The ''Right'' morally culpable for Breivik's actions, really?

Serial killers and terrorists often claim to be making political statements through violence.  But we don't immediately have to take their word for it.

Last week Norwegian psychiatrists declared that Anders Behring Breivik, who killed 77 people in Oslo and the island of Utøya in July, is insane.

Breivik disagrees.  Through lawyers he told a Norwegian newspaper that the psychiatrists ''do not have enough knowledge of political ideologies''.

The psychiatrist's 243 page report will be reviewed by the Norwegian Board of Forensic Medicine — the assessment may then be changed — and then presented to the court — which may not accept it anyway.

Perhaps Breivik is clinically insane, perhaps he is not.

But a surprising amount seems to rest on the diagnosis.

On Utøya:  Anders Breivik, Right Terror, Racism And Europe was launched by Lee Rhiannon in October.  Edited by Elizabeth Humphrys, Guy Rundle and Tad Tietze, the book is an unapologetic attempt to make ''the Right'' morally culpable for Anders Breivik's actions.

They argue ''the significance of Utøya has been demoted, obscured and ignored'' by ''hard right commentators''.  Calling Breivik insane is a furphy used to downplay his political significance (Tietze also argued this on The Drum last week).  Breivik executed terror ''in the name of the West, against those too 'tolerant' of Islam''.  The Utøya massacre was ''an unambiguous attack on the Left'' and now ''[t]he task for the Left is ... to ruthlessly expose the true nature of the Right and its authoritarian project''.

If the shape of this argument seems familiar, no wonder:  it is an almost exact inversion of that made by some conservatives in response to terror attacks carried out by Muslims.

The conservative thesis is that terror conducted by Muslims reflects something intrinsically violent in Islam itself.  The thesis of Humphrys, Rundle, Tietze, and their contributors is terror conducted by someone who cites John Howard and claims to be of ''the Right'' reflects the dark heart of mainstream conservatism.

It is no more convincing when the protagonists have been reversed.

Mainstream Muslims exist in the same ''general ideological framework'' as Osama bin Laden, insofar as they share a religion.  Yet Muslims who condemn violence are in no way responsible for violence perpetrated by others.  It is obscene to suggest otherwise.  So surely neither are conservatives, who loudly condemned Breivik in any way, responsible for his actions.

One could draw other parallels which would be equally damning and equally hollow.  All supporters of the carbon price have some moral relationship to eco-terrorism.  Stalin's Great Terror means mainstream social democrats need to have a good hard think about themselves.  Scientists are at all times one step away from fascist eugenicists.  This makes good polemic, and it's idiotic.

There is an enormous moral leap between believing multiculturalism is a bad policy and systematically slaughtering 77 members of the Norwegian Labour Party, some as young as 14 years old.  To suggest they are on the same continuum is to obscure how anybody could make that leap.

And to suggest so in order to make a domestic political point (Andrew Bolt is not mentioned once in Breivik's manifesto, but is mentioned 21 times in On Utøya) is opportunistic and petty.

The authors argue Anders Breivik is a leading indicator of the rise of a violent far right in Europe:  the massacre ''marked the transition of a section of the current European far Right to lethal violence against political enemies, characteristic of the fascist era.''

If that's true, so then Breivik's actions would take on a greater significance, putting aside On Utøya's cheap political digs.

But the data on politically motivated violence does not bear this claim out.

The latest report of the European Police Office on domestic terror within EU member states documents 249 separate terror attacks in 2010.  Of those, 3 attacks were conducted by Islamist organisations.  The vast bulk were separatist (160 attacks).  There were no ''right-wing'' terrorist attacks.  But there were 45 ''left-wing and anarchist'' attacks.  The Europol report cites the ''increased violence'', and ''increased transnational coordination between terrorist and extremist left-wing and anarchist groups''.

If we are simply looking for trends, the data suggests we should watch our left, not our right.

In fact, Europol concluded right-wing terrorism was ''on the wane''.

Obviously, that assessment was tragically inaccurate.  Europol's analysis may well be very different next year — that is, if they determine the Norway massacre was not an isolated incident.

But, while we wait, the authors of On Utøya do not offer much evidence Breivik is part of a newly violent movement, rather than a shocking outlier.  Right-wing terrorism deserves study, certainly.  Guy Rundle's contribution on the history of right-wing terror confidentially reaches back to Julius Caesar's Gallic campaigns, but stops in Italy in 1980.

Commentators are sickly eager to pin extremist violence on their ideological opponents.

The attempts to characterise Jared Loughner (the definitely mad person who tried to kill a Democratic congresswoman earlier this year) as a child of the Tea Party is just the most farcical illustration.  There was, and still is, no reason to believe Loughner had strong political views.

But the problem with On Utøya is deeper than that.

One of the fundamental mistakes in American strategy in the War on Terror has been feeding the egos of the terrorists.  Trials by military commission of terrorists confirm their self-image as soldiers of God, where trials in civilian courts would classify them more accurately and mundanely as criminals.

On Utøya does something similar, but does it deliberately.  Breivik fantasised his actions and spoke on behalf of critics of multiculturalism.  Those critics have uniformly rejected him.  Yet On Utøya seeks, bizarrely, to legitimise Breivik — and to claim violence is a logical extension of political debate (There is a striking parallel with Marxist philosopher Slavoj Žižek's argument that terror is a justifiable weapon to fight liberal democracy).

The contributors to On Utøya say Anders Breivik's actions have been depoliticised.  They seek to ''repoliticise'' them.

But by opportunistically trying to get conservatives to own the Norwegian massacre, they break down the moral barriers between democratic debate and evil.

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Newt: the last best hope for conservatives

If you want a crash course on the Republican presidential primary process, recognise that the 2012 contest has been marked by a search for a conservative alternative to Mitt Romney.

At various stages this year, that candidate has been Minnesota congresswoman Michele Bachmann, Texas governor Rick Perry and businessman Herman Cain — all of whom have crashed and burned.

Enter Newt Gingrich.

Even before Cain pulled out of the race, the 68-year-old former House Speaker was enjoying a surge in the polls.  A Rasmussen poll put him 20 points ahead of Romney nationally.  Simply put, Newt is the last best hope for conservatives.  Which means the race for the right to represent the Republican party against Democrat President Obama next year comes down to this:  Romney, the establishment candidate, versus Gingrich, the rank-and-file candidate.

The conventional wisdom continues to write off Gingrich.  He's arrogant, he's polarising, he's not likable, he has character flaws, including infidelity, extravagant shopping habits, not to mention a controversial stint as a corporate lobbyist — all these vulnerabilities have been highlighted in recent weeks.  Even George Will, a veteran conservative columnist, warns that Gingrich ''embodies the vanity and rapacity that makes modern Washington repulsive''.  Take a close scan at his baggage and you see why so many pundits think Gingrich would be a far less formidable challenger to President Obama than Romney:

• His brinkmanship in budget negotiations with the Democrats led to the infamous government shutdown in the winter of 1995 that set the scene for Bill Clinton's remarkable re-election.

• He resigned as speaker of the House of Representatives in the wake of ethics violations, a botched leadership coup and Republican congressional losses in the 1998 midterm elections.

• He made more than $1.5 million in consulting fees from Freddie Mac, a government-backed company whose lending practises helped create the conditions for the subprime mortgage crisis in 2007-08.

• He once spent an obscene amount of money — something like half a million dollars — at the jeweller Tiffany's, a controversy which brought huge delight to late-night comedians and helped nearly destroy his campaign last (northern) summer.

• He had an affair with a government staffer (now his third wife) while he was trying to impeach president Clinton for lying about an affair with a government staffer.

All true.  But these foibles are well known to voters, especially Republican preselectors.  Unlike in Herman Cain's case, Newt's dirty linen has been washed in public for some time.

The Gingrich sceptics say that even if he wins the GOP nomination in mid-2012, the right-wing firebrand's arrogance will alienate crucial independents, especially in swing electorates in swing states such as Pennsylvania, Ohio, Florida and Virginia where national elections are decided.

Perhaps.

But don't underestimate Newt.  Outgoing veteran liberal Democratic congressman Barney Frank speaks for many on the Left and even Right when he says that Gingrich is so weak that his nomination as the Republican challenger to President Obama would be ''the best thing to happen to Democrats since Barry Goldwater'', whom Lyndon B. Johnson smashed in an electoral landslide in 1964.  In fact, Gingrich has a decent chance of unseating a first-term president for only the third time since the Depression (the others being Jimmy Carter in 1980 and George HW Bush in 1992).  Here are four reasons:

First, Gingrich is highly intelligent and an excellent debater, with a wealth of public-service and private-sector experience.  He led a national campaign and historic conservative triumph in 1994 when the GOP took over both houses of congress for the first time in four decades.

Unlike Bachmann, Perry, Cain and Sarah Palin, this prolific book writer can't be dismissed as a dunce or an embarrassment.  Gingrich's PhD thesis was — wait for it! — on Belgian education policy in the Congo from 1945 to 1960 and he taught political history at university before entering politics in 1978.  His old nemesis Bill Clinton even says nice things about Newt, telling the PBS News Hour a few days ago that ''I always liked working with him'' and ''he's good on foreign policy''.  By all accounts, Newt could go 10 rounds with Obama in prime time.

Second, Gingrich is not Romney.  This is a crucial point in the Republican primary heartland, where the political landscape has moved further right in recent years.  The conservative base neither trusts nor particularly likes the former Massachusetts governor.  Why?  Because Romney — like his father George who ran (unsuccessfully) for the GOP nomination more than 40 years ago — is seen as a closet liberal or a dreadful flip-flopper.

