Tuesday, January 17, 2012

Car makers cling to subsidies of old

Seeing a Commonwealth minister beg on behalf of a special interest is embarrassing.

The Manufacturing Minister Kim Carr wrote in The Australian over the weekend that automobile manufacturing is ''an industry at the core of the society we want to be''.

Less than half of one per cent of the labour force works for the car industry.  Yet it is, according to the Minister, absolutely central to our national identity.

Perhaps he's right;  insofar as our national identity is tied up with handing taxpayer money over to a few politically well-connected and otherwise uncompetitive businesses.

It's all well and good to believe that Australian industry should be encouraged to ''make things''.  But in practise it leads to the complete subordination of an entire industry to politics, backroom dealing, and electoral calculations.

Few other industries get such hands-on cabinet attention.  Every investment, every new product announcement, every decision to open or close a factory is met with a media release and ministerial statement.

In the lead up to the 2007 election, Carr spoke about how he would ''thump the tables in the boardrooms of Detroit, in Tokyo, in Beijing'' if Labor won government.

The promise was apparently kept.  The car industry appears to have their own Minister of the Crown deputised to help with business negotiations, and their own pool of taxpayers' money on hand to sweeten deals.

This naked corporatism is surely no person's idea of the ''society we want to be''.

The first federal tariffs in 1907 covered vehicle components, as part of ''protection all round''.  Since then, state support for other industries has fallen away.  The car manufacturers' stubborn hold on their subsidy is only thanks to close political friendships.

Carr's demotion in the reshuffle late last year was widely noted.  But his new roles are important too.  Carr is not only the Minister of Manufacturing;  he is also the Minister for Defence Materiel — that is, minister in charge of the wasteful sink-hole of military equipment acquisition.

The two roles have a perverse synergy.

Carr has long argued that that a domestic manufacturing industry is needed for national defence.  He told ABC radio back in 2008 that ''You can't make a jet fighter without having a strong car industry''.

This is obviously ridiculous.  Holden needs $100 million just in case World War Three starts and the international arms market no longer sells Joint Strike Fighters?  Australians will need to beat their ploughshares back into swords?  If the Government truly believes this scenario is anything other than fantasy, well, aircraft production is the least of our problems.

Carr firmly believes that taxpayers' money should artificially prop up domestic manufacturing.  Now that he is also in charge of defence acquisitions, it is easy to see how Australian-made military equipment will be favoured even when there is better, cheaper, foreign equipment available.

On The Drum last week, Annabel Crabb pointed out almost every other country pours cash into their automobile industry.

But that doesn't mean that we need to keep supporting ours.  Right now, the rest of the world supports the car industry for the same reason we do — because during the second half of the 20th century, manufacturing unions built extremely close relationships with political parties.  Those relationships have paid off handsomely in subsidy, protection, and parliamentary representation.

There's nothing special about automobiles that demands government support.  They're not particularly challenging to make.  They're not particularly central to the economic structure.  They're not particularly hard to buy from overseas.  Their manufacturing is not particularly high-tech, at least compared to any other industry.  Yet they are particularly well connected.  And that's it.  That's why we support them.

Happily, this week has demonstrated how increasingly hard it is for the automobile industry to justify their claim on our money.

But what on earth is the Coalition thinking?

A big part of Joe Hockey's plan to reduce government spending is a $500 million cut to car industry subsidies.  That would be great.

Yet last week there were suggestions the cut may be abandoned.

Shadow ministers now talk about how critical the automotive industry is.  How ''savagely'' the Government abandoned the Cash for Clunkers scheme.  How cruelly the Green Car Innovation Fund was decimated.

The Coalition was rightly scathing about these boondoggles when they were announced.

Hockey and Andrew Robb — both described by their colleagues as ''economic rationalists'', in a neat throwback to the 1990s — are apparently holding firm on the cuts.

That the Coalition is going wobbly on spending reductions is no surprise, given Tony Abbott's deliberate attempt to take Labor's industrial base, and his embrace of economic nationalism to do so.

Still — car subsidies?  If the Coalition can't even bring itself reduce this irrational, wasteful, pointless, politicised corporate welfare program, they're going to struggle to cut anything at all.


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Paul is a prophet deserving honour in warning on America's limits

He rails against the ''American empire'' that ''brought the September 11 attacks on us''.  He condemns Obama for killing Osama.  He is indifferent to attempts to prevent Iran obtaining nuclear weapons.

He defends Julian Assange and lauds Bradley Manning, the soldier accused of leaking US secrets to WikiLeaks, a ''true patriot''.  And he is barred from addressing a Jewish forum because of his ''misguided and extreme views'' on Israel.

Who is this crazed left-wing radical?  If you're not closely following the Republican presidential race, you might think he was Noam Chomsky or Michael Moore.

In fact, he's Ron Paul:  the free-market crusader, cultural conservative and intellectual godfather of the Tea Party movement, from (of all places) Texas.

He's also the only Republican candidate other than Mitt Romney to place well in two very different electorates:  Iowa and New Hampshire.

Paul won't win his party's nomination to run against the President, Barack Obama:  his support base is solid, but not broad.  Yet his candidacy could prove to be a harbinger of what is next for American politics.  As leading neo-conservative commentator Charles Krauthammer recognises:  ''Paul is out there to build a movement that will long outlive this campaign.''

The 76-year-old Paul's most endearing quality is that he has sincere beliefs — support for social tolerance, free-market capitalism and a healthy scepticism towards foreign military adventurism — and he is not afraid to yell them out.  That sets him apart from the pack in this age of focus groups and media spin.

Most pundits highlight Paul's rigid adherence to libertarianism, most notably his pledge to slash the federal Leviathan.  But he is also the political heir to the notion of American decline that has gained intellectual currency.

In 1987, Paul Kennedy's The Rise and Fall of the Great Powers, which argued the US was in danger of ''imperial overstretch'', became an international bestseller.

