How a railway in remote Western Australia is slowing down your internet

Wrong Number:  Resolving Australia's telecommunications impasse
by Henry Ergas
(Allen & Unwin, 2008, 256 pages)

The undermining of these crucial property rights in Australia has been the ugly underside of Australian economic reform over the last two decades.  Reversing the position the ALP took to the last election, the Treasurer Wayne Swan has added his voice in support of the September 2008 High Court decision requiring BHP to provide rival iron ore miner Fortescue access to its Pilbara rail lines.

This High Court decision constitutes an important staging post in the 15 year march through private property rights.  The September High Court decision confirms and entrenches Australia's problem with property rights.  The Pilbara case, if allowed to stand, sets a precedent with enormous implications.

A LANDMARK CASE FOR PROPERTY RIGHTS

The importance of property rights in the legal, economic and social framework of liberal democracies is too often understated.  Property rights are the key to ensuring efficiency in private enterprise economies.  They embody an owner's ability to do what they please with their own property, and -- critically -- the right to exclude others from access to that property.  It is this exclusivity that provides people the incentive to save and invest in property.  Exclusive control by owners allows them the flexibility to use their property without having to negotiate and seek permission.  Private property rights also prevent free riding, where users avoid paying the full costs.  Free riding is endemic in socialised systems.

The basis for the High Court decision goes back to the 1993 Hilmer Report on National Competition Policy.  Though paving the way for reform in opening up government monopolies, or, as they are popularly described, "essential facilities", to competition, Hilmer also brought private assets within the regulatory net.  Recognising that forcing private firms to share their privately funded infrastructure with their competitors could deter private investment, the Hilmer Report excluded "production processes" from within the scope of monopoly assets that must be made available to all parties.  This was justified on the basis that that new production facilities could always be built to challenge a monopoly.  The subsequent legislation became Part IIIA of the Trade Practices Act.

If we were to apply this principle, for instance, to a car assembly line, which is itself a transport facility, we have the equivalent of a rival car manufacturer seeking access to the Toyota plant.  Such an application would be ruled out only because that facility is excluded under the production facility caveat of the Trade Practices Act.  But this is an arbitrary distinction and, indeed, the National Competition Council (NCC) has argued the exemption for manufacturing facilities should be revisited.

The National Competition Council takes its "competition" title as trumping all other facets of efficiency.  In a wish to force the sort of competition it sees as ideal, it demonstrates a remarkable hostility to free markets.  It fails to recognise that efficiency depends both on competition and on firmly defined and protected property rights.  In its 2008 Annual Report, the NCC makes a naked grab for power in seeking changes to the Trade Practices Act that would give competition regulators even greater powers over vast swathes of the economy.

Even with current exemption over regulatory control for "production facilities", there are many areas of business which appear to be caught up in the socialisation net that the High Court decision reveals.  These include other rail lines like BHP's Hay Point coal line in Queensland.  This is integrated with BHP's mining and port facilities and as such has demonstrated advantages over the open access regimes in other rail-port systems.  Also in the net are gas pipelines, and facilities like private hospitals, airports, theatres and sports stadiums.

THE TELECOMMUNICATIONS TRAP

But above all the decisions on the Pilbara rail lines have implications for the telecommunications industry.  Implicitly, the High Court has confirmed the wisdom of Telstra refusing to build its fibre optic network without assurances that it would not be subject to regulatory seizure by the ACCC.

In his new book Wrong Number:  Resolving Australia's Telecommunications Impasse, the regulatory analyst Henry Ergas conclusively demonstrates just how poisonous government involvement in telecommunications has been since Telecom Australia was partly (later wholly) privatised and full-service competition legalised.

Though new services have been introduced, and Telstra and its competitors have been on a ceaseless road of cutting out surplus costs, Australian telecommunications has remained stuck in a regulatory quagmire.  The infusion of efficient new services that the competitive market was to bring has not met with expectations.

The price that Telstra must offer others for the use of its telecom lines is regulated, as are the service features and reliability of the lines.  In addition, regulators set community service obligation payments between Telstra and other firms piggy-backing off their lines.

In all these cases Ergas demonstrates that the regulatory dice is loaded heavily against Telstra.  The government and its regulator have treated Telstra as a vehicle through which its social policies can be pursued and has sought to force Telstra to provide a cheap piggyback to its competitors.  Telstra has been required to cross-subsidise its mainline business with its profitable television, internet and mobile services.  As Ergas says in his rather deadpan way,

Mandatory access converts assets from being regulated through property rules -- the owner can choose whether or not to allow others to use them -- to being regulated through liability rules, in which the owner has no right to exclude access but rather must provide it on terms determined by others.  There is nothing that says that such a conversion will be efficient.

Australia's telecommunications regulatory regime has had adverse consequences.  The influx of competition was expected to quickly bring about an upgrade of the Telstra copper network to one capable of handling high speed data -- alongside new networks built by Telstra's competitors.

Instead, as a result of the prices being held too low, we have seen the existing -- and aging -- network being maintained and only gradually improved, while Optus and a range of retail providers have preferred to use the Telstra network rather than build their own.

Simply put, it's cheaper to piggy-back off a competitor's network than to invest in your own telecommunications infrastructure.

The lack of investment in fixed lines by Telstra or its competitors is because the regulator has been setting access charges to the network that are too low to cover costs.  The regulatory framework that was supposed to encourage competition has instead become a major disincentive to invest in telecommunications.

This perverse consequence of third-party access requirements in the telecommunications industry has really come to the political foreground over the last few years, ever since Telstra announced it was going to implement a major upgrade to the whole network which would involve ripping up the copper wires and replacing it with fibre-optic cable.

Rather than seeing new profit oriented telecom networks, we have seen $3 billion of subsidies and another $4.7 billion foreshadowed to fund a high speed network that Telstra would have funded itself given an adequate regulatory holiday.  Australia has forfeited the opportunity to replace the dead hand of regulation with an open environment for telecommunications investment, instead choosing to fall back on yet another round of political negotiation and taxpayer subsidies.

Ergas maintains that Australia has, as a result, fallen behind in the world telecom performance stakes.  His book is a masterpiece of analysis of the decisions determining the performance of Telstra, and the uniquely dictatorial powers of the ACCC over the business's prices and performance characteristics.  It is however light on in terms of specific comparisons with overseas telecom businesses performances and in providing empirical pointers to how things might be done better.

Ergas demonstrates how the regulatory arrangements for the telecommunications industry are far more aggressive than those confronting other infrastructure areas.  Rather than being governed by the generic Part IIIA of the Trade Practices Act, telecommunications is regulated under Parts XIB and XIC.  And these provisions give the ACCC much more intrusive powers to regulate, and limit the number of checks and balances the regulator has to comply with.

By comparison, Ergas argues that those industries that are covered by Part IIIA -- ports, airports, electricity networks, railways and others -- are in much better shape because of the decision to regulate infrastructure and the prices set for access are made by different bodies.  Under Part IIIA, the NCC decides whether a firm should open its facilities to competitors and the ACCC then sets the price at which it must do so.  Under XIB and XIC, the ACCC plays both these roles -- and has arguably a conflict of interest while doing so.

And from this, Ergas maintains, we have seen new investment and a general achievement of the goals set by competition policy.

But, as the High Court's Pilbara decision makes clear, simply separating the decision to regulate from the price setting function of the regulator would be no panacea to the telecommunications sector's regulatory impasse.  Indeed, the NCC has proven to be, at best, a seamless variant of the ACCC (and a stepping stone for its officers to becoming ACCC Commissioners).  Indeed, in many respects the NCC has proven even more inclined to force incumbent firms to share their property rights with others on onerous terms.  Where advances have been made, notably in gas, these were due to a review panel taking a highly unexpected decision to overturn the pro-regulatory stance taken by the ACCC and NCC.

COMPULSORY SHARING IS FOR KINDERGARTEN, NOT FOR INFRASTRUCTURE

All these problems have stemmed from Australia's excessively wide definition of an essential facility under the Trade Practices Act.  The United States, for example, does not allow access to be required simply because it is "uneconomical" to develop a further facility.  (In 1993, the Hilmer Report itself recommended a stricter test than was actually legislated.)

Nor would the US regard a facility to be essential and subject to regulatory control when, as in the case of the Pilbara rail lines, there are three such facilities -- BHP's, Rio Tinto's and one owned by Fortescue itself, all of which could provide a basis for carrying other firms' ores commercially.

The present legal framework is the outcome of faulty analysis on the part of policy makers anxious to ensure access to facilities is not restricted by excessive business rivalry.  But this has created a new form of investment risk.  Firms will now be uncertain whether their facilities are to be opened to rival businesses on terms determined by a regulatory agency.  And they will have an incentive to hold off making investment decisions hoping that a rival will move first and incur the risk of failure.  Allowing government agencies to set the prices and conditions for a firm's property is a sure-fire way of suppressing new private sector investment.

The fact is that the Hilmer Report, and the competition policy to which it gave birth, has outlived its usefulness.  Essentially the aim was to open up government owned facilities to other users and to remove all restrictions on the abilities of entrepreneurs to build new facilities.

