cover for the inventors of the shipping container.

The news aggregator Factiva records 23,133 separate stories on Steve Jobs in the first four days after his death on Wednesday. Keith Tantlinger only received 26 stories in the entire month after his death. When Malcom McLean died in 2001, he was mentioned 41 times.

It’s not a competition. But it is a revealing comparison. Jobs is exceptional in the public eye not simply because he was an exceptional capitalist – although he undoubtedly was – but because his products are in the front of our mind.

We know we’re using an iPad; the touch, design and functionality is clear. We don’t know that the only reason we can is because someone else invented and constructed and marketed and sold a container to bring it to us. The achievements of McLean and Tantlinger are entirely in the background. Virtually every single mass-produced item in the world finds itself in one of their boxes at some stage during the manufacturing and distribution process.

Jobs has breached the unwritten rule that only statesmen, or intellectuals, or others who spurn profit can be true heroes. Even though it is capitalists more than anyone else who have built the world.

Indeed, the idea of a hero entrepreneur is almost entirely absent in popular culture.

Amazon.com lists 33,000 biographies of political, military, and royal figures – nearly 50,000 if you include religious leaders. It lists only 3,000 biographies of business leaders.

Extraordinarily few films depict business people in a positive light. Two biopics stand out: Martin Scorsese’s The Aviator is one of the rare pro-capitalist genre, as is the largely forgotten Tucker: The Man and His Dream, the Francis Ford Coppola film based on the automobile innovator Preston Tucker. They offer portraits of individuals who were both heroic and tragic. Howard Hughes and Preston Tucker were innovative risk-takers whose success rested on filling the demands of their consumers.

And in both of these films, the dramatic obstacle they have to surmount is not just commercial but political. Competitors allied with governments tried repeatedly to frustrate both Hughes and Tucker by raising the regulatory barriers to innovative entrants. The same happened with McLean and Tantlinger. Any truly great innovation necessarily upsets the interests of the status quo.

Steve Jobs’ achievements were substantial. Anybody who brings a product to market that so many consumers want is worth celebrating. But there are many other stories of capitalists and entrepreneurs who have shaped our social and economic lives. In light of the huge reaction to Jobs death, we might think about broadening our search for heroic icons to the profit-making world.

Rebels Without A Cause Indulge In Delusions Of Revolution

Comparisons between the Arab Spring and Wall Street protests are facile.

It’s hard to imagine a comparison more trite than that made between the Arab Spring and the Occupy Wall Street protests in New York. The former involves millions in the Muslim world revolting against dictators and autocrats. For decades, police states have squashed dissent and violated human rights.

The latter is a small protest against consumer capitalism. The Wall Street protesters don’t like executive salaries, industrial agriculture, drug patents and personal debt. They’re annoyed with corporate influence on politics and society.

The Occupy Wall Street protest has spread to 100 American cities. It seems no press report on it is complete without reference to events in the Middle East.

On ABC’s Q&A last Monday, journalist Mona Eltahawy said the American movement was directly inspired by the Arab revolts. And the organisers of a local Occupy Melbourne – convening next Saturday to avoid weekday traffic – claim kinship with those who paid with their lives to rise against Muammar Gaddafi. That’s not just trite; it’s insulting.

It’s hard to detect much of a relationship beyond their shared use of Twitter and Facebook.

When Arab revolutionaries talk about their human rights being violated, they refer to murder, torture and looting. The Occupy Wall Street crowd refer to having to repay college loans or a mortgage.

Yet the comparison is made, just as it was with the London riots. We now know that three-quarters of the rioters had existing criminal records. Commentators claimed the riots were a social revolution like Egypt. They were just opportunistic lawlessness.

If Occupy Wall Street is nothing like the Arab Spring, what is it? The protest was conceived by counterculture magazine Adbusters. It shares the mag’s unfocused anti-capitalist ennui. And its belief corporations play the US government like a cheap violin. Occupy Wall Street is mostly occupying the wrong place. The bank bailouts were obscene. Yet it seems the protesters think government should spare no expense keeping the economy afloat. It’s hard to work out what their critique is – apart from saying bankers are rich.

If the protesters are truly incensed about the taxpayers’ money given to bankers, they’d be better off blockading the White House. ”We Want The Sacks Of Gold Goldman Sachs Stole From Us” stated one placard. Stole? Those sacks were handed over willingly by the political ”representatives of the people”.

