Bill Shorten's wrong: more Gonski money won't help schools

The fallacy that resources, facilities and more money are the key to building a successful education system is alive and well in Australia.  Opposition Leader Bill Shorten's announcement yesterday that the ALP would fund the final two years of the Gonski package at a cost of $4.5 billion in 2018-19 is proof of that.

Despite our schools crying poor, Australian governments are spending more today on education than they did in 2000.

According to the Grattan Institute, over the past decade expenditure on all levels of education has grown by 48 per cent in real terms.  Government spending on school education specifically has grown by 45 per cent in real terms in the past 11 years — expenditure in 2013-14 was $14.1bn higher in real terms than in 2002-03.

While money is important, how it is spent is more important.

Calls for higher levels of education spending by politicians, teachers and unions are justified by saying the money is to lower student-teacher ratios, toughen teacher education standards or increase teacher salaries.  The conventional wisdom is that this leads to improved academic achievement.

But the evidence just doesn't stack up.  In his research paper exploring the relationship between school resources and student outcomes, The Economics of Schooling:  Production and Efficiency in Public Schools, US professor Eric Hanushek found that "there appears to be no strong or systematic relationship between school expenditures and student performance".

OECD analysis also exposes the myth that increased funding leads to better student outcomes.  Rather, once a base level of funding is achieved, more spending has little or no impact.  A discussion of whether money can buy a strong performance in the Programme for International Student Assessment tests found that "the success of a country's education system depends more on how educational resources are invested than on the volume of investment".  Both findings suggest the focus should be on the way money is distributed, not how much of it there is.

Freeing teachers from the old-fashioned industrial relations regime, encouraging innovative practices at all levels and prioritising autonomy, competition and accountability is what will lead to a more dynamic and stronger education system.

OECD research shows that teacher quality is the single most important factor influencing student achievement, and high-performing countries prioritise investment in teachers by offering higher salaries and greater professional status.  Yet teachers in Australia are paid according to a one-size-fits-all model, with salaries being determined by length of service rather than the quality of teaching in the classroom.  The impact of this system is that a teacher with more experience comes at a higher cost, but this extra cost comes without the guarantee of better results.

This situation does nothing to improve educational outcomes, instead creating the toxic culture of apathy I encountered as a student teacher.  Improving the ­equity of schooling depends on who we have standing at the front of the classroom, not the size of the gym.

The final agreements signed between the federal Labor government and the states, more political than needs-based, were miles away from the original recommendations by David Gonski.  Gonski in its final iteration is simply about giving schools more money, as opposed to creating a system concerned with how this money is spent.

The conversation has to move away from a debate over money to a debate about the constraints under which the education system operates and how this stifles student outcomes.

Unless the ALP is willing to explore more fundamental reforms, Shorten's promise to deliver "the largest boost for school funding in Australia in two generations" will be an opportunity lost.

People's republic of distraction

A poll of 1,003 Australians released this week found 91 per cent of Australians are proud of their country.  Yet you wouldn't know that's how Australians think given the way the new Australian of the Year speaks.

David Morrison, the former head of the army, characterised Australia along the lines of the now all-too-familiar trope, saying, "We hold people back in this country for the most peculiar of reasons — their gender or the god they believe in or the colour of their skin or sexual orientation."  It was a theme he has reinforced at every opportunity.

Yes, we have our challenges, but for the 2016 Australian of the Year to make as his central message the claim we're a country plagued by sexism, bigotry, and racism makes Morrison a parody.  Most Australians have a better appreciation than David Morrison of how fortunate they are to live in this country.

Eighty-one per cent of Australians believe "the world would be a better place if other countries were more like Australia".  The ability to complain about your government and your country is a hallmark of a liberal democracy.  Those such as David Morrison and a previous Australian of the Year Adam Goodes should always be allowed to speak their mind.  What they shouldn't have is the status accorded to them by a special accolade.

Morrison was declared Australian of the Year by a government-appointed committee.  The chair of that committee is Ben Roberts-Smith, a winner of the Victoria Cross.  It's disappointing that a person as good as Roberts-Smith presided over a process that pronounced as Australia's pre-eminent citizen someone eager to turn themselves into a political activist.

OUTDATED IDEA

The concept of Australian of the Year might once have had some currency.  Now it just serves as a platform for activists to criticise the country they live in.  Australian of the Year is an idea whose time has passed and the title should be abolished.

Ninety-two per cent of Australians believe their country is better than most others, but you wouldn't know it from the way the premiers speak.  All the state and territory leaders announced this week they want Australia's successful and stable system of government to replaced by a republic.

The Australian Republican Movement says we should change because "we live in Asia, an area of the world that has dispensed with colonialism".  That's true.  Many Asian countries have replaced colonialism with corruption, cronyism and one-party rule.  Whatever the reasons we should be a republic, the attempt to make Australia more like Asia is not one of them.

The state premiers are making it hard for those of us who think federalism is important and who believe state governments should have more power, not less.

Up until this week the sole contribution the premiers had made to the recent public debate was to argue for higher taxes.  Now they want a republic.

If all the the state and territory leaders were Labor, such foolishness from them would be understandable.  But they're not.  Half of them are Liberal.  If higher taxes and the republic are what premiers devote their energies to these days, maybe it's time for federalists to admit defeat and do what Bob Hawke wants, which is do away with the states altogether.

Under John Howard and Peter Costello, the Liberal Party could be relied upon to be a bulwark against foolishness.  Whether that's still true is an open question.  On Wednesday this newspaper's editorial noted perceptively that "gay marriage, Indigenous recognition and the republic will involve a fight for the Liberal soul".  That's true.  The Liberals seem no less obsessed with these issues than the Labor Party.

If the Liberals had a comprehensive reform agenda for lowering taxes, reducing government spending, restoring freedom of speech as Tony Abbott promised he'd do, and implementing a flexible industrial relations system, then maybe the Liberals could indulge themselves the luxury of debating matters which are a long way from the Liberals' core mission.

Talking endlessly about the republic is easy.  Cutting the size of government is hard.  At the moment the Liberals are taking the easy way out.

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There is much to celebrate on Australia Day

Ninety-one per cent of Australians are proud to be Australian, and 85 per cent believe Australia Day is a day for celebration, according to a poll commissioned by the Institute of Public Affairs.

There is good empirical reason to be proud of what Australia has achieved.  Sometimes it is worth taking stock.

First:  Australia is one of the richest countries in the world.  Australia's GDP per capita was US$61,925 in 2014, the latest year collated for comparison by the World Bank.  Only Norway, Switzerland and a few city-states are richer than us.  (Financial market turbulence and the exchange rate will have played havoc with our rankings since, but, well, comparative economics is a tough gig.)

Being rich is not everything, of course.  The United Nation's Human Development Index, which takes into account things like life expectancy, inequality and environmental sustainability, puts us at number two, just below Norway.

Second:  Australia is one of the most democratic countries in the world.  FreedomHouse gives Australia its highest ranking:  a "1" for both civil liberties and political rights, including perfect scores for electoral process, functioning of government, freedom of expression and belief, associational and organisational rights, and near perfect scores for personal autonomy and individual rights, the rule of law, and political pluralism and participation.  The Economist gave Australia 9 out of 10 in its 2014 Democracy Index.  Polity IV gives us full marks for democracy.

