The Global Financial Crisis -- first the US housing bubble, then the failure of investors to understand the instruments they bought, and then many authorities in many counties insuring that private investors did not bear the consequences of bad investments -- called to mind the South Sea Bubble, the corrupt behaviour of the Walpole administration and, of course, John Trenchard's and Thomas Gordon's Cato's Letters so long ago as 1720.
Then the outrageous behaviour of Australia's two major political parties bidding for office following the recent election brought again to mind Walpole's use of unwarranted privileges to gain and hold political favour and the brilliant protest mounted against corrupt government by these ''letters''. Although we cannot expect to match the brilliance of those Cato's Letters circumstances demand a protest. What better than their formula?
Cato's Letters 1: The grand old paradigm
Scrutineering during the evening of the last Federal poll I was struck by the number of people who, ignoring the How-to-Vote cards, voted Labor 1: Liberal 2 or Liberal 1: Labor 2. They must subsequently have been sorely disappointed by the depths both majors plumbed when bidding for the favour of the independents.
Yet surely they were rational. After all, despite the National Broadband Network, carbon abatement, and other policies of smaller consequence, the major parties were not so far apart. They were the only political groups that might attempt to govern on behalf of the whole community rather than by benefiting sections of it at the expense of the whole. They and the National Party were the only ones with experience of the considerable difficulties that attend governance. When people associated with the Liberal and Labor Parties had thought about such things at all, the relatively free, equal and fraternal Australia that each would like to achieve was similar. There was a greater difference in the types of policies each believed would achieve that Australia but even this was moderate.
Hindsight told voters that both majors had quite recently governed unusually well. Economic stimulus does not seem to have worked well enough elsewhere to credit it with much here. Surely, Australia survived the Global Financial Crisis so well because of the textbook-approved reforms to the supply side of our economy and the fiscal rectitude of the Hawk, Keating and Howard Governments. (I am not critical of the initial decision to attempt stimulus; that was genuinely a hard call. Implementation and continuing it after the evidence started to come in are other matters.)
In 1975, a so called Constitutional crisis did not even look like shedding blood and that is still the temper of Australian politics. We are a very lucky people to live in such a nation and we should never forget it. Fraternity is not an immediate problem. Liberty is, but must be a topic for another day. That leaves equality.
Should not politicians attempt to govern for the benefit of all with special consideration only for those least able to cope? Should they not treat all Australians as of one class? Is not privilege abhorrent? If so, then after the election Australians experienced an unusually disgraceful political episode during which the majors bid for the support of sectional interests at the expense of the whole.
Take broadband. My family farms, and we will have our internet connection cross-subsidised by people who are much less wealthy. This cannot be dismissed as trivial. $35.7 billion is a huge sum for an economy Australia's size; one that private investors would not risk and a sum that in the unforeseeable future we may wish had yielded better returns.
Take Abbott's offer of a billion dollars for a hospital in Tasmania. Did he really believe that such a distribution of health funds was equitable or for that matter efficient? If that offer does not haunt him it should.
Winston Churchill observed that democracy is the worst form of government except all the others that have been tried. De Tocqueville, who thought that Americans might vote themselves what they could not afford, observed that a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it. More recently James Buchanan described how concentrated vested interests will tend to prevail over dispersed interests. Pitt the Elder and Lord Acton noted that power tends to corrupt. And so on. It is not as though democracy's weaknesses are unknown. No politician familiar with the shenanigans within his own political party could be unfamiliar with the potential shortcomings of democratic process. Recognising its strengths, our leaders should admit its weaknesses and lead appropriately.
The underlying problem is this: majorities are not achieved by appealing to the middle ground but by putting together coalitions of people with enough at stake in some matter to let it determine allegiance. If that were the whole story, democracy would be unworkable. In the real world, however, there seem to be enough people who put aside self interest to prefer the interest of the whole (or a principle derived from perceived public benefit) for democracy to function much better than its alternatives.
A small illustration of what has become known as public choice theory may assist. A tariff on clothing and textiles such as we had before Hawke and Keating removed it may transfer, say, $1 billion from 20 million consumers to, say, 100,000 producers organized in 100 companies and 1 union. Then each consumer has $50 at stake; each family $200; each worker $10,000 and each company $10 million. It is relatively easy for the union and employers to make life difficult for a Government, but the consumers cannot cover the cost of organizing to counter the lies and damned lies employed to defend the market privilege. Only rarely have I heard a recipient of government favor say ''I know that what I take is unfair and inefficient''. What is more damaging, many seem able to convince themselves of the truth of easily falsified rubbish. I recall Richmal Crompton who wrote: ''It is a great gift to be able to lie so as to convince other people. It is a still greater gift to be able to lie so as to convince oneself.''