Their other prominent complaint concerns the widespread housing foreclosures. But those foreclosures are the result of decades of legislators and bureaucrats chipping away at lending standards in pursuit of social goals. Again, Washington is to blame. Instead, Occupy Wall Street and Occupy Melbourne talk simply about standing up to the ”dictators of capital”.

Sure, juvenile social rebellion is common. But many journalists and commentators are eager to believe 2011 is a year of discontent – that the financial crisis has led to a global mutiny against ”neoliberalism”.

Celebrities give the protest a carnival atmosphere. Danny DeVito. Susan Sarandon. Alec Baldwin. Michael Moore, of course. Another supporter, Rosanne Barr, said she’d use a guillotine on Wall Street’s ”worst of the worst”. Barr’s rhetoric could come from the Arab Spring, but from the dictators’ side.

Many people imagine great economic crises must spark great social revolts. In the past few years, economic growth in the Middle East has been slow but still among the highest in the world. Middle Eastern protesters are angry about tyrants, not student debt and other people’s salaries. By comparing themselves with the Arab Spring, all the Occupy Wall Street crowd demonstrate is that people in the First World have nothing like the problems of those living under autocracy in the Third.

We Do Not Need An Internet Overlord

At first glance, the United Nations’ International Telecommunications Union (ITU) seems benign.

The agency helps coordinate global telephone interconnections so we can make overseas phone calls. It manages radio spectrum and satellite orbits. All tedious and technocratic work.

But the ITU is holding a meeting in December to decide whether it – and by implication, the United Nations – should take over the internet.

This meeting in December will be the culmination of a long contest between the decentralised, private internet and the leaden hand of state control.

A UN takeover of the internet could be incredibly bad. Bad for liberty and free speech online. Bad for technological innovation.

Why would we want to hand the basic structure of the internet to a committee of governments – many of which censor the internet at home?

ITU chief Hamadoun Touré pleaded in the Guardian earlier this year that only his organisation had the “depth of experience” to regulate the online world.

The ITU is an agency in decline. It was founded in 1865 to negotiate connections between national telegraph lines, set technical standards, and manage the fees each network would charge each other. Over time, it gathered more responsibilities, dealing with telephone networks from the end of the 19th century, and broadcast frequencies from the 1930s. When the UN was founded in the 1940s, the ITU was wrapped in the blue flag.

This top-down control over telecommunications had a perverse effect. As a paper in the journal International Organization argued in 1990, the ITU “created one of the most lucrative and technologically significant international cartels in history”. It picked winners and entrenched technological monopolies.

It is the last organisation we would want to govern the dynamic, bottom-up internet.

The political economy of communications has completely changed in recent decades.

During the 20th century, governments dominated telecommunications. Telephone networks were state-owned. Even in the United States, which avoided fashionable state socialism, telephone companies were legally-backed monopolies.

The ITU thrived in this environment. When governments controlled the telephone system, negotiating a connection between two national networks was more an issue of diplomacy than private commercial contracts.

Then along came neoliberalism. Public utilities were privatised. Monopolies were exposed to competition. The need for a diplomatic body to manage the planet’s spidering communications infrastructure dissipated.

It’s been a quarter of a century since the ITU’s mandate was renewed. As such, the ITU has no authority over the internet. Network companies have developed diverse interconnection contracts with each other, and have done so independently. Technical standards have developed voluntarily and organically and in response to market demand.

Above all, the internet is largely decentralised. It is a product of civil society, not government. And what few centralised functions the internet does have – for instance, the management of domain names and IP addresses – are managed by non-government organisations based in the United States.

(This is not without problems. The Bush administration intervened to stop the introduction of the .xxx domain, an own goal which undermined American claims of neutrality. But for the most part, the internet still governs itself.)

The advantage of decentralised self-governance means internet architecture is mostly out of the reach of traditional politics and statecraft.

That’s what the ITU power grab is all about.

The ITU doesn’t want control over the internet’s foundations merely to deal with technical issues like interconnection and standards. No, ITU wants policy control: to have a hand in regulating cybercrime, child pornography, even spam. It wants to pursue social goals. Hamadoun Touré talks about creating “a fully inclusive information society” – a phrase which would be easy to dismiss as meaningless if it didn’t reveal an extraordinary mission creep.