Third:  Australia is one of the freest countries in the world.  We are in equal third place for overall human rights respect in the CIRI's Human Rights Data Project.  We're ranked number seven on the Cato Institute's Human Freedom index, and number 12 on the Fraser Institute's Economic Freedom of the World Index.

These are no trivial achievements.  The majority of the world's population lives in countries which are less free, less democratic, and less respecting of the rights of its citizens than Australia.  What we have in this country is a constellation of institutions and cultural norms that are among the best on the planet.

Consider how hard it has been to export those institutions to poorer countries.  The best minds have spent decades trying to make developing countries like Australia, and their record of success is, shall we say, mixed.  Somehow we have a stable institutional order that combines both wealth and liberty.  This is more than enough to celebrate on Australia Day.  It is more than enough reason for pride of country.

Pride does not have to be a synonym for obliviousness.  There are significant pockets of disadvantage and too many people are unable to enjoy our aggregate prosperity.  Every news outlet and every columnist — myself included — pours out a litany of problems with Australia;  its government, its society, its culture.  These are very often justified.

Even among the aggregate measures of success, there are some worrying outliers.  For instance, we are lower than we ought to be on Reporters without Borders' World Press Freedom Index:  number 25 in the world, well below many of the countries we consider our peers.

And it's also true that January 26 is a peculiar day to celebrate Australia Day, given it is the day a floating prison colony found land as distant from home as eighteenth century policymakers could conceive.  That landing was no more the birth of the country we live in than Queen's Birthday is actually the Queen's birthday.  In The Age yesterday, Martin Flanagan argued that we should switch Australia Day to another day.

But what has made Australia so successful compared with other settler societies has nothing to do with the landing of the First Fleet or the intentions of the early military governors.  Success from that moment was not guaranteed.  Nor, indeed, did the landing force the settlers into an inevitable clash with the continent's Aboriginal inhabitants.  The pivotal choices were yet to be made.

In his How Australia Prospered, Ian Maclean looks at the paths Australia did not travel.  For instance, we avoided becoming like Argentina, a country with which we share many similarities, when the aristocratic squatters failed to entrench a privileged place in nineteenth century Australian politics.  There have been many junctures in our history where the Australian project could have fallen apart.

More fundamentally, stable and successful institutional orders do not have "birthdays".  If Australia Day was not January 26, then when should it be?  Australia's origins cannot be pinpointed to colonial self-government in the 1850s, the end of transportation in 1868, federation in 1901, voting rights for women from 1895, the adoption of the Statute of Westminster in 1942, full Commonwealth voting rights for Aboriginal people by the 1960s, or the Hawke government's 1986 Australia Act, which severed the Australia from the British legal system.  Each of these were milestones, yes, but milestones in what was really an evolutionary process.  Australia was not created, it grew.

Pretending that January 26 is Australia's day, even just symbolically, actually undervalues the achievement that is Australia's institutional heritage.  We could just as easily say the institutions that made Australia a success — representative democracy, the rule of law, a market economy — date back long before 1788, even before Britain existed as a discrete political entity.

Any celebration of a nation has to be coupled with an awareness of its past, for good or ill.  But while we must not let the good whitewash the ill, neither should the ill be allowed to drown out the good.  There is much to celebrate on Australia Day.  At least, that's what the data says.

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New Australia Day Poll: We Love Australia

A new poll shows Australians hold overwhelmingly patriotic views.  The poll was featured in the Herald Sun this morning.

“Australia is a great country – and Australians agree.  They are proud to be Australian, proud of our past and love celebrating Australia Day.”

The key findings of the poll are:

• 91 per cent of Australians are “proud to be Australian”
• 85 per cent believe that “Australia Day is a day for celebration”
• 78 per cent agree that “Australia has a history to be proud of”
• 92 per cent believe Australia is a better country than most other countries
• 81 per cent believe the “world would be a better place if other countries were more like Australia”

“It is no wonder that Australians love their country.  We are all treated equally before the law.  People who work hard get ahead.  We enjoy the freedom to worship.  We have largely maintained our freedom to speak.  We live in a pluralistic, tolerant, liberal democracy.

“On Australia Day we are often told that Australia needs to change.  This poll shows why those people are wrong.  We don’t need to change our flag.  We don’t need to abandon our national anthem.  We don’t need to change our constitution.  We don’t need to apologise for our past.

“Australia Day is a day for celebration.  Australia is a truly unique country.  Most people in the world for most of human history could only dream of the safety, security and prosperity that we enjoy as Australians today.

“That doesn’t mean Australia is perfect.  We do face challenges.  But Australia Day is a day to recognise what we’ve got right – and it is great to see that Australians overwhelmingly agree.”.

The poll of 1,003 respondents was conducted online by Research Now on 15-18 January 2016.

Financial agility the best way to beat stagnation

Fears that Australia and other advanced countries are in the grip of a "secular stagnation"of slowing economic growth are misplaced.

The major economic development through these early stages of 2016 has been heightened volatility in share markets in East Asia, Europe and, more recently, the United States and Australia.

There are certainly many factors which inform the running of the bulls, or in the case most recently, the bears, in equities, ranging from matters affecting certain sectors of an economy right through to wide-scale geopolitical concerns.

Interpreting share market trends is replete with complexity, but it seems new-found concerns about the economic performance of China, which is increasingly suffering under the weight of its own economic planning contradictions, is a key issue worrying investors.

For some economists, however, the run of negative sentiments overwhelming the values of corporate stocks reflects a much deeper concern about how the modern economy is faring.

There is little question that the growth forecasts of public treasuries and other government bodies have been found wanting in recent years, with Australia and other countries struggling to return to growth rates witnessed prior to the 2008-09 global financial crisis.

It is instructive, as an example, to track how the Reserve Bank of Australia has tended to revise its forecasts for real GDP growth in recent years.

In its February 2013 Statement on Monetary Policy, the RBA estimated that economic growth would range from 2.5 to 3.5 per cent, but which had subsequently been revised down until its November 2014 Statement.

In its November 2015 statement, the RBA estimated that economic growth for 2014-15 was 2.3 per cent.  A generally similar pattern can also be discerned with regard to the bank's estimates for this financial year.

For figures such as Larry Summers, a former US Treasury Secretary and president of Harvard University, advanced economies, at the very least, are now suffering from a "secular stagnation" of persistently slowing economic growth, which might even be irreversible.

Summers provides a mainly pro-Keynesian account of the problem, mainly pointing the finger at a lack of investment opportunities within the private sector, as well as a glut of savings washing through the global financial system, as key drivers of the secular stagnation.

According to Summers, the only way out of the investment rut that is holding back growth is to maintain very low interest rates, in the hope of encouraging investors to put available savings to productive uses which, in turn, will help bring about new job opportunities for the unemployed and under-employed.

The notion that secular stagnation will be a "new normal" for economies has been picked up elsewhere, including by Thomas Piketty who speculates on low economic growth rates through the course of this century to illustrate how inequality might favour those people who happen to possess high-performance financial assets.

Other interpretations of secular stagnation theory are based upon worries about the economic implications of population ageing, or claims about a reduction in the underlying rate of innovation and technological change.

Although secular stagnation is something of a fashion in contemporary economic circles, it should be understood this is by no means a new idea — actually, one could think of secular stagnation as the old wine of argumentation stashed away in a new bottle brandishing economic pessimism.

