The art of telling the truth

Getting political journalism to focus on fact checking is appealing in principle.  It is disappointing — even futile — in practice.

You can understand why people find fact checking seductive.  Our politicians pander to prejudices, fudge policy details, vilify their opponents, and exaggerate their own virtues for votes.

But as good democrats we put the winners of this squalid electoral contest in charge of the levers of government.  So it would be nice to know which politician lies least.

And there's clearly frustration with journalism as it is practiced today:  why not make its new duty to judge political untruths?

Fact checking was a feature of the 2012 Presidential campaign.  One frustrated Mitt Romney advisor said he wouldn't ''let our campaign be dictated by fact-checkers''.

But, in a column over the weekend, Australia's Laurie Oakes unintentionally demonstrated how faddish and illusory the fact checking idea really is.

Writing that he expected fact checking to become a central part of Australian journalism, Oakes identified two recent falsehoods:  Julia Gillard's ''there will be no carbon tax under a government I lead'', and Tony Abbott's claims about the future economic cost of that tax.

If only it were so clear.

Did Julia Gillard lie about the carbon tax on 16 August 2010?  Well, yes.  And no.

She probably thought she wouldn't introduce a ''carbon tax'' in the next term of government.  But that didn't mean she wouldn't introduce an emissions trading scheme.  And what we call a carbon tax in 2012 is actually the latter with an initial fixed price.

Yet free market economists have long insisted that, contrary to popular wisdom, there's not a big conceptual difference between a tax and a trading scheme.  They both price carbon.  A tax could be described as a ''market mechanism'' too.

The point is these are terms of art, not science.

The idea that a journalist — or scientist, or economist, or philosopher — would be able to provide anything near a definitive statement of whether Julia Gillard was being factually accurate is nonsense.

Anyway, how on earth could the press gallery fact check a prediction?  Tony Abbott's claims about the carbon tax's economic impact are almost entirely rhetorical.  Yes, he understates how much of recent electricity price rises have been due to the changes in the energy industry — an understatement which is regularly pointed out in parliament and the press.  But as to the carbon tax's real cost?

Models of future economic costs merely reflect the assumptions they're built upon.  We don't know how much a policy hurts until long afterwards.  Even then it's still quite hard to tell.  Fact checking of such predictions is just arguing the toss.

This problem is clearly illustrated in the latest piece on The Washington Post's Fact Checker blog.  Run by a veteran correspondent, Glenn Kessler, Fact Checker is apparently the gold standard in the field.

The story goes like this.  Republicans have been citing an Ernst & Young study saying tax increases on the rich would ''destroy nearly 700,000 jobs''.

Kessler notes that a) the jobs are lost over a decade or more, b) 700,000 jobs is only a tiny fraction of total employment, c) the study ignores the benefits of reducing the deficit, and d) there's a different study that says otherwise.

For their ''misleading'' analysis, he awarded the Republicans three out of four Pinocchios.

But who is being misleading here?  The Republicans aren't wrong.  At best they are guilty of an ungenerous presentation of the evidence.  The Ernst & Young study says 700,000 jobs will be lost — just not immediately.  You can't refute rhetorical excess.

What Kessler isn't doing isn't fact checking, really.  It's just more argument.  Which is fine, but let's not pretend that more argument is a journalism revolution.  And it's definitely not new.

Even apparently clear falsehoods — for instance, Mitt Romney's ad saying Barack Obama ''sold Chrysler to Italians who are going to build Jeeps in China'' — are more subtle than they've been presented.  In a confusingly worded Bloomberg article, Chrysler was reported to be considering exactly that.

Kessler gave Romney four Pinnochios for his Chrysler ad, but his actual conclusion was more modest.

The ad was ''a series of statements that individually might be factually defensible, but the overall impression is misleading''.

In the hands of partisans this has become a classic Romney ''lie''.

Certainly, Romney had confused the Chrysler issue in an earlier speech in Ohio.  But senior politicians are usually very clever with their words.  They don't lie.  They dissemble.

Kessler to his credit is relatively even-handed.  He goes after both left and right.

Such non-discrimination is unusual.  Fact checking is more common as a political attack than journalistic technique.  Hacks of all sides push their own fact checkers.  It's just another weapon in the partisan's armoury.  Smugly purporting to be on the side of ''reality'' is a fashionable way to hit your opponent.

There's a more critical problem with the fact checking fad.  Political journalism is a business of generalists not experts.  The best reporters know a little about a lot, not a lot about a little.

That, indeed, is why the ''he-said, she-said'' model of journalism was developed.  He-said, she-said has a bad reputation these days — it is often used unthinkingly — but it exists for a reason.  It reflects a modesty that generalists cannot rule definitively on all issues.  Sometimes you need to call a specialist.  If something is controversial, you may need to call two.

Political rhetoric is rarely true or false.  When an issue is simple, politicians will fudge it.  When an issue is complicated, it requires experts to unpack.

Either way, self-conscious and self-satisfied ''fact checking'' is no magic bullet.

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Attacks on free speech

The Tasmanian Government is the latest to join the growing anti-free speech movement.

The most recent attack comes in the form of the State Government's proposed amendments to Tasmania's anti-discrimination laws.

Some of the proposed changes in the Bill before State Parliament this week will have a crippling effect on Tasmanians' freedom to express their opinions in workplaces, businesses and even at local sporting clubs.

Currently, it's unlawful to ''offend, humiliate, intimidate, insult or ridicule'' someone based on six traits listed in the Act.  The Tasmanian Government wants to add 16 new traits to that list.

Some of the characteristics being added include political affiliation, religious belief and race.

This is ridiculous.

Democracy can only be effective when we have the freedom to offend others.

How else can we debate each other and, in the end, ensure that worthy ideas spread?

Taking topics of conversation off the table only results in bad ideas thriving in secret, and never allows controversial but important ideas to grow.

If these changes are passed, Tasmania's anti-discrimination laws will become the most onerous in the country — no other state has as many grounds on which individuals are able to sue each other for discriminatory unlawful conduct.

And although Tasmania will go further down this path than any other jurisdiction, it is not the first to move in this general direction.

Federal racial discrimination laws prohibit offensive behaviour if it is directed at the race of an individual or group.  These laws were infamously used last year to silence Andrew Bolt.  The popular journalist was hauled before the courts and forced to publish ''correction notices'' in the name of ''public vindication''.  It's disturbing to hear that kind of language used by courts in a liberal democracy.

And all Bolt did was publish two opinion pieces on the issue of racial policy in Australia.

Restricting the free expression of opinion is a growing problem.  And it's happening on the grounds that a person's feelings might get hurt.

Until recently, legislators weren't concerned with how opinions might impact on the emotional states of individuals.  But ''I'm offended'' has become a tool of incredible potence.

In Australia, governments are now consistently choosing to prefer a right not to be offended over the right to free speech.  In fact, the proposed Tasmanian law highlights just how powerful this idea has become.  The changes to the Anti-Discrimination Act move the state closer than ever to a general law against hurting someone else's feelings.

The fact that it is now unlawful to offend someone on the basis of 22 separate attributes is significant enough.

The logical next step — removing the attribute requirement altogether — is even more outrageous.

To its credit, the Coalition has recognised the idiocy of such restrictions.

In a significant victory for supporters of freedom of expression in Australia, Opposition Leader Tony Abbott promised during a speech made earlier this year to repeal the law that muzzled Bolt.

But restricting free speech based on hurt feelings is not the only threat to this cornerstone of democracy.

The Gillard Government is currently considering media restrictions, including licensing of the press.

Two inquiries into media regulation — the Finkelstein Inquiry and the Convergence Review — have recommended higher levels of government control over the content and ownership of Australia's media.

Among Finkelstein's recommendations was the setting up of a tribunal that would have the power to censor sections of the media.

Current threats to free speech are extremely concerning.  It is far too valuable a right to give up because someone might be offended, insulted or humiliated.  Nor should governments ever get to decide what ideas we see, hear and talk about.  Freedom of speech is more important than that.

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US vote: where left isn't right

A British conservative website captured the story of the United States election.  ''Disastrous for the Republicans or simply disappointing?''  The result was closer to the former for anyone committed to economic freedom and private enterprise.

On a scale 1 to 10, with 1 being the election of Ronald Reagan in 1980 and 10 being the election of Franklin Roosevelt in 1932, the re-election of President Barack Obama is an 8.3.

It's hard to disagree with Salon, the journal of the American left:  ''President Obama's re-election represents a victory for the Democratic ideal of activist government and a mandate for more of it.''