But the idea was to get such facilities away from regulatory oversight as soon as possible, something which has demonstrably not occurred.

This is made worse by an unfortunate propensity of regulatory agencies to develop vested interests in self preservation and aggrandisement.  Having abolished facilities with monopoly powers buttressed by government controls we now have created a regulatory monster that is devouring the investment incentives to build new infrastructure.  The regulatory agencies are also bringing waste by oversighting their charges.

It is opportune to consider a review of the conditions that spawned the highly intrusive regime we have created in Australia to examine whether we would be better served by the sort of lighter regulation that the Hilmer Report had in mind and which prevails in the US and other economies.

The adverse situation was created by government legislation.  It will require legislation to restore the private property rights necessary for private investment.

An easy tale to tell

It appears that the left puts me dead in the centre of Australia's public policy environment -- I, it appears, can take the credit for almost every policy reform over the last two decades.

If contemporary politics and public debate is about constructing "narratives", then the left has a distinct advantage over the right.  With the steady stream of left-leaning books, studies, long-form essays and retrospectives pushed out by publishers like Melbourne University Press and Allen & Unwin, constructing a history of the last decade can be as simple as mixing and matching secondary sources.

Two new books -- Mark Davis' The Land of Plenty:  Australia in the 2000s and Geoff Boucher and Matthew Sharpe's The Times Will Suit Them:  Postmodern Conservatism in Australia -- use this advantage to good effect.  While there are original arguments in both works, like so many similar analyses they suffer from an over-reliance on previous writers whose ideological views they comfortably share -- a practice which does little more than magnify the spurious arguments and tenuous hypotheses of earlier authors.

But if their endnotes are anything to go by, their actual research on the right wing they purport to unveil is fleeting at best.  This failure to adequately study their subject is disappointing, to say the least -- there is more than enough material in the archives of my blog, or Quadrant, or the Centre for Independent Studies' journal Policy, to drive left wing critics absolutely nuts.

The poverty of much left-wing analysis of contemporary politics is even more starkly illustrated by a recent article published in the Australian Journal of Political Science by two RMIT academics Marcus Smith and Peter Marden, "Conservative Think Tanks and Public Politics", which purports to expose the "network of interests" that dominate die public debate.  Here the analysis is even more derivative and speculative.  Like the work of Davis and Boucher and Sharpe, actual material by think tanks is conspicuously absent from their study -- in a reference list of 64 works, only six are identifiably from the Australian think tank community.

These three works are hardly unique.  But a year after the fall of the Howard Government, and at a time when commentators -- and governments -- are declaring the end of the neo-liberal settlement, taken together they provide a picture of how incoherently the left sees the Howard era, and how incoherently they see their contemporary opponents.

Turns out:  they're not fans.  Lacking a firm understanding of the intellectual sources of modern Australia liberal and conservative thought, left-wing critics are quick to retreat into conspiracy theorising.

In The Land of Plenty, Mark Davis provides an unfortunately typical argument.  Davis poses an important question:  given that the general Australian public seems to oppose the radical nature of privatisation and liberalisation expounded by neo-liberal policy wonks, how have these policies been so influential?  The answer, according to Davis, is race.  Selling off electricity generators might not be popular, but verbally bashing Aborigines is.  Davis argues that conservative activists and politicians were only able to harness enough political capital to push through their economic policies by whipping up popular prejudice about Aboriginal "dole-bludgers".  As he writes:  "In every country where there has been a conservative revolution, the political history of race and economic reform are inextricably intertwined".  Support for economic reform, is, obviously, coded racism.

Certainly, the think tanks that have pushed for economic, social and political liberty have appropriately had a lot to say about the policy settings effecting Aboriginal welfare.  I pioneered the study of Aboriginal disadvantage from a liberal perspective in the mid-to-late 1990s.  The arguments I made at the time -- that many of the policy settings that support small isolated communities and encourage welfare dependency are significant contributors towards Aboriginal poverty -- are now mainstream policy views.

But Davis sees the debate over Aboriginal issues in the 1990s as both a manifestation of racism in liberal political circles and a classic bait and switch -- while one hand was pushing around Aborigines, the other hand was quietly privatising public utilities.  This is a nicely pat story that will no doubt excite his readers.  But discussions about how Aboriginal land rights interact with "traditional" property rights is hardly something that classical liberal economists could be expected to not discuss.  Davis' argument essentially dismisses every liberal or conservative analysis of Aboriginal disadvantage as a racist smokescreen.

In The Times Will Suit Them Boucher and Sharpe put the ideas of the "New Right" at the centre of the last decade.  And like Davis, Boucher and Sharpe have a creative argument.  Australian conservatives are "postmodern" in the crudest sense of the term -- cultural and moral relativists.

Boucher and Sharpe argue that postmodern conservatives predominantly define themselves by a shifting pastiche of opponents -- terrorists, people smugglers, cultural elites, even post-modernists themselves -- not by the fixed and universal moral values that perhaps defined Menzies-era conservatism.  In this new view, the world comprises of local, incommensurable cultures which cannot help but talk past each other.  While they share this position with the postmodern left, postmodern conservatives have the obstinacy to identify with their culture and fight for it.  Boucher and Sharpe claim to stand against both postmodernisms.

Despite the ingenuity of branding the right with one of the labels they like to apply to their opponents, the book quickly degenerates into the same tedious left-wing narrative that characterises its shelf-mates.  It cursorily introduces the New Right, before liberally scattering unexamined references to Hayek and Friedman throughout its typical tale of the Howard years.  But Boucher and Sharpe casually undermine themselves when they note that the Howard Government hardly pursed a radical small government agenda.  The evidence they marshal to show just how high-taxing the former government actually was comes from the same think tanks that they claim provided the government its ideological support.

But at least, on that occasion, they were reading the work of the Australian right.  In Marcus Smith and Peter Marden's "Conservative Think Tanks and Public Politics" the absence of relevant research has a surrealistic effect.  Smith and Marden's article is a collage of complaints about the two major Australian free market public intellectuals, most of which bear no resemblance to their targets.

According to Smith and Marsden, I am at the forefront of the "renewal of forms of social conservatism" in Australia.  The authors also ping me for apparently representing a rejuvenation of the Christian Right.

This accusation is remarkably hard to square with my output.  While social policy is not a focus of my work, when it has been tackled, it has been tackled from both conservative and liberal perspectives.  In recent years, I wrote in The Australian in 2007 that "debate on gay marriage has been suffocated by a failing to consider why government is regulating marriage in the first place".  I wrote in a Howard Government retrospective that in the future, free marketeers need to develop a social policy informed by liberalism, not conservatism.  These articles are hardly indicative of a public intellectual that is dominated by the "neoconservative Christian Right".

So why do Smith and Marden spend so much time tackling what is obviously a straw man?  It is hard not to conclude that the regular claims by Australian leftists that our political system is being quietly corrupted by an insidious religious right is, oddly, wishful thinking -- the concept seems to have been imported from the United States and dumped, with not much thought, into our public debate.

But it only takes a brief glance at the policy platforms of Australian political parties to realise that the religious right, if it exists, has little influence -- the Liberal, Labor and National parties may have a preference for the status quo when it comes to social policy, but not much more than that.  And the policies of Family First are almost clones of the Labor Party's.

Smith and Marden's article is full of bizarre diversions, but their central claim is that Australia's free market think tanks dominate the public debate because of their "commanding and authoritative voices" and their claim to represent commonsense and the "public interest".  Flattering perhaps, but wrong.  It is a common view of left wing activists that the left just needs to set up a progressive think tank to "retake" the public debate.  But what would they say that isn't said a dozen times a day in a dozen different newspapers around the country?  Free market think tanks are successful in broadcasting their message largely because that message is so different to the one repeated by universities, lobbyists and public interest groups.  The number of newspaper columnists, academics and ABC broadcasters who argue that the government should spend more money on public transport is nearly infinite, but the principled dissenting voice -- that the government should not use transport as a form of social engineering -- is rare.

Unfortunately, what ties these three works closest together is their lack of understanding of the Australian right.  Part of the confusion is caused by the conflation of political actors with commentators and intellectuals -- Andrew Bolt is not John Howard any more than Kerry O'Brien is Peter Garrett.  To translate the actions of one through the commentary of the other just invites misinterpretation.  A further confusion is created by the terminology that groups atheist libertarians with Christian traditionalists undet the umbrella term "conservatives".  While they often share offices in political parties and non-government organisations, their motivations can be drastically different.

But the biggest problem with these three works is that they view Australia's right-wing through a glass that more reflects their individual prejudices, than it lets light through.

Perhaps the first step would be to read some of our material.

Hearts, minds and corporate tax rates

Global Tax Revolution:  The Rise of Tax Competition and the Battle to Defend It
by Chris Edwards & Daniel J. Mitchell
(Cato Institute 2008, 256 pages)

As 2009 begins, economic liberalism is under great strain from its various opponents.  Be it in the form of guarantees for bank deposits, fiscal pump priming policies or subsidies to failing firms, most countries appear to be taking a step back on the road towards freedom in the economic sphere.