Indeed, on virtually all red-hot button issues — stimulus, health care, climate change, gun control, abortion, Afghanistan, even Ronald Reagan — Romney has been all over the place.  This advertisement (put out by Democrats a week ago) was damaging enough.  But this interview on Fox News a few days later — in which Romney looked awkward and nervously defensive when asked to explain his many ideological contradictions — could be the nail in his political coffin.

It's a rule of thumb that a candidate must win over their party's base in order to win the party's nomination.  As Richard Nixon once told Bob Dole:  ''Run like hell to the right in the primaries, then run like hell to the centre''.  (The same logic more or less applies to Democratic primaries where candidates run to the Left before moving to the centre in a general election.)  In the past week, Gingrich has received two important endorsements from the Right.  Popular radio personality Rush Limbaugh says Newt is the ''only grown up'' in the room.  And the Union Leader, the most popular (conservative) newspaper in New Hampshire where the first conventional primary is held next month, endorsed him last week.  Both views resonate with the party faithful who are hungry for ideological red meat.

Third, Americans are in a foul mood.  Unemployment remains stubbornly high at 8.6 per cent (though last month's jobs figures showed modest signs of improvement).  Debt and deficits are skyrocketing.  Opposition to the Afghanistan war is mounting.  More than 70 per cent think the country is in either serious decline or heading in the wrong direction.

In this environment, it's a fair bet that, should Gingrich win the GOP nomination, voters may be prepared to overlook his well-known flaws and vote out the incompetent incumbent whose job approval is only just above 40 per cent.  As former Reagan speechwriter Peggy Noonan puts it:  ''People feel America's problems are so huge, so scarifying and urgent, that personal judgements feel like an indulgence''.

Fourth, beware of writing off comeback kids with momentum behind them.  The Gingrich sceptics insist that the former House speaker is a washed up, discredited figure who's spent more than a decade in political exile.  Well, the same thing was once said of Charles de Gaulle, Winston Churchill, Richard Nixon, Robert Menzies and John Howard.  When they returned to the arena years after losing leadership positions, the critics gave them the kiss of death.  But it merely amounted to mouth-to-mouth resuscitation:  they revived and rebounded with tremendous force.  As it happens, Gingrich himself subscribes to the historian Arnold Toynbee theory of ''departure and return'', the notion that some legendary leaders endure a long period in the political wilderness before returning to high office.

Now, I should add the aforementioned analysis does not amount to an endorsement.  (For what it's worth, I think the Republicans would have been better served by the likes of Mitch Daniels and Haley Barbour — popular and sound governors from Indiana and Mississippi, respectively — but they have decided not to run.)

The point here is that notwithstanding his many liabilities and weaknesses, Gingrich is more likely than Romney to appeal to the Republican conservative base during the upcoming primaries.  And if the US economy fails to improve and the American people remain angry during the next six to 12 months, Gingrich stands a good chance of beating Barack Obama next November.

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Phoney food fears ignore nimble market solutions

Nothing brings out the hyperbole like ''food security''.  Paul R. Ehrlich — of The Population Bomb fame — appeared on ABC radio in October to declare that ''civilisation is going to collapse'' because we are farming land our ancestors were unable to, and we are no longer drinking our water ''right out of the rivers''.

The fear of the moment is that population growth might outstrip food supply.  The United Nations says the planet met its 7 billionth inhabitant in November.  And the past few years have seen a surprising uptick in food prices.  The 20th century saw a decline in the price of food basics, but we've had price spikes in 2008 and 2011.

This new food crisis has something for everyone.  Tim Flannery's Climate Change Commission blames climate change.  Population panickers blame too many people.  Oxfam's latest campaign attributes higher food prices to ''speculation'', following the ''when in doubt, blame Gordon Gekko'' rule.

Two hundred years ago, Thomas Malthus argued population grows at a faster rate than food production.  Malthus was wrong then.  And his followers are wrong now.

Certainly, high food prices are bad, particularly for those on subsistence income.  But our data here is extremely patchy.

Those headline figures trotted out by activists about the millions of people going to bed hungry are so ad hoc as to be quite meaningless.

There is no reason to believe we're about to enter an era of global hunger.  Markets balance themselves.  High prices attract new producers into the market, seeking the profits on offer.  Those prices also make marginal land more viable.  The result?  Production goes up, prices go down.

In between their June and November food market report this year, the UN Food and Agricultural Organisation revised its production forecasts significantly up.  Wheat prices have plummeted.  Analysts now talk of a wheat glut.  We can thank Oxfam's hated ''speculators'' for that.  Of course, in 2004, before the price spikes, the UN was fretting food prices were too low and farmers weren't making money.

On climate change, too, the future is far more complex than the doomsayers would have us believe.  The Intergovernmental Panel on Climate Change itself says increasing carbon dioxide levels can have a positive effect on agricultural productivity.  The 2007 report concluded up to 3 degrees of warming will increase crop yields.

Certainly, higher than 3 degrees and yields could decline.  But if we factor in inevitable but unpredictable advances in agricultural technologies, then the outlook for food from climate change is good.

If temperatures and carbon dioxide have been rising throughout the 20th century, as the IPCC's report emphatically stated, then so too have agricultural efficiency and crop yields.  And quietly, away from the terrible prophecies we read in the press, agricultural innovation is happening.

The Borlaug Global Rust Initiative announced in June that scientists were close to developing ''super varieties'' of wheat which would boost crop yields by 15 per cent.

A landmark study by the American National Research Council found last year farmers who adopted genetically modified crops increased their productivity.  We've been manipulating plants since the dawn of agriculture.  Genetic modification is just the most recent.

The real threat to the future of food isn't population or climate change or stock traders.  It's ideology.  Greenpeace claims to be worried about food production.  But they are unrelentingly hostile to GM crops.  Greenpeace activists destroyed a CSIRO crop of experimental GM wheat this year.

No wonder Greenpeace thinks food is going to be a problem in the future.  They're trying to stop the technological solutions designed to fix it.  We'll need scientific progress to feed 7 billion people.

Resistance to that progress is the biggest menace to future food security.  And what about once-fashionable green policies about things such as biofuels, which convert food such as corn or sugar cane into fuel to replace petrol?  Al Gore admits biofuels are a catastrophe.  Americans are now burning one-sixth of the world's food in their cars.

Yet short-term price instability and spikes are only a problem if you are poor.  In the Third World, food insecurity is a symptom of economic underdevelopment.  In the First World, the food problem is not scarcity but abundance.

It's perhaps understandable ideologues are using the recent food price spikes to push their agendas — against globalisation, against population growth, against consumer capitalism.  Yet it's truly amazing that 177 years after Malthus died, we're still falling for the old food scarcity myth.

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Farms left high and dry by water grab

The release of the Murray-Darling plan adds another chapter of woe to those reliant on the river system's irrigation water.

At present, 11,000 gigalitres of water -- about 40 per cent of the system's flow -- goes to irrigation.

This has been an indispensable component of the basin, providing 40 per cent of Australia's agricultural output and contributing to the livelihood of tens of thousands of farms and many communities.

Based on green agitation, there have been calls to reduce this level.

The latest report from the Murray-Darling Commission says it wants to take 2800 gigalitres from the farmers.  That this is down from the previously planned 4000 gigalitres is small comfort for the enterprises that rely on the water.

The fact is that the Murray is a working river.  It is not the pre-European settlement river that alternatively flooded vast tracts of Victoria and then dried to a series of puddles.

The dams along the river bring an assured flow and allow it to be used for farming and recreation.

And though the drought left many of the native trees stressed, there is nothing abnormal in this.

Those seeking to justify the greens' demands that more of the river's flow should be reserved for the environment should be aware that the aim of these activists is to take all of the flow and to retreat from modern agriculture.

In their pressure to reduce irrigation flows, the activists are supported by farmers at the mouth of the Murray who want a larger share.

The aim is to ensure the river's estuary is fresh water.

The irony is that the estuary's natural state, before barriers were built to keep out the sea, is salt or brackish water.

Victorian Agriculture Minister Peter Walsh has warned that the measures proposed by the Murray-Darling Basin Authority would result in the closure of a dairy.

A Commonwealth Government study has said cutting irrigators' allocations would mean a reduction in agricultural production of only a few percentage points.

But such statements are beside the point.  Australian agricultural productivity has stagnated for decades because green pressures have denied us new technology such as genetically modified crops and have restrained the use of land through native vegetation plans, clearing restrictions and the like.

The drought has led to a 15 per cent saving through better uses of water and doubtless further gains are possible.  But if we sacrifice whatever gains we make by providing more resources to some mystical environmental cause, we will have little benefit.

Moreover, for the first time in a century we are likely to see burgeoning demand.  The booming economies of India and China will mean an expanded requirement for protein and dairy.

The Coalition is talking about freeing the use of the rivers in northern Australia to allow increased agricultural production.  We must also do the same with the Murray-Darling.

Crippled by its crutches

According to Ralph Norris, overseas investors are worried about the Gillard government.  No matter how worried overseas investors are, they should be reassured by one thing.  They're not the only ones worried.  So are quite a few Australians.

Norris finished up yesterday as the boss of the Commonwealth Bank of Australia.  His comment is important, but it would have been more important had he made it while still in the job.

The trouble is that if Norris or any other chief executive of a large public company were to speak their mind, they wouldn't be thanked by their shareholders.