The trouble is that activist government doesn't actually work.  The US unemployment rate of nearly 8 per cent proves activist government doesn't work in the short term.  Europe proves activist government doesn't work in the long term.

Conservatives may talk about the popular vote being close, and the Republicans holding a comfortable majority in the House of Representatives and so on, but when it comes to the presidential race, a loss is a loss.

Obama may have had 131 campaign offices in Ohio compared with Romney's 40.  And a hurricane may have stalled Romney's momentum.  However, none of this overcomes the reality of a failing economy that should have handed victory to the Republicans.

Much has been made of the demographics of the youth, women, African-Americans and Latinos favouring the Democrats.  That's true.  However, a lot of white males still voted for Obama.  The President easily won New Hampshire.  As that state's most famous resident, commentator Mark Steyn, put it:  ''But New Hampshire is overwhelmingly white — and the GOP [Grand Old Party] still blew it.  The fact is a lot of pasty, Caucasian, non-immigrant Americans have 'shifted', and are very comfortable with big government, entitlements, micro-regulation, ObamaCare and all the rest — and not much concerned with how or if it's paid for.''

There's a paradox about the political left of the 21st century.  Its members claim they care deeply about future generations when it comes to the environment.  Yet when it comes to government spending, the left has no qualms about future generations paying for the demands of the current generation of voters.  British historian Niall Ferguson was right.  ''If young Americans knew what was good for them, they'd all be in the Tea Party.''

It's hard to disagree with Steyn.  ''I wish we'd at least had a big picture election — the motto of the British SAS is 'who dares wins','' he says.  ''The Republicans chose a different path.  A play it safe, don't frighten the horses strategy may have had a certain logic, but it's unworthy of the times.''

Prime Minister Julia Gillard will be a lot happier with the US election result than Opposition Leader Tony Abbott.  If Obama won, Gillard can.

Our PM will have learned three things from Obama's victory.  The first is that politicians who pass unpopular taxes for which they have no mandate can still get re-elected.  Obama had ObamaCare.  Gillard has the carbon tax.  The second is that relentlessly negative advertising works.  Romney allowed his opponents to define his public image as a multi-millionaire leveraged buyout merchant.  Abbott is at risk of being defined as a woman-hater.  The third point is related to the second.  The Democrats claimed the Republicans would launch a ''war on women''.  Whether true or not, the claim helped swing female voters to Obama.  Gillard has already played the gender card, and she'll keep on playing it.

For Abbott the worry is that maybe voters in Western liberal democracies have stopped worrying about where the money is coming from.  If Americans don't seem concerned by their national debt of more than 70 per cent of gross domestic product (twice the level it was five years ago) it's difficult to believe Australians would be any different, particularly as we face a comparable debt figure of less than 10 per cent.

With the Gillard government promising to create a national disability insurance scheme and more funding for schools and dental care, it comes across as mean-spirited to ask where the money is coming from.  And the pressure will be on the Coalition to match whatever Labor pledges — because more government spending is what people say they want.

After Obama's re-election, William Voegeli, one of the US's leading conservative writers, said:  ''In our system, the people are sovereign.  That does not mean they're infallible.''

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Cometh the storm, cometh the climate lies

By circulating commentary that suggests hurricane Sandy was exacerbated by human-caused global warming, the Climate Commission is wilfully misleading the public.  Let us be clear, Sandy was barely a category 1 hurricane as it crossed the densely populated north-east United States.

The enormous damage resulted not from wind, but from flooding and inundation over low-lying areas where housing and commercial development was not designed to cope with such an extreme event.  Compounding the issue, vital infrastructure such as levees, public transport systems and power stations were not adequately hardened.

The flooding resulted from heavy rain and a large coastal storm surge at a time of spring tides, all eventualities that could have been predicted.

Many scientists, and now the Climate Commission, have suggested that in a warmer world tropical storms will be more frequent or more dangerous than those previously experienced.  This assertion is contentious, and evidence for it is lacking.

As has already been stressed by senior scientist Martin Hoerling from the US National Oceanic and Atmospheric Administration, and many other scientists, no evidence exists for any influence of global warming, let alone human-caused warming, on the intensity of hurricane Sandy.

Sandy was a decaying hurricane whose wind intensity was decreasing as it moved north across subtropical waters.  Importantly, the presence of a second large weather system in the north-east Atlantic Ocean and Canada blocked the passage of the hurricane and caused its impact and storm surge to be focused in the New Jersey-New York area.

The coincident alignment of a hurricane and a large extra-tropical storm is what gave Sandy its extra intensity.

In a broader context, the lack of recent global warming is also an impediment to those who argue that Sandy was influenced by industrial carbon dioxide.  There has been no significant atmospheric warming since 1996 and no ocean warming since the Argo buoy network was deployed in 2003.  In consequence, global atmospheric and oceanic temperatures are now close to their average over the past 30 years.

Suggestions that higher concentrations of atmospheric carbon dioxide have somehow influenced the formation and development of Sandy are therefore simply untrue.

The Climate Commission appears to consider it opportune to use the harrowing Sandy event, with its loss of lives and immense destruction, to push its political agenda.  But in favouring action to try to ''prevent'' global warming, the commission is propagating a wrong and costly message.

For most parts of the world, there exist 200-year documented records of severe weather events and their impacts.  Nowhere should we be taken by surprise by a severe storm and its attendant impacts.  Our understanding allows accurate estimates to be made of the frequency with which particular weather-climate hazards will recur.

Regrettably, over the past 50 years such knowledge has often been ignored as development has encroached onto flood plains and low-lying coastal margins.  There are exceptions, such as the long-established levees that protect many inland river cities.  Counter to that, building is now often approved within sand barrier dune systems that, before modification, protected coastal communities from flooding.

It is both costly and futile to try to minimise climate hazard through global engineering.  In particular, reducing atmospheric carbon dioxide does not reduce climate risk.  Instead, the cost-effective approach to dealing with all climate hazard, both natural and possibly human, is to prepare better for, and adapt better to, damaging events as they occur.

The wilful misuse of science by lobby groups to support their agendas has now become an epidemic.  The view that more frequent or extreme climate events are occurring, as advanced by many commentators, directly contradicts the considered advice of scores of climate experts, including all those who wrote the reports of the Intergovernmental Panel on Climate Change (IPCC) and the Non-governmental International Panel on Climate Change (NIPCC).

That formal government advisory bodies such as the Climate Commission are supported in their flagrant disregard for scientific principles and facts by senior CSIRO and university research managers is cause for severe national concern.

A Climate Commission that had the safety and welfare of Australians at its heart would be advising Parliament to expend resources on community infrastructure that mitigates the hazards associated with climate extremes.  It would resile from opportunistic attempts to link human tragedies such as Sandy with speculative anthropogenic global warming.

About 70 per cent of natural disasters are weather and climate related.  Building resilience by ensuring early warning and planning robust infrastructure will enhance the safety and amenity of our communities.  Sensible planning will also ensure that economic loss is minimised and that there is quick recovery in the aftermath.  These are positive actions that carry a guaranteed benefit.

Why cannot Canberra politicians and their advisers work out for themselves that climate hazard is most effectively handled using prudent and cost-effective policies of preparation and adaptation for extreme events?

Barack to the future

Barack Obama and his supporters in America and abroad are understandably thrilled after winning a remarkable electoral victory.  They are entitled to gloat over those of us who doubted he'd win or deserved to win.

Throughout the year, Obama seemed in danger of following Herbert Hoover in 1932, Jimmy Carter in 1980 and George H. W. Bush in 1992 as a one-term president.

He presided over skyrocketing levels of national debt and the most sluggish economic recovery since the Great Depression.  Polls showed that between 60 and 70 per cent of the American people believed the US was heading in the wrong direction.

But yesterday the President won far more than the 270 electoral-college votes needed to win the election.  Republicans and conservatives are already blaming hurricane Sandy, which helped freeze the Romney momentum in October.  Perhaps.  But there are more fundamental explanations for Obama's victory.

So, how did a US President win re-election at a time of widespread anxiety and even widespread dissatisfaction across the nation?

Well, it will take time to study the exit polls in detail.  But here are a few preliminary observations.

• Changing demographics:  Whereas Republicans predominantly represent middle-aged and older whites, Democrats are increasingly making bigger inroads among Hispanics (a rapidly rising minority) and African Americans as well as younger voters, who are consistently well to the left of their elders (abortion rights, gay marriage, less interventionist foreign policy).

  Democrats did a good job of encouraging these groups to turn out to vote, and more than enough did in the all-important battleground states to swing the contest in Obama's favour.