Since then, a plethora of books and articles — including most recently ''Is America Over?'' (the cover of the prestigious Foreign Affairs) — have declared the end of a Pax Americana and urged more modest visions for the US role in a plural world.

Meanwhile, Americans are suffering from foreign policy fatigue.  For 70 years — first against fascism, then communism and more recently against militant Islam — they supported and sustained a defence commitment of the most intense and comprehensive kind.  Everything else was subordinated to it;  all sorts of domestic concerns were neglected.

Today, there is no Hitler seeking global hegemony.  Yet a cash-strapped Washington spends more on military than the next 15 top nations combined.  Since both Iraq and Afghanistan have cost America dearly in blood and treasure as well as credibility and prestige, there is overwhelming support for a more prudent approach to foreign affairs and a respite from responsibilities.

Only 33 per cent of Americans, according to a 2010 Chicago Council on Global Affairs survey, think the US will remain the world's leading power in decades to come.

In acknowledging an ambitious foreign policy is incompatible with the goal of cutting spending, Paul is behaving like a true fiscal conservative.  After all, if you oppose big government, why exempt the biggest part of the state — the Pentagon — from scrutiny?  In the post-September 11 decade, annual US defence spending has risen 70 per cent to about $700 billion.

Now, one can reject Paul's views on the Federal Reserve and the US-Australia alliance (both of which he would scrap) and still accept his thesis the US is in decline and it should come to grips with this reality.  In doing so, US leaders would be in a better position to deal with the long-term structural problems plaguing the nation.

True, the US remains the world's largest economy and its lone military superpower.  But the US, far from remaining the world's policeman, is bound to define distinctions between the essential and the desirable;  between what is possible and what is beyond its capacities.

That is essentially what Paul is saying, albeit in a cranky, even eccentric, manner.  For his pains, he is denounced as a ''kook'' and ''appeaser'' and disowned by many in his own party.  But US leaders will increasingly place more stress on modesty and limits in a complex and ambiguous world.  To fall back on feel-good slogans about a ''new American Century'' may lead to a painful comeuppance.


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Sunday, January 15, 2012

Repeat after me:  all tyranny is evil and wrong

Simon Winchester is a best-selling author.  You've probably seen his popular histories, in particular, The Surgeon of Crowthorne.  He received an OBE from the Queen in 2006 for services to journalism and literature.  He is apparently witty, charming and intelligent.  And he thinks we've all been a bit unfair to North Korea.

In the London Times shortly after the death of Kim Jong-il, Winchester argued that, sure, the Hermit Kingdom has its ''flaws'', but life there is ''not nearly as bad as is supposed''.  The restaurants are few, but the medical clinics are clean.  The bars sell imported beer, and the hairdressers are friendly.

But for Winchester, the great thing about North Korea is that it isn't South Korea.  The North hasn't been ''utterly submerged in neon, hip-hop and every imaginable American influence''.  It is ''a place uniquely representative of an ancient and rather remarkable Asian culture.  And that, in a world otherwise rendered so bland, is perhaps no bad thing.''

Never mind the poverty.  The tyranny.  Or that Winchester visited at the tail end of a famine that killed about 10 per cent of the population — a famine caused deliberately by a hereditary dictatorship.  The real issue is Western consumerism.  North Korea is desperately poor, but let's focus on how crass America is.

Winchester is not alone.  Writing in Crikey, Guy Rundle argued that yes, North Korea is in a state of oppression, but (don't you know?) neoliberalism and globalisation are really bad too.

There is a long history of left-wing intellectuals apologising for communist dictatorships.  And it's always been less about the places they've venerated, and more about the intellectuals themselves:  their deep, unshakable dislike of capitalism, and their belief that Western liberties just result in vulgarity.  In his 1991 book The Wilder Shores of Marx, the English psychiatrist Anthony Daniels wrote about returning from a visit to North Korea a few years before.  He recalls describing to a colleague, a professor of medicine, the pervasive propaganda and brainwashing in Kim Il-sung's regime.  The professor responded:  ''But have you considered how much power Rupert Murdoch wields in this country?''

Sure, no 20th-century dictatorship has been without its defenders.  Stalin's Russia, Mao's China, Pol Pot's Cambodia, Castro's Cuba, Ho Chi Minh's Vietnam:  they've all been praised by Western socialists looking for a model of the good society.  And their ''flaws'', the tyranny and terror and poverty, have been downplayed.

Charlie Chaplin's The Great Dictator is one of the great anti-dictatorship films, but his opposition to tyranny was selective.  Chaplin thought ''the only people who object to Communism [are] Nazi agents''.  When he heard about Stalin's purges, Chaplin said they were ''wonderful'' and were needed in America.

When Mao died in 1976, Gough Whitlam couldn't praise the dictator enough:  Mao ''was the inspiration to the Chinese people'' and made China ''secure, stable and self-confident''.  Of course, he killed 45 million people doing so.  One would have hoped the wistful romance of tyranny would have disappeared after the fall of the Berlin Wall, and its final, conclusive, unavoidable demonstration of the dangers of communism.

Not so.  The romanticisation of communism survives.  When the former Czech president and anti-communist dissident Vaclav Havel died last month, Guardian columnist Neil Clark complained Havel had never talked about communism's good side.  Communism offered welfare, education, and women's rights.  So ''the question which needs to be asked'', intoned Clark, is did Havel's ''political campaigning [make] his country and the world a better place?''

Havel had been repeatedly tortured by the Czech police.  He was punished for demanding democracy and human rights.  But perhaps Havel's experience of torture and imprisonment blinded him to how great life under Marxist dictatorship actually was.

Or perhaps many Western writers are so desperate to blame capitalism for the world's problems that they're willing to forgive, even support, non-capitalist tyranny.

Someone is always saying something nice about the worst totalitarian states.  After Margaret Chan, Director-General of the World Health Organisation, visited North Korea in 2010, she told the media she'd seen few signs of malnutrition.  Mind you, she only visited Pyongyang and had been escorted the whole time by North Korean officials.