In uncertain times like this, it is helpful to recall some of the central conversations of liberals in previous times.  Consider the 1950s as an example.  As recalled by James M. Buchanan, the economist Warren Nutter at that time urged fellow classical liberals to "save the books".  Friedrich Hayek would broaden this concept by saying that liberals should "save the ideas".

Both of these sentiments are surely relevant today.  However, one could practically broaden them out by actually "writing the books with the ideas to be saved".  It is on this basis that Cato Institute economists Chris Edwards and Daniel J. Mitchell well and truly deliver with their book Global Tax Revolution:  The Rise of Tax Competition and the Battle to Defend It.

As explained by Edwards and Mitchell, tax competition is one of the welfare enhancing biproducts of modern globalisation.  As a consequence of drawing down barriers to capital, migration and trade since the 1970s, governments have since found themselves in a position where they must cut taxes on income, investment and wealth to attract these valuable resources.

The results of the global tax revolution have been outstanding so far.  The average top individual income tax rate across the OECD has fallen from 68 per cent in 1980 to 42 per cent by 2007.  Corporate income taxes have fallen from above 40 per cent in the mid 1980s to 28 per cent by 2007.  The tax treatment of foreign investors has been less punitive, as competition has driven down withholding taxes on cross border investments.

The book chronicles how low tax policies become transmitted across countries.  During the 1970s, the British political icon Margaret Thatcher discussed how high tax rates were a "symbol of socialism" that needed to be swept away.  After gaining office she reduced a number of taxes, including the corporate tax rate from its 1982 rate of 52 per cent to 35 per cent by 1986.  Ronald Reagan took up a similar policy stance as part of his broader "supply side revolution".

Other countries were forced to follow suit if they wanted to retain their capital and people.  However, some countries have tended to drag the chain more than others.  In 1985 Australia had cut the top personal income tax rate from 60 per cent to 49 per cent, and in 1990 down to 47 per cent.  However, fast forward to 2007, and authors show that Australia's top personal income tax rate is still at a painful 46.5 per cent.

When we look around the world today, we see just how much Australia has fallen behind on the tax reduction agenda.  Our record is exposed fully when compared to the emergence of the "flat tax club" of nations.  Flat taxes are single rate income taxes with fewer deductions, exemptions and credits.  They reduce distortions in the treatment of savings and investments, help prevent tax evasion, eliminate special deals and preferences in the taxation system, and are consistent with the all important "equal treatment of equals" concept of justice.  In 2008, 25 jurisdictions, including central and eastern European countries, have adopted single rate individual income taxes.

Global Tax Revolution clearly outlines the economic and fiscal benefits of tax competition between countries.  On the economic front, the authors state that "if tax competition can reduce high marginal tax rates on labor and capital, it can create large gains to a nation's economy".  Based on the evidence outlined in the book, there is little question that tax competition has created such gains.  In terms of the fiscal effects of tax competition, "governments would likely be larger today if tax competition had not challenged their fiscal monopolies".

An important aspect of Global Tax Revolution is that it broadens the scope of analysis to consider the social and moral case for tax competition.  This is something that has been largely overlooked by both sides of the debate so far.  Edwards and Mitchell explain that "low tax jurisdictions, or tax havens, are a safe refuge for oppressed people seeking to protect their assets".  For example, financially persecuted groups, such as Jews in the Middle East, Chinese in Malaysia or Indonesia or Indians in east Africa, can protect their precious savings in countries with lower taxes.  More generally, tax competition can spur economic growth that enables people to buy better food, clothing, shelter and health care for themselves and loved ones.

Despite these benefits, there are powerful countervailing political forces that are working to nullify tax competition across the globe.  The OECD has actively campaigned against low tax jurisdictions, and has called for countries to exchange information about taxpayer activities across borders.  It has previously threatened tax havens and other low tax countries with denial of market access and other forms of financial protectionism if they did not agree to weaken their tax and privacy laws.

The governing bodies of the European Union have regularly called for international tax harmonisation while the United Nations has sought to expand its power by levying global taxes variously on airline tickets, currency transactions, the internet and the income of emigrants.  While these remote bureaucracies have been fairly unsuccessful in their efforts to date, it is in the interests of all taxpayers in Australia and abroad to resist moves to create an international tax cartel.

Overall, countries are making good progress on tax liberalisation, but more must be done to relieve taxation burdens on citizens and business.  Australia has become a tax reform laggard in a fast moving world.  Its top personal and corporate income tax rates are the tenth highest in the world, and its capital gains tax rate is the sixth highest.  Our major Asian neighbours, including flat rate taxing Hong Kong, are pulling ahead of us in the tax competitiveness stakes.

With the Federal Treasury undertaking a review of the Australian tax system, Ken Henry and his review staff would do very well to read Global Tax Competition and draw on its lessons for the sake of an internationally competitive tax system for Australia.  If they do, all Australians can look forward to a country that embraces growth and enterprise through low taxes.

A highly readable book written in a direct style suitable for academics, policymakers and the general public alike, Global Tax Competition contains the worthy ideas that ought to be saved when it comes to the economics of tax competition.  This is one of the best ways that economic liberalism can move forward.

The Flat Tax Club:  Income Tax Rates, 2008

Jurisdiction	Year individual flat tax adopted	Individual flat tax rate	Corporate tax rate
Jersey	1940	20.0%	20.0%
Hong Kong	1947	15.0%	16.5%
Guernsey	1960	20.0%	20.0%
Jamaica	1986	24.0%	33.3%
Estonia	1994	21.0%	21.0%
Lithuania	1994	24.0%	15.0%
Latvia	1995	25.0%	15.0%
Russia	2001	13.0%	24.0%
Slovakia	2004	19.0%	19.0%
Ukraine	2004	15.0%	25.0%
Iraq	2004	15.0%	15.0%
Romania	2005	16.0%	16.0%
Georgia	2005	12,0%	15.0%
Kyrgyzstan	2006	10.0%	10.0%
Pridnestrovie	2006	10.0%	10.0%
Trinidad	2006	25.0%	25.0%
Iceland	2007	35.7%	18.0%
Kazakhstan	2007	10.0%	30.0%
Mongolia	2007	10.0%	25.0%
Macedonia	2007	10.0%	10.0%
Montenegro	2007	15.0%	9.0%
Albania	2007	10.0%	10.0%
Mauritius	2007	15.0%	15.0%
Czech Republic	2008	15.0%	21.0%
Bulgaria	2008	10.0%	10.0%

Source:  Chris Edwards & Daniel J. Mitchell, Global Flat Tax Revolution:  The Rise of Tax Competition and the Battle to Defend it

Note:  Estonia's corporate tax rate for retained earnings is zero.

The invented Jackson

What Hath God Wrought:  The Transformation of America, 1815-1848
by Daniel Walker Howe
(Oxford University Press, 2007, 928 pages)

Probably the only thing most Australians know about the seventh United States President Andrew Jackson comes from The West Wing.  In an episode in the TV show's first series, the Chief of Staff Leo McGarry instructs the Presidential staff to meet with members of the public who wouldn't ordinarily be granted a meeting at the White House.  According to McGarry, as a President, Jackson put a two tonne block of cheese in the White House foyer and encouraged visitors to come and eat it and talk with him.  (By all accounts the tale is true).  The staff find themselves in meetings with a whole series of weird and wonderful people, as they get lobbied on the need for wolf crossings on highways and harassed by UFO-watchers.

The moral of the story in The West Wing is a simple one.  Jackson was a good President because he was willing to meet with "normal" people.  In this regard The West Wing scriptwriters are merely following the standard Democratic Party orthodoxy.  Andrew Jackson, who was President between 1829 and 1837, is often portrayed as the first real "democrat" in the White House, as he fought against the commercial interests of the East Coast banks and financiers and stood up for the interests of farmers and the dispossessed urban masses.

Indeed, the historiography of the left in the United States depicts an almost seamless transition from Jackson to Franklin D. Roosevelt.  It is no coincidence that the greatest spruiker of the New Deal, historian Arthur Schlesinger, also wrote The Age of Jackson in the 1940s.  More recently Sean Wilentz, a professor at Princeton in his 2005 book The Rise of American Democracy:  Jefferson to Lincoln talks of Jackson's democratic tendencies, which he contrasts to the aristocratic airs of those such as Jackson's predecessor John Quincy Adams.  Wilentz is well-known in the United States as a strong supporter of the Clintons and the Democratic Party.  In 2006 he wrote an article "The worst President in History?" about (guess who) George W Bush.

The hero worship of Jackson and the invention of "Jacksonian Democracy" by the left in America is quite deliberate.  It is part of the American version of the history wars.  The big problem for the liberal left in the United States has been that it was a Republican, Abraham Lincoln, that abolished slavery.

What Hath God Wrought:  The Transformation of America, 1815-1848 redresses the balance of American pre-Civil War history.  As Howe points out the idealisation of Jackson is, at the very least, highly problematic.  The reality is that there was no such thing as democracy in the age of Jackson (or at least nothing that we'd today recognise as democracy).  As Howe says we would find "the limitations on the democracy of that period glaring:  the enslavement of African Americans, the abuse of Native Americans, the exclusion of women and most non-white from the suffrage and equality before the law."  Further, Jackson was a divisive figure who pursued a winner-take-all strategy in everything he did.  The phenomenon whereby a new President sacks the officials appointed by the previous administration was not introduced by Jackson but he perfected it to a fine art.