  Such trends could portend big dangers for the Republicans:  as the minority populations increase (especially in Colorado, Florida and even Texas), the share of the white vote will continue to decline in future presidential elections.  This is especially the case so long as Republicans continue to adopt a hardline stance on illegal immigrants from south of the border.

• Mitt Romney:  The former Massachusetts governor, by temperament a moderate, always seemed uncomfortable with the conservative and Tea Party agenda.  When he addressed social issues or championed entitlement reform, he seemed insincere, and people sensed it.  Since the divisive primary contest a year ago, the Republican base had always been suspicious that Romney was not one of them.

  To be sure, conservatives were more energetic in 2012 than 2008, just as many Republicans had predicted.  But it was not nearly enough to match the enthusiasm of young predominantly Democratic voters (aged between 18 and 29) and minorities (especially Hispanics and African Americans).

  Meanwhile, Obama's auto industry bailout, and Romney's equivocal response, influenced enough white, working-class voters in Michigan as well as Ohio, the battleground of battleground states, to win the rust belt.  These are the so-called Reagan Democrats — or, in Australian parlance, ''Howard battlers'' — and they help swing national elections.

  In fairness, it's a fair bet Romney's cautious and reasonable demeanour helped attract more independents in the political centre than any of the other more conservative Republican primary candidates — Santorum, Gingrich, Paul, Perry — whom he faced in a bitter primary contest earlier this year.

  Indeed, the available polling evidence indicates that Romney drew even with Obama among independents.  Ultimately, it did not matter, because the rank-and-file Democratic turnout remained nearly as strong as it was four years ago.

• Republican brand:  The spectre of George W. Bush haunts the Republican Party.  Despite his best efforts to distance himself from the Bush era throughout the campaign, Romney failed to convince enough crucial battleground state independents, who straddle the political centre, that today's Republicans mark a repudiation of the war party that dominated Washington during the Bush era.

  The Bush reputation is tainted by two costly wars, big spending policies and the Federal Reserve's housing and mortgage mania, which led to soaring debt, budget deficit and the financial crisis.  US economic growth has been lacklustre ever since, and there is little hope of a rapid return to vigorous growth.

  The exit polls suggest that by a margin of 53 to 38 points, Americans are far more likely to blame Bush than Obama for today's economic ills.

  To add insult to injury were a couple of divisive Republican Senate candidates in Missouri and Indiana, whose strident remarks on abortion and rape aggravated political centrists, especially small-l liberal women, and cost the Republicans two Senate seats.

  In coming days, the twin flanks of the party's conservative base — the free-market Tea Party as well as social conservatives — will be subjected to a great deal of criticism.  By adopting a doctrinally purist stance on economic and social issues, both groups alienate rising segments of middle America that is increasingly more progressive.

So what now for Barack Obama?

The history of second-term presidents is sobering.  Some such as George W. Bush are early lame ducks (post-hurricane Katrina);  others such as Richard Nixon (Watergate), Ronald Reagan (Iran-contra) and Bill Clinton (Monicagate) are prone to scandal.  In fairness, Reagan redeemed himself, for he primarily focused on legacy (tax reform, winning the Cold War) and history records him as one of the greatest or at least most consequential presidents.

That is why Obama is unlikely to sit on his hands, even though he still faces a Republican House of Representatives.  Whatever you think of the 44th President, he can hardly be accused of thinking small.  His first term was all about large projects (big spending stimulus, nationalised healthcare).  He will continue down the path of vastly expanding the size and scope of the federal government.

In 2008, he campaigned that he would be a ''transformational'' president.  Translation:  just as Reagan had presided over an ideological realignment in the 1980s and in the process made America a more conservative place, Obama would reshape the political landscape a generation later and move the US in a more progressive direction.  Expect the re-elected President to try to complete that course.

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Grandstanding about mobiles won't reduce the road toll

It's an old principle of policing — if you can't enforce the laws on the books, demand more laws.

More than 55,000 people in Victoria were booked for using their mobile phones while driving last year.  That's around 150 people a day.

So on Monday, the front page of the Herald Sun reported that Victoria's chief highway patrol cop wanted the government to force drivers to switch their phone off in cars.

Never mind that a ban on phones in cars would be completely unenforceable.

Victorian road rules are clear.  The Road Safety Act bans mobile phone use while a car is running.  The only exception is receiving calls or using navigation functions with a commercially fitted holder.  Even then, the driver cannot touch the phone at any time.  The fine is $300 and three demerit points.  New South Wales enacted similar laws last week.

Yet one survey suggests around 60 per cent of Victorians still use their phone while driving.  That 55,000 people booked isn't a lot, considering more than two million of the state's 3.7 million licensed drivers are breaking the rules.

The Herald Sun article said ''thousands of rogue motorists flout the law''.  No — millions do.

First things first:  it is incredibly stupid to use a mobile phone while travelling at speed.  Driving is a complex task.  Sending a text message on a phone increases the risk of accident up to 23 times.  That much is easy to demonstrate in simulations and in-car experiments.

But things get less certain from there.

The ''while driving'' data is a bit misleading.  They include a lot of circumstances we wouldn't usually call driving — like checking your phone while stopped at a traffic light.  But if the engine is running, it counts.

The NSW government commissioned a study into the extent of the problem earlier this year as part of a parliamentary inquiry.  The results were striking and counter-intuitive.

Seven per cent of accidents in NSW in the last decade involved driver distraction.  And within that 7 per cent, only 1 per cent involved a handheld phone.

Don't get too hung up on the specific numbers.  There are many complicated definitional issues.  There's a large body of academic research on driver distraction but it's not all comparable.  And, obviously, the ideal number of accidents is zero, whether related to phones or anything else.

Yet it still remains that mobile phones are extremely small proportion of the causes of distracted driving involved in accidents.  The majority of distractions come from outside the car.  Then there are those within the car — like fellow passengers, grooming, or eating and drinking.

There are even three times as many accidents involving police pursuit as mobile phones.

The overwhelming majority of accidents involve exactly what you'd expect:  speed, fatigue, and drink.  Mobile phones hardly rate.

But you wouldn't know that from the press.  Phones dominate the popular discussion of car accidents.  Using a phone while driving seems to be the ultimate in recklessness.  It is terrifying to imagine there are people speeding down the freeway while tapping out text messages.

Smart phones are a novelty, and novelty makes news.  Stories about how mobile phones cause accidents has all the characteristics of a moral panic — a disproportionate reaction to a small problem.  Drivers face worse distractions.  There are more disconcerting risks on the road.

For instance, one 2005 study found in-car entertainment systems are a far bigger real-world distraction than phones.  You have to take your eyes off the road to change a CD or radio station.  Handheld phones are problematic not because they impair drivers physically, but because talking while driving takes extra mental effort.  It's the conversation which is dangerous, not the phone.  (This explains why some studies have found hands-free phone systems are no safer than hand-held ones.)

These are uncomfortable findings.  No politician wants to challenge the right of drivers to chat with passengers or listen to the radio.  Anyway, that's why we have careless driving laws, and take recklessness and negligence into account in criminal accident proceedings.

Nevertheless, there has been a remarkable decline in car fatalities over the past few decades.  The Commonwealth government has been tracking road deaths since 1925.  Deaths have reduced from 30 per 100,000 population in 1970, to seven in 2008.  If anything, that understates the decline:  we're driving twice as much as we did 40 years ago.  And the death toll is still going down, even as more people buy more complicated phones.

A society should try not to have too many unenforceable laws.  They breed contempt for the law as an institution.  If people get used to disobeying one law, they may become comfortable with disobeying others.

As the American writer Radley Balko has argued, calls to increase restrictions on mobile phones in cars aren't about safety;  they're about symbolism.

It's already illegal to use phones in the car.  Lots of people do it anyway.  But political grandstanding about mobiles is not the same as reducing the road toll.

The 50,000+ staff draining our economy

''Fiscal austerity'' has become the phrase of choice for Western countries that need to rectify the excesses of recent decades, culminating in the spending and debt binge of the 2008-09 global financial crisis.  Even though the budgetary condition of Australia's federal government is superior to that of many countries in the Organisation for Economic Cooperation and Development, the fact remains that Australia must address its own circumstances — so a local brand of fiscal austerity is also necessary.

An important aspect of the policy debate about the Gillard government's aspiration to return the budget to surplus this financial year concerns the means by which this overall objective is to be met.  In the simplest of terms, there are two methods available to policymakers to consolidate a government budget:  reduce spending or raise extra revenues.  Which method represents the best approach to achieve the overall budget outcome?  A series of papers by economist Alberto Alesina draws on the experiences of numerous Western countries to provide some crucial answers to this question.  The conclusions Alesina derives are difficult to ignore:  that governments should reduce spending, rather than increase tax, should they wish to return a budget to a state of normality with the least reduction in economic output.