It is similar with thousands of issues, each defended by an organised minority beholden to self interest, emotion or fear. We all would like a bigger share of whatever is for the moment the national wealth -- say, a better local school, hospital or communication service that people elsewhere pay for. Wouldn't we all like others to subsidize our favourite hobby -- the arts, football, whatever? It is so convenient to have our own employment protected from competition that we tend to forget consumers and the unemployed. Those of us who live in favoured environments don't want coal mines and gas hubs and we don't want hoi polloi climbing the city-fringe hills or turning up as refugees. When offered privileges by leaders who neglect the morality of their calling we can be a selfish lot and potential government favouritisms are almost endless. Unless the recently appointed Minister for Delivery of the Pork, Simon Crean, finds substantial ''regions'' within the cities, the recent deals call for wealth transfers from city people to country people. The privileges are of a type that Hawke, Keating and Howard much reduced. They tend to be regressive which, since wealthy people find it easier to organise, is hardly surprising. Fortunately they come after Hawk, Keating and Howard.
While such favouritism is obviously unfair and therefore immoral, it is not so widely understood that it is also inefficient causing national wealth to be less than it could be. Privilege causes industries and professions to produce goods or services other than those most wanted at higher price than needs be; it causes people to be unemployed; it causes infrastructure to provide less benefit than it could if properly located or if the same expenditure were applied to other assets; and it results in high levels of taxation and incompetent public sector delivery. Recall the recent pink bats and school halls fiascos; these were caused less by common-a-garden incompetence than by the government attempting what was never within its competence. In short there is dead weight cost.
The parliamentary reform that featured much among the demands of the now notorious Three Amigos has undoubted popular support. While, with one exception, I don't expect their ''reforms'' to do much good, neither do I expect much harm. My exception is an office of budget management answerable to the parliament: I suppose more-or-less along the lines of that recently adopted in the United Kingdom.
Parliaments do what they must do better than I think the public appreciates. They do not, indeed cannot, govern. For this they are too large and they have not the resources, nor even the calibre of personnel, especially after the Ministry is effectively taken from them. First, without bloodshed, Parliaments choose the team that will control the vast machinery of government. Then, what has been called the High Court of Parliament holds that team to account before the jury of public opinion. Most importantly, despite nonsense to the contrary, by denying the ruling team their confidence or money they can, and sometimes should, get rid of it. That power, much attenuated by Party discipline, is the threat that allows parliaments to compel governments to adhere more-or-less to principles of good governance. First parliaments reveal and in the extreme they can sack. There are other systems but ours works tolerably well. Of course, Parliaments must sanction new legislation but I suggest that at least half of that we would be better off without. The programs on which governing parties have been elected and the mandates they have claimed have proved mixed blessings. Nearly all governance is conducted by the authority of statutes passed years before and the only new legislation governments really need is money bills.
The last thing that should be demanded of parliaments is consensus. They are combative. They are designed to be combative. They fulfil their function, to the extent that they do fulfil it, by combat. I concede that better manners and lest posturing would improve them, but those are concerns for culture, not standing orders. The posturing reminds me now of past occasions when ministers reminded me of cockerels showing to their hens who sat behind.
What might we have anticipated of a Government that achieved office promising to misuse public trust? What might we expect of an Opposition that tried to achieve office by the same? What might we expect from the independents who seem to have had scant idea of the principles that ought to constrain the exercise of power, even less appreciation of what they didn't understand and certainly not the humility to place themselves in the way of learning from conventional sources? What might we expect from Andrew Wilkie, Bob Katter, Tony Windsor, Adam Bandt and Tony Crook? Bit by bit I am finding out, but I turn instead to some behaviour that might minimise damage.
Surely members of the Gillard Government would like future serious commentators to say as complimentary things of them as current ones say of the Hawke and Keating Governments. Surely there is much that they can learn, not from past visions but from past quite-strictly-limited aspirations, practices and the determination to press on when sufficient support was hard to muster. For instance, Hawke found in the Fraser Government's ''black hole'' an excuse to abandon or minimise the cost of his party's more reckless promises. While breaking irresponsible promises will always attract criticism the real immorality is in the making of pledges that ought never to be made. It is not within my competence to devise tactics for dealing with vested interests that have been promised too much but it has been done before and the need is great. Julia Gillard might revitalise an old tradition of her party, opposition to privilege. She might govern as though she meant it when she promised to govern for all. Tony Blair may have some advice for her on how to deal with privilege within the labour movement itself.
The Coalition too might learn from its past. Remember that the Howard and Peacock Oppositions actually supported Hawke's most difficult reforms, sometimes even leading the debate. Some within its ranks might form another dry rump that will fit it for government in due course, prevent it aligning with undeserving vested interests, and popularise beneficial policies such as substantial deregulation of law and medicine. Surely its members would like one day to form a government that was as favourably remembered by history as Robert Menzies and John Howard. Some might settle for being favourably remembered even if they don't survive politics long enough to form such a government.
Right now this reads like an unrealistic pipe dream. Why? Australia enjoyed as much for about a decade and a half. Are conditions today so much more difficult? Just because media report politics like football with winning and losing teams is no reason for politicians not to think beyond the most immediate election. They have done so before.
And the independents? Should they care, they might start with a little theory, say, some public choice theory and, say, Walter Bagehot on Westminster etc. The Parliamentary library and research service is, or was in my day, a superb tool.
Adam Smith said that there is a great deal of ruin in a country. Perhaps there is, but once begun there seems always to be more to come. Fiscal rigor and reform fell into serious disregard during Howard's final year and all of Rudd's years. It has just been made even more difficult for the major parties to govern fairly and efficiently. Equality deserves better than the lip service of political harlots.
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