Some countries want the UN to control what network operators charge each other. Other countries even want to tax internet telephony firms like Skype to protect the revenue of their old national telephone monopolies.

It gets worse from there. A coalition Russia, China, Tajikistan and Uzbekistan want the UN to regulate online speech by curbing:

The dissemination of information that incites terrorism, secessionism or extremism or that undermines other countries’ political, economic and social stability.

Of course, their idea of what information undermines “stability” may differ from ours.

Will that authoritarian coalition get its way? Probably not. But the absurdity of this last proposal simply demonstrates the risk of UN control. Under the ITU, the internet will be a geopolitical plaything.

It’s hard enough protecting online freedoms from the national security excesses of liberal democracies.

Imagine vesting the power to tinker with the basic structure of the internet with as discreditable a political body as the United Nations.

Don’t Just Tinker With Government – Reduce It

There are few concepts more nonsensical in Australian politics than the “efficiency dividend”.

Yet in the politics of public service cuts, few are more heavily relied upon.

You’d think that an efficiency dividend was a financial benefit that came once efficiencies were found. That’s what it sounds like, after all. Nope: it’s the other way around. By cutting the public sector, governments take the dividends first – in the form of reduced payroll costs – and just hope the efficiency comes later.

The reasoning is pretty crude: with fewer staff, the public service will simply have to be more efficient. How, exactly? They’ll figure it out. Efficiency through adversity.

Of course, there’s nothing wrong with reducing the size of the public service. It’s worthwhile.

The Commonwealth employs 160,000 people; the states and territories around 1.2 million. These are huge figures. So while it sounds pretty extreme that the Federal Coalition might cut 12,000 jobs over two years, that’s a small part of the whole and roughly the pace of natural attrition.

Campbell Newman’s target of 20,000 jobs is more ambitious, but even then that comes out of Queensland’s public service pool of 207,000.

In any organisation, labour costs are among the biggest costs. Governments that need to balance budgets tend to look at public service size first – particularly conservative governments, who don’t see bureaucrats as a voting constituency.

Public service cuts have their own little ritual. “Frontline staff” will be fine, assures the government. “Essential services” will disappear, counter public sector unions. Bureaucracies – for whom size is a measure of success – shift around staff and threaten to eliminate their most politically popular functions. The press speak of promises broken and everybody tries to divine in the entrails of Newspoll and Essential what it all means.

By the end of this, the poor old government will be lucky if it gets its dividend. It certainly won’t get any “efficiency”.

Because these big job cuts – a dozen thousand here, a dozen thousand there – are like taking a baseball bat to a photocopier: briefly satisfying, perhaps, but it won’t make it copy better.
The only way to meaningfully reduce the size of government is to reduce what government does.

There are, no doubt, inefficient elements within the public service. But those inefficiencies will not be identified through orders from on high about across-the-board workforce reductions.
Cutting jobs without cutting the tasks which those jobs exist to perform will – in every likelihood – undermine service delivery, without sustainably lowering the burden on the taxpayer.

This is an uncomfortable reality. Far easier to insist the public service goes on a diet.

The vast majority of public finances are tied up in health and welfare. Take the Commonwealth, for instance. Its largest agencies are Centrelink, the Taxation Office and Defence. These agencies harbour between 20- and 27,000 staff each. The next largest agencies are substantially smaller: immigration has a labour force of around 7,000, Medicare just over 5,000.

You can see why for new governments, it is appealing to shave these departments by a fraction.

But they are also the departments most closely integrated within the political system. Welfare and defence are two of the central features of the modern state. You can tell how serious an opposition is about reducing the size of government by whether they talk about these biggies, or whether they just rabbit on about marginal things like foreign aid, which are, in truth, a tiny fraction of the budget.

So if governments want to reduce the public sector permanently they’ll have to be creative and courageous. Want Centrelink to be a lighter load? Then your priority has to be welfare reform, not public service cuts. Want the Defence Department to be less of a money pit? Then reassess our defence strategy, or our wasteful acquisitions program. Simplify the tax system if you want to shrink the tax office.

It’s not completely hopeless. There are many things that could be done. For instance, a truly cost-cutting government could get the Commonwealth out of education – that is, return education to the states where it is constitutionally allocated. (And, because they actually run schools, the states have a far better idea than Canberra about where money should be spent.)