It is on this basis that I recently released a paper that provides a proposed road map of public sector employment cuts for the federal government to pursue.  The paper, Razor cuts, not paper cuts:  a framework for right-sizing Commonwealth government employment, says such reductions should be closely aligned to broader policy actions to reduce the government's overall size and scale.

First, the government should consider divesting a range of entities to the private sector, which therefore entails a transfer of employees from the public sector.  Privatising the ABC, Australia Post, Medibank Private and SBS alone should transfer about 44,000 people to the private sector.  Such reforms would not only improve the efficiency of entities now held under government ownership, but would help the Commonwealth's fiscal consolidation efforts by furnishing it with asset-sales revenues and removing future labour cost commitments.

Second, the Commonwealth could transfer a substantial number of its employees to state and territory governments to decentralise spending and reduce duplication of public sector roles and activities within Australia's federal system.  Existing federal education and health functions are obvious candidates for transfers back to the states, potentially reducing Commonwealth employment by a further 8100 people.

Consistent with the Commonwealth's responsibilities enumerated in the constitution, other activities and staff that should be returned to the states include those in the areas of agriculture, families and community services, infrastructure and transport, regional policy, resources and sustainability.

Third, the Commonwealth could cut its spending and staffing levels by abolishing a range of activities which either do not correspond with the economic conception of ''public goods'' or impose unwarranted economic costs on the community.  My paper nominates climate change and industry policy as two aspects of government activity that should be abolished outright, as well as areas such as the arts and sport, foreign aid, gender equity, preventive health and wheat export marketing.

Implementing this tripartite reform framework would be expected to deliver substantial cuts to public sector employment, which contrasts sharply with the positions adopted by the two major political parties to date.

The Gillard government outlined in the 2012-13 budget a menu of proposed employment reductions across general government sector agencies to the tune of about 3100 full-time-equivalent staff averaged over the financial year.  This announcement has raised concerns in some quarters about the potential effects on policy-making and service delivery.  However, my analysis notes that the targeted level of job cuts is significantly lower than the annual number of separations from the Australian Public Service in recent years.

Subsequent developments in the Mid-Year Economic and Fiscal Outlook show the government is effectively watering down its initial target through extra funding to hire more Customs and Taxation Office compliance officers.

During the 2010 federal election, the Coalition outlined its aspiration to reduce Commonwealth employment by about 12,000 staff over two years through natural attrition.  On the basis of public service separations data supplied by the Public Service Commission, the Coalition would have easily achieved this target if it had won the last election.

My alternative road map to public service reform unashamedly adopts the position that government job cuts tied to broader spending cuts are essential to expanding the relative size of the private sector and promoting economic growth.  Public administration will remain essential to ensure that the federal government provides basic goods and services, such as defence and a customs union, allocated to it under the constitution.

However, an excessive level of public sector employment entails a serious risk to economic robustness and vitality for three reasons:

The salaries and entitlements needed to maintain public sector jobs are coercively financed through distortionary taxes, which impede economic performance.

Growth in employment opportunities within the public sector tends to attract labour towards that sector, and away from the private sector where labour tends to be used more efficiently.

Public policy bureaucrats are engaged to advise or administer tax or regulatory policies that attenuate private sector growth, and government service delivery staff tend to deliver services at lower levels of efficiency relative to their private sector counterparts.

References to the smaller relative size of Australian government compared with governments in Europe overlook the fact that our public sector, and therefore government employment, has in itself grown too large in size and scope relative to the basic roles and duties demanded of government.  Our current federal government has tended to lean towards increasing existing taxes, and introducing new tax bases, to consolidate its budget.  However, this approach is proving to be economically risky.

The Australian economy, especially its non-mining sectors, is growing at a rate far below its potential, leading internationally mobile owners of capital to openly ask previously unheard questions about the safety of investment returns from new and future tax incursions.

While it's somewhat late in the day this financial year to do so, the government should pause and rethink its strategic emphasis on the mix between spending cuts and tax increases to deliver its budget surplus objective.  Should it choose to lean towards spending cuts, and associated staffing reductions, as I suggest, for this and future financial years, the government should expect to find a much easier road to surplus, along with beneficial flow-on effects for private sector activity.

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In praise of ticket scalping, horse eating and trading in human organs

Should we be able to buy horse meat at restaurants or for home cooking?  It is not as if horses are a protected species.  We already export them for human consumption.  Australian food markets sell goat, kangaroo, camel, buffalo, crocodile, even wallaby and alpaca.  Why not horse?

Yet when a Perth butcher and a Melbourne chef tried to introduce horse meat two years ago, they were met with a storm of protest, and had to withdraw it from sale.

If horse meat seems a bit banal, then what about pets?  How would you feel if somebody slaughtered their family dog and sold the meat?  Disgust?  More likely repugnance.

These odd questions are among the valuable contributions to humanity by the 2012 co-winner of the economics Nobel Prize, Alvin E. Roth.

Roth won for devising a system where donor organs are matched with patients.  There is a global shortage of organ donors.  One Australian dies every week waiting for a transplant.  A strategy to help deserves all the recognition it gets.

So where does repugnance come in?  We already have a great way to harmonise organ supply and organ demand — markets.  If donors were able to charge for their kidneys, there would be more kidneys available.  People respond to incentives.  And a legal, regulated, safe market for organs would be better than today's dangerous illegal market.  Yet it is unlawful to compensate someone for donating a kidney.  We are relying on altruism to meet our transplant demand.

Roth devised an algorithm to efficiently allocate what little organ supply there is with some of those who need transplants — given that legislators have decided it is immoral for people to trade organs for money.

The Nobel committee described this anti-market bias as ''ethical grounds''.  Some ethics.  By limiting the amount of organs available, those ethical grounds are killing people.

Roth published an influential paper in 2007, Repugnance as a Constraint on Markets, in the Journal of Economic Perspectives.  We find all sorts of things repugnant.  And we do so instinctively, not rationally.

Take gambling.  Many find sports betting obnoxious, as if it undermines the purity of sport.  Calling for a ban on internet betting, Nick Xenophon once complained cricket had been ''reduced to just another event to have a punt on''.  Likewise, some political professionals believe that gambling on an election is highly distasteful.

When, in 2003, a team of Pentagon economists tried to set up prediction markets — that is, using betting to predict the likelihood of future events — for terrorist attacks, they were pounced upon.  One congressman described the program as trading in death.  ''There is something very sick about it,'' said Senator Barbara Boxer.

Just ''something''.  Sure, betting on future terrorist attack probabilities is unorthodox.  But it might have worked.  The purpose was to predict attacks and stop them.  Yet for those politicians, it felt wrong.  The program was quickly shut down.

What we think is repugnant is determined by our culture.  Historically, lending money at interest has been unacceptable.  This makes some strange sense.  Lenders who charge for the privilege of borrowing money seem a bit heartless — it is not like idle money is being used.  And why should people get rich just for sitting around?

Ticket scalping is another repugnant market.  It somehow seems unfair to pay more than the cover price for concerts.  But a basic lesson of economics is that markets allocate goods to those who value them the most (that is, those who are most willing to pay).  Scalping is a good thing.

Ticket scalping also shows how special interests can use repugnance as cover for their own private gain.  Ticket sellers want governments to stamp out the secondary ticket trade.  They don't like the competition.

Yet anti-scalping laws make it harder to get tickets to popular events, not easier.  Just like outlawing the organ market makes it harder for sick people to get transplants.  Or banning horse meat restricts the availability of tasty horse meat.

It is fine for individuals to object to certain practices.  If you don't want to be compensated for your organ donation, you don't have to charge.  And nobody is forcing you to bet on future terrorism.

But it is a real problem when feelings obtain the force of law.  That gut reaction — ''there is something very sick about it'' — can sometimes cause real harm.

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The Western Way of Economic Decline

''Imperial overreach'' is sometimes used to describe a United States that is less and less able to maintain its global dominance.  The phrase reflects upon the fall of ancient Rome and the demise of the British Empire.

Britain's decline followed its economic exhaustion and the growing unacceptability of political controls by one nation over others.

American world domination has never entailed much direct political control.  And, unlike Rome, America obtains no tribute from other nations and in fact subsidises them (something the Soviets also did with their satellites).  A topical illustration of this is the $1.5 billion a year aid to Egypt, described by President Obama as not an ally, though of course strictly speaking it is.  Egypt, under its present leadership, may however be better considered as a state opposed to the USA and its interests, and that $1.5 billion a year to constrain its hostility is considered good value by the US government.

