Author: Chris Berg

WikiLeaks and the virtue of transparency

WikiLeaks’s release of American diplomatic cables “may put lives at risk”. The White House spokesman Robert Gibbs claims that the release may damage the “cause of human rights”. WikiLeaks’s actions are “reckless” and “dangerous”.

Sounds serious. But we’ve heard these claims before.

When each of the Afghan and Iraqi war logs were released earlier this year, US officials lined up to condemn the whistleblowing site in the strongest possible language. The Afghan documents, “put the lives of Americans at risk”, according to the US national security advisor. The Department of Defense said the Iraq files dump “could make our troops even more vulnerable to attack in the future”.

On Sunday night a Republican Senator from South Carolina wildly argued on Fox News that “The people at WikiLeaks could have blood on their hands.”

The operative word in that sentence is “could”.

Having lived with WikiLeaks’s release of the Iraq and Afghanistan war logs for months now, Pentagon officials concede there is no evidence that a single person has lost their life as a result. Not one.

And when requested in the lead up to the latest release, the State Department refused to guide WikiLeaks as to which documents should be redacted to protect against “significant risk of harm”.

Instead they insisted the site delete all the documents and forget it ever happened – something the messianic and volatile WikiLeaks head Julian Assange was quite unlikely to do.

Crazy-brave, with all those lives at stake. But more likely just a bad bluff. Major government departments aren’t good at poker.

The passionate assertions that national security will be compromised, that lives will be lost, that the cause of human rights will be set back: shameless, unadulterated hyperbole, by a government not even sure what’s about to be released. Transparent attempts to dissuade WikiLeaks from revealing uncomfortable material.

To take a random example out of the 243 documents released so far, it mustn’t be nice to have it publicly known US diplomats think Bavarian premier Horst Seehofer is “unpredictable” and has only “shallow foreign policy expertise”.

The full diplomatic archive of a quarter of a million documents will be released in dribs and drabs over the coming months.

Some of what we’ve seen is little more than banal gossip. Nobody needed leaked diplomatic communication to realise, say, Dmitry Medvedev “plays Robin to Putin’s Batman” as one cable put it, although it’s great fun to see it in an official document. Or that Kim Jong-Il is a “flabby old man”. That Silvio Berlusconi is “vain” with a “penchant for partying hard”. It will shock the international community to learn Hamid Karzai is “extremely weak”.

One overwhelming impression from the cables which have been released: professional diplomats are unimpressed by the politicians they’re compelled to work with. If only we could see their pens turned against their US political masters.

Other cables are more important, but still only embellish what we know already.

For instance: the US government has been trying to convince other countries to resettle its Guantanamo Bay detainees for years. But thanks to WikiLeaks we now know how desperate those US negotiators sound: officials tried to convince Belgium accepting prisoners would be “a low-cost way for Belgium to attain prominence in Europe”.

This is not materially new information. But it is more revealing than the sterile reports we’re familiar with.

After all, it is one thing to know the world’s superpower is negotiating to resettle detainees. It’s quite another to learn that the superpower sounds like an anxious salesman as it tries to do so. Or like a shonky political party treasurer selling tables to a fundraiser: Slovenia was told resettling a detainee would earn Slovenian leaders an audience with Barack Obama.

These cables further underline how the original decision to set up Guantanamo Bay dropped the US into a complicated long-term legal bind from which it is still struggling to extricate itself. It’s not revelatory. But the desperation is very, very revealing.

So too is the deep mistrust within the Middle East towards Iran.

Arab leaders in the region endlessly crow about Israel, but in private it is Iran they worry about. The cables vividly show that the leadership of Qatar, Abu Dhabi, Oman and Bahrain are all deeply concerned about Iran’s nuclear program. Saudi Arabia has been urging a US attack on Iran.

Analysts have been saying this for years, of course. But the unadorned cables make their points starkly and unambiguously.

Julian Assange is anti-war. But when the world reads the Egyptian president telling the US ambassador to only enter dialogue with Iran “so long as the [US] does not believe a word [the Iranians] say”, the case for dealing with Iran as soon as possible is strengthened, not weakened.

The documents are unlikely to damage America’s global reputation.

While foreign governments will kick up a fuss about what they read, they know how diplomacy works. They’re worried they could be the victims of the next WikiLeaks release.

Neither are they likely to be of great interest to foreign intelligence services. At a minimum, 3 million American soldiers and officials have access to the cables and the clearance to read them. That’s the security problem, not WikiLeaks. Let’s assume much of these cables have leaked before, just less publicly.

In the past, the US government itself made use of WikiLeaks to expose corruption and mismanagement in the United Nations. One of George Bush’s senior officials said in July, “Transparency and accountability in government and international institutions is a best practice and of great importance and WikiLeaks previously has been a force for good in the area.”

It must be harder to see the virtue of transparency when you’re the target.

Chris Berg is a Research Fellow with the Institute of Public Affairs. Follow him attwitter.com/chrisber
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If Marriage Is So Good, Why Not Invite Everyone In?

It didn’t take much for a wave of pro-gay marriage sentiment to echo through the socially liberal wing of the Labor Party.

A Greens motion that politicians should “gauge their constituents’ views” on gay marriage (which you’d have thought was their job anyway) has led a growing list of Labor MPs to declare their support. And Julia Gillard has brought Labor’s national conference forward six months so her party can debate the issue next year.

That’s Labor. What about the Liberals?

You’d think conservative opposition to same-sex marriage would be a no-brainer. Resistance to major social reform is seen as part of the DNA of Australian conservatism. Certainly, no Liberal politicians have stuck their necks out. Malcolm Turnbull, who you’d think would be the best bet, has made it clear he believes marriage is between a man and a woman.

Yet there is a strong conservative argument for legalising gay marriage. Conservatives who decry the decline of marriage as an institution are right. Straight people have been undermining the sanctity of marriage for decades. This is a bad thing.