Bank chiefs are especially vulnerable.  For as long as banks rely on funding guarantees from government and confront an ever-growing array of regulation, it's not wise for a bank boss to give an honest opinion in public.

And it's especially unwise for bank bosses on multimillion-dollar salaries to give honest opinions.

Just a month ago, fresh from his wins on the mining tax, the carbon tax, and banning the live cattle trade to Indonesia, the leader of the Greens, Bob Brown, was on the ABC resurrecting his campaign for a super profits tax for banks.

''You've only got to look at the way the big banks give their CEOs -- Kevin Rudd described them 'obscene' salary packages between $8 million and $16 million a year -- to see that they're not short of a shekel'' (Why Brown used ''shekel'' instead of a word like ''dollar'' or ''quid'' can only be speculated.)

If foreign investors are looking for reasons to be worried, they can contemplate what happened in federal Parliament last week.

The speaker of the House of Representatives who was widely regarded as doing a good job, was replaced by someone who at best can be classed as unpredictable.  What foreign investors would make of what's happened is anyone's guess.

Julia Gillard and Wayne Swan like to compare Australia's economic performance with the rest of the world.  It's true that Australia has done relatively well -- but comparing us to Europe or the United States is not much of a consolation.  At least our Prime Minister has been elected -- which can't be said of Italy or Greece.

In the UK this week, 2 million people went on strike to complain about budget cuts.  The budget cuts that Wayne Swan boasts of to deliver his surplus are so tiny they won't even be noticed.

And of course, the Treasurer's cuts are not ''cuts'' in the sense that spending is reduced in absolute terms.  The ''cuts'' simply mean that spending won't increase by as much as the government had initially wanted.

A quick review of how much the federal government has spent annually over the past few years as set out in the government's Mid-Year Economic and Fiscal Outlook released this week reveals that any discussion of ''cuts'' is ridiculous.

In the year following the election of the Labor government, spending increased by 12.7 per cent in real terms.

Spending in this financial year is projected to increase by 3.7 per cent, then expected to fall by 3.0 per cent before rising by 3.3 per cent.

With cuts and increases swinging around so much it is hardly a picture of an administration in suffering.

According to Norris, what overseas investors fear is Australia's problem is a minority federal government.  On this, he's half right.  Minority government itself is not the problem.  There have been lots of minority governments at the state level and some of those administrations have proved competent.

New Zealand had a minority government before last weekend's national election and they're going to have one again.  They don't seem to have had anything like the troubles that the Gillard government has invented for itself.

In Australia at the moment, Julia Gillard is depending on a motley ragbag of Green and independent MPs.  What unites that motley ragbag is their temperament, which is anti-corporate, and their willingness to see more regulation as the solution to any problem.

Other than the mining tax, which Kevin Rudd made up all by himself, it's difficult to think of a single policy initiative pursued by Julia Gillard since she became Prime Minister that has not been the result of demands from either the Greens or the independent MPs.

The issue is not minority government.  The issue is who a minority government has to rely on to stay in power, then what a minority government has to do to keep happy those MPs who support it.

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Cut, cut, cut: Wayne Swan has more work to do

The tabloids have nailed Wayne Swan's budget cuts -- taking money away from mums, but keeping the gold pass travel for retired politicians.

It doesn't matter that the gold pass doesn't actually cost that much, or is under review, or whatever, it isn't a good look.  Ditto for increasing HECS for maths and science -- the education revolution is on hold.

Wayne Swan faced some tough questioning at his press conference and the Mid-Year Economic and Fiscal Outlook (MYEFO) has not been well received.

The fact that the MYEFO is being received at all is a dramatic change.  It is usually a dry document examined only by true-believing policy wonks;  this year it has dominated the news cycle.

This highlights the community's growing interest in public finance.  That in itself, however, reflects a growing concern about the state of our public finances.  To be fair, we are in a much better position than most other, if not all, comparable economies.  On the other hand, we are not where we'd like to be or should be.

The MYEFO contains various fiddles and fudges that characterise public finance accounting, increased taxes and charges, and some spending cuts.  All up the figures generate a $1.5 billion surplus next financial year.  So far, so good.

Yet nobody really believes the numbers and the expectation is that more savings (read deeper spending cuts) will have to be found between now and the May budget.  Treasurer Swan is well within his rights to withhold announcing those cuts until the budget, but the pressure to perform will intensify over the next six months.

In addition to substantial spending cuts, some symbolic cuts need to be included in any package.  Gold class travel has to be wound back.  The living away from home allowance for politicians should be reformed along with reforms of the private sector allowance.

There is one existing symbolic cut that should be reconsidered.  The so-called efficiency bonus is lazy policy.  Government agencies will have to find a 4 per cent cut in expenditure (up from 1.5 per cent).  These sorts of savings are very popular in many organisations where senior management want to avoid tough decisions.  Spreading the pain equally avoids asking some profound questions.

If something is worth doing, it's worth doing well.  That means proper resourcing.  Efficiency dividends often strip out resourcing but don't strip away responsibility.  That means more gets done badly.  Even those with a preference for smaller government need to recognise that good government doesn't mean cheap government.  So rather than strip 4 per cent from everyone, the Government should be examining all activities it undertakes and considering whether to continue them.  In fact there could even be an argument for increased spending in some areas.

If asked to nominate those areas where substantial reductions could occur I would point first to foreign aid.  Right now it's not a lot of money, but remains a good starting point.  The Department of Climate Change could be dramatically reduced and folded back into Treasury and many of the smaller agencies currently exempt from the efficiency dividend could be placed on the chopping block.  The ComCar scheme could be axed -- politicians should pay for their own public transport the same as everyone else.

Of course my choice of cuts is likely to be controversial -- but that is the whole point.  If Government needs to save money it needs to cut programs and shrink in size, not just provide poor quality service.  Making those choices is difficult and tough.

If Wayne Swan wants to actually deliver a surplus next year he needs to a stop talking about being tough and become tough.

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Culture of entitlement a road to nowhere

Australians love government.  Many will try to claim otherwise, but evidence suggests that they are happiest when receiving a gentle drip-feed of government money and services.

As a nation, Australia's cultural identity is built upon the myth that its citizens are rebellious pioneers, stockade-erecting individualists who would prefer the Government to grant us our basic rights and leave us alone, thank you very much.

Unfortunately, like so many cultural traditions, this supposed deep-seated suspicion of Government proves false upon closer inspection.

The term ''middle-class welfare'' has achieved a sort of sickening ubiquity in public discourse, yet that is precisely what the electorate has come to expect:  handouts and subsidies simply for showing up and going about the business of ordinary life.  ''Need'' is confused with ''feels entitled to'', and Australia's standard of policy deliberation is becoming poorer for it.

The truth of this observation is given by this week's MYEFO-spurred outrage over cuts to the baby bonus.  Wayne Swan's announcement that the bonus would be cut by $437 to $5,000 has provoked howls of outrage.  The Daily Telegraph declared the cuts to be ''Wayne pain for families'';  Mia Freedman asked on Twitter, ''Of all the things the govt had to slash in the budget, the Baby Bonus?  Really??'';  and Tony Abbott has labelled the cuts as ''a rip-off of the forgotten families of Australia''.

Forgotten families?  Hardly.  Under the Howard government, of which Abbott was an integral member, so-called middle-class welfare payments became enshrined as a vital pillar of government policy, more so than traditional Liberal concerns such as commitment to small government or the primacy of the rights of individuals.  Far from being forgotten, middle-income, two-parent traditional families with children became prime targets of government assistance.

And the culture of entitlement perpetuated by Howard and his government has shown no sign of abating under recent Labor governments.  Both Rudd and Gillard have been content to continue using government handouts to the relatively well-off as a carrot to encourage voter acceptance of politically difficult public policy.

The Gillard Government has been at pains to justify the carbon tax through the accompanying subsidies to ''nine out of ten households''.  Upon its passage through the Senate, the prime minister insisted that as a result of the tax ''families will see increases in family payments''.  It appears to have become impossible to advocate policy on its supposed merits -- to sweeten the deal, handouts to the majority of Australians must be attached.

This sort of quid pro quo in legislation leads to populism in government and the death of courageous policy decisions.  Tax reform is especially difficult to implement in Australia:  after all, it took 25 years from the Asprey Report to the GST taking effect to institute a broad-based consumption tax.  Policymakers are too content to take easier routes to reform, delivering compensation by way of subsidy instead of undertaking the much more difficult task of explaining to the electorate why reform is necessary and of long-run benefit.

But the increasing use of subsidies to smooth the passage of difficult legislation has even more problematic ramifications.

By allowing government to subsidise our procreation choices, our electricity bills, or anything else, we implicitly admit to legislators that we are not capable of making our own consumption and investment decisions.  It is a tacit acknowledgement between voter and government that government knows best, and that we the voters cannot survive without its warm benevolence.

Once we concede to the Government that we can't buy a house or have a child without government assistance, we open the door to further concessions, such as the need for government to manage our diets or alcohol intake.  Government ceases to engage in ''big-picture'' policies that promote economic productivity and growth, and it instead devotes its resources to telling us how to live.

The culture of entitlement that exists in Australian society is, in the long term, highly detrimental.  It is impossible to engage in debates about future prosperity and the best means of achieving it when voters have become accustomed to allowing government to make their decisions for them.

In order to have intelligent conversations about future policy directions and outcomes in Australia, it is necessary for politicians to cease relying on a handout to sweeten reform.  A society that is suffocating on its own sense of entitlement is unlikely to remain productive.