In other words, find the efficiencies, and then take the dividend.

Of course, there is no government or opposition in the country that wants to seriously rethink what the public service does. There’s a lot of tinkering planned, but no reform.

Targeting the bureaucracy mistakes the symptom for disease. If you really want smaller government, you need to reduce its functions.

Why Capitalism is Awesome

Each year the glossy business magazine FastCompany releases a list of what it considers to be the ‘World’s 50 most innovative companies’. This list is populated much as you would expect.

In 2012, the leader is Apple, followed by Facebook, Google, and Amazon.com. Spot a theme? In the top ten, there are only two companies that are not primarily digital companies. One, Life Technologies, works in genetic engineering. The other (try not to laugh) is the Occupy Movement. FastCompany describes them as ‘Transparent. Tech savvy. Design savvy. Local and global. Nimble.’ One might add: pointless.

Put fashionable Occupy aside. Not only are most of the others digital firms, but they’re all flashy, unique, and they’re almost all household names.

Everybody from BRW to BusinessWeek hands out most innovative company awards. They’re all pretty similar and predictable.

But these lists have a perverse effect. They suggest that the great success of capitalism and the market economy is inventing cutting edge technology, and that if we want to observe capitalist progress, we should be looking for sleek design and popular fashion. Innovation, the media tells us, is inventing cures for cancer, solar panels, and social networking.

This widely held belief couldn’t be more wrong. The true genius of the market economy isn’t that it produces prominent, highly publicised goods to inspire retail queues, or the medical breakthroughs which are duly packaged up for a 7pm news bulletin.

No, the genius of capitalism is found in the tiny things — the things that nobody notices.

A market economy is characterised by an infinite succession of imperceptible, iterative changes and adjustments. Free market economists have long talked about the unplanned and uncoordinated nature of capitalist innovation. They’ve neglected to emphasise just how invisible it is.

One exception is the great Adam Smith. In his Wealth of Nations, the example he used to illustrate the division of labour was a pin factory. He described carefully the complex process by which a pin is made. Producing the head of the pin ‘requires two to three distinct operations’. To place the head on the wire is a ‘peculiar business’. Then the pins have to be whitened. The production of a pin, Smith concluded, is an eighteen step task.

Smith was making an argument about specialisation but his choice of example was important. It would be hard to think of something less impressive, less consequential than a pin. Smith wanted his contemporaries to think about the economy not by observing it from the lofty heights of Windsor or the lecture theatre, but by seeing it from the bottom up — to recognise how a market economy is the aggregate of millions of little tasks.

It’s a lesson many have not yet learned. We should try to recognise the subtleties of the apparently mundane.

Capitalism means efficiency

Ikea’s Billy bookshelf is a common, almost disposable, piece of household furniture that has been produced continuously since 1979. It looks exactly the same as it did more than three decades ago. But it’s much cheaper. The standard model — two metres high and 80cm wide — costs $79. And from an engineering perspective the Billy bookshelf is hugely different from its ancestors.

In those 30 years the Billy has changed minutely but importantly. The structure of the back wall has changed over and over, as the company has tried to reduce the weight of the back (weight costs money) but increase its strength. Even the studs that hold up the removable book shelves have undergone dramatic changes. The studs were until recently simple metal cylinders. Now they are sophisticated shapes, tapering into a cup at one end, on which the shelf rests.The brackets that hold the frame together are also complex pieces of engineering.

Ikea is a massive company. Tiny changes — even to metal studs — are magnified when those products are produced in bulk. There is no doubt somebody, somewhere in the Ikea product design hierarchy whose singular focus has been reducing the weight and increasing the strength of those studs. They went to sleep thinking about studs and metals and the trade-offs between strength and weight. Their seemingly inconsequential work helps keep Ikea’s prices down and its profits high. With each minute change to the shape of the Billy’s metal studs they earn their salary many times over.

Being massive, however, Ikea has an advantage: it is able to hire specialists whose job is solely to obsess about simple things like studs. Ikea is well-known for its more prominent innovations — for instance, flat-packing, which can reduce to one-sixth the cost of shipping, or the extremely low staffing of its retail stores.