But comparing America's eroding world domination to the collapse of ancient Rome does reveal some uncomfortable similarities.

Ancient Rome was undermined by revenue shortfalls.  Aside from bureaucratic needs, funds were required for ''bread and circuses'' to placate a largely unemployed Roman mob, which had a tested capacity to overthrow governments.  Imperial Rome also needed revenues to pay mercenaries who, like the indolent Roman mob, had a proven ability to replace emperors.

In this respect, America's resemblance to Ancient Rome is more chilling.  America is facing a crisis — which Europe and Australia share — due to increasing proportions of economic output being directed to unproductive expenditures.  These are social expenditures including old-age pensions, incapacity-related benefits, health, labour market programs, unemployment and housing.

The expansion of social entitlements has far surpassed the effect of an ageing population.  Since 1980, social welfare entitlement spending has risen from 16 per cent to 23 per cent of GDP in the EU and 13 per cent to 20 per cent in the USA.  In Australia it has risen from 10 per cent to 16 per cent.

This increase has not occurred as a result of hard times but in a period of considerable affluence across the board.  Scandinavia has usually been at the frontier of entitlement spending.  In Denmark, out of the population of 5.6 million only around 1.8 million are not dependent on the state for their income and even they have considerable benefits in housing, child care and so on.

Alongside the increasing provision of entitlements is a corresponding revenue shortfall.  Taxation increases create incentives for people to avoid tax by reducing or concealing taxable activities.  This compounds the inducement that an entitlements mentality legitimises for people to become tax recipients, by reducing the available income and the share of it retained by producers.

Borrowings have allowed budget deficits to be bridged in the modern era but, as Greece and Spain are demonstrating, debt levels store up even greater future problems.  The USA's vastly expanded entitlement spending has been fundamental to its situation whereby revenues now cover only 60 per cent of spending.  Out of its annual $3.8 trillion in expenditures, $2.25 trillion is on social security, health and so on.  America's annual budget deficit is $1.5 trillion with its debt now being equivalent to 25 per cent of world income.  Such borrowing levels cannot last.

Mitt Romney, in drawing attention to the ''47 per cent'' of people who receive income from government transfers, did more than recognise the expenditure and deficit problems the USA faces.  He addressed an undermining of self-reliance by a culture of dependency.

The Democrats and the media depicted Romney's use of the 47 per cent figure, with its corollary of expenditure cuts to balance budgets, as a ''gaffe'' that might cost him the election.  This underlines a serious problem faced by modern democracies.  People will vote for politicians who promise them benefits even if the delivery of the benefits undermines the productive capacity of the economy.

The impasse of rising demand for spending and constrained capacity to pay was the major theme of the biennial Mont Pelerin conference of (mainly) free market economists, held in Prague in September.  The host, Czech President Vaclav Klaus, lamented what he saw as the failure of the optimism following the ''Velvet Revolution'' that overturned communism.  Klaus spoke of how this optimism had faded into a new form of socialism, the genesis of which we should have detected with the popularity of the Club of Rome and the dominance of the intellectuals with their socialist proclivities.  Among the problems he identified were the 1960s liberation, when the anchor of long-standing traditions of self-reliance was jettisoned, subsequent NGO dominance and the development of the human rights ideology which replaced and usurped civil rights.

Independently of the Romney remarks, the Swiss journalist Gerhard Schwarz summarised the danger to the West's economic well-being posed by democracy in its current form.  A democratically elected majority government can demand wealth transfers to the unproductive, regulate the productive and reward the agitational, thereby creating adverse incentives towards work, savings and investment.  Schwarz concluded, ''Democracy belongs in its proper place, namely wherever decisions are taken on matters affecting everyone and where public goods are involved.''

Every democracy has constitutional provisions designed to prevent the ''tyranny of the majority'' but these provisions have been eroded under the modern state.  The Australian Constitution, like all constitutions, was developed to stop the governing party — whether comprising a minority or a majority — from looting those on the outer.

Those wanting to extend government controls in Australia used to deride the 1901 ''horse and buggy'' Constitution for the constraints it imposed.  But its capacity to prevent government seizing and redistributing income and controlling the economy and people's lives has been progressively destroyed.  Constitutional niceties have not prevented government intrusion at levels unthinkable by those who developed the restraints on government more than a century ago.  In 1901, the federal government had only 258 regulatory laws compared to 150,000 today.  Few of these laws have simply been transferred from state jurisdictions to federal.  In 1901 the Commonwealth was responsible for taxing and spending just 3 per cent of national income compared with 24 per cent now, while state government has also grown.

In Australia as elsewhere, constitutional restraints on government have proved insuff­icient to prevent the looting and debasement of individual liberties, constraints on which focused the minds of the ancient Greek philosophers and the thirteenth-century English barons at Runnymede alike.

If government is not once again confined to these more restricted functions, we will see a continuation of the economic decline of affluent nations that has been evident for the past five years.

The challenge is, how do we get there from here?

The regulatory and tax impositions are now deeply entrenched.  Romney's 47 per cent as the share of people who are beneficiaries might be even higher in other democracies.  Ruth Davidson, the Scottish Conservative leader, has demonstrated that only 12 per cent of Scottish households pay more in tax than they receive in public services.

Persuading the many to forgo benefits they extract from the few may only be achievable if the consequent economic ruin becomes an immediate threat to the availability of plunder.  Perhaps this point has been reached in the USA and, together with Romney's superior political skills, will bring a Republican election win.  But even that would be unlikely to result in more than a temporary check to the stultifying outcome of unconstrained democracy.

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Don't believe the Asian century hype

The Government's Asian century white paper finally reveals the conceptual poverty of the Asian Century idea.

Certainly, Asia will continue to grow prosperous and come to dominate the global economy.

But Ken Henry's white paper demonstrates that the concept of an ''Asian century'' offers almost nothing to guide Australian public policy in 2012.

Don't believe the hype.  The Asian century is not the stuff of wonky earnestness.  It is a political story.

A simple reorganisation greatly diminishes the whole project.  We can group the proposals — sorry, ''pathways'', a horrible word that the Government uses to conflate policies with goals — of the white paper into two categories.

The first category is things that are true no matter which continent dominates the next 100 years.  The white paper wants Australia to be one of the top ten richest countries by 2025.  Fair enough.  But this holds regardless of whether there will be an Asian century, or an American century, or a New Zealand century.  Most of the white paper is like this.

One sentence reads:  ''A world-class school system is essential to Australia's success in the Asian century''.  What do the last four words contribute?  The government will create ''a long-term national infrastructure strategy''.  It will establish a Tax Studies Institute.  There will be a National Plan for School Improvement.  We ought to expand our trade with the rest of the world.  The Asian century conceit adds nothing to these ideas.

The white paper even plugs Closing the Gap.  Ending Indigenous disadvantage is extremely important, but what on earth does it have to do with Asia?

In the second category are proposals specifically designed to deal with rising Asian economies.  There aren't many in this category.  And they're all pretty minor — even token.

Of these, increased Asian language teaching is the most significant.  I've criticised this idea in the past, and Benjamin Herscovitch from the Centre of Independent Studies has done so recently at length.  Yet even if more Asian language teaching was necessary, it's an oddly trivial hook for this ambitious white paper.  Is offering Chinese at more schools really the pivot on which our nation will turn?

The quality of proposals declines sharply from there.  The white paper says that one-third of board members of Australia's top companies should have deep knowledge of Asia.  This is a pretty gimmicky idea.  Anyway, why is intellectual composition of the boards of private firms any business of the Commonwealth government?

One welcome proposal is to boost the numbers of tourism and working visas from Asia (you could ask:  why not boost visas from everywhere?).  Yet in the mid-year budget just last week the government significantly raised the cost of visas for foreign workers.

Asian century boosters have always struggled to link their statement of the obvious (Asia is growing) to concrete proposals.  This white paper is most ambitious attempt yet.  If Ken Henry can't make it work, nobody can.  But it fails.

Apart from continuing to strive to be productive and educated and rich — good things whether our neighbours are rising or declining — it's not obvious that Australia needs to do anything special about the rise of Asia.

Indeed, that may be the point.

The white paper mostly just reiterates existing Gillard government policies.  Far from jolting us out of our complacency, the paper encourages it ... well, as long as we stick with Labor and its NBN and its schools plan and its carbon tax.