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The world will be no safer under Basel III

The Basel Committee on Banking Supervision is about to introduce its Basel III accords, global regulatory standards which govern how much capital banks are required to hold.

But it's not typically a great idea to introduce huge regulatory increases when the world is on the brink of economic collapse.

And the Institute of International Finance (IIF) suggests Basel III implementation could slice 3.2 per cent of GDP in Europe, North America, Japan and the United Kingdom in the next five years alone, and leave the global economy with 7.5 million fewer jobs.

Sure, the IIF represents more than 400 banks, so they would say that.  Governments admit it will slow the economy, but by much less.  (They would say that too.)

Basel III was developed in haste after the financial crisis.  Like its predecessor, Basel II, its purpose is to ensure banks have an adequate buffer of capital if there is a bank run.

Regulators say capital requirements are necessary because governments insure bank deposits.  The idea of deposit insurance is to guarantee depositors won't lose their money if the bank goes under.  But the insurance also means banks and their customers don't wear the cost of wild speculation and risky banking practices.  So regulators believe banks need to be compelled to be prudent.

In other words, a new regulation introduced to patch up the unintended consequences of older regulations.

The existence of Basel II in the lead-up to the financial crisis has always been a gaping hole in the theory that we should blame a lack of regulation.

But it's worse.  The Basel II Accords -- designed to keep the banks secure, designed to protect the depositors against excessive risk-taking, designed by some of the world's most intelligent people -- were the primary cause of the crisis in the first place.

That is the conclusion of Engineering the Financial Crisis:  Systemic Risk and the Failure of Regulation by the political scientist Jeffrey Friedman and the economist Wladimir Kraus.  The book was released in October.

Friedman and Kraus's argument complicates both left and right crisis narratives.  The causes of the housing bubble are well known:  policies to boost home ownership, low interest rates, and Freddie Mac and Fannie Mae's 71 per cent stake of the non-traditional mortgage market.

But explaining the housing bubble is just the half of it.  You have to explain how that bubble turned into a banking crisis.

Basel II actively encouraged banks to hoard mortgages.  Its capital buffer rules weighted mortgages far higher than business or consumer loans.  When the bubble burst, the banks were holding a disproportionate number of dodgy mortgages because they'd been urged to do so.

This is not a completely new story.  Friedman and Kraus give it empirical support.  They show that American bankers weren't actually that reckless.  They favoured what they imagined to be safer, more expensive assets over cheaper, riskier ones.  And the banks were nowhere near as leveraged as they had a legal right to be under Basel II.

Furthermore, it wasn't ''irrationality'' that caused the crisis.  That widespread theory assumes bankers and regulators had enough information to know what they were doing was bad, but they all went crazy and did it regardless.  The irrationality thesis has no explanatory power.

It was just that everybody -- regulators, bankers, politicians, investors -- thought highly-rated mortgages were a lot safer than they were.

So how did the banking crisis become an economic crisis?  Basel II, after all, was supposed to halt a contagion at Wall Street's edge.

Friedman and Kraus argue that Basel rules are inherently contradictory.  The capital buffers which Basel requires aren't buffers at all.  The idea behind capital buffers is, again, that if there is a run on a bank, the bank will be able to dip into reserves to survive.  But if it uses those reserves, even in a crisis, it will suddenly be under Basel's required capital threshold, and will be legally penalised.

As one economist pointed out, there has been little ''consideration of the paradox that the buffer function of regulatory capital is limited because this capital is needed to satisfy the regulator''.  When the banks hit Basel's capital minimums in the last months of 2008, credit froze, and the ''real'' economy started to hurt.

So it is sickly perverse that Basel III's main purpose is to raise capital minimums even higher.  And analysts from the Cato Institute have argued that it ''retains many of the weaknesses of its predecessors'' -- particularly ''a highly gameable weighting system'' that led to the hoarding of mortgages in the first place.

Basel III shows that governments are trying to fix the finance sector's problem before they've figured out what the problem actually is.  The first and most important question has to be why the crisis occurred.  Answering that takes reflection.

But legislators work faster than academic economists.  Already by 2009 politicians were running down new regulatory paths.  In February that year Kevin Rudd had concluded that Basel II was ''inadequate'' and that it needed a successor.  This is meaningless.  All regulations were inadequate at stopping the crisis.

Anybody who says they've got a handle on the causes of a crisis that big and that complicated in its immediate aftermath is wrong.  And they're being deceitful if they say they know how to fix it.

The United States Congress passed the Dodd-Frank financial reform act six months before its own Financial Crisis Inquiry Commission released its report into the causes of the crisis.

Such is the false confidence of regulators and politicians.

Basel III standards are about to be disseminated around the world.  There is no reason to believe that the economic system will be any safer or more stable.  And it could be a lot poorer.

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Carbon tax can't work unless all share the load

Over the next two weeks the justification for introducing a carbon tax will unravel as securing a new international carbon cutting agreement collapses.

This afternoon Australia time, an attempt to find a continuous international agreement to cut greenhouse gases will commence in Durban, South Africa.  The key focus of the conference is to negotiate the framework for cutting emissions after the Kyoto Protocol expires at the end of next year.  No one is expecting much.

Over the past few weeks disengaged governments have deliberately lowered expectations to avoid a repeat of the spectacular collapse of morale following the Copenhagen summit.

What's being ignored is the structural impossibility of securing an agreement now and even in 2020.  The modern international system was designed after World War II on the principle that rich countries designed the rules but also carried all the responsibilities.  By comparison poor countries got little say and weren't expected to do any heavy lifting.

That changed in the 1990s.  Developing countries have rallied and are now exercising their voice, but still don't accept the same level of responsibility.  That spirit is enshrined in the principles of the UN Framework Convention on Climate Change.

The convention text states that action should be taken ''on the basis of equity and in accordance with their [countries] common but differentiated responsibilities and respective capabilities [and] accordingly [developed countries] should take the lead in combating climate change''.

The proposition appears reasonable:  developed countries are those that have emitted the most to date and become rich in the process, therefore they should take the lead.

But during this century developing countries will be the source of emissions growth and it's politically unsellable in democracies that countries should take on a heavy cost burden while others free ride.

That nexus is at the heart of the ongoing deadlock in international climate talks.  And it's not alone.

The same problem exists in the World Trade Organisation.  The 2001 Doha Development Agenda is near collapse because developing countries want developed countries to cut their subsidies and tariffs while they keep their own barriers in place.  The fact that their own trade barriers are harming their economies is immaterial to the debate.  And the same pattern exists in most multilateral forums including the UN's health, intellectual property and even biological diversity bodies.

Considering cutting man-made greenhouse gas emissions is only a worthwhile exercise if every country pulls their weight:  the challenge is unsolvable with an equity-based approach.

Accepting that there'll be no new international agreement soon, Climate Change Minister Greg Combet said in a speech to the Australian National University on Friday that our government ''would be prepared to accept a second commitment period for Kyoto [post-2012] if it were matched by parallel commitments by other major emitters''.

Combet's words are cheap.  Combined, China and the US contribute more than a third of the world's emissions and have already stated they won't join.

China has already stated that Kyoto ''is the cornerstone of the climate regime and its second commitment period is the essential priority for the success of Durban'' while also making it clear they won't be a party to it.

Meanwhile the US is seeking to unwind commitments they've already made.  At the Cancun summit last year rich countries agreed to finance a $US100 billion-a-year ($103bn) Green Climate Fund to help developing countries adapt to a changing climate.  Earlier this week the US lead negotiator, Todd Stern, advised the US wasn't happy with the design compromising their paid-up membership.

The most likely outcome of the conference is a reviewed timeline for securing a global agreement.

Meanwhile Australia is spruiking a negotiating deadline for the middle of this decade to have an operational agreement by 2020.  Even that's ambitious.

As the ANU's Stephen Howes and Frank Jotzo wrote on these pages the focus is to get ''bottom-up'' momentum through carbon markets to push international action.

Combet clearly agrees.  In the same ANU speech Combet claimed that ''international carbon markets are growing irrespective of the developments in the UN negotiations''.

Combet's statement is factually incorrect.  A World Bank report released earlier this year highlighted that carbon markets are in recession because of the lack of confidence of a new international agreement post-2012.

The earlier expansion of the number of carbon markets is headed in the same direction, as political resolve wanes in the face of limited international agreement.  Following the re-election of the John Key-led National government in New Zealand, their impotent emissions trading scheme will be made even weaker.

Equivalent mumbles are now appearing in Europe.

It's hardly surprising.  Last week a study from Swiss global banker UBS reported the European scheme has wasted $287bn without cutting emissions.

According to data from the UN climate change body, almost all of Europe's emissions reductions were achieved through decreased industrial activity caused by the global financial crisis.  The only country where carbon markets are expanding because of domestic policy is Australia under Combet's leadership.

All of this is bad news for Australia's carbon tax.  The carbon tax was passed through the parliament on the myth that other countries would take equivalent action reducing the economic harm it will impose.  Combet said we should expect ''Durban will be one stepping-stone along the path''.  He should be careful where he steps.  The conference's stepping stones are more likely to be lily pads.

A job for life is hard labour for a modern economy

The ACTU on October 24 announced an inquiry into insecure employment.  It has identified 40 per cent of Australian workers as being engaged in one of four categories of insecure employment:  independent contracting;  labour hire;  fixed-term employment;  and casual employment.

The campaign's banner is ''Secure Jobs.  Better Future''.  Its objective is an employment nirvana where almost everyone is a permanent employee.  The employees will enjoy the fruits of permanent employment, a suite of union-endorsed conditions and entitlements.  The workers will then worship the ACTU for creating a workers' paradise in Australia.