In 1938, Alvin Hansen, an American intellectual disciple of John Maynard Keynes, presented an address in which he surmised growth to be in secular decline because of fewer investment opportunities in a mature economy, combined with a decline in population growth.

A few decades later, Paul Ehrlich and other theorists believed that the growth rate of economies will fall away in trend terms because of environmental degradations and severe limitations on natural resources.

The growth pessimism of Hansen, and Ehrlich, were swept aside by the realities of solid economic growth waves subsequent to World War II, and the "Great Moderation" through the 1990s and 2000s, respectively, and there are no firm grounds for believing that secular stagnation will take root now.

At its most fundamental level, it should be understood that economic growth and similar phenomena are intended to reflect an aggregate of a myriad of economic decisions that we as individuals actively make, on a daily basis.

In other words, economic growth trends are ultimately the result of human actions, and not something forced upon us beyond our control, and if we want to lift the growth trend there are certain actions we can take to help make a return to robust economic growth.

Entrepreneurs will attempt to discover lucrative sources of value in the service of the customer, even in trying economic conditions, but if we want more of them to discover higher-valued opportunities, best to ensure the institutional environment are accommodative of productive endeavours.

The prominent American economist John Taylor suggests that demand-side explanations for falling growth do not necessarily fit neatly with the facts.

In a paper presented to the American Economic Association in 2014, Taylor noted that "there is a clear empirical association between the poor economic performance in the past 10 years and the shift in economic policy toward more discretion, more intervention and away from predictable rule-like decision making".

The very regime uncertainty that regular fiscal and regulatory adjustments entail explains why some measures of public sector activity, such as the amount of legislation passed through legislatures during a given period of time, are not necessarily conducive to realising economic prosperity.

In this context the key question will be whether the political class can muster the will, particularly in a federal election year, to disentangle themselves from market-based economic activity by reducing our uncompetitive tax burdens, rationalising inefficient spending, and eliminating unwarranted red tape.

It is true that Australia will need a new wave of economic growth if its residents are to enjoy a sustained improvement in their material well-being, which more often than not serves as a crucial platform for better social outcomes.

Although growth in recent years has been uninspiring, to say the least, it is not inevitable that we are caught in the grip of a secular stagnation of declining growth that we cannot avert.

Every Australian has an interest in ensuring that the combination of entrepreneurial discoveries and creative disruption weeding out entrenched interests outpaces the roadblocks posed by anti-growth public policies.

But in any event, one should be casting a most critical eye over secular stagnation growth theories which, if embraced, risk causing more economic harm than good.

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Celebrating the achievements of Professor Bob Carter: 1942 — 2016

I'm writing to readers to let you know that Professor Bob Carter passed away yesterday evening following a heart attack he suffered last week.  He died peacefully in the company of his family.

As his wife Anne said — "One thing is for sure, Bob made the most of every minute he had and was a fighter to the very end."

We have lost a great scientist and a very fine person.  I first met Bob in 2005.  Bob was then a professor at James Cook University in Queensland.  I don't have a science background and what struck me immediately about Bob was the way he could put the most complex scientific questions into understandable terms.  The other thing that hit me was his passion.  He was passionate about science, about communicating about science, and about the benefits that science could bring to humanity.  As is so often the case, the most passionate people are the most enthusiastic and most cheerful, and Bob was no exception.  Bob's passion, enthusiasm, and cheerfulness was infectious.

As I spent time with Bob over the years he'd often talk with me about how what was happening in the science of "global warming" (as it was at first!) and then climate change was an adulteration of everything that science stood for.  Bob would often talk to me about Galileo and his pursuit of the scientific method and scientific integrity.  As he wrote in Climate Change:  The Facts 2014, "Science should not be about emotion or politics, yet it is uncomfortably true that public discussion of the global warming issue has for many years been conducted far more in accordance with those criteria than it has been concerned with science per se."

That was how Bob, who started his academic career as an assistant lecturer in geology at the University of Otago in 1963, came to the question of climate change.  And that was how Bob came to be one of the most influential voices in the public debate on climate change not only in Australia, but in the world.

Bob had an incredible record of contribution to science through his public communications and his outstanding academic record across the fields of geology, palaeontology, marine science, and of course climate change.  His work was recognised in numerous awards and honours including as an Honorary Fellow of the Royal Society of New Zealand, and through the Outstanding Research Career Award of the Geological Society of New Zealand.

The book by Bob, Climate:  The Counter Consensus that came out in 2010 had a huge impact on me.  As I said he had the gift of explaining complex things clearly and cogently and it was these qualities that made the book so important.  I reviewed it in November of that year and you can read the review here.  There's one statistic from the book that has always stayed with me and which is a bit unfashionable to talk about and which you don't hear often these days — "99.55 per cent of the greenhouse effect has nothing to do with carbon dioxide emissions caused by humans".  This point that Bob made is like the 'Andrew Bolt question' that no politician ever wants to answer — "exactly what difference will anything Australia does on climate change make to the world's temperature?"

Bob wrote numerous research papers and other books on climate change and he spoke on dozens of occasions around Australia at public events, parliamentary hearings, and briefings.  He was always incredibly generous with his time and in addition to everything Bob did, he worked with many organisations including with the "Nongovernmental International Panel on Climate Change" which is an international panel of some of the world's best climate change scientists.

You can watch Bob here at one of the briefings he held around the country on climate change last year.  The last time Bob spoke publicly was in October last year when he, Dr Jennifer Marohasy and Brett Hogan gave evidence at parliament house in Canberra to the federal Coalition's Environment Committee.  What amused Bob and me at the time was how upset The Guardian newspaper was that Bob, Jennifer and Brett were giving politicians the alternative viewpoint to the "accepted consensus"!

Bob was an immensely valued friend to me.  He will be very sadly missed.

Jedi vs Jihadi

Knighthoods have returned!  No, not in Australia — Malcolm Turnbull remains PM, and the highest award in the Australian honours system will remain closed off to everyone.  The galaxy's most famous knights, those warrior-monks of the Jedi Order, returned to the silver screen last month in the much-hyped continuation of the Star Wars franchise.

Academics like to say that pop culture is a microcosm of the wider culture, and that what we see in film, television and literature is merely a reflection of the contemporary society in which it appears.  Like much of what academia says, this is specious at best.  The suggestion that Hollywood is a reflection of modern civilisation is simply too pessimistic to contemplate.

In fact, what people read into pop culture says more about Western culture than anything else.  So while the film itself doesn't say much about contemporary cultural attitudes, the surrounding commentary is revealing;  and what is said about Star Wars reveals a lack of regard for Western history, particularly our history of orders of chivalry and crusading knights.

In the galaxy far, far away, we can generally conclude that the Jedi are the good guys.  Yes, they take in and train the future Darth Vader on little more than an unverified prophesy.  And, yes, ultimately their dedication to protect the highly bureaucratised and high-taxing central galactic government blinds them to the fact that the office of the Galactic Chancellor was being occupied by a Sith Lord (preventing that was surely a key performance indicator).  That all goes to questions of competence, but their intentions were generally always pure;  they are the heroes of the piece.