Big-box stores have revolutionised retail in the last decade. In the United States, Wal-Mart’s extremely well-managed logistics have ground down the price of consumer goods across the American economy. Costco has done the same, eliminating the barrier between consumers and wholesalers. Even Amazon.com, usually thought of as an internet firm, could be easily seen as a big-box retailer. Amazon’s network of warehouses across the US are not so different to Wal-Mart’s.

The success of these firms rests entirely on the management of their supply-line. For big-box retailers, innovation is about efficiency, not invention. Famously, Wal-Mart’s logistics capability proved greater than the American Federal Emergency Management Agency (FEMA) during Hurricane Katrina in 2005. Wal-Mart brought supplies to stricken New Orleans suburbs well before FEMA managed. As one New Orleans sheriff told the press: ‘if [the] American government would have responded like Wal-Mart has responded, we wouldn’t be in this crisis’. Another suburban mayor said that Wal-Mart was his town’s ‘only lifeline’.

Extremely resilient supply chains may not win glossy innovation awards but they are the source of much of our modern prosperity.

But Ikea and Wal-Mart are big and famous companies. So let me suggest another icon of capitalist innovation and dynamism: pizza.

Capitalism tastes better, cheaper

Pizza is one of our most mundane and simple foods. It would be the last place most people would look for innovation and engineering. It is, at its most basic, a thin bread topped by tomatoes and cheese — a food of the poor of Naples, exported, and endlessly interpreted by the rest of the world. The most expensive pizza in the world is $450, topped with lobster, Russian caviar, Alaskan cod, and has to be ordered a day in advance. Yet it does not deviate from the basic model: pizza is, and will always be, just flatbread with toppings.

Forty one per cent of Americans eat pizza at least once a week, whether purchased frozen and reheated in home ovens, delivered or taken away, or cooked from scratch at home. All of these choices are more complicated than they seem. Keeping a pizza crisp long out of the oven so it can be delivered, or making sure it will crisp up in a variable home oven after having been frozen for weeks is anything but simple.

Moisture is the enemy. For frozen pizzas, this means that toppings have to be pre-cooked precisely to avoid some ingredients being burned while others are still heating through. Frozen pizza takes a lot of abuse — it is partially thawed each time it is transferred from manufacturer to supermarket to home freezer. So the dough has to be precisely regulated to manage its water content. Cheese freezes poorly, and consumers expect it to melt evenly across the base, so manufacturers obsess about cheese’s pH range, water and salt content.

And of course all these decisions are made with an eye on the customer’s budget and the manufacturer’s profitability. The consumers of family-sized frozen pizzas tend to be extremely price sensitive. The opportunities for innovation in processes, equipment, automation, and chemistry are virtually endless.

It gets even more complicated when we factor in changing consumer tastes. The modern pizza customer doesn’t just want cheese, tomato and pepperoni. As food tastes grow more sophisticated they look for more sophisticated flavours even in frozen pizza. It’s one thing to master how cheddar or mozzarella melts. Dealing with more flavoursome brie or smoked Gouda is another thing entirely.

Like Ikea’s stud specialist, there are hundreds of people across the world obsessed with how frozen cheese melts in a home oven. These sorts of complications are replicated across every ingredient in this simple product. (How does one adapt an automated pepperoni dispenser to dispense fetta instead?)

Customers demand aesthetic qualities too — as they say, we eat with our eyes as much as our tastebuds. Processed food can’t look like processed food. Frozen products have to look authentic. Customers like their pizza crusts to have slight burn marks, even if home ovens won’t naturally produce them. So manufacturers experiment with all sorts of heating techniques to replicate the visual result of a wood-fired oven.

Takeaway pizza seems easier but has almost as many complexities. Some large pizza chains are slowly integrating the sort of sauce and topping applicators used by frozen goods manufacturers. Cheese is costly and hard to distribute on a budget. Dominos use a proprietary ‘auto-cheese’ which takes standardised blocks of cheese and, with a push of a button, shreds them evenly across a base.

For takeaway pizza, moisture problems are even more pervasive: the cooked pizza has to survive, hot and crispy and undamaged for some time before it is consumed. If the box is closed, the steam from the hot pizza seeps through the bread, making it soft and unappealing. But an open box will lose heat too quickly. Engineers have struck a balance. Vents in the box and plastic tripods in the centre of the pizza encourage airflow. Deliverers carry the pizzas in large insulated sleeves to keep the heat in and reduce the damage from the steam.