Marriage is a private form of social welfare. Spouses insure each other against sudden loss of income. Married couples are less vulnerable to financial stress than single people.

The benefits of marriage on mental health and wellbeing, income and happiness are widely acknowledged. Married people tend to lead more stable lives. Their relationships are more durable.

There’s justified concern Australia is losing “social capital”; that the bonds of the community are weakening. And the evidence suggests married people integrate better in communities and the workplace.

So extending the marital franchise to gay and lesbian couples would multiply the number of Australians who can join this crucial social institution, spreading the positive impact of marriage on society.

The most common conservative case against gay marriage is that the very idea is an oxymoron; marriage, by definition, is between a man and a woman. But this seems less about protecting the sanctity of marriage and more about protecting the sanctity of the dictionary.

Conservatism isn’t opposed to change. It simply seeks to make change manageable. And if the symbolic value of the word “marriage” is important, then the social benefits accrued by that symbolism should be available to same-sex couples. On the other hand, if the word is merely shorthand for a utilitarian contractual relationship between two rational, calculating individuals, then barring gay individuals from signing such a contract is obviously discriminatory.

Conservatives have one more question to be answered. Doesn’t gay marriage hurt straight marriage? That’s an empirical question we can measure.

In their book Gay Marriage: For Better or For Worse? What We’ve Learned From the Evidence, William Eskridge and Darren Spedale look at the effect that recognition of same-sex relationships – marriage and civil unions – has had on Scandinavia since Denmark introduced registered partnerships in 1989. The authors found that after nearly two decades of registered partnerships in Scandinavia, social indicators, if anything, were getting better. Total divorce rates were lower. There were higher rates of straight marriage, fewer out-of-wedlock births.

Caution is worthwhile. These changes aren’t due to same-sex unions – just because two women get married doesn’t mean you’re more likely to stay with your opposite-sex spouse. But it does suggest gay relationships do not undermine straight relationships.

In the past few years, a number of countries have adopted gender-neutral definitions of marriage. Opponents of gay marriage should reveal how they predict straight marriage will be harmed? Early indications suggest it has not been harmed.

The conservative case for gay marriage is one that respects and venerates the institution of government-approved marriage.

A more radical answer to the gay marriage question would eliminate government’s role. There are, after all, two distinct aspects to marriage in Australia. There’s the religious and cultural aspect: marriage is a sacrament, sanctified by religions, families and friends. Then there is the legal aspect: marriages are stamped and approved by the government.

Why do we need the latter? Marriage could be privatised. There’s really no need to have any central authority deciding who is married and who isn’t.

This is, of course, not an approach the Greens or the ALP are likely to adopt. Nor is it the most conservative approach.

If marriage is so socially beneficial, why not encourage as many to join it as possible? The choice is between excluding gay people from the foundation of strong families or inviting them in.

Staring Through The Greens’ Populist Prism

In The Drum last week, Liberal shadow minister Kevin Andrews described the Greens as little more than Marxists for Forests.
The Victorian Liberal Party’s decision to not preference the Greens in the state election, was, in part, because that view is widely held within the party’s grassroots. The decision seems to be the right thing by their supporters: Liberal voters do not want to feel responsible for entrenching the far-left in a position of power.
But this presumes the Greens’ policy views are driven by a bleak, terminally unpopular radicalism.
The recent political melee over banks and their stubborn insistence on making profits suggests otherwise.
Neither the ALP or the Coalition are the biggest populists in Federal Parliament. The Greens are.
Compare the major parties’ responses to the recent interest rate rises with that of this blossoming minor party.
Seeking to get a leg up over the Government on interest rates, Joe Hockey flirted with naked and obvious populism – railing against the Government for not acting against the perfidy of bankers, and full of dark hints about “levers” which the Coalition could pull.
Yet when challenged on what those levers actually were, Hockey stepped back from the populist brink. The shadow treasurer released a complex nine-point plan for regulatory reform of the finance system.
Wayne Swan has had great fun threatening the banks on talkback radio when they’ve callously raised rates, but the art of governing is managing competing objectives – it wouldn’t be prudent, or good policy, to directly stop them from doing so.
So the Federal Treasurer met the political opportunity of the Commonwealth Bank’s interest rate rise with assurances he, too, would be releasing a detailed and complicated plan for regulatory change in the future.
But then there’s Bob Brown.
On Sunday the Greens leader announced his party would prefer to simply ban banks from lifting their interest rates past Reserve Bank movements for two years.
In other words, Brown had no complicated plan; no attempt to delicately balance the incentive structures of the banking industry with community dissatisfaction about those profitable institutions. He proposed a bludgeon: outlaw banks doing what the Greens think is a bad thing.
“It’s time they gave something back to the average Australian,” Brown said.
Then forcibly lower ATM bank fees, force banks to offer fee-free savings accounts, and forcibly limit mortgage exit fees: all to stop, in Brown’s words “excessive profiteering”.
Helpfully, profiteering is defined. “Banks continue to exploit this essential service to maximise their profit.” In other words, profiteering is exactly what all businesses try to do, all the time.
Of course, all parties are prone to blustery populist rhetoric.
A Google site search uncovers nine uses of the word “profiteering” on the Liberal Party website, (mainly about people smugglers, and, for some reason, lobster fishers) and two uses on the Labor Party’s site.
But that’s nothing compared to the Greens, whose website features the word “profiteering” 295 times.
And there’s something deeply populist about a party which thinks it can give everything to everyone, at any price, at any time.
In Victoria, the Greens transport plan for Melbourne pours tasty infrastructure manna across the city. Under the Greens’ plan, the city would receive 10 new rail lines, nearly 40 new stations, 12 new tram lines, and 550 new trams. (Why not 650? Why not 11 new rail lines? Why stop building stations when you get to your 40th?)
And, of course, the Greens promise to reinstate tram conductors, because, well, people say they miss the old conductors.
This plan will never, ever happen. Not just because Greens won’t win government in their own right. But because there is no chance they’d ever be able to afford it if they did.
Understandably, the major parties have been a little miffed by the Greens’ transport generosity. Why should the Greens be able to shower the electorate with promises of gifts it will never be able to give, when Labor and the Coalition are so constrained by the tradition of pretending their policies are cost-effective?
In Victoria, the reluctance of the Greens to have their policies costed is a tacit admission that, really, cost-effectiveness isn’t the point. It’s the thought that counts. Their plans and policies are specifically designed to make the major parties look miserly.
When seen through the populist prism, the Greens’ policy platform looks very different to their radical reputation.
They’re the most vocal defenders of the anti-siphoning laws, which “protect” sports fans from having to get Foxtel. (Sure, the anti-siphoning laws entrench the free-to-air television oligopoly, but that is a minor point when there is pandering to be done.)
The Greens want the Government to limit private sector working hours, which sounds appealing after you’ve worked a long day, but only makes sense if you don’t believe government policies can have any unintended consequences whatsoever.
The Greens claim Australia has an expansive immigration program only because nasty “big business” controls population policy.
And, of course, there’s no government service they don’t plan on spending more on. Governments have limited resources. Popular expectations of what government should do are limitless. This is, however, not a constraint the Greens feel applies to them.
Of course, there are many deeply unpopular policies the Greens support. Parties should be praised for defending unpopular things. Too often it’s the only way we get positive reform.
And it’s more noble than the alternative.
Better a party stands up for unpopular radical views it truly believes in than succumb to simple populist demagoguery.