It's too much to call Howe a "conservative" but unusually among historians he's willing to recognise the benefits of organic, rather than revolutionary change, and he appreciates the importance of the rule of law.  To a large extent Howe regards the middle decades of the nineteenth-century in the United States as the time during which the growing economic and financial markets of the country brought with them the political and social changes that allowed the notions of individualism and liberty to be embedded in the American psyche.

However, the growth of the market did not come without pain.  Although we now regard the United States as the ideological epicentre of "small government", it hasn't always been so.  Up until the 1830s American state governments were as actively engaged in "nation building" as is the Australian Government in 2008.  It was the depression of 1837 that sent many state government-owned corporations bankrupt and which opened the way for a greater role for free enterprise.

When it was published in the United States What Hath God Wrought was hailed as one of the decade's outstanding books of history.  It brilliantly combines the economic, political, and social history of pre-Civil War America into a story that is at least as interesting as any of the best episodes of The West Wing.

Not all "property" is equal

Against Intellectual Monopoly
by Michele Boldrin and David K Levine
(Imprint, 2008, 572 pages)

Intuitively, there seems to be nothing wrong with the argument for intellectual property.  Innovation improves living standards and a functioning IP system provides a mechanism by which innovators are rewarded with a form of protection for their ideas.

There is little point spending big for research if your competitors simply copy the innovation and reduce its price to the point where the innovator cannot make up the initial investment.

There has certainly been an explosion in IP extension around the world.  It is inevitable then that such a rapidly expanding regulatory framework should contain costs as well as benefits.  Against Intellectual Monopoly is a powerfully argued book by two distinguished economists on the unintended consequences of intellectual property.

Michele Boldrin and David K Levine argue that intellectual property should not be considered as a form of property rights.  Intellectual property seeks to protect copies of the property, not the property itself.  A world without patents doesn't prevent you from selling or using your idea, but it does prevent you from controlling what other people do with copies of your idea.  The idea itself is not "stolen", and hence, intellectual property is designed to provide the initial innovator with a monopoly over a good -- preventing new entrants from using it without paying the necessary license fee.

More controversially, Boldrin and Levine argue that it's the existence of this kind of legal monopoly that actually prevents innovation by blocking competition.  Particularly when innovation is made incrementally, patented goods make it too costly or even impossible for innovating entrepreneurs to improve upon existing patented ideas.  The emphasis here is on patents;  copyright is discussed by the authors but is not the focus of the book.  Trademarks are generally supported by Boldrin and Levine.  The disproportionate focus on the patent system weakens the holistic attack by the authors on intellectual property as a whole.

The authors note that every empirical study they have found on patent protection and innovation in the twentieth century has concluded that there is "weak or no evidence that strengthening patent regimes increases innovation;  they find evidence that strengthening the patent regime increases ... patenting!"  Even more interesting are some of the opinion polls taken of businesses in regards to their attitudes to patents.  A Carnegie survey conducted in 2000 from 1,118 firms showed that patents were one of the least effective methods in reaping the benefits of innovation, the most effective being lead time and secrecy.

That businesses should cite the importance of lead-time is not surprising.  This is one of the reasons why the authors reject the fixed cost argument put forward by patent advocates.  Instead, Boldrin and Levine argue that competitive rents may be enough to make a return on the initial investment of an innovation without the need of a patent.  This is because a new market is typically not big enough to produce all the goods necessary to meet demand, and this limited capacity for supply allows businesses to price goods above the marginal cost, a condition necessary for profit.  The return won't be as big as it would with intellectual property, but it would be enough to make the innovation worthwhile and allow competitors the freedom to make improvements to the product without the legal cost.

Boldrin and Levine are keen to point out that the free rider problem associated with competitive markets is not as strong as convention dictates it to be.  While patents make more sense if the new idea can be quickly translated into a competing product, this is typically not the case.  In most scenarios, the time needed to take an idea, hire employees who have the training to convert it to an actual product, package it and sell it back on the market, is typically not "instantaneous".  This makes the first-mover advantage particularly important.

The book provides a strong theoretical backing for a competitive system to provide just as much innovation as a market with intellectual property.  The author's are more radical than this though, declaring that "abolishing intellectual property protection is the only socially responsible thing to do".

The results are not enough to completely blow away the IP system as a whole.  There is certainly evidence that patents can and have encouraged innovation, particularly in markets that were initially without IP protection.  But it may be enough to encourage further research into a notoriously difficult field.  There is certainly an element of groupthink surrounding the benefits of patents, particularly amongst lawyers.  This book is a worthwhile contribution to challenging that belief.

Obama's Presidency for Dummies

Team of Rivals
by Doris Kearns Goodwin
(Simon & Schuster, 2005, 944 pages)

In selecting Hillary Clinton as Secretary of State President Obama has made history repeat itself.  His historical guide-book is Team of Rivals, a big fat gem of a book from Doris Kearns Goodwin which has proven irresistible to the US political class and also to many ordinary readers.

The key tale told in the book which drew the eye of Obama, Clinton, and the watching media, was that of a previous upstart President-elect from Illinois named Abraham Lincoln who chose as Secretary of State his defeated rival for party nomination -- a previous Senator from New York named William Seward.  Obama has famously read Team of Rivals and afterwards telephoned the author to discuss it.  His appointment of Senator Clinton is therefore said to be part of a self-conscious effort to emulate the conciliatory measures of America's greatest President.  "I think it reflects a great inner strength on Obama's part that he is seriously considering creating a team of rivals as Lincoln did," Goodwin has told the US media.

When Lincoln succumbed to the assassin's bullet it was one of his Cabinet members who said "now he belongs to the ages", and from the vantage of the twenty-first century it is easy to fall for the trap of seeing not the real Lincoln, but some kind of secular saint.  Not the real man, but the marble figure whose eternal gaze looks down past the Washington Monument towards the Capitol.  Goodwin has done a great service by her subtle understanding and deft re-telling of the political machinations of Lincoln's time, breathing life back into the man and, if anything, increasing our appreciation for what he achieved.  Goodwin has previously written studies of FDR, the Kennedys and of Lyndon Johnson, and has a clear skill in interpreting politics.

The real Lincoln had his principles, but he was a politician in what then and now is the most thoroughly democratic nation on earth.  Until the watershed year of 1860 his political career had seen thirty years of electoral striving, mostly resulting in failure.  He practiced for his famous magnanimity in victory by repeatedly displaying graciousness in defeat.  At the Republican National Convention his come from behind victory over Seward and also secondary rivals Salmon Chase and Edward Bates owed much to the skills honed in those years.  As Kearns puts it:  "having risen to power with fewer privileges than any of his rivals, Lincoln was more accustomed to rely upon himself to shape events."  Not for nothing is the sub-title of the book "the political genius of Abraham Lincoln."

Even Lincoln had to bow to political realities.  On the night before the vote was taken at the nominating Convention, Lincoln's representatives told him they could bring across the crucial votes of Pennsylvania if its leading light, Simon Cameron, was promised a place in Cabinet;  "Make no contracts that will bind me," he cabled back, but the fixers went ahead anyway, saying "Lincoln ain't here, and don't know what we have to meet."  Plausible deniability having been established, the votes were delivered and Cameron became Secretary for War.

Team of Rivals has been described as a multi-biography, focussing on Lincoln and the three other men who stood for nomination as the candidate of the fledgling Republican party, each of whom was brought into the Cabinet.  For Lincoln, the stakes were high because each of the other men represented distinct constituencies within the party.  Seward was a Senator from New York and seen as the most abolitionist of the four and therefore most repugnant to the interest of the Southern and border states.  Bates was from Missouri, one of the border states (which were slave states but which remained loyal to the Union) and was formally still a member of the moribund Whig party rather than a Republican.  Chase was an Ohio politician with a national profile through his anti-slavery stance, but seen as more pragmatic than Seward, and was seen by abolitionists as too willing to appease the South.  As the convention got under way, Lincoln emerged as the only candidate who could carry every Northern state.

Since the Democrats had split on the question of slavery and the Electoral College which decided the Presidency (based on votes in each state) was effectively "first past the post", achieving the majority in each and every anti-slavery state was critical to the Republican's political strategy.  Lincoln -- who was opposed to slavery but who said that preserving the Union took precedence -- was not only the compromise candidate between the factions but the one whom the machine-men believed would stand the best chance of claiming the White House whilst preserving the Union.

With the election won the push for secession in the Deep South became virtually unstoppable.  With Lincoln's blessing Seward made a conciliatory speech to the Senate, but its real targets were the border states and the waverers within them.  Obama is said to approach Lincoln in his ability as a speechmaker, so it is interesting that Goodwin shows how deeply the earlier President and Seward collaborated on Lincoln's first speech as President, carefully calibrating the messages to the South and their own constituencies.  The closing call to the "mystic chords of memory" was drawn from one of Seward's suggestions.  That Delaware, Kentucky, Maryland, Missouri, and West Virginia, all slave states, all remained within the Union was a positive outcome of this diplomacy.