The Asian century paper is a political document.  It's a theme for the Government now that most of the Rudd-era ambitions have been squared away;  a fresh ''Labor vision'' for the party of Keating and Whitlam.  It doesn't have to be particularly coherent or convincing.  It just has to be plausible.

And, to be fair, it is.  The white paper exudes seriousness.  It is ridiculously Big Picture.  The Asian century is intellectually flattering:  everybody feels smarter when they talk about it.  In the last 48 hours almost every special interest in the country has claimed their pet issues are the key to surviving the new Eastern paradigm.

Given that the Asian century is above all a political idea, it seems significant that the Opposition has been caught off-foot.  First the Coalition welcomed it, said it lacked detail, then said it lacked funding.  By Monday Tony Abbott had described it as ''laughable, frankly''.  Then he moved on to Peter Slipper.

This is probably not wise.

The Asian century looks like Julia Gillard's election strategy.  It's a lot better than Moving Forward.  But like so many political visions, it's seems more profound than it is.  We should not confuse narrative for substance.

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Obama and Romney heeding McGovern's call to come home

''This hero of war,'' declared President Obama, ''became a champion of peace''.  According to Bill and Hillary Clinton:  ''We must continue to draw inspiration from his example and build the world he would fight for.''

Richard Nixon once told Henry Kissinger:  ''This fellow to the last was a prick'', but veteran Republican senator Bob Dole called him ''a true gentleman who was one of the finest public servants I had the privilege to know''.  Liberal Democratic hawks detested him, yet he was personal friends with his ideological foe, Barry Goldwater.

As these strong and conflicting reactions on the part of the mighty indicate, George McGovern was a very significant and controversial figure in American politics.

A national legislator for nearly a quarter century and a decorated bomber pilot who flew 35 combat missions against Hitler and the Nazis, he was a leading critic of America's policy of anti-communist containment.  He also gave opposition to the Vietnam War respectability within the American system as early as 1963.

Yet McGovern's death last week did not receive any press attention in Australia.  Nor did the Foreign Minister's office issue a media release, even though Bob Carr himself gave a gushing 20-minute tribute to novelist Gore Vidal on Lateline after his passing a few months ago.

This lack of local interest is odd.  For one thing, McGovern was the Gough Whitlam of American politics.  Both were standard-bearers of social democrats and left-wing radicals at a time of widespread cultural and social unrest.  Both championed far-reaching progressive reforms at home while opposing the Vietnam War and the isolation of Communist China years before the case for withdrawal and rapprochement became popular.  Both also suffered humiliating landslide election defeats (McGovern to Nixon in 1972, Whitlam to Malcolm Fraser in 1975 and 1977).

Moreover, although McGovern's foreign policy failed to appeal to Nixon's ''Silent Majority'', his message is resonating with Middle America four decades later.

His candidacy set the scene for the triumph of Democratic doves over the Cold Warriors in the mould of Harry Truman and John F. Kennedy.  That enabled Republicans to portray Democrats as being soft on national security for generations.

Today, in the wake of the financial crisis and costly wars in Iraq and Afghanistan, Americans are rediscovering the costs and limits of the use of force.  As the conservative columnist George Will has noted, McGovern's slogan ''Come home, America'' probably summarises the thinking of a slight majority of the American people.

And both Barack Obama and Mitt Romney know it.  Take last week's presidential debate on foreign policy.  During the 90-minute encounter, they sounded positively McGovern-esque, keen to pivot to domestic affairs while warning about getting bogged down in another Middle East quagmire.

The President said ''nation building'' begins at home on three occasions while Romney mentioned ''peace'' 12 times.  The Republican's insistence that ''we can't kill our way out of this mess'' sounded like one of those anti-war catchphrases at Woodstock.

Today, as Will observes, the US ''is near a semi-McGovern moment''.  Polling evidence shows that Americans are less interested in foreign policy than at any time since the 1930s.

Yet although Australians have been closely following this presidential race, we have failed to catch the emerging bipartisan consensus about America's place in the world.  While the US will remain the most formidable presence on the global stage for the foreseeable future, the days of a Pax Americana are fading fast.

Whereas in 2004 one presidential adviser declared ''We are an empire now, and when we act we create our own reality'', these days a presidential aide talks about America ''leading from behind''.  According to this new doctrine, the phrase reflects the reality that the US lacks the power to impose its will and leadership across a more plural world.

The response from left to right has been hostile:  the New York Times' Maureen Dowd lamented ''it sounds rather pathetic'' while Fox News' Charles Krauthammer complained it's ''not leading;  it's abdicating''.

But the argument is less foolish than the reaction it provoked.  The message is not that passivity is a foreign policy virtue.  It is that, depending on the circumstances and the nature of US interests, it is sometimes appropriate for Washington to pursue a more cautious and multilateral foreign policy.

That is a defensible, even sensible world view, especially at a time when the necessary economic resources for a policy of US global leadership are not available.

Next week's close election race reflects a highly polarised and deeply divided nation.  But there's one issue on which a broad consensus is developing:  the call to reorder US priorities in favour of domestic affairs and pursue a more prudent and discriminating world role.

As Romney said last week:  ''We don't want another Iraq, we don't want another Afghanistan''.  To the extent that such attitudes prevail, they reflect the spirit of George McGovern.

Destroy! Gillard Government goes all Dalek on charities

As Christmas approaches, many Australians will be planning to donate to charity.

Few would realise, however, the incredible damage the Gillard government is about to unleash on the sector with the advent of the Australian Charities and Not-for-Profits Commission (ACNC), expected at some point before the end of the year.

The ACNC will force charities to adhere to a raft of new tax and compliance requirements, dissuade people from becoming involved with charities and turn people off from donating.

There are 600,000 not-for-profit entities (NFPs) in Australia of which approximately 56,000 are charities.  In relative growth terms, the NFP sector is second only to mining.  Clearly, charities in Australia are big business.

In May 2011, the government announced $53.6m in funding for a ''one-stop-shop'' for the ''support and regulation'' of the NFP sector to replace the various arrangements in place in each state and territory and federally with the Australian Taxation Office.

It's admirable for the government to cut the red tape and make things easier for charities — but that's not what they're doing.

The ACNC will force many charities to submit ''Annual Information Statements'' for the first time.  They will have to give the government detailed information about their activities, operations and volunteers.  And more charities will be compelled to notify the ACNC if they make changes to their board of directors or amend their constitution.

The cost to charities of this will be huge.  The Baptist Ministries initially estimated that the ACNC would cost Baptist churches across Australia an extra $1 million on compliance.

So far only South Australia has announced that they will be amending their current arrangements to fit in with the ACNC.  Far from creating a one stop shop, all the ACNC has done is whack another layer of regulation on charities.

The ACNC will also ramp up the penalties for when things go wrong.  Australians currently donate $14.6 billion in volunteer time every year to charities.  The ACNC legislation proposes that volunteer board members could be held personally liable in cases of management malpractice and will introduce exorbitant fines as penalties.

Indeed, the potential penalties faced by volunteer board members of charities is greater than a director of a normal business in many cases.

These measures won't stop people from doing the wrong thing.  They will simply discourage people from becoming involved in charities in the first place.

And the ACNC will force charities to submit increased levels of information about their donors which can be made publicly available at the discretion of the Commissioner.

Whilst the level of detail of information required is yet to be made public, the fact that individuals may well be forcibly identified to the government and publicly ''outed'' against their will only serve to prevent many from giving at all.

Of course, it's also a gross violation of a person's right to privacy for details about their private donations to be handed over to the government.

Apart from the damage the ACNC will do to charities, and the bungling over the issue of getting the states and territories on board, the government's communication with the sector over the proposals has been appalling.

To take one example, the government will be increasing taxation to the earnings of NFPs that are deemed to be ''non-altruistic''.  It is yet to be communicated to charities what is considered non-altruistic and what is not.  To make matters worse, this increased taxation will be applied retrospectively.  As in, right now.

Indeed, the sector is currently in the farcical situation of operating under a taxation framework that is yet to be finalised and certainly yet to be communicated.

The ACNC is one of the worst examples of government involving itself where it is not needed or wanted.  Far from making things easier for charities, the ACNC will make things harder and more expensive.  Charities should be left to get on with serving those in need, not the government.

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BA humbug, Mr Swan

Only someone with an arts degree would try the sort of stunts Wayne Swan has attempted.

The Treasurer, with his Bachelor of Arts (Hons) from the University of Queensland, has decided that tax increases are to be officially called ''budget savings''.