Even better, Chan had seen no signs of obesity.  North Koreans, the Director-General approvingly noted, do a lot of walking.  People in affluent Westernised Asian countries do not.  I guess the upside to material deprivation is how it encourages physical exercise.  And there is, Simon Winchester might say, a real ''authenticity'' in that.


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Saturday, January 14, 2012

Fair's fare benefits government, not business

The Rudd/Gillard governments have introduced many business-unfriendly policies.

Three of these the mining tax, Fair Work Australia (FWA) and the carbon tax were to promote the ALP's political ends, rather than those of the nation, and many business representatives offered inadequate opposition to them.

A high point was the mining associations' stand against Rudd's mining tax.  In its original form, that tax would have seized much of the value of firms whose success has cushioned the impact of the global financial crisis on Australians.  Vigorous business opposition reduced the proposal's damaging effect.

FWA, masquerading as a ''fair go'', loads the dice in favour of unions and vastly enlarges their role, even though they barely represent 12 per cent of private sector workers.

It is designed to reverse the trend of declining union membership and to increase unions' abilities to fund Labor's election campaigns.

The outcome has been hit-and-run industrial disputes and wage increases uncompensated by productivity improvements.

This strangles competitiveness and increases costs -- by $200 million in the case of the Qantas dispute.

To save the business, Qantas management confronted union blackmail, which invited attacks from government ministers, including Bill Shorten, the man most likely to replace Gillard as Prime Minister during 2012.

With the carbon tax, business compliance has been crucial to the government passing a program, which, if left to stand, will progressively choke competitiveness across our most productive industries.

Only one of the three industry-wide business association, the Australian Council for Commerce and Industry, consistently opposed the carbon tax.  The Australian Industry Group (AIG) and the Business Council of Australia (BCA) offered various degrees of support.

The AIG sought a carbon tax but at half the Government's $23 rate.  Heather Ridout, its CEO throughout the negotiations, has since been appointed to the Reserve Bank board.

The BCA shifted from support of an emissions trading tax, to seeking a $10 carbon price and then to opposition unless other countries implemented similar policies.

Few of the major sectional industry associations have been prominent in pointing to the economic damage inherent in the carbon tax legislation.

The Minerals Council opposed it vigorously but originally did so only because it offered inadequate compensation to its member firms.

The Housing Industry Association also originally opposed the tax only on technical grounds but this hardened to bring the association adamantly against the government's carbon tax and its Liberal Party direct action alternative.

THE Australian Bankers Association opposed the carbon tax only because it prefers a cap and trade system so that its members can benefit from trading in carbon credits.

The carrot of soil-enriching subsidies tempted support from the National Farmers Federation but eventually the federation opposed it.

The electricity and gas industry peak body, the Energy Supply Association of Australia supported a carbon tax as long as the brown coal generators receive adequate compensation.

Experience shows that industry representative bodies focus on promoting their members' sectional interests.

In order to obtain particular concessions, they frequently offer support to government 'big picture' policies.

Unfortunately this provides cover for policies that enhance the government's political interests at the cost of the nation's interests.


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Friday, January 13, 2012

Slay the super sacred cow

There's one good thing about the local stockmarket falling 15 per cent last year:  people are beginning to ask what the point is of compulsory superannuation.

Instead of arguing about things at the margins of superannuation policy, like how to enforce fund transparency and give members choice between funds, we should debate the fundamentals.  We should talk about whether compulsory superannuation should even exist.

Compulsory superannuation has become a sacred cow for both sides of politics.  It is worshipped because it has given Australia the fourth-largest pension market in the world.  And it has created an industry of superannuation rent-seekers.  Compulsory super is now a very fat and lazy sacred cow and no one is willing to touch it — let alone slaughter it.

The Labor Party won't do anything to disturb this cosy world.  Compulsory super was invented by Paul Keating and Bill Kelty, and they knew exactly what they were doing.  The influence of the trade unions in Australia no longer rests on membership.  Union power is now exercised through the hundreds of billions of dollars controlled by the industry superannuation funds.

And now that 12 per cent has become accepted as the new level of compulsory contribution, watch how the ALP and the super industry will agitate to set a new standard of 15 per cent and higher.

Why John Howard and Peter Costello did not repeal compulsory superannuation when they came to power in 1996 is a mystery.  Why the Liberal Party supports it is a mystery.

Even more mysterious is why Tony Abbott, who has no qualms about opposing every other piece of bad policy from the Gillard government, decided in November last year not to fight Labor's increase in the contribution level to 12 per cent.

The idea that, in addition to levying taxes, the government should also stop people spending their own money by forcing them to save is something that should make Liberals very uncomfortable.  And in the current financial climate Australians aren't able to save their superannuation.

They're losing it on the stockmarket.  Forced saving, regardless of whether the returns are positive or negative, is inconsistent with any notion of personal freedom of choice.

It's about time Liberals started scrutinising some of the traditional justifications for compulsory super.

There's the paternalistic argument that individuals must be forced to save ''for their own good'' because otherwise they'll retire and not have enough money to live on.  This arguments rests on the assumption that at the age of 65 a person will be financially better off if 12 per cent of that person's wages have been saved in superannuation.  In some cases this will be true.  But in many other cases it won't be.

In fact, this highlights the Soviet-style one-size-fits-all super policy that applies in this country.  Everyone is forced to save at the same rate regardless of their personal circumstances.  A person wanting to use their salary to pay for an educational qualification to help them gain a higher income is treated the same way as someone who feeds their weekly pay into a poker machine.  Because of the behaviour of a few, the government makes everyone suffer.

The main economic justification for compulsory super is that in the long term it will reduce government spending on the pension.  This is questionable.  Treasury estimates that in 2050, 75 per cent of retirees will still be able to get all or part of the pension because their super will be inadequate.

That doesn't look much like a system that's reducing the taxpayer's burden.

Compulsory superannuation offends practically every principle of what should be Liberal Party philosophy.

If an Abbott government does keep compulsory superannuation it must, at a minimum, make drastic changes.