This inspires much commentary on what real world comparisons can be made to the Jedi, and the commentary tends to reveal a glaring absence of Western historical knowledge.  So while the Asian influences are well known and oft-repeated, what is typically disregarded is the fundamentally Western basis of the Jedi knights.  It's easy to imagine the creation of the Jedi being influenced by the paladins in the court of Charlemagne, senior soldiers who embodied Christian valour.  In fact, Jedi chivalry is lifted right out of mediaeval Europe, which in turn was highly religious.

This knightly piety influenced the crusaders.  In particular, military orders consisting of sword-wielding warrior-monks, dedicated to religious conflicts — a description which safely covers the Jedi, too.  The longest surviving of those warrior-monk orders was the Order of Saint John which ruled the island of Malta until their capitulation to Napoleon's forces in 1798.  Like the Jedi, the Knights of Malta were required to swear vows of poverty, chastity and obedience.  It was also highly exclusive like the Jedi Order;  where a person could only become a Jedi Knight if they had an affinity for using the Force (the much derided explanation is the existence of "midi-chlorians" in the blood), a person could traditionally only join the Knights of Malta if they belonged to a noble lineage (a sufficient blueness in the blood).

Admittedly, noting the Crusader background of the Jedi might be discomfiting;  the Crusades are universally considered a dark period for Christianity.  Yet, as historian Professor Bernard Lewis noted in his Brief History of the Last 2000 Years, the Crusades were a limited, defensive quest to reclaim holy sites in the Middle East, and to also unite the Eastern and Western branches of Christianity.  Viewing the Crusades as unmitigated Christian evil is an overly simplistic perspective of an incredibly complex period of Christendom's conflict with Islam, but it sticks nonetheless.  For their part, the Knights of Malta would later play an undoubtedly positive role in the world by combating the Barbary pirates and policing the Mediterranean Sea.

Regardless, mediaeval Christianity should be readily identifiable in the Jedi.  Instead, the focus invariably gravitates towards the Asian influences, such as Hinduism, Taoist philosophy and the films of Akira Kurasawa.  Bizarrely, comparisons are now being drawn between the Jedi and today's greatest villains, the genocidal butchers of the Islamic State.

Comparing the Jedi to the Islamic State is not necessarily oxymoronic, just moronic.  Islamist attacks in Paris and San Bernardino, and the continuing rampage of the Islamic State in the Middle East, made it the biggest global story of 2015.  In pop culture, nothing was as big as the continuation of the Star Wars franchise.  It's not really surprising that it has become fashionable to try to connect the two.  And so it is we have shallow suggestions that the Jedi Order is just like the Islamic State, while Luke Skywalker was actually on the path to jihad, whose participation in the destruction of the Death Star was naturally re-imagined as a terrorist attack.

Obviously, the Death Star assault could only be designated as an act of war:  it was a planet-destroying military installation — itself an instrument of terror — that actually travelled to the Rebel base to deliver their destruction.  For the Rebellion's response to be characterised as an act of terror would be to characterise every military engagement as terrorism — and thus make the term meaningless altogether.

Any jihadi comparison is similarly implausible.  Professor Lewis identifies Muslim jihad as an offensive war to bring the world under Islamic law.  The same cannot be said for the Jedi.  As it was for the Crusades, the Jedi's holy war is only a temporary battle, and by the time of The Phantom Menace, the Jedi have long since fought their holy war against the Sith.  At this point, and much like the post-Crusades Knights of Malta in our world, they serve a peacekeeping and law enforcement role.  And just like the Knights of Malta in 1798, the Jedi's indolence led to their end, albeit much more violently.

Ultimately, people can and will interpret these things in any way they please.  But the fact that the rebuttals — or any other commentary for that matter — fail to even mention the Western basis for the Jedi Knights feeds into a sense of cultural malaise.

After all, if we can't recognise the inherently Western nature of our pop culture heroes, then what does that say about attitudes toward the modern West more generally?

Donald Trump is not a conservative — just look at his views on trade

Donald Trump's proposal to end all Muslim immigration to the United States has unleashed a justified torrent of commentary around the world.  But it is his views on free trade that are more indicative of the source of his support, and the tensions he creates within the conservative movement.

Trump displays none of the conservative virtues.  He is rash, inconsistent, disdainful of knowledge and policy detail, and nonchalant about making pledges which he could not, as president, possibly fulfil.

If conservatism is a temperament — a deference to tradition, or, as Edmund Burke said, to a "manly, moral, regulated liberty" — then Trump is not a conservative.

He appears to have no interest in statescraft or stability.  Remember Tony Abbott's 2013 promise to slow down the news cycle and end political dysfunction?  Trump promises the opposite.  And it is entirely possible that he will be voted as the nominee of the conservative Republican Party.

At the sixth Republican candidates debate last week, Trump tried to explain what he meant when he told the New York Times editorial board that he wanted to impose a 45 per cent tariff on all Chinese goods coming into the United States.

First he tried to say the New York Times reported him wrongly — which, if you listen to the audio of his meeting, is an outright lie.

Then he argued that he was, in fact, "totally open to a tariff", because he believes China is manipulating its currency and imposing tariffs to penalise American manufacturers.

It is shameful that the Grand Old Party is so close to nominating such an empty demagogue.

It fell to Marco Rubio to explain during the debate what economists have been trying to explain for two centuries:  tariffs harm consumers by raising the price of goods at home and do nothing for economic development.

The cost of any tariffs imposed by China on imports is borne by Chinese consumers.  The cost of a Trump tariff would be borne by American consumers.  The United States would do better to ensure that its businesses were free to grow at home rather than resent the self-harming policies of its trading partners.

That Rubio's bog-standard defence of trade was a rare moment of rationality in the Republican debate is a sign of how the Trump phenomenon has unmoored all but the most moored candidates, chasing the resentment that this garish business mogul has tapped into.  It is shameful that the Grand Old Party is so close to nominating such an empty demagogue.

Every political party is a coalition of groups, each with their own attitudes and appeal that have banded together to form government.

The Republican party has always had a populist wing that co-inhabits uneasily with the business conservatives who are more interested in free markets and small government.  There is a lot of overlap in ideas between these two groups, but also much to distinguish them.

Trump is unusual as a presidential candidate because he has no interest in managing that coalition.  His strategy is to appeal directly to the populist market, and ignore the business conservatives.  Hence the repeated claims that his wealth means he is not beholden to party donors.

Trump represents one side of the Republican party in revolt against the other.

The numbers tell the story.  A November 2015 survey found that where the rest of the field count around 35 per cent of their support from white working class voters, Trump enjoys 55 percent of this demographic.  It is these voters who most believe they have lost out from industrial globalization, and feel they are suffering from competitive pressure from new migrants entering the workforce.

Regardless of whether Trump wins the nomination or flames out in the next fortnight, the significance of his candidacy for the Republican ideological coalition will be felt for decades.

So why is Trump's position on free trade a more powerful indicator of his significance for the conservative movement than his much more radical immigration policies?

As well as the ban on Muslim immigration, Trump wants a fence on the US-Mexico border that he insists Mexico will pay for.  And he wants the 11 million undocumented immigrants in the United States forcibly deported.

But as extreme as these positions are, the domain of Republican immigration policy had already been ceded to the demagogues before Trump came along.