The much-admired French literary theorists Jacques Derrida and Michel Foucault would have been proud of the country's Treasurer.  For Derrida and Foucault the meaning of a word is entirely subjective, so it is irrelevant that 99 per cent of adult speakers of the English language in Australia understand ''budget savings'' and ''higher taxes'' as two entirely different things.

As anyone who has studied English literature at a university would know, Swan's own personal definition of ''budget savings'' is no less valid than anyone else's definition of ''budget savings''.

Only someone with an arts degree would implement something like the mining tax that has wrecked Australia's international reputation as a stable investment destination yet hasn't raised a cent of revenue.

And only someone with an arts degree and who has no experience of business would establish a ''Business Tax Working Group'' that had on it a representative of the Australian Council of Trade Unions.  It's no wonder it broke up in acrimony on Wednesday.

This story of Wayne Swan is typical of the contribution that arts graduates have been making to this country since the 1960s.  The editors of the Macquarie Dictionary  are probably arts graduates, too.  Only people who were once arts students would change the accepted definition of ''misogyny'' to suit the political purposes of a Labor prime minister.

Most arts and humanities courses as taught in Australia's universities these days are a waste of the students' time and a waste of taxpayer funds.  The Marxist-inspired theories of knowledge, language and learning that together go under the name of ''critical theory'' have infected every aspect of the humanities.  Students now endure deciphering sentences like this one from Derrida:  ''But because me and myself, as you no doubt are well aware ... are going to die, my relation — and yours too — to the event of this text ... is that of a structurally posthumous necessity.''

On average arts graduates earn less than other university graduates and have less chance of finding a job.  Last year 76 per cent of all university graduates with a bachelor degree who wanted a full-time job had found one within four months of finishing their course.  The comparable figure for arts graduates was 64 per cent.

Students are turning their backs on the humanities as they realise what they're being taught doesn't broaden their minds and doesn't prepare them for employment.  A law degree is now what an arts degree once was.  At least law requires students to write coherent sentences.  Thirty years ago Australia had 12 law schools.  Now it has 30.  Not all of this growth in law can be attributed, though, to the decline in the quality of arts degrees.  Once upon a time if a young person wanted to change the world, they aspired to be a democratically elected politician.  Today to change the world you become a lawyer.

In response to dropping enrolments, universities across the country are cutting subjects and staff in arts faculties.  In Melbourne's The Age  last week, the cuts to arts faculties were described as a threat to the health of our democracy.  If arts faculties were doing what they once did, namely introducing students to the greatest thinking of Western civilisation, such criticism might be valid.  But that's not what they do any more.  Now arts faculties teach about structurally posthumous necessities.

The health of Australian democracy should not be measured by the number of students enrolled in gender studies.

In his An Enquiry Concerning Human Understanding  published in 1748, David Hume described the work of a certain species of philosopher.  What he said could apply to the academics in the humanities in Australia in 2012.

''Though their speculations seem abstract, and even unintelligible to common readers, they aim at the approbation of the learned and the wise;  and think themselves sufficiently compensated for the labour of their whole lives, if they can discover some hidden truths, which may contribute to the instruction of posterity.''

The pity is that the majority who teach humanities at Australian universities are a long way from discovering any hidden truths or making a contribution to the instruction of posterity.

Instead arts faculties produce treasurers like Wayne Swan.

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Good mail on privatisation

The Gillard government has urged states to sell their electricity assets, but at the same time has left privatisation of its own assets off the reform table.

While the general public impression may be that all the federal government's ''family silver'' has been sold off, the privatisation lull since the early 2000s has meant some entities which would be more efficiently operated in private hands remain firmly under government control.

One of the remaining candidates for privatisation is Australia Post.

In similar fashion to government postal services in other countries, Australia Post is being squeezed in regard to both the revenue and cost aspects of its operations.

Technological developments such as the internet and mobile phones have meant that the use of letters as a mode of communication has waned significantly, eating away at a traditional source of revenue for Australia Post.

The latest figures show that Australia Post has lost about $91 million through the exclusive ''reserve service'' requirement imposed by the government to deliver letters within Australia and from overseas to Australian addresses.

The organisation is also labour intensive, which is not altogether surprising given another regulatory requirement by government that it physically provides weekday deliveries to most Australians, and maintains 4,000 odd postal outlets including a mandatory share in rural and regional areas.

But with its highly unionised workforce prone to strike action opportunities to use labour-saving technologies, such as vending machines for standard letters or Express Post envelopes, have not been fully exploited.

Australia Post appears to be holding its own in the competitive market for parcel deliveries, thanks to a boom in online retailing not of its own making, however its responses to the fall in letters have starkly illustrated that it remains an inefficient, unresponsive government entity.

Very soon Australia Post will party like it's 1996 because it will launch, wait for it, a ''Digital Mailbox'' service in which people receive email, pay bills and store documents in one online location.

Even those with a cursory knowledge of the internet know that Hotmail (which was launched in 1996), banks, telephone companies and other private concerns already provide such services, raising questions about the inherent wisdom of a government-owned entity duplicating that which already exists.

There has also been speculation in recent years that Australia Post wish to move more deeply into the financial services arena, a field in which governments in the past have had poor management records.

Australia is grouped together with a small cohort of countries that have engaged in partial liberalisation of postal services during the 1980s and 1990s.

In 1989 the Hawke government enacted the Australian Postal Corporation Act, which ''corporatised'' Australia Post entailing that the organisation would be subject to general taxation and regulatory requirements similar to those facing private sector businesses.

The objective of corporation was to improve Australia Post's efficiency by enforcing it to act ''as if'' it were a private entity whilst remaining under government ownership, with the Communications Minister being Australia Post's sole ''shareholder''.

The Act, and subsequent legislative developments, reduced the degree of exclusive monopoly rights held by Australia Post in the distribution of heavy-weight letters and parcels helping to enhance the growth of private courier services.

These measures were steps in the right direction, however other countries have proceeded further down the road of postal services liberalisation.

In countries such as Germany, Malaysia and the Netherlands the government post offices have been either partially or completely privatised, mainly through the public offerings of shares.

The monopolistic rights accorded to government post operators to carry letters have also been abolished entirely in several countries, including Germany, New Zealand and Sweden.

Australia should follow the path of the postal reform pathbreakers to improve the efficiency of the presently government-owned postal carrier, and deepen postal and courier services markets.

At the very least Australia Post should be fully privatised, and could be expected to perform effectively as a private operator given that it has existed for almost a quarter-century on the ''training wheels'' of corporatisation.

What of the community service obligations applicable to the carriage of letters and physical services accessibility?

One option could be that the government sell off the rights to a bidding company to deliver the CSO arrangements for a fixed term on a least cost basis.

However in a country characterised by ever-increasing access to internet services, such as email and online bill paying facilities, and greater private sector competition there is a case to further liberalise the regulatory requirements entailed under the CSO.

About a decade ago the Howard government proposed that private companies could charge market rates for the delivery of letters weighing between 50 and 250 grams, a reform not implemented due to political considerations.

The government's ''no privatisation'' stance is lamentable, as it deprives consumers of the potential benefits provided by the realisation of private sector efficiencies.

And in the short term to not privatise government assets also deprives the government of financing options to plug its yawning budget deficit gap.

But with the radical innovations witnessed in communications markets over the last two decades, no sound rationale remains for the government provision of increasingly antiquated letter and small parcel postal services.

There is still some lucrative low hanging fruit of prospective privatisation ripe to pick;  it is time for the government to pick it.

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The puritanical public health movement

For eight weeks in 2011, four public health researchers — three from the Cancer Council, one from the University of Western Australia — watched 792 music videos aired on Australian television.  They recorded all the mentions of alcohol, tobacco or illegal drugs.

The results were published in the journal Alcohol and Alcoholism in September this year.  About one-third of the music videos referenced drugs.  The vast majority of those references were to alcohol.

Here the full horror is unveiled:  ''references to alcohol generally associated it with fun and humour''.  Only 7 per cent of the music videos that referred to booze presented alcohol in a neutral or negative light.

The paper argued music videos mentioning alcohol positively should be classified differently and regulated out of the morning timeslot.

But more broadly, the implicit claim of this research is there is something wrong with our culture:  not just ''the culture of drinking'', but culture in general.

Society associates alcohol consumption with fun, humour and celebration.  According to the researchers, that association is ''insidious''.  One might add:  pretty accurate.

This minor paper tells us a lot about the spreading ambition of public health activism.

The modern field of public health started with campaigns against ignorance.  Educational programs were designed to inform the citizenry of the health consequences of their choices.  The messages were simple.  Smoking is bad for you.  Keep fit.  Eat more vegetables.