The publicity to date has featured the usual horror cameos of worker exploitation.  Such exploitation has occurred under all labour market manifestations.  It is wrong under any circumstance and labour market regulation should always facilitate its punishment and eradication.

The national inquiry will involve public hearings by a panel chaired by former ALP minister Brian Howe.  A former senior presidential member of the Australian Industrial Relations Commission, Paul Munro, will be deputy chairman.

The ACTU introduced the insecure employment concept in September.  This coincided with the release of the results of a survey of union members called the Australian Working Census 2011.

Union sources describe the campaign as unprecedented.  Employers and business are urged to participate to demonstrate the inquiry's independence.  This pleading suggests it may be legitimate to question the degree of independence of the whole exercise.

The chairman said he would approach the investigation with an open mind.  He said he had a longstanding concern about how the changing nature of work was affecting the economy and society.  Howe added the sweeping statement:  ''If the theme of the post-war years was all about security, now it's all about risk.''

This gives an indication of where the inquiry is headed.

What chance is there that the initiative will conclude that casual, contract and labour hire employment are an intrinsic characteristic of a modern labour market that assists Australian firms compete in a connected and dynamic world economy?

The chairman even expanded on these sentiments in reassuring us that the inquiry would approach its task with an open mind.  He observed:  ''As work becomes more insecure, it not only puts pressure on the mortgage and the household finances if people can't get decent paid work, but it is putting a terrible strain on their family lives and their communities.''

What chance is there of the inquiry adopting a submission that many Australians prefer casual, contract, fixed-term and labour-hire employment?  Will the inquiry entertain a view that the labour market has changed markedly from the 1970s and that the 24/7 world of today demands labour market flexibility?  Rigid labour rules telling people how they must work end in catastrophe.  Just cast a glance towards the rigid labour markets of Europe for an international model of what not to do.

I believe the ACTU campaign misreads the mindset of working-age Australians and the economic imperatives of 2011.

This is not surprising as trade union membership has fallen to a mere 14 per cent of the private-sector workforce.  The ACTU and unions increasingly reflect the views of this declining segment of our society.  Of the 41,000 respondents to the Working Australia Census 2011, 98.1 per cent or 91.8 per cent, depending on which section of the census report you rely on, were union members.  This is not a representative sample of Australians.

Many Australians enjoy the independence and freedom of contracting and labour hire.  It affords them control over their own destiny.  It allows them the opportunity to build a business and benefit directly from their skills and knowledge.  They place a premium on a satisfactory balance between work and private life objectives.  Careers are often pursued jointly with partners to maximise family and job potential.

Younger people are not as turned on by stability, certainty and belonging as their parents.  They will typically change jobs frequently throughout their careers.  The idea of working for a long term with a single employer is the exception.  The sense of belonging to a collective such as a union is anathema to many.

Many businesses have to deal with peaks, troughs and seasonal variations in operating conditions.  The management of these changing conditions through a permanent workforce is often untenable.  Casual employment enables many businesses to cope.  Also, casual employment offers thousands of young people an entry path to permanent employment.

It is wrong to claim as the ACTU does:  ''All the convenience goes to bosses and all the stress and uncertainty associated with casual work goes to employees.''

The spirit of enterprise and having a go has been beneficial to Australia.  It has been fundamental to the development of industries that underpin our prosperity.

To impose union-devised restraints on that spirit will weaken our prospects in this competitive world.

The ACTU should recognise that many Australians value choice, freedom, independence, individuality and having a go.  They accept the risks of relying on reward directly linked to effort.

The ACTU has misread many working Australians today.  Its campaign is bound to fail.

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Withdrawal from Afghanistan would not hurt our US ties

While the past week's coverage of the enhanced military co-operation between Canberra and Washington may suggest otherwise, the most urgent item on Australia's foreign policy agenda is how to extricate ourselves from the depressing and endless war in Afghanistan.  The conflict has dragged on for 10 years and never have so many people on both sides of the Pacific been questioning its value.

According to an Essential Research poll this week, support for Australia's withdrawal from Afghanistan has increased from 47 per cent to 64 per cent in the past year.  And according to a CNN/ORC International poll last month, a record high 63 per cent of Americans now say the war is no longer worth fighting.

And yet in his 3000-plus-word address to Parliament last week, President Barack Obama dedicated only one paragraph to the conflict.  (Prime Minister Julia Gillard skipped the subject altogether.)  One is left with the impression that our political leaders increasingly find it harder to justify a war that involves more blood and treasure and no promise of a happy ending.

Make no mistake:  we were right to invade Afghanistan in October 2001 in order to hunt down Osama bin Laden and his cohorts as well as topple the black-turbaned tyrants who gave al-Qaeda shelter and support.

But as the then foreign minister, Alexander Downer, has recognised, that mission has mainly been accomplished.  Other issues -- the routing of the Taliban and the building of a viable democratic state -- are simply beyond our reach.

Almost all trends are moving in the wrong direction:  the corruption-plagued Afghan government remains a basket case, our ally Pakistan can't be trusted, the occupation is costing the Americans $10 billion a month, and Australian deaths have nearly trebled in the past 18 months.

American hegemony should not be confused with American omnipotence.  If the experience in Iraq and Afghanistan has taught us anything, it is to recognise that when it comes to defeating tribal warlords in alien societies, the US finds itself wrong-footed and outwitted, not so much an eagle as an elephant.

No wonder Obama wants to withdraw as much as a third of the US occupation presence before next November's presidential election.  In fact, in mid-2012, before the fighting season concludes, he will pull about 35,000 troops out of Afghanistan.

To what extent will such a rapid withdrawal expose our Diggers to even greater risk?  Gillard has failed to answer this.

No one should doubt the skill and bravery of our armed forces in Afghanistan.  But our war aims are incoherent, our exit strategy is never explained, and our presence is exacerbating the problems we went in to solve, serving to destabilise Pakistan rather than to stabilise Afghanistan.

No one wants Afghanistan to once again become a Club Med for terrorists.  But as distinguished US conservative columnist George Will asks:  ''If US forces are there to prevent re-establishment of al-Qaeda bases -- evidently there are none now -- must there be nation-building invasions of Somalia, Yemen and other sovereignty vacuums?''

Moreover, the Afghan Taliban do not yearn for global martyrdom;  they merely want to restore Pashtun rule in Afghanistan.  That may not be ideal for the people of that war-torn country, but it hardly represents a threat to vital Australian interests.

Would Canberra precipitate a crisis in US-Australia relations by withdrawing our 1550 troops from the war?  Hardly.  Most NATO leaders have rejected Obama's appeals for extra troops in the south, where most of the fighting is occurring, and other allies -- Canada, the Dutch -- have pulled out.

History also shows that the alliance can survive.  Robert Menzies and Dwight Eisenhower bitterly clashed over the Suez crisis in 1956.  Gough Whitlam's ministers Jim Cairns and Tom Uren called Richard Nixon and Henry Kissinger ''maniacs'' and ''murderers'' for the Christmas bombing in 1972.  Bob Hawke's left-wing Labor comrades rejected Ronald Reagan's MX missiles in 1985.  None of these episodes damaged ANZUS.

The US alliance should remain the centrepiece of Australian foreign policy, under a Labor or Coalition government.  But one can agree with that assessment and still believe there is no silver lining to this war.

We should leave Afghanistan to the drones and the US elite and specialised forces, search for a negotiated political settlement and withdraw our troops from what is known as the ''graveyard of empires''.  That is what most Australians want.  But political pressure needs to grow stronger if withdrawal will be achieved any time soon.

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''Profit'' is not a dirty word -- it keeps the system going

It seems that one obligatory item can be found at any protest rally these days, regardless of its cause.

Be it an ''occupy'' mob protesting against relative income inequality, a group campaigning for an environmental cause or a cohort agitating for social changes, one is almost guaranteed to find at least one placard that reads:  ''People before profits''.

This sentiment has long been reflected in socialist thinking, which conceives the appearance of a profit in a company's accounts as evidence of the exploitation of production value provided by underpaid working classes.

Other lines of thought also inform this antagonistic attitude towards profit making, such as the idea that firms can only reap profits by imposing exorbitant prices on goods and services that the consuming public is forced to bear.

To some extent the economics profession has largely unwittingly fed public sentiment against corporate profitability, by portraying continuous profit as a kind of market imperfection in a world where perfect competition would otherwise eliminate economic profits in the long run.

All of these approaches which feed the ''people before profits'' narrative create an obstacle to a more reasoned understanding of the largely beneficial role and nature of profit.

When it is appreciated that the attainment of profits is a signal of economic excellence, and not greedy exploitation or awkward imperfection, there is in fact a good argument instead to scrawl ''people and profits'' on placards rather than ''people before profits''.

When explaining profitability it would be remiss not to mention the entrepreneur, such as Henry Ford, Steve Jobs, Bill Gates or Sir Richard Branson, who purchases and marshals capital, labour and other resources to produce goods and services for sale on the open market.

The entrepreneur undertakes the task of organising the business and covering its costs, assuming economic risks and confronting government impositions, all in the hope that the effort invested will eventually reap a reward of a profitable economic activity.

As important as the entrepreneur is to any market economy, it is the action from the other side of the counter that confirms whether or not a business keeps some revenue leftovers after all the expenses are covered.

In other words it is the amount of purchases by humble, everyday customers that determines if a business, regardless of its size, generates a profit representing a return to perceptive yet hard working entrepreneurship.