For a start, it should impose the same regulatory requirements on union-dominated industry funds as are applied to retail funds.  Next, it should liberalise the list of assets in which superannuation can be invested.

If a government is genuinely concerned for the long-term financial security of individuals, then those individuals should be allowed to use their super to invest in their home.

Owning a home provides more financial security than a share portfolio.

If Abbott and the Liberals won't abolish compulsory superannuation, they should at least consider allowing individuals some semblance of choice by providing an opportunity for opting out of the system.


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Wednesday, January 11, 2012

Era of cheap energy needn't be over

Energy Minister Martin Ferguson has launched the government's draft white paper on energy.  Having run the gauntlet of bureaucratic committees, much of the paper comprises anodyne phrases that talk about energy use doubling, new markets emerging and so on.

It also contains fantasies about how renewables are going to replace fossil-fuelled electricity.  That said, the draft is a useful compendium of energy market material.

Ferguson's remarks in launching the draft paper's policy statements were highly pointed.  He used the occasion to make explicit some of the policy formats that are lurking inside it.

Among these is his acceptance that private ownership will always be a more efficient means of supplying electricity, including in the distribution and transmission networks — the poles and wires that account for half of electricity's costs.  His call for privatisation of these networks recognises the inevitable workplace inefficiencies of government entities and sets him apart from state politicians, Labor and Coalition, other than in Victoria and South Australia.

He also wants to accelerate the process of retail competition in electricity, where residual regulatory barriers raise costs in all jurisdictions other than Victoria.

Ferguson has long been an advocate of increased uranium exports.  Building on this, he further courts the ire of the Green left by proposing nuclear power for Australia.  However, this is conditional on the failure of the optimistic nostrums about technological breakthroughs in renewables.

A key part of his vision of future energy supply is coal seam gas (CSG) reserves, which he noted were comparable in size and rather more conveniently located than conventional sources of gas.

He says he opposes populist calls to force producers to set aside some part of CSG production for local use on non-commercial terms.  But he does leave the door open for such intervention.

Even so, Ferguson's promotion of CSG marks him out as more pro-development than the somewhat prevaricating Coalition position and certainly differentiates Labor from its Green allies.  In that respect he also saw the case for having the government's research and development spending encompass nuclear, carbon capture and storage, and clean coal.  All were ruled out by the Greens in the $10 billion Clean Energy Foundation.

But this faith in government research and development is at odds with the poor record of Australian government spending in commercialising R&D.  The Australian Bureau of Statistics reports that though governments and universities account for 36 per cent of the nation's R&D spending, this is the source of less than 7 per cent of innovation.

Undiscouraged, Ferguson has snared increased spending for his Energy portfolio through the carbon tax policy.  Research into technology like carbon capture and storage, low-emission coal and renewable energy will soak up more than $475 million of taxpayer money next year.  A subsidy to converting food into ethanol will take up another $67 million.  It would be astonishing if this spending delivered any value.

The Energy portfolio accounts for only a small part of the wasteful expenditure the government devotes to green schemes.  Even excluding the direct departmental overheads, this expenditure amounted to $3 billion in 2009-10, the most recent year for which Canberra has published an aggregate figure of such outlays.

Ferguson claims that a Coalition government could never repeal the carbon tax, given the constellation of political forces in the Senate.

This view is inconsistent with his support for the surge of spending on green R&D.  Putting a ''price on carbon'' was trumpeted as the single instrument that would efficiently encourage lower carbon emissions, while also fostering carbon-free and carbon-light technology.

Government R&D spending is a double subsidy that undermines the supposed theoretical elegance of the single instrument on which a carbon tax or cap-and-trade is based.  The avalanche of new green energy projects shows no faith in the carbon tax policy.  At best, this is wasteful ''winner-picking'' policy.

In the final analysis, Ferguson declared ''the era of cheap energy is over''.  But we are not running out of cheap coal and gas, so it's only over if the government requires the fat lady to sing a final aria that our carbon tax is irremovable.

That, with China alone each year adding more coal-fired electricity generation than Australia's total capacity, would be a fruitless economy-busting end to the opera.  A Chinese carbon tax at the trivial level mooted would not change this.


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The closing of the Australian mind

It has long been the lament of academics that their self-evidently brilliant ideas and advice are seldom heeded in the ''real'' world.  Nowhere is this disappointment more evident than in the field of social sciences, particularly political science and public policy.

One recent illustration of academics' frustration with their failure to influence public policy was the launch of The Conversation, a website which describes itself as ''an independent source of information, analysis and commentary from the university and research sector''.  Headed by former Age editor Andrew Jaspan, the website is primarily resourced by the Group of Eight elite Australian universities.

Evidently, it is well-funded.  Besides Australia's major universities, it also enjoys support from corporate partners, the CSIRO, the Federal Department of Education, Employment and Workplace Relations, and the Victorian Department of Business and Innovation.  This support appears to allow it to employ dozens of staff, including editors — and in some cases, deputy editors — for each of the website's ''sections'' (''Science + Technology'', ''Politics + Society'', ''Environment + Energy'' and so on).

The Conversation was launched explicitly to address the ''problem'', as described by University of Melbourne Vice-Chancellor Glyn Davis, that universities are not successful at communicating their messages to the public;  as if the reason academics are unable to influence public debate is because they lack a highbrow version of News Limited's opinion website, The Punch.

As the site's charter admits, it hopes to ''give experts a greater voice in shaping scientific, cultural and intellectual agendas'', and aims to work for the advancement of the ''public good''.  It also promises to be ''editorially independent'', provide ''diverse'' content and be ''free of commercial or political bias''.  Whether it achieves this is open to question.

Professor Judith Sloan, one academic who can boast a tangible impact on policy and public debate, is unconvinced:  ''This site strikes me as emblematic of all that is wrong with Australian universities.  Crammed with puerile, naïve, left-wing tosh, the contributing academics really have no idea when it comes to serious public policy contributions.''