Debate: Is Australia too conservative?

If Australian democracy is getting too conservative, as the affirmative team suggest, what does that mean?

In a speech just before her death, the radical freedom novelist Ayn Rand described contemporary conservatism as the “God, family, tradition swamp”.

I do not believe that is not a particularly appealing trio. Waleed and myself have been asked to contest the statement view that Australia is getting too conservative, but, and I’ll only speak for myself here, I am far from a conservative.

No conservative would believe in the total and immediate abolition of all industry subsidies and trade barriers, getting the government out of the marriage business, a reduction in the armed forces, and opening the borders to almost all immigrants who wanted to come here.

That’s where I stand.

But the idea that Australian democracy has become too conservative is wrong.

On the first, it seems clear that Australian democracy has little interest in conserving anything. The last few decades have seen rapid and overwhelming social and economic change – much of which has been propelled by governments liberalising the legal framework governing individual relations and the structure of the economy.

Every year, the federal government passes more than 6000 pages of legislation. This should not strike any of us as if the government seeks to “conserve” anything.

Yet in these most unconservative times, it seems as though everybody is bending over backwards to claim the mantra of authentic Australian conservatism.

Kevin Rudd famously described himself as an economic conservative. One pillar of that conservatism was, apparently, a belief in balanced budgets. We’ll let belief through to the keeper, as he did. Another pillar was a belief in an independent reserve bank – a belief which every side of Australian politics shares and nobody had ever accused Rudd of doubting.

Tony Abbott is described – and describes himself – as the archetypal Australian conservative. Abbott’s views do tend to what we commonly consider to be social conservatism. He’s opposed to gay marriage – but not, importantly, homosexuality in general. That’s not unusual. Opposition to gay marriage is the norm in federal parliament.

But then he’s a long term supporter of workplace deregulation, which, however you look at it, is a repudiation of a system of industrial relations that dates back nearly to federation. Uprooting that system, for whatever reason, is hardly a “conservative” thing to do.

Ditto with the way Abbott, and the Howard government, sought to do it – to shift industrial relations powers from the states to the Commonwealth government.

In other words, further eroding the structure of government which we have inherited from the Australian founders.

Abbott has described the states as “Australia’s biggest political problem”. He has a plan to fix it.

Then there are the regular claims that the true “conservative party” are the Greens. This has a hint of truth to it, beyond the simple linguistic relationship between the word conserve and conservative.

On Twitter the other day the state Greens MP Greg Barber wrote that he believed “we need a new political philosophy, where politicians see themselves as trustees, not liquidators of environmental inheritance”. In other words, politicians benevolently and selflessly safe keep the world for future generations – it is hard not to see the shadow of 19th century Toryism in Barber’s words.

A conservative in the 19th century was opposed to the free market Whigs who are the intellectual ancestors of the free marketeers who now describe themselves as conservatives.

Don’t worry – I’m confused too.

A conservative in Russia in 1994 was a communist. A conservative in Iran 2010 is a theocrat.

We describe evangelical Christians as “conservatives”, although in their enthusiasm, they are closer to the French revolutionaries Edmund Burke criticised than the sober masses he defended.

We describe the advocates of the invasion of Iraq as conservatives, although there is hardly anything conservative about invading a country, eliminating its leadership, disbanding its army, and just hoping democracy will spring forth out of the sectarian strife which results.

My point isn’t to say that conservatism is a meaningless word. But just to say that simply describing someone or something as conservative is fraught with difficulty.

Of course, we’re all guilty of this. Conservatism is a convenient cipher for a set of policy views and attitudes we associate with people who willingly adopt the word.

Conservatism is a discreet and specific philosophy.

There is a substantial body of political and philosophical literature which has defined and developed a conservative philosophy of government.

In fact, it’s almost a misnomer to call it a philosophy at all. Instead, let’s call it a disposition.

And, despite the contention of our friends in the affirmative, it is an exceeding rare disposition in Australian politics.

Certainly few in federal parliament could justifiably describe themselves as conservative.

Here’s why.

Conservatism is the anti-ideology. Conservatism has no political program. It is the only political movement that has no plan, no vision for the future, no picture in its mind of the ideal world.