As the 20th century economist Ludwig von Mises once stated, it is the purchasing decisions of customers that ''render profitable the affairs of those businessmen who best comply with their wishes''.

And, lest public suspicions linger that a dollar of profit earned is a dollar reaped through monopolistic exploitation, a profit announcement by one business sends out a signal to businesses everywhere that there exists a market that could keep on delivering an excess of revenues over costs.

These profits encourage entry by new sellers into the lucrative market, in turn providing further investment and employment opportunities for market participants.  Economic creativity is fuelled as new entrepreneurs tinker with the successful products with a view to deepening the market with more sales to new customers.

In addition to the role of profits in encouraging product quality improvements, competition between larger numbers of business rivals will tend to drive down final prices for the benefit of the consumers.

Like applause volunteered by patrons at an art exhibition or sporting match for outstanding performance, profits represent the echoes of economic applause resonating throughout the entire market system.

Yet those who complain about profitability also tend to ignore the existence of profit's flipside, and that is loss, as a powerful error-correcting element of the market process.

When all is said and done nobody is forced to provide custom to a private business.

If the business does not provide a useful product or decent service there will be no custom and hence insufficient sales revenues to cover costs and deliver a profit.

And technological, economic and other changes can also render a previously profitable business model unviable in the long term.

The economic reality is that it is a commonplace experience for a profit rooster one day to turn into a feather duster of loss the next.

Ironically this is a key to why capitalism is so successful.

That is because a business incurring a loss signals to the wider market that scarce resources should be redirected to other ventures instead.

This will then ensure that a market economy sticks with more efficient activities more generally.

Anti-capitalist protesters in recent weeks have trained their critical attention toward politically well-connected business establishments, particularly in automobiles, energy and finance, that persuaded governments to subsidise their operations and insulate them from adverse economic conditions.

These protesters share with small government classical liberals an intense distaste for rent-seeking activities that ''socialise'' corporate losses at taxpayer expense.

But the two groups diverge to the extent that anti-capitalists not only wish to see an end to the corporate welfare culture but also to the realisation of profits through honest, open, customer-pleasing market competition.

The appearance of ''people before profits'' placards will come and go as protests wax and wane, but which side arguing the merits or otherwise of profitability ends up winning the hearts and minds of the public will unquestionably play a critical part in shaping our future economic direction.

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A touch of Fightback! would do Abbott a lot of good

This week marks the 20th anniversary of the launch of the Federal Coalition's groundbreaking economic reform manifesto, Fightback!

At a time when the public is beginning to question the Federal Coalition's commitment to a serious reform agenda, it is pertinent to remember where Fightback! began.

Announced in late 1991 amidst a conflation of soaring unemployment, spiraling debt, declining productivity, growing welfare dependency and a deteriorating Federal budget, Fightback was promoted as a panacea for the ills plaguing the Australian economy at the time.

In seeking to restore Australia's economic prosperity, Fightback! aimed to ''achieve a generational change in policies and attitudes''.  Fightback! proposed a 15 per cent GST, $13 billion worth of income tax cuts, $10 billion of expenditure cuts, a multi-billion dollar privatisation program and a complete overhaul of Australia's social security, Medicare, higher education, workplace relations and public service systems.

By putting policy before politics, Fightback! sought to recast the political landscape, placing the battle of ideas front and centre.

At first, this approach was hugely successful.  It brought down Bob Hawke and his party's public support.  But over time, Fightback! became better known as a form of slow-working political poison.  Its sharp edges, rigid ideology and lack of political grease resulted in the Coalition losing 1993's unlosable election, and brought about the political demise of its key architect, John Hewson.

Yet, while Fightback! died unloved, its policy legacy lived on.

Over four consecutive electoral terms, the Howard Government successfully implemented much of the Fightback! agenda.  Indeed, the intellectual arguments for the GST, personal and company tax cuts, public enterprise privatisations, IR liberalisation and the modernisation of the higher education and Medicare systems can all trace their roots back to the original Fightback! vision.

But today, no such vision exists.  Fightback! has been forgotten, the economic dries have vacated the field and liberal politics is now dominated by the practice of relentless opposition.  Where in the 80s and 90s liberal politics was a melting pot of ideas and serious debate, today it is a policy wasteland.  Destroying ideas is almost as important as creating them, and nearly every reform the Government proposes is wrong.

This development is a tragedy for Australian politics and bodes poorly for our nation's long term future.

When political parties stand for nothing other than their desire for power, policy integrity begins to erode.  And in recent months, the consequences of this affliction have begun to show within the Federal Opposition.  Protectionism, economic isolationism and timidity on IR reform are all the early signs of a policy vacuum opening up.

While populism has always had its place within opposition politics, it cannot be allowed to rule the roost.  Eventually, ephemeral statements must be replaced by philosophical conviction.

As our nation delves deeper into the 21st century, complex issues such as population growth, skill shortages, rising energy costs, declining productivity, sustainable development and tax reform will all require a comprehensive Liberal response.  The challenge for the current generation of policy leaders is to ensure that a detailed and thoughtful one is authored.

Unfortunately, the lesson many politicians learnt from the original Fightback! experience was the importance of placing smart politics before good policy.  Indeed, it is this lesson which has given birth to the small-target strategies of many subsequent opposition leaders.

However, Australian politics need not be this way.  Fightback! had more than one lesson to teach.

Fightback! showed us that while smart politics was important for winning government;  sound policy was necessary for providing good government.

As the Federal Coalition knuckles down in the lead up to the next Federal Election, it should keep this lesson in mind.

Good governments cannot govern on the hop.  They need a roadmap to ensure they do not lose their way.  Fightback! did that for Howard.  No one did it for Rudd.  Time will tell if someone does it for Abbott.

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Yes we can ... with exceptions, qualifications and requirements

Barack Obama told the Australian Parliament last Thursday that our country and his are ''among the most open economies on Earth''.

This is true, as far as it goes.  The United States is 10th out of 141 countries on the Economic Freedom of the World Index.  Australia is fifth.

But that observation sits uncomfortably with almost everything else Obama said in his speech to the Parliament.

The 44th president mouths his support for free trade but carves out so many exceptions, qualifications and requirements that, if those caveats were put into action, the United States would plummet down the economic freedom rankings faster than you could say ''level playing field''.

After all, how to reconcile ''History teaches us the greatest force the world has ever known for creating wealth and opportunity is free markets'' with ''We seek trade that is free and fair''?  Perhaps it is asking too much of the White House speechwriting B-team to be internally consistent.  Yet it is not clear what the qualifier ''and fair'' is supposed to do apart from repudiate ''trade that is free''.

Free trade is the universally recognised principle that national borders should be open to goods no matter where they come from.  Fair trade is the opposite.  First literally:  the phrase originated as a synonym for protectionism in the 19th century.  And second practically:  its modern popular use describes a trading system that discriminates between different third world producers according to first world standards.  Those who conflate the two are saying they support free trade and oppose free trade at the same time.  That's incoherent even for politics.

Obama then ticked off a series of standard refrains.  Countries need to play by the rules (as if the benefits of trade are only possible if that trade is approved by World Trade Organisation lawyers in Geneva).  Currencies need to be market driven (a clear swipe at China, which is desperately, if nervously, trying to fix its currency issues).  ''Workers' rights'' need to be respected (wholly admirable, but this vague demand has been long used by unions to protect themselves from foreign competition).

It's obvious from his speech alone that Barack Obama is no friend of free trade.  It's less obvious why so many Australian conservatives and liberals were full of praise for the president when he was here.

Obama's domestic record on trade openness is not good at all.

Most notoriously, his stimulus package had a crucial ''buy American'' provision.  The provision mandated that steel, iron or manufactured goods purchased with stimulus money had to be produced in the United States.

Actually, it was worse than that.  Steel, iron or manufactured goods purchased for a project which received any stimulus money at all had to be domestically sourced.  In other words, if a project received just one dollar of federal stimulus, everything bought with non-stimulus money on that project had to be American as well.

The Government Accountability Office found that Buy American red tape badly delayed many stimulus funded projects.  And, of course, substantially reduced their value for money.

The administration's jobs act, which is spluttering its way through Congress at the moment, has the very same Buy American provision.  This is naked, unabashed protectionism imposed as a gesture to Obama's trade union supporters.

Yes, the administration talked a big game on the benefits of free trade agreements between the United States and Korea, Columbia and Panama.  These agreements were negotiated in the twilight of the Bush era.  But Obama deliberately delayed passing those agreements for four years.  His friends in Congress were responsible for part of this delay, sure.  But the White House squibbed many opportunities to shepherd the agreements through.  Then the administration saddled the agreements with expensive trade adjustment payments which ensured further delays:  the US federal deficit would make anyone question whether now is a good time to expand the welfare state.

The Obama administration also had a chance late last year to resuscitate the Doha round of international trade talks, as the trade analysts Philip I Levy and Scott Lincicome pointed out at the time.  They completely failed to do so.

As a candidate, Obama played the same game as he did in Australia last week.  He would say he was a supporter of free trade, but then rail against ''unfairly traded'' products which ''flood'' American markets.

In his State of the Union address this year he said his goal for the country was to ''win the future'', a bizarre and hackneyed phrase which implies that prosperity is an international competition with winners and losers.  This is the exact opposite of what we know about trade -- countries which exchange do so because it is mutually beneficial.  Trade is not a contest some countries ''lose''.

As a small country plugged into the global economy, Australia depends on free trade for our prosperity more than most.  The US president came to our parliament and disingenuously championed protectionism.  It should be embarrassing there was no outcry.