Indeed, if you believe that diversity should extend to the ideological realm, The Conversation is hardly fulfilling its charter.  Take a recent sampling from its ''Environment + Energy'' section:  one article labels the governments' carbon tax as ''profoundly inadequate'' because it doesn't go far enough, another argues that the climate debate focuses far too much on ''the risks to Australia's economic prosperity'', and a piece cheerily points out that businesses could become more ''efficient'' thanks to the carbon tax.  Others suggest that ''one small thing you can do for the environment'' is to ''be inspired'', and yet another argues that scientists have a duty to speak out against policies such as the Victorian government's decision to allow grazing in Alpine national parks.

On a brighter note, one article suggested that Christopher Monckton should not be prevented from speaking at a university, but not before comparing climate sceptics to ''Holocaust deniers, supporters of paedophilia, critics of vaccination [and] advocates of racial inequality''.  The website also proudly featured ''Monckton watch'' on its homepage, a section dedicated to criticising the British climate sceptic during his visit to Australia.

Every article that appears on the website is accompanied by a disclosure statement that lists any possible conflicts of interest the academic author may have.  Obviously, this is part of The Conversation's efforts to elevate itself above commercial media and demonstrate the rigorousness of its content.

But many of these articles, supposedly ''curated'' by The Conversation's team of professional journalists, are littered with political talking points like ''clean energy future'', a phrase that features in headlines and introductory paragraphs of numerous articles on the website, and — coincidentally, of course — in the Gillard government's publicly-funded advertising campaign in support of its carbon tax package.  This represents either willful participation in the government's propaganda campaign or, more charitably, sloppy editing standards, because neutral language would be both more accurate and more illuminating.

Moreover, one way that academic writing distinguishes itself from opinion journalism is that it is referenced and peer-reviewed.  Yet the articles that appear on The Conversation are rarely footnoted and only occasionally contain links to other articles which back up their claims.  Neither are articles on The Conversation peer-reviewed, which is ironic considering many articles published on the website assail climate sceptics for not submitting their work to this process.

Conservative or even vaguely centre-right voices appear extremely rarely on the site.  To be fair, that is not totally the fault of the editors:  the reality is that academia is substantially dominated by the Left, and paeans to renewable energy are probably easier to source than robust critiques of big government.  But herein lies the problem.  One of the reasons academic ideas are not taken seriously in the political world is the perception that they come solely from one end of the ideological spectrum.

In this light it hardly seems surprising that academics fail to make their mark on public policy debates.  The dominance of the Left on campus may be gratifying for those who hope to change society by influencing the young, but it actually contributes to their exclusion from the public policy process.  And in order to actually influence public debate, you need ideas that are relevant, achievable and have some semblance of community support.  Australian academics are not just one flashy website away from reshaping the nation according to their vision.  To achieve that, they require nothing less than a fundamental cultural revolution.  Until then, others will hold sway.  Judging by their contributions to date, that might not be a bad thing.


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Tuesday, January 10, 2012

The Gold, the Red and the Green

There has been one constant in the defining struggle in politics over the past two centuries.  That struggle has been between those who want more of their country's resources and incomes to be ''fairly'' shared on some politically determined basis, and those who want the incomes and resources to be retained by the people who earn and own them, allowing those people to consume their income and wealth with minimal restraint on the direction of such consumption.

We might best define that struggle on a collectivist-individualist axis.  Over the twentieth century and in the centuries that preceded it, insofar as domestic politics was at issue, the major battleground of the struggle was between socialism and free enterprise.

Failure of the great socialist experiments of the twentieth century demonstrated that the pursuit of individual self-interest, private ownership of property and competition in commerce has no rival in the creation of high living standards.  But, as the slogans of the Occupy Wall Street (OWS) protesters demonstrate, income and wealth ''redistribution'' remains a siren song for those who don't understand or don't care how wealth and income are created.  The OWS movement's signage is the primal scream of a new generation requiring to be disillusioned anew.  But real-life examples of the damage of forced redistribution are fast disappearing.

The OWS movement is however a sideshow, since in the past thirty years we have seen the emergence of environmentalism as a new dimension in the collectivist-individualist struggle.  This has been largely focused on the use of natural resources, with the two sides ranged against each other in terms of trade-offs between private and communal use on issues about how land and mineral development is owned and controlled, use of the atmosphere and water, and the sorts of goods and services that may legitimately be offered for sale (or free distribution).

Environmental collectivists in earlier times were, like their less successful brethren the consumerists, genuinely concerned citizens operating within the mainstream and seeking to smooth what they saw as undesirably rough edges in a capitalist system that was in most respects quite satisfactory.  But either through taking over and radicalising existing organisations (as occurred with the Australian Consumers Association) or forming new ones, these concerned citizen groups have been converted into ''useful idiots''.

The modern militant environmental activists share with the socialists a reverence for authoritative self-selected leadership guiding the general populace.  However, they differ markedly from the collectivists in the socialist mould in terms of the goals to which resources should be directed.  The socialists sought equality of incomes and developed a theory which claimed that this would also be accompanied by more efficient production.  Environmental collectivists see the struggle focused on preserving the natural environment from human use and, where possible, returning it to an arcadian pre-industrial condition.  The central goal is to have conventionally defined productive use reduced.  Some, though not all, in the movement recognise that this also means lower income levels.  Environmental collectivists see greater value in the unpriced benefits in minimising urban development, farming, forestry, fishing, water use and mining.  In some cases they prefer to see no human access to these resources.

Where environmentalists' claims have most merit is with assets that were previously so abundant that they were unowned but have since become scarcer and subject to conflicting uses.  The atmosphere is among these, as are certain seas and rivers (those where the waters are not already owned and where the ownership has imposed costs on people downstream).  Processes are required for resolving these conflicting uses where the property rights may have shifted or evolved.

In most countries the collectivist arm of this confrontation has become dominated by political movements that label themselves ''green''.  The movement's aspirations have moved well beyond the resolution of conflicts into seeking to control private property that might impinge on public goods.