As well as tracking the high politics of the time, Goodwin is perceptive and occasionally touching on the personal lives of the protagonists.  This is helpful in understanding the politics, but has its own interest.  Salmon Chase, for instance, had faced the tragedy of the death of three wives, and his beautiful and effervescent daughter Kate took on -- very successfully -- the duties of Washington hostess.  Seward had married an ardent abolitionist who for health reasons did not move to Washington, and their correspondence is full of loneliness and love, as well as political fervour and high idealism.  The account of the tragic death of Lincoln's eleven year old son, Willie, from typhoid in 1862 and the impact this had on the President and his wife, Mary, is difficult for any parent to read.

Providing this context enables Goodwin to make the critical link between the various personal lives and the success of Lincoln's achievement in creating a (mostly) united and effective Cabinet.  As Fox News has observed in this context, many Presidents claim to want a government of talent and independent thought, but few have the wherewithal to achieve it.  Nixon said that he abhorred yes-men, and then fired anyone who disagreed with him.  Carter's early commitment to Cabinet process and weekly meetings trailed off into grudging acceptance and monthly sessions.  Lincoln made it real by exercising restraint in public forums and his considerable charm and powers of persuasion in private meetings.  He used to call on Seward in the evenings, and the two men swiftly became such firm friends that Seward publicly attested to Lincoln's fitness for command and put aside any thoughts of his own advancement.

The First Lady, Mary Lincoln, established new precedents in terms of entertaining the Washington social elite, and by her skills in staging events and judicious distribution of invitations helped overcome the initial scepticism of the manners of the President from the frontier.  Goodwin provides a juicy digression on Mary's shopping sprees to furnish the White House and her personal wardrobe -- enough to rival Jackie Kennedy or Sarah Palin -- precisely because it is relevant to the wider objective of establishing Presidential legitimacy and social leverage for the First Family.  At a time when Lincoln's senior General, the aristocratic (and ineffectual) George McClellan was snubbing his Commander-in-Chief and referring to him as the "original gorilla", the battle for social standing was inseparable from the wider political project.  Perhaps our era's Presidential "Chimp" -- as George W Bush was sometimes called -- would not have fared so badly in elite opinion if his determinedly private First Lady had taken more of a lead from Mary Lincoln's example.

If President Obama has displayed any reticence about accepting that Hillary Clinton can be a twenty-first William Seward, it perhaps reveals that he is thinking of another story from Goodwin's book.  While Lincoln and Seward became firm friends and an effective team, the partnership with Secretary of Treasury, Salmon Chase was less smooth.  Chase was a capable administrator but faced allegations of corruption.  Somewhat of a drama queen he had a habit of offering his resignation to Lincoln over the merest perceived slight, convinced his abilities and political base made him indispensable.  Described by Goodwin as having "an insatiable desire for supreme office", Chase continued to serve in Lincoln's Cabinet while not-so-privately canvassing to replace him as the Republican candidate for the 1864 election.  The ever-patient and restrained Lincoln never revealed his exasperation, and only when he felt secure did he strike, accepting with alacrity an offer of resignation that Chase had written purely as a pro forma.  We can only wonder whether Obama questioned in respect of Hillary Clinton:  is she a Seward, or a Chase?

Civil War-era commemorative envelope of Abraham Lincoln’s cabinet.
New-York Historical Society, Library of Congress

Oh, to be Prime Minster in a (somewhat) gentler age

Andrew Fisher:  Prime Minister of Australia
by David Day
(Imprint, 2008, 512 pages)

Given the fate of those who have previously started on the task of writing an Andrew Fisher biography, David Day could be considered brave to have taken on the task.  Both Dennis Murphy in the 1980s and Clem Lloyd in the 1990s died while still in the midst of research;  fortunately, Day has survived long enough to complete the long overdue story of the three-time Labor Prime Minister.

The lack of a Fisher biography has, in Day's view, benefitted Fisher's contemporaries, Alfred Deakin and Billy Hughes.  Day comments that "historians have largely formed their view of Fisher based upon the biographies of Hughes and Deakin, which have tended to downplay Fisher's role during these years and enhance the role of their subjects".

Having served as a minister in the short-lived Watson administration in 1904, the first government Fisher headed was in office in 1908-09.  All governments, until the Fusion of the non-Labor parties in 1909 created a two-party system, were minority ones.  Fusion was expected to blunt the prospects of Labor forming government.

Instead, the first post-Fusion election in 1910 delivered Fisher's Labor a landslide victory.  The result was not only significant for Australia, but "it was important also in the history of the world, with Fisher's victory being the first time anywhere that an avowedly socialist government had been elected to power".

Narrow defeat for Labor in 1913, when the election was accompanied by referenda to increase Commonwealth powers, was followed by victory in 1914.  However, between the calling and the holding of that election the First World War had begun, placing Fisher in the role of wartime leader to which he was clearly not suited.  His last spell of 14 months in the top job was not a happy time for Fisher as he found "his optimism eroded by the war, the machinations of his colleagues and the increasing frailty of his body".  He quit, became High Commissioner in London, and left the far more bellicose Hughes in charge.

For an Australian Prime Minister, it is actually remarkable how little of his life Fisher spent down under.  He was an Australian resident from 1885 to 1915 (from the age of 23 to 53), and was a member of either the Queensland or Federal Parliaments for more than two thirds of that time.  He had grown up near Kilmarnock in Scotland, before emigrating to the mining fields of Queensland and then spent his later years, as both High Commissioner and retiree in north London.  While an Australian resident, he had lengthy visits to Britain in both 1902 and 1911.  After his permanent shift back, he returned just once to Australia, for a few months in 1921.

Labor like to mythologise that they have always been the party of the Australian nationalists, but Fisher made it very clear that when he returned to Britain he was going "home".

Also challenging Labor's self image is the striking degree that support for the White Australia Policy was the most important campaigning message for their early MPs.  Fisher was always unequivocal on the racial point, saying in 1909 that "he would not be content 'until the last coloured man had disappeared'." One strategy to achieve this end that he pursued as opposition leader was to block a Deakin Government measure to allow Asian Australians to be eligible for the old age pension.

It might surprise some readers to learn that Fisher's Labor was more averse to government debt than some other parties at that time.  Fisher objected when the Deakin Government wanted to borrow £3.5 million to fund some naval boats.  Day comments that the Deakin proposal "would squander the healthy financial condition of the Treasury, which had been restored under Fisher's careful administration" and that, "on principle, Fisher opposed non-productive expenditure being paid for with loans".

Later, when back in government, Fisher had to confront the problem of where the money would come from for nation-building schemes.  His Treasurer Hughes put it nicely when he said that if the funds were to come from revenue then "God help the people" and if from debt then "God help us!"

The common historical narrative of the first federal decade also tends to overlook the fact that "on the contentious issue of the tariff ... the Labor Party was divided between protectionists and free traders".  In the first Labor Government in 1904 Fisher was given the ministry of trade and customs where he showed himself to be "a free trader in principle but a protectionist in practice".

A fascinating aspect of this book is its demonstration of how different the lifestyles of politicians and Prime Ministers were a century ago.  Prime Ministers could be absent from the country for months attending overseas conferences, or undertaking trips of a semi-leisure nature and in 1910-11 there was a ten month period without a parliamentary sitting.

Despite representing Wide Bay in Queensland, Fisher resided in Melbourne and, for much of his time as Prime Minister, Fisher, his wife, his growing brood of children, his mother-in-law and three unmarried sisters-in-law lived in a three bedroom house in South Melbourne, from which Fisher walked, or caught public transport, to his city office.  The press also adopted different methods, with Day noting that "he lived in a gentler age, with the journalists deciding not to confront him on the wharf but to cable him a list of questions that he could consider".

However, not every aspect of politics was gentler in that era.  Day describes the gruelling schedules that were part of election campaigns, visiting town after town, receiving deputations and delivering a speech in every one.  He records that "on one day alone, Fisher, spoke fourteen times, while he travelled on everything from a train to a coach and buggy, and even on a railway tricycle and on horseback".

Certainly, a striking number of politicians of the era succumbed to early deaths.  One final feature of elections of the era is worth mentioning.  In 1910, Deakin, keen to learn results on election night, heads to the Melbourne GPO to await the arrival of telegrams.

Fisher had a number of impressive personal views, objecting to the conferring of honours and to dressing up in ridiculous traditional outfits.  Day captures well the conflict that can often befall someone where sticking to one's personal principles can cause offence to others.  In the end, Fisher accepted the position on the Privy Council and the need to wear fancy clothes for the coronation of George V.

There are also humanising elements of Fisher such as his "tendency to defer work until some deadline made its completion imperative".  His private secretary, Malcolm Shepherd, had to adopt a variety of strategies to get Fisher to focus on the drafts of speeches or to sign correspondence.  Shepherd's memoir is an important source for Fisher's Prime Ministership, although Day notes that while it provides "the best close-up view ... it suffers from the common predilection of private secretaries to portray themselves as the real lord of the manor".  Even at the time, there were articles that "portrayed Shepherd as the brains behind Fisher".