In fact, it’s not really fair to call it a “movement” at all – a value system that rejects the idea that society should progress towards a goal can’t be described as moving anywhere at all.

Progressives imagine human nature to be mutable – that the way we see and react to the world is a symptom of environmental factors, and that as a consequence, that environment can be changed.

Conservatives see human nature as immutable – that there are constants which no planner could ever change. Some self-described conservatives may revere tradition, and place the cultural and social norms of the past on a pedestal, but “conservatism” – that is, the philosophy of conservatism – sees tradition as merely a reflection of these immutable truths.

The true conservative is not opposed to change. Changes occur, outside the realm of politics, and societies have to adjust to cope. Change can be regretted, it can even be restrained, but it should not be opposed.

“When it is not necessary to change, it is not necessary to change”, said the conservative Viscount Falkland who tried, and failed, to keep England from descending into civil war in the seventeenth century.

Change must be organic. It does not come from planners or idealists, but from below. The conservative believes it should come incrementally. It should be limited.

Just as conservatives resist visions of the ideal world, they resist plans to achieve that ideal world. The conservative intellectual Michael Oakeshott – and more than any other, Oakeshott is the modern go-to thinker for conservative thought, a genuine heir to Edmund Burke – gave the reasons for this as due to different types of knowledge.

There is knowledge that can be learnt – knowledge that can be contained in books, to be studied, to give us the impression that we have expertise in an area. Planners focus on this sort of knowledge. If we want to completely revolutionise a social institution, social science data must be studied, social experiments run, academic papers written, and conferences held to devise the perfect way to enact change. This is technical knowledge – like devising and reading a recipe from a cookbook.

But Oakeshott argued that there is other knowledge which planners cannot access. He calls this “traditional knowledge” – the knowledge inbuilt in those social institutions which planners are unfamiliar with. As we all know, following a recipe is easy. But if you do not have the knowledge built up from years of cooking – like how to cut vegetables, how to sift flower, what parts of the chicken to discard – your dinner may look and taste awful nevertheless.

It’s not just a matter of developing more complicated recipes. Much traditional knowledge resists being written down. There is no formula for speedy chopping – you have to build that skill up over years, learning the balance of your favourite chef’s knife.

Planners may be able to write the recipe for social change. But the recipe can never be comprehensive. And, a conservative would argue, if you have the hubris to completely redraw the contours of society, you’re inevitably going to make mistakes. You’re going to discard things which you might think are anachronistic, or out-of-date, but are, unbeknowenst to you, the foundations on which that society is huilt.

You might think that this sort of thinking forms the mainstay of Australia’s right of centre political thought.

After all, you’ve all heard the clichés about how governments cannot pick winners, and how government planning always fails.

Conservatives share a scepticism of central planning and government coordination with classical liberals, and economic rationalists, and radical libertarians such as myself. The writing of Ludwig Mises and Friedrich Hayek were devoted to emphasising  how little we know about what we think we can plan.

But Oakeshott’s conservatism and classical liberalism sharply diverge. For those economic rationalists which dominate Australian politics, on the left and the right, and the Hayekians which Kevin Rudd believed had hijacked the Liberal Party, are motivated by a vision of an ideal future.

Even if that future is white picket fences, and a small population – it’s still a vision. The ultimate rejection of Oakeshottian conservatism.

Nostalgia is not conservatism. Conservatism is about more than just pining for the past – it’s not white faces behind white picket fences.

And populism is not conservatism. There’s nothing inherently conservative about “Stop The Boats.”

All sides of politics are animated by a vision of future Australia, whether it’s a small Australia or a big Australia, a multicultural Australia or a ethnically-homogenous Australia, whether it’s an Australia focused on manufacturing or mining, on services or industry, on wireless broadband or fibre-optic broadband, or one where the government is more involved in the economy or less involved.

This is quite different from the conservatism described by Michael Oakeshott when he writes that:

To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near to the distant, the sufficient to the superabundant, the convenient to the perfect, present laughter to utopian bliss.

In Australia, all sides of politics are searching for a plan for the future. All sides of politics are animated by a vision of a future Australia – one shaped by the economic, social and political reform they prefer. All sides of politics claim the mantle of economic modernisation.

So is Australian democracy too conservative? Obviously not.

Healthy Living… In A Nanny State

If there was one area of human existence which should be left to individual choice, you’d think it would be what we eat.

So the National Preventive Health Agency Bill, now ferreting through federal parliament, is quite a big deal. The agency is charged with preventing chronic disease caused by obesity, alcohol and tobacco through education campaigns and the mass-production of research papers.

It sounds harmless, but if it passes, it will represent the institutionalisation of the Australian nanny state.

The agency is to be a government-funded body with the specific purpose of expanding the scope of government – colonise spheres of human existence that have, until now, been left free from state interference.

We got some indication of the ambition of the new agency from the Kevin Rudd’s Preventative Health Taskforce, which, when it reported in 2009, recommended its formation. That and 121 other recommendations to tax, regulate, and impose national standards on food, beverages, and tobacco.

Julia Gillard announced last week the agency will not have the power to impose taxes on junk food. But that misses the point: the agency has no power to impose taxes on anything. It will, however, be empowered to lobby the government incessantly to do so.

In the long run, the formation of a permanent institution like this is more pernicious than any individual nanny state tax the government might decide implement.

Last year the British government spent 38 million pounds funding institutions to lobby for new laws and regulations, according to a 2009 study by the Taxpayer’s Alliance.

When that government launched a public consultation on potential methods to control tobacco use in 2008, there were a massive 96,515 responses. But a full 70 per cent of those responses were email campaigns originating from government-funded lobbyists – bureaucratic offshoots from the United Kingdom’s National Health Service, like “D-MYST”, the youth wing of SmokeFree Liverpool.