If you watched the sixth debate, you would have seen Rubio back away from his role in the 2013 bipartisan immigration bill — a bill lauded at the time by business conservatives — that would have provided a way for the 11 million immigrants Trump wants to deport to become citizens.

By contrast, until Trump, the cause for free trade has at least received lip service support, despite globalisation's role in changing the industrial landscape that many working class Republican voters have resented.  No question that there are always some stark violations of the free trade principle.  The Republican platform says the party "stand[s] ready to impose countervailing duties if China fails to amend its currency policies".

But Trump goes much further, calling for "fair" trade at the same time as he describes himself a free trader — the classic protectionist pitch — and damning even the North American Free Trade Agreement as a "disaster".

In a perceptive National Review piece, writer David French argues that Trump's rise shows that Republican strategists have overestimated the conservatism of Republican voters.  Regardless of whether Trump wins the nomination or flames out in the next fortnight, the significance of his candidacy for the Republican ideological coalition will be felt for decades.

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Poorest members of Trans-Pacific Partnership to benefit most

Why is Australia a party to the Trans-Pacific Partnership agreement?  This regional free trade agreement between 12 Pacific Rim nations, including the United States, Canada, Japan, Vietnam, Malaysia, and Australia, has been almost universally panned, left, right and centre.  Yet it is likely to be signed in New Zealand in February.

A report by the World Bank released last week claimed the benefit to Australia from signing the agreement would be a near imperceptible fraction of a per cent of growth a year — just an added 0.7 per cent of GDP by 2030.  The government's own economic advisory agency, the Productivity Commission, says the Trans-Pacific Partnership will distort trade rather than free trade.  And GetUp calls it the "dirtiest deal you've never heard of", driven by "big business, big pharmaceuticals and big tobacco".

They're all wrong.  Yes, the Trans-Pacific Partnership is not perfect.  It has bad parts.  It might require the government to further crack down on copyright piracy, even as the piracy problem is ebbing away in our world of Netflix and Apple Music.  The Investor-State Dispute Resolution mechanism — which allows firms to sue the Australian government in special tribunals — is, in the words of the American libertarian think tank the Cato Institute, "unnecessary, unreasonable, and unwise".

And the deal's importance for the global economy has been wildly overstated.  The Abbott government tried to desperately pump up the significance of the free trade deals it was signing as it saw its other economic growth strategies slip away.

But trade deals are policy bundles.  The question isn't whether the Trans-Pacific Partnership has bad parts.  It's whether the good parts outweigh the bad parts.  Nor is the question of whether Australia "wins" from the deal.  It's whether it enhances global welfare.

The poorest signatories are likely to be the deal's biggest beneficiaries.  The World Bank believes that the Vietnamese economy will be 10 per cent larger by 2030 thanks to the Trans-Pacific Partnership.

Malaysia will be 8 per cent richer.  Brunei 5 per cent richer.

These figures represent real people in real countries getting better lives thanks to an agreement we will sign.  The benefits dwarf the $90 million a year Australia gives in overseas development assistance — foreign aid — to Vietnam.

Free trade deals exist to solve a political puzzle.  The puzzle is this:  countries that allow foreign imports are richer, all else being equal, than countries which discourage foreign imports.  Protectionism is bad for consumers and bad for the economy.  This is counter-intuitively true even if every other country in the world is protectionist.  On the question of free trade the economics profession is almost unanimous.  Yet in recent decades few countries have been happy to unilaterally reduce trade barriers.

This is where free trade agreements come in.  They allow governments to sell domestic tariff reductions to their voters by pointing to the fact that other countries are reducing tariffs as well.  A lot of people think that international trade has to be done on a "level playing field" to be good.  This is bad economics.

But it is a political reality.  Many voters will accept a reduction in protection only if they see other countries doing the same.

There's another reason why we might want to sign a trade deal:  insurance.  Trade deals reduce the likelihood of a future trade war — that is, the deals prevent countries raising their trade barriers in retaliation for perceived slights.  Taking this insurance effect into account, the economists Richard Harris and Peter Robertson have found the economic benefits from the free trade deal the Howard government signed with the United States have been up to four times larger than previously believed.

This particularly important for Australia as we are highly trade exposed.

I'm not suggesting that the politicians who sign free trade agreements have these sorts of sophisticated reasons for doing so.  Politicians pander to voters.  They talk a lot of nonsense about exports and imports, about how they're forcing opening foreign markets to exporters, extracting concessions from other countries and so forth.

But by pursuing free trade deals they are building a more prosperous world.  The Trans-Pacific Partnership tangles the economic interests of an entire region together.  Call it mutually assured construction.  Being part of this process isn't pointless or "dirty".  If you think international development and international relationships are important, then trade deals are some of the best foreign policy we can do.

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The head-to-head for Treasurer

The success of Malcolm Turnbull and Bill Shorten this year will to a very large extent depend on the performances of their respective Treasurer and shadow treasurer.

For Turnbull success in 2016 has two elements.  The first is winning the election — which on current polls he'll do.  The second element of success for Turnbull will be for him to demonstrate that he can lead a genuinely reforming government.  The jury is still out on whether he can or wants to do so.  Beyond the fact that we're being urged to be agile, the philosophical thread of a Turnbull government is at times difficult to discern.

For Shorten in the absence of an election victory, success will be simply to stay within touching distance of the Coalition to ensure Labor is competitive at the election after the next one.  Labor's challenge is to demonstrate that it's changed from what it was just a few years ago, and that a Shorten-led government will not be so cavalier with other people's money as were Kevin Rudd and Julia Gillard.  Neither Scott Morrison as Treasurer nor Chris Bowen as shadow treasurer are making the task for their leaders any easier.

Morrison and Bowen are both smart, hard-working, and good communicators.  But so far both have demonstrated few of those attributes.  The way Morrison is running the tax debate seems to guarantee but one outcome — higher taxes.  Bowen's achievement as shadow treasurer for the last two years seems to be limited to having written a history book on former Australian treasurers.  He's been largely invisible in the public discussion.  It would be difficult to know just what Bowen believes.

Sam Dastyari's bashing of multinationals is crass politicking and hugely damaging to the country's reputation as a destination for foreign investment but at least Dastyari displays a degree of enthusiasm for the job.  As does Bowen's understudy, the former economics professor Andrew Leigh, whose interventions are invariably considered, well-made, and based on evidence.  To be fair Morrison has only been in the job four months.  Bowen doesn't have that excuse, and he also was treasurer for nearly three months during Kevin Rudd's last interregnum in 2013.

Morrison's messages have often been confused and contradictory.  One day he says he wants lower taxes, and the next he flirts with raising them.  He's also remarkably relaxed about the fact that federal government spending is at nearly the same level as during the "unprecedented crisis" of the GFC.  Worse, he seems to have convinced himself that government spending can't be cut because "it would undermine consumer confidence".  For Bowen or Wayne Swan to believe this is understandable — they both want government to be bigger.  But for a Coalition treasurer to repeat such a line is utterly bewildering.  Thankfully neither Paul Keating nor Peter Costello ever fell for this Keynesian fallacy.