Fisher had an interesting mix of hobbies including chess, art and golf.  The last of these he only took up around 1912, the same year he purchased a much larger home in East St Kilda.  Included in Fisher's papers is a scoring card of a round of golf that he played at the Riversdale Golf Club in 1912.  His playing partner was the 26 year old journalist, Keith Murdoch, who becomes a significant figure in the narrative from that point on.  It is Fisher who commissions Murdoch to go to Gallipoli in 1915 and provide some accurate information on the real state of that campaign.  Murdoch's eventual report proved to be a "political bombshell" that forced the British Government to accept that success was never going to be achieved there.

By the time the troops were withdrawn Fisher was no longer Prime Minister.  He had been driven by a desire to show that Labor could be just as patriotic as the conservatives, but "this was not the purpose for which Fisher had devoted himself to a life of politics".

Day's third biography of a Prime Minister, following his studies of Curtin and Chifley, is an important contribution to the nation's political history.  However, the book is not without flaws, the most irritating of which is that each chapter starts with a paragraph that attempts to capture Fisher's end-of-life situation, trapped upstairs in his Hampstead home, suffering from severe dementia.  While a couple of these passages are movingly written, they tend to cloud our view of the active, energetic and ambitious younger Fisher.

Andrew Fisher, leaving Adelaide railway station by car.
Fisher is seated in the rear right hand side of the vehicle, ca. 1912

Slow going on our way back to nature

The Enemies of Progress:  The dangers of sustainability
by Austin Williams
(Sociatas, 2008, 156 pages)

Occasionally one is genuinely surprised by programs on the ABC.  Recently, a regular radio favourite on Saturday morning, On Design with Alan Saunders, included an interview with the British architect Austin Williams.

Normally Saunders interviews all sorts of people about design and lifestyle, the radio equivalent of a trendy weekend newspaper supplement.  But Williams, straight off the starting block, started attacking the "moralistic, parochial, misanthropic and risk-adverse" Green mantra of sustainability.

In short order, Williams claimed that sustainability was small minded -- in pretending to change the world, it only got us to change our light bulbs.  He described George Monbiot as sanctimonious and extremist -- Monbiot, after all, once said about his own book Heat:  How to stop the planet burning that if it frightened his readers to stay in bed all day, then that would be worthwhile, as they would thereby have reduced their consumption of fossil fuels.

If listeners were in any doubt about what they were hearing on "their ABC", Williams continued by comparing sustainability to a woman who had only two weeks to live and was told by her doctor to give up smoking, drinking and sex.  "But will it make me live longer?" she asked.  "No", the doctor replied, "but it will seem like it".

Predictably, the ABC website was flooded with complaints from listeners.  "How does a reactionary like this with nothing creative to say get on the radio?"  "Did I really hear this twaddle!!!!!"  "Is this an example of the ABC's effort to find 'journalistic balance'?"

Well, just maybe, but how refreshing it was.

Austin Williams, the author of The Enemies of Progress:  The dangers of sustainability, is Director of the Future Cities Project and an architect and project manager by profession.  Previously Technical Editor of the Architects' Journal, he now writes for a wide range of publications on urban and transport issues.  The Enemies of Progress is a very polemical -- and very satisfying -- rant against the pervasive indoctrination of sustainability that has paralysed political will and cultivated a fear of the future in our society.  With echoes of Virginia Postrel's The Future and its Enemies, the book systematically documents the effects of sustainability on energy production, architecture and the city, our neo-colonialist attitudes towards the developing world's "sustainable underdevelopment", and the role of the United Nations and Al Gore and our educational institutions in the systematic spread of green propaganda.

Williams spends precious little time on the inaccuracies and falsehoods that underpin green claims -- it is as if he doesn't have time -- but he amasses some wonderful statistics on their consequences and brings home just how pervasively this new zeitgeist has permeated our thinking.  Take transport and the importance of mobility for human progress.  Quoting Dr Thomas Arnold on seeing a Victorian steam train, "I rejoice to see it, and think that feudality is gone forever", the author clearly links the notion of human progress to the ability of people to move from the dead end of village life to a future in the city.  Immigration has throughout history been a yearning by people to improve their lives.  Increased mobility is the key and is being demonstrated every day before our eyes in the flight from rural China and India to the big cities.  But this impulse has been turned on its head by the dead hand of sustainability.  Now, "local is good, slow is best".  Western environmentalists hate the city, and wish these masses would remain in their low impact, ecological wonderland, in poverty.  May I urgently suggest to anyone who thinks along these lines to read the 2008 Man Booker Prize winner, The White Tiger by Aravind Adiga on the grim reality of rural life and the servant class in India.

In this new "sustainable" world view, congestion and grid lock of our cities becomes an anti-city, anti-progress propaganda obsession.  But how many people would know that London had the same number of cars in 1963 as it did in 2003, before its congestion charge was introduced.  Williams illustrates the measly approach to infrastructure development in Britain by contrasting it with the dynamism of China and India.  China plans to build over 8000 kilometres of roads in the next five years, in addition to the 30,000 kilometres of highways it has already built over the past 20.  India is upgrading and resurfacing 65,000 kilometres of road network in the next 15 years.  But contrast this sort of activity to the developed world -- the British Transport Minister boasted recently that in the last two years they will have "delivered approximately 10 kilometres of road improvements to the network".

The new feudal arbiters of our travel plans turn out to be politicians like Tony Blair, who famously argued that "a new approach to transport may mean sometimes not travelling at all".  In this way the United Kingdom's transport policy becomes a value judgement, not a "state provision".  It is hard to believe that there is no irony in Cool Britannia's driving test that will soon include questions like:  "could my journey be better made by bike?"  Williams deftly contrasts this new constipated approach to Mrs Thatcher's claim that anyone catching a bus after the age of 30 "has failed in life".  Contradictory attitudes to travel are given by illustration.  The Bishop of London claims that "flying is a sin against the planet", whilst at the same time the Queen gives a knighthood to Easyjet boss Stelio Haji-Ioannou, praising him as the person who had "made it possible for millions to fly".  In the meantime, Prince Charles swears to reduce flights for the monarchy, whilst the Pope gets into trouble for opening Mistral Air for Catholic pilgrims from Rome to Lourdes.

Williams signals that the dangerous corollary to reducing energy consumption is that governments then weaken in their will to provide needed increases in energy generation like, for instance, nuclear.  The pattern is clear here in Australia.  With the current Prime Minister's obsession with his emissions trading scheme, we see scant consideration for the realistic need for expansion of coal generated electricity or effective investment in increasing our energy output in any form.  But, as we all know, the chattering classes and doctors' wives believe that "doing without can be fun".  They have it completely wrong when they recommend that India, for instance, should look for labour-intensive solutions rather than capital intensive ones.  As Williams explains, "It is minimisation of human effort, not external energy, that is the key to progress."

Williams sees the environmentalist ideals of self sufficiency or living off the grid as simply a retreat -- a metaphor for social and political disengagement:  "Instead of pissing into the tent, or out of it, everyone's simply pissing off."  Williams sees this as political nihilism.  It is a lack of desire to engage in meaningful, transformative change through society.

In the penultimate chapter Williams looks at the inherent misanthropy of environmentalism and links it directly to a threat to democracy and prosperity.  UN Secretary General Ban Ki-moon is one of many who have claimed that climate change poses "as much of a danger to the world as war".  So who is the enemy?  With an apparent lack of irony, Osama Bin Laden, from his eco-hideaway agrees, and chastises the White House for not observing the Kyoto accord.  Williams thus sees, from a Western democratic perspective, that there are parallels between the anti-humanism of environmentalism and the nihilism of radical Islamists.

Environmentalist's misanthropy is feeding the growing demoralisation with rational modernity, preferring instead to wallow in the metaphysics of "Gaia".  And Islam taps into the perceived cultural vacuum in Western modernity.

The worry for the author is that our Western values, our developed, progressive, democratic values have no purchase in a sustainable universe.

Overall, the book is a dispiriting read, but certainly it is a rallying call to counter the current unsustainable sustainability madness.

Into the mind of Buffett

The Snowball:  Warren Buffett and the Business of Life
by Alice Schroeder
(Bantam, 2008, 976 pages)

Warren Buffett frequently seems to be in the right place at the right time.  He invests in companies just before their stocks rise rapidly;  and he has exited the stock market before several collapses, such as the tech crash of 2000.  As a result, Buffett is one of the richest people in the world.

For decades, people have wondered if Buffett's foresight was due to skill or luck.  Now a biography of Buffett by Alice Schroeder has been released, right in the middle of the current financial crisis.  It seems as if Buffett's timing has been spot on yet again -- the book will be examined by many for insights into how to survive the downturn.

There have been many books written about Buffett before, but this massive book (of almost 1000 pages, including references) is the first authorised biography.  It is called Snowball because Buffett benefited from compounding of returns, similar to how a snowball becomes larger and larger as it rolls down a hill.

While there are many interesting stories in this book, unfortunately it is so long that few will last the distance.  The book needed a much better, or more forceful, editor.  Like Stephen Hawking's A Brief History of Time, I suspect that many who buy Snowball won't read it to completion.