We could easily replicate this analysis for almost every processed or manufactured food in the typical supermarket. Then we could reflect on the complexity of serving food, not in a home kitchen, but on an airplane flying nearly 1000 kilometres an hour, 36,000 feet in the air, cooked in a tiny galley, for hundreds of people at a time. Some of the most extraordinary logistical accomplishments of the modern world are entirely unnoticed.

Some—like airline food—we actively disparage, without recognising the true effort behind them.

Why capitalism means innovation

One of the great essays in the free market tradition is Leonard Read’s ‘I, Pencil’. Read was the founder of the influential American think tank the Foundation for Economic Education. In his essay, he adopts the perspective of an ‘ordinary wooden’ lead pencil and purports to write his genealogy. He began as a cedar tree from North California or Oregon, was chopped down and harvested and shipped on a train to a mill in an Leandro, California, and there cut down into ‘small, pencil-length slats less than one-fourth of an inch in thickness’. Read goes into detail about the lead—not really lead, but a complex graphite and clay mixture whose components are sourced from Ceylon and Massachusetts—the lacquer, the labelling, the eraser and the metal that holds it in place.

Read’s point: ‘not a single person on the face of this earth’ knows how to make a pencil on their own. There is nobody in the world that can harvest, construct and bring together all those components. The construction of a pencil is entirely dispersed among ‘millions of human beings’, from the Italians who mine pumice for the eraser to the coffee manufacturers who supply the cedar loggers in Oregon.

Read was vividly illustrating a famous point of Friedrich Hayek’s — these separate people manage, through nothing but the price system, to make something extraordinarily complex. None of the pumice miners intend to make a pencil — they simply want to trade their labour for wages. Adam Smith’s invisible hand does the rest.

Read published his essay in 1958. The chemical formula for the eraser — known as the ‘plug’ — has changed repeatedly over the interim half century. The production is highly automated, and the supply-lines are tighter. Chemicals are added to keep the eraser from splitting. Synthetic rubber production in 2012 is much different than it was in 1958. These tiny plugs look pretty much the same but have evolved in a dozen different ways.

‘I, Pencil’ magnificently captures the complexity of markets, but it doesn’t quite capture their dynamism. The millions of people involved in pencil production aren’t merely performing their market-allocated tasks, but trying to find new ways to make their tiny segment easier, cheaper, and more profitable. The pencil market — as far from a cutting edge firm like Facebook as you could imagine — is still full of entrepreneurs trying to break apart established business models, to shave costs and rationalise supply chains.

In 1991, a gross of 144 simple, Chinese-made wood pencils sold on the wholesale market for US$6.91. In 2004 that price had declined to $4.48. And this is before we consider the variety of pencils available to consumers — not just wooden ones of different shapes, sizes, and different colours and densities, but mechanical pencils, jumbo sized childrens’ pencils, rectangular carpenters’ pencils, and on, and on, and on.

Why government doesn’t understand innovation

Even the most iconic devices of the modern age have behind them this quiet iterative change.

Apple launched its iPod in 2001. In retrospect it seems like the device exploded on the scene and created an entirely new market overnight. But it took years, and many iterations of the iPod for it to become iconic — the first model’s price was far higher than any of its competitors (the iPod was not the only MP3 player on the market) and its user navigation was clunky.

There have been nearly two dozen versions of the iPod. Some features and designs have been tried and dropped. The software has been revamped over and over. It wasn’t until 2003 that Apple even launched the iTunes store, which is tied so closely to the iPod (and iPhone) consumer experience today. Each new feature added to a device like the iPod creates its own problems, and they take time to sort out. Steve Jobs did not manage a team of inventors. He managed a team of refiners.

If FastCompany has a warped view about the nature of innovation in a market economy, they are not alone. Governments do too.

The Australian federal government has its very own Minister for Innovation (currently Greg Combet) and his Department of Industry, Innovation, Science, Research and Tertiary Education doles out grants for inventions and start-ups. The Commercialisation Australia program sponsors inventors who ‘have transformed an innovative idea into reality’. Innovation Australia funds grant-seekers to turn their ‘ground-breaking ideas into commercial products’.