The situation is already much the same here: submissions to the Preventative Health Taskforce were dominated by government-funded entities. Councils, non-profits, health networks, and university public health departments all submitted proposals for new laws – and more funding.

One of the key tasks of the new agency is to develop a “national prevention research infrastructure”.

Usually, more research into the social problems and policy effectiveness is good. You can never have too much research.

But much preventive health research is highly politicised, value-laden, and of use only to those who share its predetermined conclusions.

We’re all familiar with the regular announcements that alcohol use, for example, costs Australia an enormous amount of money every year. These massive numbers are described as “social costs”.

As the New Zealand economists Eric Crampton and Matt Burgess have shown, the methodology which underlines almost all of these social cost studies (one endorsed by the World Health Organisation) is fundamentally flawed.

They typically mix costs borne by private individuals and firms – like workplace absenteeism – with costs borne by government – like funding the health system.

But the more critical problem is the failure of these studies to adequately account for the benefits of “harmful” behaviour.

And humans like fat and salt and ale; that’s the way we’re wired. To look at only at the negative consequences of human behaviour without mentioning the positive consequences is rigging the game.

Health paternalists who propose government intervene in individual choices never make explicit the value judgements which inform their belief. After all, not everyone has maximum health and minimum risk as their overriding goal. (If they did, the automobile industry would disappear immediately.)

The National Preventive Health Agency cannot divine everybody’s personal, highly subjective values. For instance, how much they value their current selves (the immediate sensory pleasure of hot chips right now) compared to their future selves (the potential they will get fat if they consume too many hot chips).

But the public health community assumes the most “rational” decision in any circumstance is to favour your future health by limiting your present consumption.

And if you think otherwise, then, well, you’re wrong.

Many argue, pragmatically, that we need to interfere in individual decisions because we pay for them. Our public health system means that the cost of obesity is borne not just by the obese but by every taxpayer. It’s a fair concern.

But first of all, it’s not always true: particularly in the case of tobacco, where the taxes levied on cigarettes overwhelmingly exceed the costs smokers impose on the health system.

And the medical cost of obesity and alcohol is often mitigated by the unpleasant but nonetheless true observation that alcoholic and obese people tend not to live long enough to cost taxpayers as much as the healthy elderly. If you’re going to calculate the cost of individual choices to taxpayers, you should at least include all the data.

Nevertheless, this argument proves too much. Is government provided health care really incapable of coping with free will? So should we be changed to suit the health system – as the health paternalists would seem to suggest – or should the health system be changed to suit us?

If it wants to do its job properly, the National Preventive Health Agency will tackle these heady philosophical, economic and social questions.

I wouldn’t put money on that.

Instead, it’s a fair bet the agency’s output will be drearily predictable: inflated estimates of the costs of obesity, alcohol, and tobacco use, and incessant lobbying for new laws and regulations.

Greens have an irrational fear of foreign money

Over the past decade, the Greens have rebadged themselves as a polished and sophisticated third party. But their spat over the potential sale of the Australian Securities Exchange is a revealing one.

On Tuesday, Bob Brown announced his party has deep reservations about allowing the ASX to merge with the Singapore stock exchange. Brown says the merger may not be in the national interest, and Australia needs to protest the lack of Singaporean democracy and the execution of Australian citizen Nguyen Tuong Van in 2005.

The Greens leader is no doubt heartfelt about Singapore, which definitely has human rights problems. The death penalty is one. Its mandatory military service is another.

But his outrage about the ASX-Singapore merger is all too convenient. If you were to take Brown at his word, you’d have to assume he has been apoplectic over Optus’s prominence in Australia (Optus is owned by Singapore Telecommunications), and furious about American investment – last year, 52 people were executed in the US.

Instead, Brown’s symbolic stand on the ASX seems motivated by quite another thing entirely: a general opposition to foreign investment in Australia. Economist Wolfgang Kasper called this ”capital xenophobia” – the irrational fear of foreigners’ money.

Bob Brown would say the ASX is special, as Australia’s primary stock exchange, a privilege granted by government. But the government has already licensed another exchange. Chi-X will start trading in early 2011.

Foreign companies owning assets and operating businesses in Australia have to operate under Australian law, even if those companies are partly owned by foreign governments. That should be the end of the story.

The ASX sale may not go through. But it’s not the only foreign investment the Greens oppose. They want to limit foreign ownership of land and water to ”avoid exploitation”. As Greens Senator Christine Milne said in her July blog: ”Our children will never forgive us if we become tenant farmers in our own country.”

For years the Greens have stoked fears international investors might buy farms, claiming they threaten ”food security”. Perhaps, but only if you believe global trade is going to suddenly collapse and foreign investors flee the country, burning their crops as they go.

Despite their urbane and worldly image, and their compassion for the poor in developing countries, the Greens are oddly hostile to the world actually coming to Australia. They want to keep Australian stuff in Australian hands, paid for with Australian money.

The Greens seem to be motivated by a peculiar form of nationalism – it’s downbeat, stripped of any patriotism or even pride of country, and one which imagines the ideal Australia to be small, self-sufficient, and somewhat isolated.

Take, for instance, their attitude to immigration. They want Australia to accept more refugees, which is good. But they also want to reduce the total number of migrants coming into Australia by further limiting skilled migrant places. The world should keep its money and stay where it is.

Australia has one of the most restrictive foreign investment regimes in the OECD. The Financial Times described our system as a ”protectionist relic”.

The Australian and Singapore stock exchange merger will have to go through the Foreign Investment Review Board, which could easily recommend the government reject it.

Then it has to get past the Treasurer, who can knock it back if he determines the investment wouldn’t be good for the ”national interest”. (Read: ”for any reason whatsoever”.)