It's a travesty that at the end of a once-in-a-lifetime economic boom Labor left a federal budget deficit.  A bigger travesty would be if the Coalition followed in Labor's footsteps and did nothing about the deficit.  The book that Bowen wrote last year, The Money-Men:  Australia's 12 Most Notable Treasurers, is not uninteresting.  Even though at times he lets his partisanship get in the way, for example his claim that Costello was merely "competent and solid" is laughable, Bowen nevertheless makes an important point about the job of treasurer, and by extension shadow treasurer.  "A treasurer must argue internally for politically difficult but necessary economic reforms."  At the moment both Morrison and Bowen seem to have picked the easy option.

"Prime ministers will naturally be nervous about these reforms, but a good prime minister-treasurer relationship will see a balance reached.  Importantly, a prime minister will feel more comfortable giving a treasurer the authority to embark on economic reforms if they are confident in the treasurer's ability to sell those reforms.  As John Howard said to me in 2014:  'A treasurer must be in the media every day.  Every day.  Making the case for change, being one of the government's most effective communicators'."

Australia needs a vigorous economic debate that's about more than just the best way to raise taxes.  It's a debate Morrison and Bowen should be leading.

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In defence of ''peak sequel'' capitalism

Is Hollywood running out of ideas?

In the wake of the unsurprising success of the seventh iteration of Star Wars, it can't have escaped anyone's attention that the American film industry is now pouring out sequels and reboots and exploiting established franchises.

This year we're going to get Zoolander 2, My Big Fat Greek Wedding 2, Kung Fu Panda 3, Batman v Superman, Finding Dory, Captain America:  Civil War, X-Men:  Apocalypse, Now You See Me 2, a Ghostbusters reboot, a fifth instalment of the Jason Bourne series, Bridget Jones's Baby, another Jack Reacher movie, another Independence Day, a sequel to Bad Santa, and of course the next Star Wars film.

After 2016, there's another Indiana Jones in the works, at least one more Alien, another American Pie, more Avatars, another Blade Runner, a Die Hard prequel, another Frozen, and apparently a Star Wars every year until we die. Dominic Knight has dubbed this "peak sequel".  By one count there are 156 sequels in the works.

So it's easy to be pessimistic about the imaginative vibrancy of Hollywood.  One influential essay in GQ in 2011 forecast the "(potential) death" of American film as an art.  There's a helpful infographic floating around on "Hollywood's waning creativity".

But there is every reason to look at Hollywood's sequel, franchise and reboot fashion with optimism, even admiration.  They are a symbol of cultural health, not stagnation.

First, the situation is not exactly as it looks.  While there are more sequels there are also a lot more movies, as trade sources in the US and UK complain.  Don't like the flashy pop juggernaut of Star Wars:  The Force Awakens?  Go see the bleak Revenant, which just won the best picture Golden Globe.

Anyway, adaptations and franchises have been Hollywood's game since the very beginning.  Cinema has always dug through and repurposed other cultural products.  One of the earliest, greatest films, the 1902 silent A Trip to the Moon, is a mixed adaptation of stories by HG Wells and Jules Verne.

In the golden age of studios, filmmakers happily converted popular novels into film.  By my count, at least 15 of the 20 best picture Oscar winners between 1950 and 1969 are adaptations of novels, plays and musicals.  These were sometimes very well known, including Oliver! (a film adaptation of a musical adaptation of Charles Dickens's novel);  My Fair Lady (an adaptation of a musical adaptation of a film adaptation of the stage play Pygmalion);  and Ben Hur (a reboot of a 1925 adaptation of an 1880 novel that had been made into a play in 1899 and a 1907 film).  Possibly the best American film is a sequel of an adaptation:  The Godfather Part II.  Look at how derivative the Internet Movie Database's top 250 movies are.

It's not clear how adapting well-loved and established stories for film is substantively more creative than adapting well-loved and established film stories for more films.  What standard of creativity does the all-female reworking of Ghostbusters violate that West Side Story (a film adaptation of a musical adaptation of Romeo and Juliet) did not?  It would be weird to complain we're getting too many Shakespeare reboots.  For what it's worth, The Revenant is an adaptation of a novel too.

I made the point before Christmas that all culture relies on appropriating from earlier culture.  George Lucas's 1977 Star Wars was boldly original, but was also a complex pastiche of narrative tropes and imagery.

But there are stronger arguments for a Hollywood full of franchises than everyone-does-it and if-you-don't-like-it-go-see-something-else.

As TV shows become more film-like — with higher production values, and longer stories that stretch across an entire television season — franchising means films are becoming more TV-like.  Imagine those endless Marvel films (Iron Man, The Hulk, The Avengers, Thor, Captain America and so forth) as episodes in a long running story, rather than standalone movies.  Like any show there are better episodes and worse episodes, but in sum they add up to a stronger whole than each individual would be.

Star Wars is a great example of how franchises can enrich a culture rather than shrink it.  Everybody but the most contrarian agrees that Lucas's three Star Wars prequels, released between 1999 and 2005, mostly fail as individual pieces of dramatic entertainment.  (Yes, OK, an arguable exception is 2005's Revenge of the Sith, sure.)  But as exercises in constructing a rich and deep fictional world, they are remarkable.  Sequels and franchises allow filmmakers and audiences to mine further veins of potential stories.  No character need briefly appear on the screen and disappear forever.  There's always the opportunity for a spin-off.

Audiences clearly want this.  The fanfic subcultures which pop up around every major film reveal an audience eager to further immerse themselves in the fictional universe.  Books, comics, and TV specials are released to add depth for those who want more.  The Star Wars expanded universe offers audiences a map of the long-ago, far-away galaxy with its own traditions and tales.  The Marvel Cinematic Universe has its own comics, short films, TV shows, and the enormous back catalogue of stories and characters dating to the Second World War.

Even all that tacky merchandising that consumers lap up is a sign of cultural engagement.  They want to take the film experience home with them.  Surely this is what we want from culture — a communal experience, shared stories, imaginative worlds.

Movies have always been the most explicitly commercial art form.  If you view art and commerce as distinct, separate spheres then it must be tempting to view "peak sequel" capitalism as displacing the original visions of genius auteurs with repetitive dreck.  But art surely has to speak to people.  These grand worlds being built by sequels and franchises are doing that.  They should not be regretted;  they should be embraced.

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Welfare experiment may have applications in Australia

Giving everyone an obligation-free basic income might change the way we think about welfare, but it is fraught with economic and financial risks.

Late last year, it was announced that Finland's national social insurance provider would conduct a pilot study from 2017 into fundamentally reforming its welfare system.

The idea is that the raft of unemployment, health, family and other benefit programs currently provided would be replaced by a flat, untaxed, basic income allocation for every adult, regardless of their employment situation or wealth status.

A small-scale trial will initially be undertaken, in which eligible Finns would receive a basic income of 550 euros each month during the pilot phase, to subsequently increase to 800 euros per month.

If the trials are successful, the government of Finland could consider scrapping much of its already expensive and complicated welfare state with a basic income, in what could be the most ambitious rollout of this radical idea ever seen.

The proposal for a basic income is only one aspect of a class of significant welfare reform ideas that have been recommended in the past.

Although basic income is often stereotyped as a concern for political progressives and social democrats, there have actually been several supporters of this welfare model amongst some classical liberals and libertarians.

Liberal support for the basic income is largely motivated by a desire to eliminate implicit poverty traps that come when welfare subsidies interact with progressive income taxes, and to downsize the wastefully large bureaucracies charged with administering complex welfare schemes.