In this, they share much in common with, indeed are often leading components of, the OWS movement and other political overrides of private decision-taking.  It is, as the Marxists would say, no coincidence that with socialism diminished in credibility and popularity, communists like Lee Rhiannon and Adam Bandt moved to the Greens.  In this respect the watermelon epithet which has been used to denigrate ''greens'' is more accurate than some of its original formulators realised.

With both greens and socialist collectivists, the battle lines blur over particular issues.  Thus, with some issues, green collectivists find common cause with interests that are more akin to the genteel concerned citizenry that earlier comprised the environmental movement.

This can be seen in the campaign of the London Daily Telegraph against further urban development in rural England.  In that campaign, which is mirrored in other countries, a conservative journal is seeking to redefine some individual property rights so that they are used for the benefit of others.  Beneficiaries of this are those incumbents in the areas where housing development is proposed who see use of their neighbours' land for more housing as reducing their own land values.  Other beneficiaries include recent purchasers of housing close to other areas near urban centres, who paid a premium price for their properties as a result of restraints and would see new housing depress those prices.  To a lesser degree, all incumbent owners gain from restraints since these raise the land value of all properties other than the mainly farmland that is excluded from commercial development.  The losers are the land-owners whose property rights have been partially collectivised and those who face excessive housing costs as a result of land access regulations.

This common cause between conservatives and greens on environmental matters has its counterpart in contemporary issues regarding socialist control of the means of production.  While there is no longer any plausible or large group of people calling for government ownership of the means of production, there are conservatives who share common ground with socialists in the successor agenda to this, namely areas of industry policy with what is sardonically referred to as ''winner-picking'' by governments.  This normally means government selecting promising areas of development and assisting firms in those areas.  The idea is to preserve a considerable scope for individual initiative and property rights, to bring operational efficiency, by not discriminating in favour of particular firms and, by and large, avoiding the waste inherent in direct government investment.  Even so, the success rate of such policies is very low.

The allure of planning to avoid the seeming waste of resources moving into blind alleys is long-standing.  The Institute of Public Affairs in the early part of its seventy-year history was among those conservative voices in favour of tariffs and selective industry support and the policies remain attractive to many on the right of Australian politics.  Among more recent exponents is the Australian-born chairman of Dow Chemicals, Andrew Liveris.  In his book Make It in America:  The Case for Re-Inventing the Economy, Liveris has called for government identification and support for selected industry sectors.  While not seeking in the words of the British Labour Party's Clause 4 (repealed in 1995) to seek ''common ownership of the means of production, distribution and exchange'', this does move towards such a position.

Collectivisation, whether socialisation of property or in its modern environmental dimension, generally means diverting income-producing assets to activities that will produce less value in its conventionally measured sense.  It may well have been the case that the reservation of vast parkland tracts for, say, the Great Barrier Reef brought greater benefits than if the resources were to have been left to private ownership, but each such increment adds less value.

Collectivisation of Australian land accounts directly for around 11 per cent of the nation in designated national parks, with a further 15 per cent under indigenous ownership and control.  However, land use regulation, environmental requirements, planning and heritage requirements and planning restraints for urban development mean the remaining 74 per cent of the nation is also semi-collectivised.

All of the restraints on individual use divert activities away from the uses that individuals who own the resources would prefer.  In addition the creation of the rules necessitates a bureaucracy which can be successfully overcome only through extremely costly procedures.  As an example, for those who want to build a new house on land previously used for farming, Victoria's Growth Areas Authority has identified over 500 regulatory steps that must be navigated.  This is before a house can be constructed even in an area designated as within the Melbourne Urban Growth Boundary.

The costs of inflexibilities and bureaucratic paperwork can never be accurately assessed.  However, in agriculture production has stagnated-ABARE reports that output over the past forty years has increased a mere 0.3 per cent a year.  This is in spite of massive advances in pesticides and new plant varieties-though green pressures have prevented many of these that use genetic modification being grown in Australia (and in the EU).

Much of the stagnation of agriculture has been the result of withdrawing land from production in certain areas, excluding land from clearing in pursuit of international Kyoto agreements, and denying the use of water.  With respect to irrigation, allocations are being reduced in the Murray-Darling Basin, which produces one third of Australia's agricultural output.  These restraints on water use, which are planned to increase, are motivated by chasing an illusion that we should transform the nation's most prolific ''working river'' into an environmental totem.  In fact the outcome of returning the river to some previous ideal, as well as destroying productivity, would be most unwelcome in view of its natural swings from flood to parched trickle.  Other restraints prevent the use of water in the northern ''wild rivers'' for irrigation.

Unlike agriculture, mining development has proceeded rapidly in Australia.  This is in spite of increased regulatory controls and excising of land with mineral potential through national parks, Mabo restraints and the like.  The extent of this regulatory restraint is such that it is unclear what the counterfactual would be.  It is certain that even faster development could have been possible and in this regard notwithstanding some pressures on labour supply, it must be remembered that mining employs only 1.5 per cent of the labour force.

The costs of transferring assets to collective decision-making is not always clear, especially since the damages are likely to be in the form of forgone income increases.  But the costs are real and manifest in terms of poor resource use, wasteful expenditure of government and private resources to assess the merits of particular uses, and discouragement of enterprise.  All of these mean less output for the economy and lower living standards.

These measures are proposed to be augmented by imposing special new taxes on mining activity, taxes originally proposed, with Greens support, to provide higher levels of government spending and which are now at least for the present confined to the two most important mineral products, coal and iron ore.

The Australian government, in introducing a tax on domestically consumed fossil fuels, is adopting a policy that may be unique, in that it involves the nation deliberately sabotaging its own competitiveness by shackling the industries that represent the highest value in terms of productivity:  coal and electricity.  It would be worse than the United States abandoning information technology or Denmark deciding that dairying should be phased out-worse, because of the ubiquitous nature of fossil-fuel-sourced energy in the economy and because the alternatives come with very low levels of productivity.

In the light of the impending legislation, the forward wholesale price of electricity for the fourth quarter of 2012 compared with the current year is up by $20 per kilowatt hour, or more than 60 per cent.