The economic consultancy ITS Global suggests we forgo $5.5 billion of investment every year because of this strict regime. That’s money which could have created jobs, and been used for innovation and training. And even been taxed.

Joe Hockey has also been asking Wayne Swan to explain why Australia should let the Singapore exchange buy the ASX.

Admittedly, this has not been Hockey’s best week. Yet on foreign investment, the Coalition and the Greens line up disconcertingly often. During the election campaign, Tony Abbott called on the government to monitor – with a view to limiting – foreign investment in farmland.

These announcements make the Coalition look like populists abandoning their lofty free-market principles.

But for the Greens, opposition to foreign ownership and immigration seems to be a key plank of their political philosophy.

Economic Populism: A Minefield For The Liberals

It’s an odd sight to see the Liberal Party push for more regulation of the finance industry.

Joe Hockey said yesterday the Coalition would push for an inquiry into the finance sector, because the banks are “out of control”.

He has a big, bold plan – full of additional powers to regulators, increased scrutiny of bank profits, cracking down on what seems to be risky behaviour, and enlisting Australia Post as an outlet for small lenders. That’s a taste: it’s got nine points. The details will be earnestly debated.

Nevertheless, it seems strange to announce a policy two months after an election with more detail than most of the policies you took to the election.

And having banged on about the Rudd government’s never-ending series of inquiries, the opposition is now calling for one itself.

But, remember, last week Hockey was saying the government should regulate home loan interest rates. It can’t be a coincidence.

Politically, Hockey’s proposals are less about managing risk in the finance sector, and more about being tough on banks. Being tough on banks is very popular.

And as much as Hockey dresses it up, that popularity has nothing to do with the bank’s government guarantees, or the four pillars policy which makes the sector into a quasi-oligarchy.

According to a Galaxy poll commissioned by the Institute of Public Affairs in July, 59 per cent of voters want a super-profit tax levied on banks.

All treasurers and shadow treasurers love to threaten lending banks every time the Reserve Bank lifts interest rates. Afraid of criticising the Reserve itself – that would be an unsportsmanlike violation of central bank independence – the Big Four are fair rhetorical game for politicians wanting to demonstrate their concern for middle Australia.

Kevin Rudd once famously told Westpac to “have a good hard look at itself” after a rate rise. As hard as they try, moral suasion and confrontational language do not change household mortgage payments.

So banking is not well-loved.

Yet Hockey’s intimation last week that he wants to limit interest rates increases was not met with wide acclaim.

One colleague, mistaking it for a Greens proposal, called it a “lunatic, fringe-type” idea. Malcolm Turnbull took a different, but much more hurtful, tack. He adopted a tone of naive confusion, before belatedly backing the shadow treasurer.

Wayne Swan blusteringly compared Hockey to Hugo Chavez, as if his counterpart was one step away from shutting down critical television stations. And every second press article claimed Hockey’s views were a direct repudiation of the Liberal Party’s “free market principles”.

I put that phrase in quote marks because that’s where it gets tricky.

Hockey’s push against banks clearly illustrates the Liberal Party’s uncomfortable balancing act. In opposition, it flirts with economic populism, but can’t quite bring itself to travel down that dark road.

We saw this play out a fortnight ago as well. Shadow finance spokesman Andrew Robb started to talk about using the levers of government to modify our exchange rate. As colleagues publicly proclaimed their confusion, Robb backed away from that one too.

Now both Robb and Hockey are searching around for legislative mechanisms to achieve policy goals that a) don’t get them branded as economic interventionists and b) don’t sound idiotic.

It’s all about finding the right “levers” – a strange word which seems to imply that governing is like running a factory for the first time. Robb and Hockey seem to be hoping there are levers the previous factory owners didn’t know about.

Of course, there are none. Hence the policy confusion of the last two weeks.

In a way, Labor had the same problem. They went to the 2007 election promising to ease cost of living pressures. But there really wasn’t anything Labor could do about prices at the supermarket and bowser; Kevin Rudd settled on the feeble GroceryChoice and Fuel Watch instead.

The Liberal Party has a harder time at this cheap economic populism, because they’re supposed to be, well, “liberal”. Certainly, on balance, the Liberals tend to favour more market oriented solutions to policy issues. And often the party leans towards smaller government than the Labor Party. They usually oppose more regulation, and propose more tax cuts.

But we can all think of dozens of exceptions to the Liberal Party’s free market inclination.

The purpose of a political party is to get elected. And the free market approach to public policy is an unpopular one. This is true across any number of policy areas. If the great financial reforms of the 1980s had gone to a referendum, they would have been rejected. A party that cuts the size of government usually cuts the size of their approval ratings.

Voters are hypocrites: they hate bureaucratic busybodies, but want government to solve their problems. They think there are too many laws, but think there should be a law to fix everything.

Obviously, it’s an ideological minefield out there.

If the last two weeks have shown us anything, it’s a minefield Joe Hockey and Andrew Robb are struggling to navigate.

An Illusion Of Safety

Here’s a way to make driving safer: make it riskier.

A German safety expert recommends we raise speed limits on our roads, not lower them.

Ulrich Mellinghoff, head of safety at Mercedes-Benz, argues that raising the top speed on long stretches of Australia’s roads to 130 or 140km/h could help combat driver fatigue.

Mellinghoff’s argument is counter-intuitive. It will definitely make driving feel less safe, but it could result in fewer accidents. And it fits in with an increasing body of knowledge that suggests government attempts to protect us are have the opposite effect – making us less safe and, crucially, less able to manage risk.

We’ve had widely owned, personal transport for more than a century now. And we’ve learnt a lot about safety in that time. The University of Chicago economist Sam Peltzman famously studied the results of the American 1966 Motor Safety Act that mandated new car safety standards. Instead of making driving safer, Peltzman found, the new standards prompted drivers to be more reckless on the roads, and endangered the lives of pedestrians. Other risk analysts have found the same occurred when seatbelt laws were introduced around the world.