Nevertheless, there are notable stories to be found.  Buffett's mother was verbally abusive, striking terror into Buffett and his siblings.  Her family had a history of mental illness.  Snowball doesn't gloss over these difficult issues in Buffett's life.  Buffett told Schroeder that if people gave different accounts of an event, then Schroeder should choose the less flattering one.

He started his entrepreneurial activity very early, gaining a substantial income by running paper routes and later by putting pinball machines in barber shops.  He started paying income tax at the age of 14, went to Colombia Business School and then pursued an investing career.  While Buffett set a target of being a millionaire by the age of 35, he easily beat this by reaching a million by the age of 32 (and this was in 1962).  Nevertheless, he lived (and still lives) a very frugal life.  He still owns and lives in the fairly modest house he bought in Omaha for $US31,500 in 1958.  He dressed so modestly that some investors were turned off from investing with him because he didn't "look" successful.

There are many useful lessons in Snowball, particularly from Buffett's early life, when he unsurprisingly learnt his best lessons.

Buffett was a keen follower of the investment philosophy of the legendary Ben Graham who advocated investing in companies that were undervalued -- the price of their shares was below the value of the underlying assets.  Buffett spent days poring over balance sheets of companies to find this hidden value.  He bought into these companies, believing that the stock price would (eventually) increase to reflect the value of the company's assets.  Importantly, if the stock price fell, Buffett didn't panic and sell -- he would often buy more of the company.  If a value stock never reached Buffet's estimate of fair value, he would gain a controlling share of the company and then distribute the underlying assets to shareholders (at a considerable profit, of course).

Buffett essentially invested when the market was low (and everyone else was leaving the market) and exited the market when the market was high (and everyone else was investing).

Value investing served Buffett extremely well.  He invested in American Express, a company that was fundamentally sound but was in major strife in 1963.  Buffett's investment may have saved it from bankruptcy.  He did make some poor investments, but these were hugely overwhelmed by his successes.  His original investment in a failing textile manufacturer, Berkshire Hathaway, may not have been a good idea, but Buffett transformed the company into his investment company, now worth hundreds of billions.

Other lessons learned by Buffett included not to be afraid of failure, but to always learn from any mistakes.  When he believed in something, particularly an investment, he went for it with his whole heart.  And he was very patient, holding investments for the longer term.  While Buffett strongly advocated value investing, he rejected investing based on market sentiment or technical analysis.

But the most important lesson from Snowball is that you can make squillions from the stockmarket by investing in value.  This is why he avoided many market crashes, such as the internet bubble of 1999.  Buffett used his continuing success as a compelling argument against believers in the efficient market hypothesis (such as Paul Samuelson), who argued that no one could beat the market forever.  The failure of this hypothesis has been used by many as an argument for substantial regulation, which is a complete non sequitur (imperfect markets are not necessarily improved by an imperfect government).

Unfortunately, the interesting parts of Snowball are somewhat hidden in a mass of details that should have been cut back.  Buffett's larger transactions are quite fascinating;  but Schroeder gives us the mostly homogeneous details of most of his smaller transactions.  Similarly, she runs through the details of his early investors, even when these details are very similar.  In addition, Schroeder is not a wordsmith -- she writes in a matter-of-fact way, generally lacking a stylish turn-of-phrase or careful analysis.  This is perhaps due to her background being in stock analysis, rather than journalism or writing.

There are also a number of apparent contradictions in Snowball including on page 220:  "Hardly anybody knew Warren Buffett" and then only two paragraphs later "In fact, by 1959, he was getting somewhat of a name around town."  On page 14 we find Buffett mostly turned down giving speeches, but on page 23 it is argued that he gave lots of speeches.  Again, this looks like poor editing.

The larger contradictions or oddities are not in Schroeder's book, but in Buffett's life itself.  Snowball does discuss in some detail how Buffett separated from his first wife Susie but did not divorce her and ended up living with another woman, almost with the blessing of Susie.  While Schroeder deals with this peculiarity, she should have also dealt with other ones given the length of the book.

Buffett's performance at school changed dramatically over time, but Schroeder doesn't explain this adequately.

Buffett could talk about stocks for hours on end, but found it hard to talk about anything else.  He memorised vast collections of numbers and an entire textbook on investing;  he also did not like his individual foods to touch:  "If a stalk of broccoli brushed his steak, he recoiled in horror."  To me this unusual behaviour could be the classic symptoms of Asperger's syndrome, a point also recognised by the review of Snowball in the Times of London.  However, Snowball doesn't satisfactorily analyse this behaviour.

Buffett's views on economic policy also appear odd.  He became a Democrat in the 1960s because of the civil rights movement, but also signed on to many of the Democrat's economic policies, including increasing taxes on the wealthy and (substantially) increasing regulation of financial markets -- which would seem counter to his own interests.  This is not adequately explained in Snowball.

Buffett may have this view because he may think that market regulation could stop the wild fluctuations in stock prices that hurt his own wealth.  However, Buffett actually made significant profits from buying in downturns, when value stocks are cheap.  To value investors, this is a time to enter the market.  The cynical could argue that Buffett would make money from the inconsistency of regulations (for example, if a financial product is banned, sell products that are different in form but the same in substance).

His support for higher taxes is particularly incomprehensible, because he also supports people being able to spend their money as they wish, he avoids tax several times during the book and higher taxes would reduce the stock returns that put him where he is.  In addition, higher taxes would reduce the amount he can give away himself, which would be clearly better directed than government spending.

Snowball is a reasonably enjoyable voyage into the mind of one of the world's great capitalists.  However, it is unfortunate that there are so many detours on the way that it is a real struggle to plough through to the end.  This is a pity, because practically everyone could do with the considerable insights his life provides.

Bah, it's all the same to me

John Howard and the Conservative Tradition
by Norman Abjorensen
(Australian Scholarly Publishing 2008, 211 pages)

It's never easy to get a detached judgement on a serving or recently-retired politician, especially one as polarising as John Howard.  Norman Abjorensen's hostility to Howard would make his attempt problematic in any case, but what really hurts this book is Abjorensen's conceptual framework.

His underlying thesis is that liberalism and conservatism amount to pretty much the same thing -- "essentially one and the same with but minor cosmetic differences" -- and that they are both opposed to democracy, which is more or less synonymous with socialism.  Although I disagree strongly, a book arguing this contention could be very interesting.

Unfortunately, Abjorensen presupposes rather than defends it.  An argument that, on the contrary, liberalism and capitalism are deeply hostile to conservatism, can't even get started;  the conceptual resources aren't there to entertain it.  The whole category of progressive, individualist, non-statist thought, which most of us call "liberalism", just disappears.

This is a pity, because Abjorensen's topic is a fascinating one:  where does John Howard stand in relation to the intellectual roots of his party?

The story begins with the Fusion of Protectionists and Free Traders in 1909.  The Protectionists were nationalist, welfarist and xenophobic;  the Free Traders were more like a classical middle-class liberal party.  Philosophically they had little in common, but the class barrier kept them apart from Labor and they merged into a single party, from which our Liberal Party directly descends.

Unlike many historians, Abjorensen gives due weight to Fusion and the role of George Reid, the Free Trade leader.  He claims that Howard's ascendancy represents a revival of the Reid tradition:  a form of liberalism (or conservatism -- remember, they're the same thing) explicitly supportive of free markets and hostile to government intervention.  Joining a chorus of recent left-wing pundits, he labels this "neo-liberalism".

Many will be surprised to see Howard painted as a friend of the free market.  But the usual counter-arguments don't work against Abjorensen, because he has defined their premises out of existence.  He can happily concede, for example, that WorkChoices was about class conflict and authoritarian control, because for him that's what the free market is always about.

All sorts of reforms therefore get redefined as "neo-liberal" -- even Reid's trademark cause of free trade.  Although Abjorensen realises that protection served business interests and "blurred or even denied class divisions", he can't make the leap to see free trade as progressive.  Hence Bert Kelly's emergence is treated as part of the right-wing revolt against Keynesianism, while John Hewson -- liberal free marketeer, and a better candidate for Reid's mantle -- fails to appear at all.

Conversely, when Howard breaks with his party's tradition by defining himself as a conservative, Abjorensen doesn't see that as contradicting the free market agenda -- it's just an unusually frank instance of neo-liberalism.

Now, maybe most Howard-era economic reformers really were just authoritarian conservatives in disguise.  But if that's what neo-liberalism is (and since its recent usage seems to be a coinage of the left, they can make it mean whatever they want), then it just makes the absence of "liberalism" as a real category all the more obvious.

Stripped of the artificial construct of neo-liberalism, the similarity between Reid and Howard comes down to the fact that they were both lawyers, and that they were both from Sydney -- not quite enough to hang a theory on.

Abjorensen, however, is sure they are connected.  He cites Judith Brett approvingly against seeing Fusion "in purely class-model and economic terms" and says that on that basis "John Howard's rise and political success is difficult to explain and account for."  But Australia is much less of a class society than a hundred years ago;  the fact that Howard to some extent succeeded in building an ideological party doesn't mean that his Fusion predecessors were doing the same thing.  And it certainly doesn't mean they shared his ideology.