Proponents of the carbon tax concede, albeit reluctantly, that their policies will mean lower income levels.  They have to admit it because the Treasury modelling which lends them respectability says that will be the case.  That modelling elevates Treasury into the world of technological forecaster, since it has assumed the emergence of new technologies, such as carbon capture and storage, and low-cost wind power.  And this comes on top of the heroic assumptions, against all the evidence, that the whole world will swing behind the tax.

Perhaps even more importantly, Treasury has not drawn its willing political supporters' attention to the fact that its modelling is circular-it shows increased productivity because this is one of the assumptions.  So no matter how heavy the sledgehammer taken to economic drivers, the model would inevitably forecast increased national income.  This would be the case if the carbon tax was at $23 or $1000 per tonne.

Although the Treasury forecasting arm tells the Labor-Greens coalition that, even with its fantasy assumptions, according to the modelling income levels will be lower, the politicians and their auxiliaries in government and among government-financed institutions don't really believe it.  They tell us about the merits of getting in on the ground floor with these new industries which will give us the incentive to develop Solyndra-like factories that will take the Chinese and Indian markets by storm twenty years hence.  Solyndra, like its smaller-scale variant, the Victorian windmill blade factory that got taxpayer funding to open up a new world-conquering infant industry, went into liquidation.  Government-created industry champions just never seem to cut it.

There appear to be constant and at times irresistible pressures to shift resources towards collectivism and politicisation of decisions that were previously under the control of individual owners or discoverers.  Rarely does the shift take place in the opposite direction.  Testimony to this is the almost inexorable increase in the share of government in national incomes.  It seems that only the onset of economic catastrophe produces the sort of wind-back of government seen in the Thatcher years in the UK and more recently in Scandinavia.  Even the imminence of disaster has sometimes not led to pressures to reverse the trend, as can be seen in Argentina over many decades and, more recently, in Venezuela.  We have not yet seen any nation reversing the green regulatory communalism that is now far more pervasive than the socialist framework of the twentieth century.


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What's wrong with ''no''?

The Government and its supporters apparently believe Tony Abbott's big character flaw is that he opposes their policies.  They make up cute little jokes about it.  Noalition.  Mr Negativity.  There is apparently an ALP pamphlet called The Little Book of Dr No.

But who is this critique supposed to convince?  Apart from people who believe the Government can do no wrong, that is.

Every government accuses those on the other side of parliament of being too negative.  When they were in power, the Coalition did the exact same thing.

''It's not the job of an opposition to be negative when it's against the national interests to be negative,'' said John Howard in 2005.  Government press releases said Kim Beazley opposed Coalition legislation ''for the sake of opposing''.  So did Simon Crean.  And Mark Latham.

While he was the workplace relations minister, Tony Abbott complained bitterly about Craig Emerson's ''feral'' opposition to any workplace reform.

Presumably Emerson genuinely thought workplace reform was a bad idea.  If so, opposing it seems to be exactly what a person in his position should have done.  And Abbott, presumably, thinks that the carbon price is a bad idea.  (At least, he does now.  He's definitely more convinced of its badness than Julia Gillard is convinced of its goodness.)

On the surface, the attack on Tony Abbott's ''relentless negativity'' is a claim that the Opposition has no values, that it is only driven by political considerations.

But the attack is guilty of the same.  It has nothing to do with the content of any of the Government's policies — just an assertion that the Opposition is getting in the way ... of what?

Abbott is a conservative, and one who understands what conservatism means.  His book Battlelines heavily cites Edmund Burke and Roger Scruton.  No fair reading would dismiss his discussion of conservatism as lightweight.  Abbott has tried to shape the Liberal Party as not simply a conservative party, but a philosophically conservative party.

For a philosophical conservative, change should be incremental and hesitant.  Even reluctant.  In Battlelines, Abbott approvingly quotes the philosopher Michael Oakeshott when he said the ''modern mindset'' is ''in love with change ...; fascination of what is new is felt far more keenly than the comfort of what is familiar.''

Abbott responds that the known status quo, with all its flaws, is preferable to a hypothetical ideal.

''Conservatism prefers facts to theory ...  To a conservative, intuition is as important as reasoning, instinct as important as intellect.''

This may seem like a deeply anti-intellectual approach, but it isn't.  Conservatism is a recognition that very smart economists working with very smart legislators can sometimes get things wrong — even though they're very, very smart, and their intentions are very, very good.

So a conservative would absolutely oppose the majority of new government programs — especially reforms on the scale of the carbon price or the mining tax.

And the No Strategy certainly is better than the aimlessness of most oppositions.  Shadow ministers under Brendan Nelson and Malcolm Turnbull would criticise the Government for being ''all talk and no action''.  A program is behind schedule!  An election promise hasn't been kept!  But a bad promise that hasn't been kept is a good thing, surely?  Before Abbott, the Coalition seemed to be arguing that the Rudd government was not being the best Rudd government it could be.

The real problem with Abbott's No Strategy isn't that it is negative.  The problem is that his negativity might not be consistent.

There's no point saying no in opposition if you're going to say yes in government.  As prime minister, Abbott will be lobbied by ministers trying to fund their pet projects.  Some of those ministers will be puppets of their departments, for whom prestige and expenditure are the same thing.  Other ministers will just want to spend their time in government divvying out cash.  Abbott knows all about the latter ministers.  He was one of them.

Unfortunately, even in opposition Abbott's negativity is selective.  When he doesn't say no — that is, when he comes up with positive policies of his own — they don't tend to be very good.  Take his expanded anti-dumping program, which requires importers to prove they're not selling in Australia below cost.  Or take his parental leave scheme and the vast increase in middle-class welfare that it represents.

Just last week Joe Hockey proposed a crackdown on foreign investment in agriculture.  This is a prime candidate for no.  But many in the National Party don't like it when Chinese companies buy farms, and Abbott doesn't want to be negative to his Coalition partners.

There's nothing wrong with no.  Abbott just needs to say it more often.