Economists call that ”moral hazard” – when people feel they are insulated from the consequences of their actions and behave differently as a result.

In 2007, a researcher in Bath, England, attached proximity sensors to his bicycle to see how car drivers responded to his bike helmet use. On average, cars came nearly 10 centimetres closer when he wore a helmet than without. Drivers acted much more dangerously because they assumed the rider was safe. These problems aren’t limited to road safety.

The insurance industry is acutely aware that some customers fail to protect their property when it’s insured. Bushwalkers venture further away from civilisation if they believe search and rescue will be there to help them.

Researchers have even found the introduction of improved ripcords on parachutes did not lower the incidence of skydiving accidents. Instead, they just encouraged skydivers to pull their cords later.

We saw the moral hazard dynamic play out most dramatically in 2008, as the global financial crisis looked set to sweep away the entire world economy. Wall Street made riskier and riskier financial trades and employed ever more complex and precarious financial instruments because of an assumption, cultivated over decades, that if they got in too much trouble the government would bail them out. It would be bad if they lost their financial gambles. But they wouldn’t lose the business over it. They were too big to fail.

Calling a company “too big to fail” is a self-fulfilling prophecy. The marketplace starts to imagine the company is unsinkable and relies on it.

Having bailed out other firms, the market really went into free fall when the US government declined to bail out Lehman Brothers in September 2008, dramatically reversing that assumption.

It wasn’t the government’s failure to bail out Lehman Brothers that caused the panic. It was implying they would do so, and at the last minute whipping the protective blanket away.

The long-term cause of the financial crisis was the suggestion the government would do anything to protect bankers. The short-term cause was that it didn’t.

This isn’t an argument against seatbelts or bike helmets. Seatbelts combined with drink-driving laws, education and cultural change have reduced Australia’s road toll significantly. But it should be a warning: many of the well-meaning attempts to make us safer are counterproductive, making us more likely to take risks, and less likely to think about the consequences.

There are solutions. In a revolution in traffic management across Europe, a number of towns are removing traffic lights, stop signs, and other road markings. Once eliminated, drivers enter intersections more slowly and more attentively. Instead of focusing their attention on signs, they make eye contact with other drivers. They negotiate. Accidents in these towns have dramatically declined.

The Dutch have been experimenting with “shared streets”, where the barriers between pedestrian walkways and roads are eliminated. Again, this sounds abominably dangerous. But when guard railings between the footpath and the road were removed from London’s Kensington High Street, accidents fell by 47 per cent.

A spontaneous order emerges when people feel they are fully responsible for their own driving. And it’s a safer one than in a traffic management system that tries to push drivers along pre-determined paths, barking orders along the way.

It’s like the spontaneous order that emerges in society and markets when people are responsible for their actions. So let’s hope risk and reward can be rejoined in the financial sector too.

We talk a lot about helicopter parents who over-parent and insulate their children from the world. The obvious downside of this kind of parenting is that children learn nothing about managing danger.

Perhaps it’s time to talk about helicopter governments as well: always hovering above their citizens, ready to swoop in the moment they stray off the safest path.

It’s An IKEA World

It’s a tiny squeak in the roar of global capitalism, but IKEA has altered its ubiquitous Billy bookcase ever so slightly.
The fasteners which fix the top, middle, and bottom shelves in place are now plastic, not metal.
And the studs on which the adjustable shelves rest are no longer simple cylinders but hollow little cups with a lip which rests against the side of the bookcase. The new studs are vastly more complex pieces of industrial design; thinned at the end, but ridged to “grip” the walls of the holes they are stuck in.
The old studs weighed three grams a piece. The new studs weigh just one gram.
The changes to studs and fasteners are nearly imperceptible. But there are sixteen studs per bookcase. The bookcases are shipped all over the world – flat-packed into cardboard boxes, stuffed into the omnipresent containers of global capitalism, and sent to one of IKEA’s 267 stores.
If you multiply the weight saving over the 3.1 million Billy bookcases produced every year… well, you can bet IKEA’s management knows exactly how tiny changes add up.
The retail price of the Billy has declined over the last 30 years in every country it is sold. A few years ago, the basic Billy sold in Australia for $99. In the 2011 catalogue, it was listed as $79.
No company epitomises global capitalism more than IKEA.
After all, at first glance, it’s an unusual space for an innovative company to occupy. Furniture is hardly cutting edge, retailing furniture made largely of wood even less so. There’s no fashionable Moore’s Law (the theory the processing power of computers doubles every two years) for cheap couches and brightly painted wood side tables. IKEA is far from the realm of biotechnology or the information technology.
Yet few companies play the capitalism game harder.
For example: IKEA pays next-to-no tax. It isn’t even a Swedish company: the umbrella body for most of the stores is registered in the Netherlands, and it’s registered as a charitable foundation. The company fled Sweden in the 1970s because of the Scandinavian country’s inheritance tax (now abolished) and its high income tax (definitely not abolished).
Observing IKEA’s low tax burden is not to criticise it. Any company is within its right to minimise its tax profile while observing the law. Just as individuals hoard receipts for their personal tax deductions, companies are entitled to do the same.
But it is to point out that IKEA’s success at avoiding its tax liability is in our interest – we reap the benefits of an aggressively capitalistic company pushing hard against its competition.
The furniture isn’t always good quality. (Is it ever good quality? I don’t imagine there will be many IKEA heirlooms.) But it’s damn cheap.
And the company offers aesthetics and design affordably to those who can’t afford an Eames lounge chair or a Regency writing desk. In previous generations, the young and the poor scrounged for furniture at op shops and garage sales. In the 21st century the young and the poor buy Grevback, Husa and Rykene. It’s often cheaper, and they get to pick the colour.
That should be reason enough to celebrate capitalism and the dynamics of the marketplace.
But by and large we don’t. We dismiss or ignore the micro-innovations we see around us – the ever so slight increases in our standard of living.
Think of the tiny changes to products at supermarkets which may be little, but are genuine help.
You can buy grated parmesan cheese in single serve packets. Honey now comes in squeezable, plastic containers, which is pretty convenient, but also designed to be upside down, to harness gravity, and with suction lids, to keep the container clean.
These sorts of innovations may seem trivial. They aren’t. Some of them – like the changes to the Billy bookcase – keep prices down and profits high. Others reduce waste. Others just ease petty frustration.
Critics of the market economy claim we’re getting unhappier, fatter, less virtuous, dirtier, and more iniquitous.
I think for the most part the data suggests the critics are wrong. But put aside those debates for a moment. And celebrate the joy of capitalism: the trickle of innovation, invention, efficiency and entrepreneurship which steadily, gradually, but inexorably increases our living standards.
That means celebrating better hairdryers, cheaper linen, sturdier toothbrushes, more cup-holders in cars, flexible silicon bake ware, safer razors, a wider variety of cheaper clothes, and stronger dishwashing gloves with longer sleeves. (Matt Preston might also point out paper towels are more robust these days.)
None of these products are exposed to the argument they’re just indicators of conspicuous consumption: nobody ever impressed with a Billy bookcase or toothbrush.
They’re just the things we quietly enjoy. And they’re result of millions of people competing in a global economy to make our lives just a fraction better.