But ideas are the easy part. Getting things done is hard. Setting up a business, paring down costs, acquiring and retaining market share: those are the fields in a market economy where firms win or lose. Apple’s iPod wasn’t a success because of the brilliance of its idea, the elegance of its prototype, or the financial backing of its parent firm. It was a success because it was continuously refined and changed and the prices of its components were kept as low as profitability would allow.

The brilliance of the market economy is in that — the small innovations made to polish and enhance existing products and services. Invention is a wonderful thing. But we should not pretend that it is invention that has made us rich. We have higher living standards than our ancestors because of the little things. We ought to be more aware of the continuous creative destruction of the market economy, the refiners who are always imperceptibly bettering our frozen pizzas, our bookshelves, our pencils, and yes, even our smartphones.

A Crackdown On Illegal Immigrants. Interested? Anyone?

Last week Immigration Minister Chris Bowen introduced a bill into parliament. Had we been any other country on the planet this would have been extremely controversial.

Columns would have been published. Talkback callers would have been enraged. Television panels would have pontificated.

But our immigration debate is peculiar. The Migration Amendment (Reform of Employer Sanctions) Bill 2012 will in all likelihood be ignored.

It shouldn’t be. This legislation significantly increases the penalties for employers who hire “illegal workers” and gives a whole range of new inspection and police powers to the Immigration Department to enforce them.

The bill erodes the right to silence, for one, and establishes powerful search warrants with which immigration officers can enter premises to hunt down evidence of illegal workers.

More broadly, the bill puts meat on a new and punitive immigration regime: it is now the legal responsibility of employers to find out whether the people they hire are entitled to work in Australia.

So yes: a crackdown on illegal immigrants! The stuff tabloid dreams are made of.

Or not. In the Australian consciousness, immigration politics is purely about asylum seekers.

By definition, asylum seekers want authorities to find them. Illegal workers do not. They are people who are working in breach of their visa conditions. They may have overstayed their temporary visas, they may be here on tourist visas, or they might be working more hours than their student visas permit.

It’s hard to measure, but we know there are at least 50,000 illegal workers in Australia. A Government report (PDF) in 2010 suggested it could be as many as 100,000.

That figure is a lot more than the few thousand who have sought asylum in Australia by boat.

Why the disconnect?

Immigration politics is not about quantity but visibility. And our borders are uniquely secure. The twentieth century fantasy of full state control over who enters and exits a country has only come close to realisation in Australia.

Those dinky boats may seem like a threat to our “sovereignty”, but they are actually a demonstration of it. Our high-tech Navy picks them up, and our bureaucrats ploddingly process each one in turn. Every migrant interacts with the system at some point. There are no exceptions.

In almost every other country, borders are far too porous to imagine a government could be this diligent.

So in the United States, the United Kingdom and the richest nations in Europe, it is illegal workers who bear the brunt of the political and public attention. We obsess about the people who want to come here. The rest of the world obsesses about those who already are there.

This focus on asylum seekers means we ignore the great issue of our time: the clash between national borders and an increasingly global employment market.

The Government’s new illegal worker bill is evidence that we are not as isolated as we think. One hundred thousand people is not trivial.

But the Immigration Department’s arguments for why we need to crackdown on illegal workers are unfortunate.

First: if we allow illegal workers to work, our immigration controls will be weakened. In other words, immigration restrictions are needed to maintain immigration restrictions. It gets even more circular from there. Illegal workers are a problem because of “costs associated with locating and removing illegal workers”. Read that one again.

Second: illegal workers “deny Australian citizens and permanent residents the opportunity to obtain a job”. It would be nice if the Immigration Department didn’t endorse the claim that foreigners crowd residents out of the employment market, but, well, there you go. Likewise, we might put aside the claim that illegal workers “may not meet … stringent health and character tests”.

One final argument is the most convincing, but perhaps not in the way it is intended: illegal workers are susceptible to exploitation.

This is undoubtedly true. But it is because those workers face the threat of deportation that they are so vulnerable. The stricter we are about visa overstayers, the more we increase the chances that they will be exploited by unscrupulous employers who threaten to call Immigration if they complain.

We know from international experience that an aggressive pursuit of illegal workers and their employers can create as many problems as it tries to solve.

So that this crackdown on illegal workers is likely to sail through unexamined has nothing to do with its desirability. It is, instead, a window into the strangeness of the immigration debate in Australia.