Such benign information provision is a thing of the past.  Now public health is a great social project.  It desires nothing more than a complete rewiring of our preferences and a rewiring of the culture which it assumes formed them.

It's not just that the study of public health is deeply paternalistic and patronising.  Nanny state accusations have pursued the field for decades.  And no wonder:  the Rudd government's Preventative Health Taskforce even recommended the Government regulate the portion size of restaurant food.

But nanny state doesn't quite capture it.  Public health is an imperial discipline, dragging in everything from cultural studies to urban planning.  And it does so all in the service of an increasingly ambitious program to reshape society and prioritise health above all other moral values.

Take the most fashionable adjective in public health right now:  ''obesogenic''.  This pseudo-medical term describes an environment — usually physical, but sometimes social and cultural — which encourages over-eating and under-exercising.

Under the obesogenic flag, public health activists seek to colonise debates over housing sprawl, economic policy, public transport, childcare, house size, telecommuting, infrastructure spending, consumerism, and sustainability.  Even law and order has been dragged into the public health domain:  high crime rates mean parents don't let their child walk to school which means those children get fat.

Here public health becomes less a medical concern and more an umbrella social critique.  As one book, Obesogenic Environments, puts it, obesity is first and foremost a social problem.  Certain obesity-encouraging practices have become culturally embedded.  We eat out more.  We drive instead of walk.  It is the self-appointed task of public health activists to change those embedded practices;  that is, ''promote healthier choices''.  Town planning has to change.  Tax policy has to change.  Infrastructure spending has to be reprioritised.  Our preferences have to be redirected.

With its grand social crusade, the public health movement has come full circle.

Temperance activists in the late nineteenth and twentieth century talked as much about social practices as alcohol consumption.  The major American temperance lobby was called the Anti-Saloon League.  Saloons weren't just bad because they were where the drinking happened.  They kept men away from their families, and encouraged other sinful behaviour.

In Australia temperance activists lashed out at everything.  In 1896 the South Australian politician King O'Malley described barmaids as ''the polished fangs of the stagger-juice rattlesnake ... angels of mercy luring men to their own destruction''.  Several states banned barmaids.  One major avenue for female employment — and the economic independence it brought — was closed.  Poor old barmaids were merely collateral damage for the monomaniacs obsessed with stamping out booze.

In the same way, today's public health movement is willing to jettison many other values in its quest to rewire society.

The hard-won conveniences of modern life — cars, restaurants — are obstacles to a better world.  Popular culture is ''insidious'', simply because it reflects our own beliefs back at us.  Choosing what we eat and drink is not a right, it is a prison.

Public health is groping towards a full-blown political philosophy.  Sure, it speaks the language of medicine.  But it is more ambitious and vague than that modest field.  The paper on music videos is a ham-fisted attempt to give cultural studies a scientific patina.

Like the puritans of the past, the public health movement is flailing against a society and economy it believes is deeply unwell.

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Timing is everything: making sense of Swan's corporate tax shake-up

One of the more contentious issues in the 2012-13 Mid-Year Economic and Fiscal Outlook (MYEFO) is a tax-timing change.  Corporate income tax will be paid monthly instead of quarterly for very large corporations (with $1 billion or greater in annual turnover) after January 2014, and then phased in for smaller corporations (with annual turnover greater than $20 million).

The important point to remember is that this change has no impact on the 2012-13 budget outcome.  The question is whether this is a reform well worth undertaking anyway.

The government is very careful to tell us that ''this measure is estimated to raise $8.3 billion on an underlying cash basis over four years''.  That may sound like a lot of money, but the government expects to raise about $317 billion in corporate income tax over the same four-year period.  The next thing to note is that this is a cash-basis analysis.  The corporate sector will not pay any more money to the government;  it will just pay some money earlier and not later.

This matters because the government faces timing problems.  $5.5 billion of the $8.3 billion gets paid in 2013-14, pushing the budget into surplus for that year.  That is if everything else goes to plan.  That the 2013-14 budget is a surplus only due to a timing change indicates trouble.  Revenue from this reform declines quite rapidly after that — timing issues are always about swings and roundabouts.  In that sense, this is a very cynical reform as it shores up the 2013-14 budget — coincidentally, also an election year.

The cost to the private sector will be two-fold.  First, the increased compliance costs associated with remitting money to the government will increase.  Rather than paying once every three months, corporates will have to pay every month.  The government has undertaken to consult with the business community prior to implementation, but will have to lift its game after the Resource Super Profits Tax experience.

The second cost is the opportunity cost of paying early.  That money could either be invested or used for working capital purposes.  In other words, the government will be draining $5.5 billion from the corporate sector in 2014 — more precisely the first half of 2014.  The overall effect of reducing working capital by that amount isn't clear to me, but that money will have to be found elsewhere and financed at the corporate cost of capital, rather than at the current risk-free rate.  For the economy as a whole, cheap finance will be replaced by more expensive finance and the additional cost will be borne by workers, consumers, and shareholders.

Over time, the government won't get any more money from this reform, but it will impose some cost on the economy.  That doesn't necessarily make it a bad reform.  Yet the MYEFO doesn't make the case that this is a good reform either.  All we are told is that some other countries do this too (Canada and Sweden, for example), and it will more closely align income tax payments to income, as income is earned daily while tax is paid quarterly.

It is understandable that the government would like to receive its money sooner rather than later — but at what cost?

It is not clear that there are too many economic benefits to monthly tax payments — a budget surplus on the back of a timing fiddle is a budget in trouble — while there are costs associated with this change.  Right now, there isn't enough detail or analysis to support this reform — it is up the government to make a case.  The important trade-off relates to the effective tax subsidy corporations enjoy relative to the compliance and tax-collection costs business has to bear.  When the government can provide information as to that trade-off only then will we have enough information as to the merits, or otherwise, of this reform.

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Stay tuned for the red underpants theory of bad TV

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Regulations that worked in 1901 do not work now

On this day in 1781 the British army in North America surrendered to George Washington at Yorktown.

Six years later an independent United States adopted the world's first modern constitution, on which Australia's 1901 Constitution was modelled.

Government regulation and taxation were the reasons behind the American colonial revolt.

Even though the taxes levied by Britain were low, the slogan ''no taxation without representation'' was persuasive.

Constitutional restraints on government — even democratic governments — are there to impede regulatory measures or tax grabs that favour some constituents at the expense of others.

But the restraints on government are not working.

In 1901 the Commonwealth spent 3 per cent of national income.

Today it taxes and spends a whopping quarter of the income that firms and individuals earn.

The Gillard Government's roll call of new and expanded taxes includes:

CARBON taxes, renewable energy requirements and spending on unbankable green schemes costing over $15 billion a year, plus a $10 billion Clean Energy Fund.

NEW taxes on mining, our most vibrant sector, now the highest in the world.

THE National Broadband Network, in which Australia is, uniquely throughout the world, reintroducing a monopoly government owned telecommunications system.

WATER buybacks in the Murray Darling that will needlessly reduce agricultural productivity.

Other big new taxpayer-slugging programs will lift schools spending, bring in a new dental care system, and raise wages for those presently on low pay in the social services sector.

On top of this spending are intensified regulatory measures.  The Commonwealth Government in 1901 had 258 pages of regulatory Acts.

Today it has more than 100,000 pages.  The Rudd/Gillard Government has introduced 20,000 regulations and regulatory changes to expand its controls over businesses and individuals.

Among the most significant are expanded environmental regulatory measures that impose high costs and project-killing delays, especially on mining and agriculture.  Recently we have seen bans on high productivity fishing trawlers.

Regulations also prevent firms from replacing unproductive employees.

That impediment on businesses apparently does not apply to the trade union movement, which is sacking supernumerary staff to focus its spending on re-electing the Gillard Government.

Regulation constraining union activity is the one area where we have seen a reduction.

The ''tough cop on the beat'' that Julia Gillard promised would replace the Australian Building and Construction Commission has proved inadequate to combat appalling conduct by picketers.

Unions are using aggressive picketing in the campaign to force firms like Grollo to hire shop steward agitators — a double whammy that makes firms pay for their own destruction.

It is an astonishing tribute to business that, in spite of government, most firms survive and some even prosper.

However, the Government's overbearing growth and support of illegitimate union activity is adding costs and suppressing opportunities for business enterprises — the only creators of sustainable jobs.

The various constitutional restraints on government that were put in place at the time of Federation have clearly failed.

Government as a regulator and spender just keeps on getting bigger.

Stagnation will be the result unless measures are taken to arrest this growth.

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