Individual Liberty In The Eyes Of A Novelist

Novelists often have strongly held political views. Nobel Prize-winning novelists are obviously no exception.
 
But what is surprising about the winner of this year’s Nobel Prize for Literature, the Peruvian Mario Vargas Llosa, is just what those political views entail. Vargas Llosa is a classical liberal. With varying degrees of sympathy, Australians might call his politics free market liberalism, libertarianism, or neo-liberalism.
 
In other words, he’s a supporter of liberty. And not in the vague, collectivist sense offered by those who speak of freedom as taking control of the state for their own purposes. But in the individual sense. Vargas Llosa supports low taxes, limited government, private property, and free markets. He’s even a fan of business, describing it in a 2003 essay as a “beneficent institution of development and progress”.
 
While most commentary has mentioned Vargas Llosa’s strong political beliefs in passing, his politics is more than incidental to his life and work. He won the Nobel “for his cartography of structures of power and his trenchant images of the individual’s resistance, revolt, and defeat”. The thread which ties his novels together is the human desire for freedom, and many of his essays and non-fiction work apply liberal philosophy to Latin American politics.
 
One of the earlier political controversies he engaged as a liberal was opposing the nationalisation of the Peru’s banks by president Alan García in 1987. García, who has had a second term as president since 2006, now celebrates Vargas Llosa’s Nobel win.
 
On the back of that campaign, and with a new liberal political party, Vargas Llosa ran for the Peruvian presidency in 1990. He lost.
 
Since then he has been Peru’s most prominent and fearsome advocate for individual liberty and liberal democracy. His influence in Peru is so substantial he triggered a ministerial ousting last month when he resigned from a museum committee to protest a new law excusing human rights abuses under Alberto Fujimori, Peru’s president during the 1990s. Fujimori is now in jail, but has many allies in Peruvian politics.
 
Vargas Llosa has had a long running stoush with Cuba’s Fidel Castro, and Venezuela’s Hugo Chavez, describing the latter as autocratic. He has close relationships with free market think tanks in Latin America, in the United States and around the world.
 
That’s his political credentials. But why are they so surprising? Vargas Llosa has just won one of the highest prizes for literature. There’s been speculation his political views meant he didn’t get the Nobel earlier.
 
We seem to presume that culture is the sole responsibility of the left. Perhaps justifiably: I don’t think it’s overgeneralising to say the majority of artists, actors, writers and musicians profess near uniformly social democratic views.
 
The Argentinian writer Luisa Valenzuela said Vargas Llosa’s liberal politics “stains his literature”.
 
Liberalism is easily caricatured. First as a political philosophy of cruelty that believes all people should be subjected to the harsh storm of the marketplace. Only those who manage not to drown deserve to survive. Or alternatively, as a dictatorship of the accountants, obsessed with efficiency and streamlining above all human concerns.
 
Against these caricatures, liberalism’s critics offer a vision of a society built on compassion and cooperation. And this vision is easy to sentimentalise.
 
Certainly, liberalism resists collective goals. As a philosophy it provides no support for the pursuit of national greatness, which throughout history has been the source of much romantic sentiment. So liberals struggle to tell “national” stories as they are sceptical that artificial collectives like the nation have any real moral agency. Only individuals do.
 
In 1997, Vargas Llosa told the Los Angeles Times that the great battle of the future was the “battle against borders, against this provincial, small, petty vision that defines a human being through the idea of a nation”.
 
Vargas Llosa’s achievement is to show that liberalism has its own romantic elements. Individual liberty is as much a cultural achievement as a political one. When individuals are able to pursue their own goals, free from the structures of the state or the collective, they are able to self-actualise – to realise their own potential and live their preferred life.
 
It was, after all, the development of individualism that provided the spark for modernity. The great Swiss historian Jacob Burckhardt argued the cultural and philosophical achievements of the Italian Renaissance were largely attributable to the idea of the individual as a unit. It’s easy to trace this idea through history to the 21st century political philosophy espoused by liberals like Vargas Llosa.
 
Last week the Mexican historian Enrique Krauze described Vargas Llosa’s win as “an act of justice toward literature and toward liberty. They are two inseparable words”.
 
If nothing else, his deserved Nobel Prize should remind us that culture, art, and creativity are not just franchises of left-wing politics. Individual liberty has the capacity to stir the heart as much as collectivism.