There is also the concern among liberals that government all too often invokes paternalistic conditions upon welfare recipients, such as the numbers of jobs unemployment benefit recipients must apply for, or what people can or cannot spend with their welfare cheques.

Finally, it is envisaged a basic income model, or similar, could even be used to replace burdensome anti-job regulatory settings such as the minimum wage.

The libertarian author Charles Murray, for example, suggested an annual cash grant for each American adult citizen of $US10,000, whilst philosopher Matt Zwolinski is another high-profile liberal advocate for basic income.

Other liberals, most famously Milton Friedman, argued for the similar notion of a "negative income tax" in which, essentially, people earning below a certain threshold amount receive a subsidy from government rather than pay income tax.

If a person earns no income the negative income tax provides all of their income via a subsidy, and this is paid at the highest rate, and as the person earns more their subsidy is gradually withdrawn until they become a net taxpayer.

A concern widely raised against basic income is that it would induce a significant reduction of labour supply, as people elect to abstain from work in response to receiving a "no questions asked" transfer payment from government.

It is not necessarily conclusive that such an effect would dominate decisions about how many hours people aim to supply to the labour market, because for those already working it is effectively more expensive to take up leisure as post tax earnings are raised.

The magnitude of the labour supply effect will depend, in part, upon the level of payment provided under the basic income arrangement.

If the basic income is used to replace a variety of administratively complex means-tested welfare payments then the incentive for people especially on lower incomes to look for more work is probably enhanced, at least in some circumstances.

In addition to the potential impact of the basic income on employment, there is the question as to whether this welfare reform scheme might prove to be fiscally unaffordable.

The Australian welfare state is hugely expensive, being a major contributor to our overall budgetary problems, with the Bureau of Statistics estimating that spending by all levels of government on social security and welfare stood at $156 billion in 2013-14.

This figure does not include public sector expenditure on other aspects of the welfare state, including education, health, and public housing.

Whether a basic income would become more fiscally burdensome than what is already in place would critically depend upon both the coverage of the scheme and the payment rate which applies.

By way of example, each adult Australian resident could have received about $714 per month in a basic income guarantee during 2013-14, leaving the social security budget no worse off.

However our public sector is already deeply in debt, so providing a basic income payment at a rate markedly lower than $727 per month could be much more affordable from a fiscal standpoint.

On the other hand, organising such a policy change across the three levels of government would pose as a herculean, likely impossible, task.

The impacts of a basic income on employment and budgets are still being disputed, and in any case would need some testing in the real world, but other fundamental concerns have tended to be overlooked in the debate so far.

Some economists have warned that the integrity of a basic income regime is likely to be susceptible to political opportunism, for example extending welfare benefits to different constituencies for vote-buying purposes.

Essentially, even if the basic income initially cleared away the complexities of the existing welfare system, politicians would later attempt a return to discriminatory welfare by offering special benefits on top of the basic income to specific groups on the basis of their needs.

Making welfare more selective, and thus more discriminatory, in provision across the population has been the obvious experience in advanced countries, and there is nothing inherent in the basic income proposal to suggest it would fundamentally reform political behaviour in that regard.

Similarly, a basic income could, in fact, make paternalist policies even more attractive to politicians, because governments would have the opportunity to unilaterally impose directives upon everybody receiving basic income support.

There are plenty of problems with the Australian welfare system as it stands, being fiscally unaffordable, damaging to work incentives, and posing a paternalistic fist down upon those who cannot climb up the income scale.

The Finnish basic income experiment must appeal as an alternative, but it will be necessary to be clear-eyed about the potential downsides of extending a blank cheque to all.

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Dick Smith couldn't compete and that is why it failed

Troubled electronics retailer Dick Smith's shock receivership leaves investors and customers on tenterhooks.

All those shoppers who bought gift cards during the Christmas retail rush will be outraged to discover they are now "unsecured creditors", while investors who bought in to the company at $2.20 per share a mere two years ago have lost all their money.

Administrator Joseph Hayes from McGrathNicol is barely in the door but already the post-mortems have appeared.

The future of the business — and its 3300 employees — hangs in the balance.  But an important question is whether this is an isolated failure, or the first of many business failures in some sort of contagion?

Woolworths sold the retailer to private equity firm Anchorage Capital Partners in November 2012, which then floated the company on the stock exchange a year later for $520 million.  After the sale the new management team set about getting rid of what it called "aged and obsolete" stock, writing down the value of its inventory by $58 million.

It may well be that the business expanded too rapidly in the last couple of years.  The retailer's annual report highlighted the opening of 25 stores.

If, as suggested by Stephen Batholomeusz, the market was at fault for not properly analysing the implications of the restructure before the initial public offering, this is small comfort to employees and consumers now.

In a dynamic economy businesses should fail on a regular basis.  In a growing economy those businesses will be replaced by other, more efficient businesses and consequently workers and consumers, and investors too, will be better off over time.  This is what Prime Minister Malcolm Turnbull had in mind when he spoke of a disruptive economy.

So on the one hand, a business that expands too rapidly and experiences financial distress, as may have happened to Dick Smith, suggests an isolated failure.  On the other hand, with economic growth being sluggish and world economic growth predicted to remain sluggish we might expect more business failures in the short term, with workers struggling to find new jobs and consumers reining in their spending.

Dick Smith has many competitors — including JB Hi-Fi and Harvey Norman, and even Office Works, Bunnings, and Aldi for some product lines.  Despite deep discounting well before Christmas, Dick Smith was unable to generate the bumper Christmas sales it was expecting.  But it seems Dick Smith was never expecting massive sales growth — looking at its prospectus in 2011 it had revenue of $1.28 billion and by 2014 it was forecasting revenue of $1.226 billion.

Yet investors seemed to believe a company then worth about $20 million was worth $520 million.  Investors and regulators are going to look long and hard at private equity floats.  But the lesson here is that equity investors need to do their homework before investing.  The old adage, "If it's too good to be true, it probably is" applies.

This all suggests that a poor competitor has exited the market.  Sad, and not without a human cost, but that is how our economic system operates and is intended to operate.

That perspective, however, is not grounds for complacency.

All of Dick Smith's competitors have been expanding too.  They too have financing costs that require servicing.  They too have to work at meeting the demands of consumers who can be quite fickle.  Just because the economy is sluggish doesn't mean the disruption is going to go away anytime soon, if ever.

On a positive note the failure of a poor competitor does suggest that we're unlikely to see a wave of business failures.  This isn't the beginning of a contagion where we see a whole spate of similar firms suddenly experience financial stress and failure.  There are lessons to be learned (actually re-learned), but no profound revelations.

From a policy perspective the question becomes what, if anything, should government do?  Over the past couple of years the government has focused on GST collection as a means to assist Australian retailers compete against internet sales.  This is mostly propaganda to justify a tax grab.  It is not at all clear to me that diverting money from consumers to Canberra will assist local retailers, or even foreign retailers for that matter.

What needs to be done is to make it easier to start businesses in Australia, easier to employ people, easier to invest in Australia, and easier for Australians to trade with foreigners.  I fear that our political elites are currently focused on meeting those objectives.

Surveys on business confidence in the Turnbull Government had mixed results in November 2015.  A survey from Roy Morgan showed an increase in business confidence of 6.5 points in October, 16.3% higher than in August.  However a NAB survey for the same month reported muted business confidence.  The most recent survey results in business confidence are yet to be released.