The less Parliament sits, the better off we all will be

''We're getting on with the job''.  This has long been the standard response of Julia Gillard and her leadership team to questions about low poll numbers, the Foreign Minister's latest tweet, or anything else they don't want to talk about.

The hung Parliament isn't gridlocked.  Far from it.  More than 140 pieces of legislation have passed through both houses.  And despite the gauntlet of Bob Katter, Adam Bandt and a motley crew of independents, more than 180 pieces of legislation have gone successfully through the House of Representatives.

A few months ago Treasurer Wayne Swan was bragging this was ''in pretty stark contrast'' to the US and Europe, where parliaments have passed fewer laws.

But hold on:  why is all this law-making a good thing?  (Great!  More rules!)  The government's delight at its hectic law-writing schedule must be surprising to those who actually have to deal with the consequences:  judges.

Chief Justice of the Federal Court Patrick Keane said earlier this year the ''volume and complexity of federal laws'' meant that ''opening the Tax Act [which has blown out to 6000 pages long] is like entering a parallel universe''.

So it's weird the government thinks placing even more Byzantine restrictions on society and the economy is worth boasting about.  Certainly, not every piece of legislation passed has made a new law.  Some bills change laws already on the books, others eliminate existing laws.  Yet every change has consequences.

Business surveys report a huge increase in the amount of time it takes to monitor regulatory and legislative change.  Corporate boards spend more time than ever focusing on legal compliance, instead of on service delivery or innovation.

That's not just the fault of Gillard's government.  It's the fault of successive governments, Labor and Coalition, which have steadily increased parliamentary productivity.  Now there is an orgy of fresh legislation every year.

And those governments have been egged on by a political culture that favours action -- any action -- over steady-as-she-goes.

Commentators have recently complained that governments no longer have an appetite for big reform.  At least, not like Bob Hawke, Paul Keating and John Howard did.  Let's put aside the questionable evidence for this claim.  Isn't it remarkable how so much of this commentary avoids judging the virtues or otherwise of that ''reform''?  The criticism seems to be that legislators aren't pushing through massive change at a sufficient clip.  Anything will do.  Huge new taxes, or huge new tax cuts.  Doesn't matter.  Just as long as they're huge.

The Parliament and the press gallery are predisposed to like active governments.  A great politician is one who changes the country.  A great parliament is one that maximises its opportunity to write and pass new laws.  Australian political history is one long game of one-upmanship.

Poor old Kevin Rudd took this bias to its logical conclusion.  He spun so many government wheels in motion that his successor is only now starting to control its oversized chassis.

The bias towards legislative frenzy is not helped by oppositions that accuse the party in power of being all talk and no action.  This was true while Brendan Nelson held the Liberal leadership.  But it's an odd criticism coming from a conservative party.  Conservatives believe change for change's sake is fundamentally bad.  The last thing a conservative would want is frenzied reform.  ''Do nothing'' should be a compliment.  Let society evolve by itself.

Just as bizarre are the opposition's complaints the government hasn't planned for enough parliamentary sitting days.  The government will sit ''only'' one in four working days in 2012.  But that's excellent.  ''No man's life, liberty or property are safe while the legislature is in session,'' wrote a 19th century lawyer.  The fewer sitting days the better.  The father of liberalism, John Locke, argued that while parliament was better than monarchy, parliamentarians need to be restrained.  One way was to limit how often they sat.

Conservatives who understood these issues hoped the 2010 election result might restrain Parliament's obsessive law-making.  Obviously not.  If only the hung Parliament was as deadlocked as its critics claim.

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A note of scepticism about the Obama visit

The first time I turned out for a US president was two decades ago when George H.W. Bush came to town.

He drove through Sydney and I ran cheering behind the motorcade.  I was only 20 and, like most yanko-philes, I was panting just to get a glimpse of the man who had kicked the Vietnam Syndrome in the Gulf.

Those were the days.  The US had just emerged the victor from the Cold War without a shot being fired or blood being shed.  It achieved global superpower status, not by assertive or ambitious action on its own part, but by the self-induced collapse of its rival.  It had no plan in place to exploit its unexpected dominance, nor did it formalise and adopt one.  The US military seemed more concerned with having effective exit strategies in place than with implementing ambitious, open-ended projects.

It pains me to say this, but this week's presidential visit seems very different.  Don't get me wrong:  the Australian people still greatly admire the US president, clearly a man of great wit and intellect.  The 60-year-old alliance remains the sacred cow of Australian diplomacy.  And the US remains the world's largest economy and its lone superpower.  All true.  But serious doubts dog what Sir Robert Menzies called ''our great and powerful friend''.

Once universally considered to be awesome in its scope, today the world is much more aware of the limitations and costs of US military power.  When it comes to defeating tribal warlords in medieval societies, America finds itself wrong-footed and outwitted, not so much as an eagle as elephant.

Add to this the plethora of problems that afflict the US -- stubbornly high unemployment, consistently lacklustre growth, skyrocketing debt and rising budget deficits, increase numbers for home foreclosures, badly damaged credibility and prestige after Iraq and the GFC, what neoconservative founding father Irving Kristol once identified as ''clear signs of rot and decay germinating in American society'' -- and it is no wonder smart people question whether the US can sustain the burdens of global hegemony.

As US scholars and former office holders as ideologically diverse as Richard Haass, Brent Scowcroft, Joe Stiglitz and Paul Kennedy have recognised in recent years, America's serious fiscal crisis will eventually erode its economic power, which is the foundation of military power;  and as the relative gap between Washington and other rising powers diminishes, the costs of challenging American hegemony will decrease and the payoff for doing so will increase.

That is what in essence the authors of our Government's Defence white paper appeared to recognise two years ago.  We are witnessing, they identified, ''the beginning of the end of the unipolar moment -- the two-decade era of American pre-eminence in the region''.  Translation:  taken together with the dramatic rise of China and the emergence of India, US decline presages a shifting balance of power in east Asia.

It has been said that post-9/11 US foreign policy is a work in progress, and that those who get too close run the risk of being hit by a piece of falling scaffolding.  It's not clear whether the decision, formally announced in yesterday's joint press conference, to allow US forces to use Darwin for forward positioning will hurt Australia's standing in Beijing.  But it is surely the case that although the US alliance will endure, it should also change in the new era.

How so?  Well, instead of the sturdy, straightforward virtues of unconditional loyalty, we'll need to play a more demanding diplomatic game than ever before.  Instead of going ''all the way'' on the American bandwagon, we'll need to cultivate some of the skills of the helpful passenger -- which include some careful steering, timely map reading, a judicious use of the brakes and, not least, better road manners -- lest we crash into our largest trading partner.

Which perhaps makes it surprising that Julia Gillard has marched in lockstep with the president on two key issues that could have unintended consequences for Australian foreign policy:  the deal to enhance military cooperation with Washington as well as her strong support for the depressing and endless war in Afghanistan.

(Incidentally, it is striking that the usual suspects have not treated Gillard as they did John Howard:  where are Mungo MacCallum's taunts of ''Little Julia''?  Or Humphrey McQueen's rants about the ''American lickspittle''?  Or Alison Broinowski's lament about the ''Deputy Sheriff''?  More to the point, the PM's stance on the rotations of US forces and the Afghanistan war mark a far cry from her calls in 2005 for an ''independent foreign policy'', which is left-wing code for snubbing Uncle Sam at every opportunity.)

The elephant in the room during Wednesday's press conference, as well as in Parliament House today, was unquestionably China.  Although they express themselves in different ways, both Obama and Gillard seem oblivious to the emerging geopolitical reality that distinguished Harvard Professor Steve Walt has recently identified.

Writing in the Washington-based National Interest, Walt argues:  ''If China is like all previous great powers -- including the US -- its definition of vital interests will grow as its power increases;  and it will try to use its growing muscle to protect an expanding sphere of influence,'' he argues.  Given its dependence on energy imports and export-led growth, Beijing might want to make clear that no other state deny it access to the resources and markets, on which China's future prosperity and stability rely.  Such a situation, warns Walt, would encourage Beijing to challenge the current US presence in Asia.

Now, people of good faith will fret and wail about an expansionist dragon;  and this is understandable at face value.  But they should also recognise that the US, since it rose to great-power status, has also sought to exclude outside powers from its neighbourhood.  It is one thing to say the enhanced military coordination that Obama and Gillard announced this week won't amount to containment, but China will probably think differently.  Look at it from another perspective:  how would the US feel if the Chinese maintained a network of alliances and a sizable military presence in the east Pacific?

As Walt concludes:

Over time, Beijing will try to convince other states in the region to abandon ties with America, and Washington will almost certainly resist those efforts.  An intense security competition will follow.

How would Gillard, for instance, respond to a Sino-American spat over Taiwan or the South China Sea?

The other key issue, of course, is Afghanistan, a war without purpose and which has lasted more than ten years, longer than the combined length of our participation in the first and second world wars.  (In his 3,000-word address to Parliament today, Obama dedicated only one paragraph to the war while Gillard skipped it altogether.)  It is not clear to what extent Obama's withdrawal of one third of the 100,000 US troops from Afghanistan in mid-2012 will expose our Diggers to even greater risk in a quagmire where Australian casualties have nearly tripled in the past 18 months.  But it's a question that neither the president nor Prime Minister satisfactorily explained.