Abjorensen has a skilled command of Liberal history, and there is interesting material here.  But it is history with odd gaps;  because he is interested in the legacy of Fusion, we get an extended treatment of Bruce and Menzies, but not of leaders who started out in the ALP.  Yet surely Joe Lyons looks more like a precursor of Howard than Reid does.

It must also be said that Abjorensen has been poorly served by his publisher;  the proofreading is nothing short of appalling.  Almost every paragraph has sentences that lose the reader with wrong words or aberrant grammar.

Persevere, though, because Abjorensen is tackling important matters -- even if he typically deals them a glancing blow rather than a direct hit.

Nixon as culture warrior

Nixonland:  The Rise of a President and the Fracturing of America
by Rick Perlstein
(Scribner, 2008, 881 pages)

Richard Milhous Nixon was born into a modest, working-class Protestant family.  He worked at his father's service station.  In his 20s, he studied law at university and worked as a solicitor at a commercial law firm.  Elected to the national legislature, in his mid 30s, he quickly became a senior member of government and was viewed as a politician on the rise.  But at 49, Nixon suffered a devastating political loss -- written off by the media as yesterday's man.

In his early-to-mid-50s, Nixon endured a long period in the wilderness before making a remarkable comeback.  And at 56, he led his right-of-centre party to power during a time of economic uncertainty and national division over social and cultural issues.

As the nation's leader, Nixon was marked as an apostate by the high priests of the media and universities.  He was accused of using the "dog whistle" to send subtle signals that appealed to the prejudiced in the community.  He alienated the metropolitan sophisticates who took it upon themselves to represent the conscience of the nation.  Above all else, he represented a threat to the prevailing leftist political and cultural landscape.

For Australians, this is an eerily familiar story.  But there are clear differences between John Howard and Richard Nixon.

For one thing, the Australian Prime Minister had thicker skin and a better temperament than the highly insecure and slightly erratic American President.  Listen to the riveting Nixon tapes on YouTube, even Howard haters would be hard-pressed to accuse their nemesis of talking in such a vulgar and paranoid manner behind the scenes.  Howard's long period of public service, moreover, was defined by consistent philosophical convictions, even in the face of widespread public opposition -- think of Iraq, the GST, Telstra privatisation and industrial relations reform.  Nixon, on the other hand, was a relentless political opportunist:  anti-communist hard man one decade, realist exponent of detente the next;  free-marketeer who preached the virtues of small government, but also an unashamed Keynesian who presided over big government.  Democratic presidential candidate Adlai Stevenson spoke for many in 1956 when he said of Nixon:  "This is a man of many masks.  Who can say they have seen his real face?"  And, oh, another big difference:  Howard's career did not end in disgrace.

Still, if you swap the Liberal leadership loss in 1989 for the Californian governorship loss in 1962;  "Lazarus with a triple bypass" in ruling out any comeback for "You won't have Nixon to kick around anymore";  "Howard Battlers" for "Nixon Democrats";  "Mainstream Australia" for the "Silent Majority";  "cultural dieticians" for "Ivy League elites";  "Doctor's Wives" for "effete snobs" and you have the subject and theme of Rick Perlstein's important book Nixonland:  The Rise of a President and the Fracturing of America.

The Perlstein thesis, which has attracted praise from both Left and Right in the US, is this:  from the 1964 Democratic landslide victory to the 1972 Republican landslide victory, Nixon exploited America's anxieties and unrest in the service of consolidating his own political base and realigning the political landscape.  Nixonland consists of two irreconcilable groups of Americans, whom Perlstein dubs Franklins and Orthogonians.  Named after two university fraternities that represented polar opposite positions during Nixon's college days, the Franklins were the well-connected, condescending insiders on campus;  and the Orthogonians the resentful outsiders and little guys who faced adversity from the outset.  In this narrative, Frankins are the sophisticates in the media, arts and universities;  Orthogonians the silent majority of Middle America.  Needless to say, Nixon, "a serial collector of resentments", was drawn to the latter.

With LBJ's election in 1964, the nation was "more united and at peace with itself than ever".  But within the next eight years, America "plunged into chaos".  At the extreme, Perlstein argues, members of these two groups of Americans killed one another or tried to kill one another, most often in cold blood.  The Watts riots of 1965, the anti-war protests, drugs, sex education, juvenile delinquency, rising crime, the spreading counterculture, Klansmen, hippies, Weathermen, the Black Power movement, the white New Left -- these events and characters were part and parcel of the era.

They also provided a political opening for a calculating (and hitherto washed-up) politician from California.  Nixon's genius, Perlstein argues, was to direct populism -- the white backlash -- against the Franklins who controlled the Ivy League universities such as Harvard, as well as elite liberal newspapers such as the New York Times.  He ruthlessly used cultural issues to drive a wedge between the Orthogonians -- patriotic, culturally conservative, salt-of-the-earth and hard-working Democrats -- and their increasingly Franklinite party under George McGovern.  (In the Australian context, think of how Howard reached out to the Battlers, disoriented by decades of radical economic and social change, who revolted against Paul Keating's increasingly elitist Labor party.)  According to Perlstein, Nixon set the scene for the culture wars that persist to this day.

So, what is one to make of all this?  Well, notwithstanding Perlstein's many strengths as an insightful historian who combines a narrative wit with an encyclopaedic grasp of political affairs, there are problems with his thesis.

First is the contention that Nixon presided over a political and cultural realignment, that he ended the post-depression FDR coalition of northern liberals and southern segregationists, that he presaged the rise of a new conservative hegemony in Washington, and that he seeded the ground to a long-running culture war that continues to divide America.  Some of this is true, but Perlstein seriously overstates his case.  Although Nixon talked like a conservative populist, he walked like a liberal.  Indeed, what he liked to say of Disraeli's political philosophy -- that "a sound conservative government" consists of "Tory men and Whig measures" -- could have been said about his own governing agenda from 1969 to 1974.

Remember:  Nixon was the first President to embrace affirmative action, mandating its extension to women as well as blacks.  Both federal spending and regulations grew faster than they had under LBJ and Hubert Humphrey.  He created a mass of green measures (Clean Air Act) and state agencies (Environmental Protection Agency).  He set price and wage controls, in what was America's most concerted attempt to impose state control of the economy since the war.  He even proudly boasted he was Keynesian, a claim anathema to most conservatives who were increasingly embracing the free-enterprise ethos of Milton Friedman and the Chicago school.  Even John Kenneth Galbraith called Nixon a socialist!  Perlstein ignores or at least downplays all of this.

Remember, too, Nixon's conduct of international relations.  His stress of Kisingerian realpolitik, which drained American foreign policy of its Wilsonian idealism, aggravated many conservative brethren.  It was Nixon, much to the chagrin of Cold Warriors, who sidelined anti-communist Taiwan, opened relations with Red China and secured -- gasp! -- detente with the Soviets.

If Nixon had indeed remade the American landscape in a more conservative image, how does Perlstein account for the widespread hostility towards the president within his own ranks?  William F. Buckley Jr, founder and Editor of National Review, complained that America, under Nixon, had "lost -- irretrievably -- any remaining sense of moral mission in the world".  "Nothing Nixon did surprised me anymore," lamented 1964 GOP presidential candidate Barry Goldwater.  "He had contradicted himself so often that I was beginning to expect it".  Nixon was a "devious and singularly unsatisfactory leader," according to leading right-wing columnist William Rusher, who "seemed to almost enjoy traducing every conservative position with which he had come to be identified in the course of a quarter century in politics".  Not much red meat there.  (It is worth pointing out that Howard, far from alienating his supporters, consolidated his base during his nearly 12 years in power.)

Another problem with Perlstein's thesis is his argument that Nixonland lives on.  "Do Americans not hate each other enough to fantasise about killing each one another, in cold blood, over political and cultural disagreements?" he asks.  "It would be hard to argue they do not.  How did Nixonland end?  It has not ended yet."

But the intensity of the violence and paranoia from the mid 1960s to the early '70s is surely alien in today's America:  a nation which now has a liberal black President, whose immediate predecessor -- the most divisive and ideological president in history, we're told -- promoted more minorities to his cabinet than any of his predecessors and who purged the remnants of Dixicrats from the Republican party (recall George W. Bush's call for then-Senate majority leader Trent Lott to step aside in 2002 after his badly framed prosegregation, pro-Strom Thurmond remarks).  This is a nation, remember, that has not had a white male Secretary of State since the mid 1990s and that has witnessed the rise of a big black and minority middle class.  Nixonland, the nation of dog-whistle politics, widespread violence and anger, one where politics is vicious and psychological, no longer exists.

Herein lies the fundamental difference between Nixon and Howard.  Contrary to Perlstein, Nixon did not realign the American landscape;  that task was left to Ronald Reagan several years later when he, in cahoots with anti-communists, supply-siders and social conservatives, smashed the FDR coalition that defined the post-1933 political order.

Howard, on the other hand, did remake his nation in his image.  So much so that the only way that Kevin Rudd and the Labor party could win in 2007 and consolidate power was by copy-catting the conservative PM's political agenda.  Could perhaps a refined version of the Perlstein thesis, one that puts less stress on a psychodrama and more emphasis on conservatism's idea-driven ascendancy, be applied to Howardland?