Yet I remain cautiously optimistic.  The economy remains structurally sound — the challenges it faces are mostly political.  Politicians need to take their focus away from themselves (and each other) and focus more on getting the economy and business going again.  That means cutting the tax burden, cutting wasteful spending, cutting red tape, cutting green tape, and toning the anti-business rhetoric down.

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The alternative to Uber's surge pricing isn't fair either

Uber's surge pricing seems to offend our sense of egalitarianism, but it's because of this feature that the service is constantly available for those who need it.

On the morning of New Year's Eve, the ridesharing company Uber sent its customers an email warning of increased prices particularly between 12:30am and 4am the next day, the time that revellers were likely to want to go home at the same time.

Nevertheless, on January 1, there was an inevitable spate of outraged press stories where customers complained about the extremely high prices charged by Uber during those peak hours.  In some cities, Uber prices were nearly 10 times the normal price.  One person paid $720 for a ride from Sydney to Blacktown.

This can't have been a surprise.  The price is set by an algorithm.  As well as the email that morning, Uber notified riders of the surge prices and required them to manually accept the increase before they confirmed the ride request.  The Uber smartphone application also allows riders to estimate fares in advance.

One suspects that more than a few of these unhappy riders were "tired and emotional", in that charming media euphemism.

The case for what Uber calls "surge pricing" is simple.  Uber drivers cannot be simply forced to work at the busiest or most inconvenient times.  They have to be enticed to drive on New Year's Eve — an evening where many drivers would probably rather be partying than ferrying passengers.  Higher prices are enticing.  This is basic supply and demand stuff.  Surge prices also encourage drivers already on the road to go to where demand is highest.  In the absence of surge pricing, there would almost certainly be shortages and queues.

Uber did not invent market incentives.  The company just exploits them.  Allowing for demand-driven pricing is one of Uber's best features:  it ensures the service is constantly available for those who need it.  Surge pricing is one of the reasons Uber is walking all over the taxi market.  Yes, it would be nice if our fellow citizens were happy to drive us around at the cheapest prices on demand at the busiest times, but as Adam Smith said, you can't run an economy on benevolence alone.

And yet it is undeniable that many people see price surges like those engineered by the Uber algorithm as violating an unstated ethical code.  When a smaller surge occurred during the Sydney siege, the outrage was worse, as it seemed like Uber was profiting from the city's fragile state.

Supporters of markets have a habit of sometimes dismissing these concerns out of hand, but they shouldn't.  Market exchange, as one of the basic forms of human interaction, has a deep ethical dimension.  It needs to be defended.

The earliest traces of what we now call economic reasoning was preoccupied with the search for principles that would explain why certain goods were more expensive than others.  The debate was concerned with how the "just price" was determined — a price which was fair and ethical according to the ideas of Christian justice.

Some medieval theologians and philosophers believed the just price was the price it would take to cover the cost of production plus a small profit.  Thomas Aquinas argued that the just price was what a just person would agree to.  Others believed the just price was whatever the prevailing local market price was.

This final explanation might seem a cop-out but it packed an intellectual punch in the medieval period.  According to these proto-free marketeers, the just price was that which could be freely and voluntarily agreed to by two independent agents.  After all, one of the alternatives to the market setting a price is if a lord sets a price by diktat, and forces those they rule to sell for less than market value.

Social institutions are about trade-offs, not solutions.  There is no perfect way to resolve the tension between supply and demand.  Unless market participants are forced to provide a service, that service will either be rationed by price or it will be rationed by queuing.

Surge prices seem to offend our sense of egalitarianism, but as Jason Brennan and Peter M Jaworski point out in their recent book Markets Without Limits, queues are not very egalitarian either.  Queues don't treat everybody equally.  Queues favour those who are willing to spend time in queues.  Not everybody has that time.  Some people really need an immediate Uber ride, to get home to babysitters or because they are unwell.  Others merely want a ride.

Psychologists and behavioural economists have spent decades documenting all the irrationalities, systemic errors, and cognitive biases that lead humans to make bad decisions.  The intuitive revulsion many of us have to market pricing in moments of extreme demand ought to be one of them.

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Church collapse has specific reasons

The Australia of the early 21st Century is a society that is laden with moral and ethical language, to the point where there is hardly a political, sporting, or community experience that does not have moral champions suggesting ways in which our society should proceed to a desirable future outcome.

Green groups have given climate discussions a moral framework of hurt, pain and damage inflicted on Mother Nature.  The Australian Football League is challenging racism amongst those who attend their matches, and groups as diverse as Essendon Football club, the Catholic Church and the Australian Defence Force are upbraided for failing to care properly for those for whom it is thought they are responsible.  Football coaches, priests and generals along with politicians are diminished in community eyes as leaders with moral failings and tendencies to hide or cover up their alleged self-serving ways.

It is not difficult to see that perceptions of moral failure and alleged self-indulgent leadership, has created a society distrustful of any authority and ready to complain of victimhood at the earliest opportunity.  The resulting number of Australians who are suffering drug-related illness, psychological traumas, unfair dismissals, divorce, child abuse or betrayal and rejection of any sort must now be in the millions.

Concurrent with this moral surge has been a collapse of the traditional moral guardians of society — Australian churches.  Whilst Roman Catholics are holding their own, mostly through immigration, the other mainstream churches are at virtual collapse.  The Anglican Church itself notes that up to one-third of its dioceses face bankruptcy.

Whilst financial strife is unsettling, there has been virtually no analysis as to how such circumstances have arisen.  Increasingly, Protestant churches are panic stricken into mindless support for any issue that will be seen to garner community support.  A desperate need for financial security rules all.  We have witnessed these churches support David Hicks (an Australian captured fighting for the Taliban), criticise the actions of the Australian Border Security and cast coal mines as the new evil.  Church attendance continues to wither.

These churches lack a central narrative as to who they are and what they stand for.  If they stand for anything, it will only be the latest left leaning popular cause, which will be packaged in language eliciting guilt, shame and disgust at the actions of government or society as a whole.

Suggesting that Jesus Christ may be relevant to modern Australia cannot be considered.  Many of these Christians are ashamed of their church and their nation.  A vision of church corruption and a society that oppresses minorities, destroys freedom and suffocates the individual, sees these churches repudiate their own traditions.

These churches recognise that Western civilisation was developed by the church, but they see both Western civilisation and church tradition as oppressive of women, minorities and individual rights.  In their view everything good and proper in human society has been opposed or ignored in the name of Jesus.  Currently, there seems to be no alternative to endless shame, dishonour and victimhood and no hope of resurrection in these churches, so perhaps a gratuitous suicide is the correct outcome.

Fortunately, such a brutal view of the faith contains little truth.  The Church has left an indelible and good imprint on Western civilisation.  Western law is largely the gift of Church canon law.  Intellectual inquiry, sponsored by Church universities, triggered the scientific revolution and the idea of helping the poor without thought of reciprocity is a fundamental Christian idea.  This is the continued narrative of the Churches that still have Jesus Christ at the centre.

The Church is the builder of Western civilisation and, despite the obstacles confronting societies like Australia, still insist that self-hate, victimhood and shame in our society are attitudes that build nothing and invite deserved decay.

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