Don't get me wrong:  it was imperative to hunt down Osama bin Laden and his cohorts as well as topple the black-turbaned tyrants who gave Al Qaeda shelter and support.  But that mission has mainly been accomplished.  Other issues -- the routing of the Taliban and the building a democratic state -- are simply beyond our reach.  Our war aims are incoherent and our presence is exacerbating the problems we went in to solve, serving to destabilise Pakistan rather than to stabilise Afghanistan.  We are spending more blood and treasure in a misbegotten adventure in the graveyard of empires.

No-one wants Afghanistan to once again become a Club Med for terrorists.  But as the distinguished US conservative columnist George Will asks:

If US forces are there to prevent reestablishment of Al Qaeda bases -- evidently there are none now -- must there be nation-building invasions of Somalia, Yemen and other sovereignty vacuums?

Would Canberra precipitate a crisis in US-Australia relations by pulling out of the war?  Hardly.  Most Nato leaders have rejected Obama's appeals for extra troops and many -- Canada, the Dutch -- have pulled out.  Look, too, at history:  Menzies and Eisenhower bitterly clashed over the Suez crisis in 1956;  Whitlam's ministers called Nixon and Kissinger ''maniacs'' and ''murderers'' for the Christmas bombing in 1972;  Hawke's Labor comrades rejected Reagan's MX Missiles in 1985.  None of these episodes damaged the alliance.

The US alliance should remain the centrepiece of Australian foreign policy, under a Labor or Coalition government.  But one can agree with that assessment and still believe that there is no silver lining to the war.

So for what it's worth, here's my tip for the Prime Minister as she waves Obama goodbye today.  Leave Afghanistan to the drones and the US Special Forces, withdraw from this odd, irrelevant place and save our diplomatic resources for what really matters:  ride two horses simultaneously in our own region.  Washington won't be thrilled, but it would serve the Australian national interest.

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Free trade tied up in knots

We should welcome the fact that Australia will be the shower head capital of the world thanks to what happened in Honolulu a few days ago.  Leaders of the 20 countries in the Asia-Pacific Economic Co-operation forum (APEC) decided to cut tariffs on ''green goods'' to 5 per cent by 2015.

Our Prime Minister celebrated and said this would open up markets for Australian-made products such as wind turbines, fuel cells and water-saving shower heads.  Great.  APEC is proof of just how distorted the priorities of developed countries have become.

APEC is more worried about shower heads than about the 200 million people in India who don't have access to drinking water.  (Although since India is not a member of APEC, maybe this wasn't that much of a concern.)

None of the Australian journalists at the Honolulu meeting asked Julia Gillard whether she believed Australians could make wind turbines, fuel cells and shower heads better or more cheaply than the Chinese.

Maybe Australians could make these products better, but we can't make them more cheaply.  At the same time as the PM talks about the wonderful potential for Australia to make shower heads, it is the official policy of her government to push up the price of one of the most significant costs in the manufacturing process -- energy.  All of this is happening while the chances of the United States adopting a ''price on carbon'' are practically zero.  Which is what President Barack Obama admitted when he arrived in Australia this week.

But the APEC meeting wasn't a complete waste of time.  Nine countries, including Australia, the US, Chile and Vietnam, committed to forming a free trade zone as soon as possible.  This is good news.  And it's good that Labor is behind it.  At the moment, Labor's rhetoric on free trade is better than the Coalition's.

Tony Abbott's new anti-dumping policy is completely unnecessary.  His threat to force importers to demonstrate that the goods they bring into Australia are not sold at less than the cost of production is a bureaucratic nightmare.  Dumping is far from the biggest issue facing Australian manufacturing.

Increasingly, these non-tariff barriers appear at the behest of environmental non-government organisations (NGOs).  The Illegal Logging Prohibition Bill, now in the Federal Parliament, aims to stop the importation of illegal logged timber.

Similar to Abbott's anti-dumping proposals, timber importers will be required to prove their timber is not illegally logged, a task that is expensive, time-consuming, and may prove impossible.  As a study commissioned by the Department of Agriculture, Forestry and Fisheries revealed, the legislation is attempting to solve a problem that doesn't exist.  Australia's timber imports are less than one-tenth of 1 per cent of global timber production.

This shows how environmental NGOs are successfully converting their anti-corporate campaigning into legislative trade barriers.  Timber, coffee, sugar, cotton, palm oil and beef are some of the commodities the NGOs have set their sights on.  As I identified in a recent report, Environmental NGOs imposing [in]voluntary regulations on consumers and business, there's a growing tendency for NGOs to boycott individual companies that don't comply with the NGO's self-imposed standards.

If a corporation attempted such action against another corporation as a result of a commercial dispute it would be illegal under the Competition and Consumer Act and the Australian Competition and Consumer Commission would intervene.  But under an exemption in the act, if an NGO boycotts a company because of ''environmental'' concerns, it is legal.

Abbott has allowed Julia Gillard to capture the free-trade high ground.  This is incredible given it was the Gillard government that unilaterally banned the live cattle trade to Indonesia.

Further, at the same time as the government talks about cutting tariffs, it's establishing a whole new series of non-tariff barriers on imports and exports.  The latest, thanks to the government's tobacco plain packaging legislation, means that cigars imported into Australia will need to have the bands around them removed.

That's because those bands violate the rules on plain packaging.  It's a worry that in communist Cuba you can smoke a cigar that has the manufacturer's band around it, but you can't in Australia.  And it's a worry when the Cuban government threatens to take Australia to the World Trade Organisation.

The Labor government talks a good game on free trade.  The problem is that the reality doesn't always match the rhetoric.

Commonwealth Games bad news for the Gold Coast

Poor Gold Coast.  Acting Queensland Premier Andrew Fraser told reporters after the city won the right to hold the 2018 Commonwealth Games over the weekend that the economic benefits would be ''priceless''.

That's right:  the Queensland Treasurer suggested that the financial gain for the Gold Coast was completely unquantifiable.

Politicians are living in a fantasy land when it comes to the economics of major events.

Evidence that international sporting festivals provide any economic benefit to their host is almost non-existent.  The games will discourage as much economic activity in the Gold Coast as they will boost.  Probably more.

We have enough serious, scholarly, dispassionate studies of major events to be strident here.  Winning the Commonwealth Games is nothing to celebrate.  It is bad news for the Gold Coast.

Of course that is not how the Games bid has been pitched to voters.

Anna Bligh has argued the bid is ''vitally important for the future of the Gold Coast''.  Fraser may believe the benefits are priceless, but the Government and the bid team have been spruiking an economic benefit to the city of between $1.4 billion and $2 billion (naturally, the Government prefers the higher number).

According to comments by the bid chair Mark Stockwell late last year, the Games will also create 24,000 jobs.  In Queensland Government press releases, that projection has become a nice round 30,000 jobs.  One press release is higher again, and weirdly specific:  33,540 jobs between 2015 and 2020.

These figures are apparently based on a ''feasibility study'', which the Government commissioned.  The study is not available for public scrutiny.

It doesn't have to be.  We already know it's wrong.

In their 2008 paper ''Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?'', the economists Dennis Coates and Brad R. Humphreys survey the ''large and growing'' peer-reviewed literature on major sporting events.

There is an overwhelming consensus among academic economists that no tangible economic benefits from subsidising events, stadiums, or sports franchises exist.  None at all.  In fact, some papers have found substantial losses from hosting these big national or international sport festivals.

After all, major events are not all economic boom.  They are disruptive.  Roads are closed.  Residents stay away;  when locals might have gone out for other entertainment, they stay home fearing crowds.  Businesses which cannot take advantage of the visitors see their sales slump.

Major events are not even unambiguously positive for the hospitality industry.  One study failed to find any statistically significant relationship between the US Super Bowl -- which moves from city to city each year within the same country and provides a convenient natural experiment for major sporting events -- and hotel occupancies or retail sales.

Infrastructure gets built, sure, but not necessarily the most useful infrastructure.  Events distort spending priorities.  Stadiums have only limited uses once the event is over.  Transport designed to ferry thousands to an event only held once might not be the most useful transport once fans go home (and why governments don't do their job and build needed infrastructure until a major event forces them to do so is beyond me).

Add these problems to the large amount of taxpayers' money used to directly finance major events, and the economic case slips away very quickly.

One academic analysis of the 1994 World Cup in the United States estimated the host cities lost up to $9.3 billion.

But beforehand the boosters were predicting it would increase economic activity by $4 billion.

Every single Commonwealth Games, World Cup or Olympics is matched by a consultancy report forecasting the huge numbers of jobs that will be ''created'', the flood of tourism which will be unleashed, and the massive infrastructure investment that will be sparked.

Anna Bligh launched Queensland's bid for the Commonwealth Games in August 2008.  The feasibility study came well after.  She told parliament in June 2009 she had ''recently'' agreed to commission the study, but the Premier was already talking up all the glorious new jobs it would bring.  You might say that was jumping the gun.  It wasn't.  It was a study commissioned by a Government for a major event.  Of course it was going to find a squillion jobs would be created.

Last year the Gold Coast Business News decided the benefits of the Games so concrete, the reverse must be true as well.  They titled an article on the bid ''Unsuccessful Games bid could cost Gold Coast $2B''.  Sounds serious.

What happens from now is all very predictable.  Tourism lobbyists will spend the next seven years talking up the event.  A few years after the Games have ended, and once it is blindingly obvious the influx of long-term tourism dollars has not arrived, they will blame the Government for ''failing to capitalise'' on the global goodwill.

Then everybody will move onto bidding for the next event, armed with fresh new consultancy reports and suffering amnesia.

Such is the fantasy world of major events.

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