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Monday, January 09, 2012

The Difficult History of Free Speech

Last year was a bad one for freedom of speech in Australia.  It was not just the decision in the Andrew Bolt case, and calls from the Greens and others for the licensing of newspapers, that were depressing, but the obvious lack of understanding by many commentators of the history and philosophy of freedom of speech.

As with so many of the other important features of Western civilisation, the concept of freedom of speech can be traced back to the ancient Greeks.  One of the first steps on the Greek path towards allowing freedom of speech was the first involvement of ordinary people in intellectual life.  An early example came around 700 BC when Hesiod wrote his Theogeny, a theological work which considered ''the gods and the universe ...  as a matter of private interest''.  The freedom of a non-cleric such as Hesiod to write about such matters was a radical departure from the civilisations of Egypt and Mesopotamia, where ''religious subjects were treated by members of the established hierarchy''.

A century later, the Ionian philosophers were also laypeople, such as an engineer (Thales) and a mapmaker (Anaximander), ''not charged by their communities to concern themselves with spiritual matters'' but ''moved by their own desire for an understanding of nature ...  they did not hesitate to publish their findings, although they were not professional seers''.  They began to assess the origins of the world around them from first principles, not relying on received myth, thus beginning an era where matters of the religious and political order were open to debate.

This meant that the fate which befell Thersites in the second book of Homer's Iliad might not befall future generations of Greeks.  Arlene W. Saxonhouse, in Free Speech and Democracy in Ancient Athens, makes the point that Homer described Thersites as the ''ugliest soldier at the siege of Troy ...  a blathering fool'' and yet he delivers a fine speech echoing much of what the hero Achilles had said in a speech in Book One.  Thersites gets a whack from Odysseus for his trouble but, as Athenian democracy evolves, men like Thersites get the chance to be heard and judged on the merit of their argument, not their status.

In Athens, the reforms of Solon in the 590s BC extended the right of citizens to express opinions, and the concept of free speech became a more practical reality after the reforms of Cleisthenes in Athens around 508 BC.  According to Herodotus, the Athenians' dominance is directly linked to Cleisthenes's introduction of isegoria, freedom of speech in the Assembly of the Demos, as every hoplite now fought with greater valour, because he felt that collective victory served his own personal interest.

The trend towards an extremely liberal regime peaked in the age of Pericles in the 430s BC, but even Athenians had certain limits on what they considered acceptable.  While dramatists such as Aristophanes used the freedom of speech to launch spirited attacks on public figures in their plays, the gradual decline of Athens compared to rivals such as Sparta and Thebes meant that not all saw the freedoms Athenians enjoyed as an advantage.  The most famous example of this came when a popular jury found Socrates guilty of introducing false gods and corrupting the young and sentenced him to death.

The Roman republic sometimes allowed a reasonable degree of free speech for its citizens, but at other times it was repressive.  One advocate of free speech in the dying days of the republic was Cato the Younger, the chief political antagonist of Julius Caesar and the Triumvirate, and called ''the conscience of Rome'' by Livy.  Cato's name was to receive renewed reverence as the cause of freedom gathered support in the eighteenth century, when Cato was the hero of a popular London play written by Joseph Addison, which also became a favourite of George Washington.  Cato's name was also used as a pseudonym by the British writers John Trenchard and Thomas Gordon, who published a series of letters from 1720 to 1723 condemning tyranny and promoting various freedoms, including freedom of speech.

Once the Roman republic had gone, tolerance of disloyal speech varied according to the identity of the emperor, with some such as Augustus, Claudius and Vespasian being reasonably tolerant, while other such as Tiberius, Caligula, Nero and Domitian allowed no dissent, with offending authors meeting fates such as being burned alive.  The capricious nature of the state is well illustrated by the Emperor Constantine's conversion to Christianity in 312 AD.  Until then, Christians were oppressed by the Roman state;  afterwards non-Christians were.

In the modern world, England became the leader in liberalising freedom-of-speech laws.  While many writers hark back to the signing of Magna Carta in 1215, real progress began in the seventeenth century, particularly with the Petition of Right (1627), which meant that, at least in theory, no person could be arrested solely for disagreeing with the government.  It is no coincidence that the period of enormous political upheaval in the lead-up to the Civil War saw the first recorded use of the expression ''freedom of speech'', by Sir Edward Coke in his Institutes of the Laws of England (1628-44),

At the height of the Civil War in 1644 came the publication of one of the most important works ever written about freedom of speech, John Milton's Areopagitica.  Today, Milton is best remembered as the poet who wrote Paradise Lost.  However, he was also a partisan in the English Civil War, producing a number of pamphlets in support of the cause of Parliament and Cromwell.  In contrast to the bulk of his political output, Areopagitica was actually an attack on an act the Parliamentarians had passed in 1643.  This law sought to impose a new form of censorship on a literary scene that had exploded into life after royal censorship broke down in about 1641.

Areopagitica is a powerful attack on the evils of censorship.  The issue had become personal for Milton when his Doctrine and Discipline of Divorce was published in 1643.  Its radical arguments, including advocacy of divorce, had been almost universally condemned, with religious leaders demanding that the work be burnt, while the Stationers' Company, with more secular concerns, were upset that his failure to obtain a licence jeopardised the copyright system.

Milton argued that censorship had not been a part of ancient Greek or Roman society.  Areopagitica gets its name from the Areopagus, a hill in Athens, which was the ancient site of courts.  In the fifth century BC, the hill's name had been invoked by the Athenian orator Isocrates, who gave a speech arguing for the restoration of power to the tribunals.  Milton uses many other classical and biblical references, including St Paul in the Book of Acts, throughout the work.  In one of the cleverest passages, Milton makes fun of the fact that ''debtors and delinquents may walk abroad without a keeper, but unoffensive books must not stir forth without a visible jailer in their title''.  A key argument of Milton's was that freedom of speech should never be proscribed in advance.  Action should only take place once an offence had been committed.

Milton claimed that this censorship was a more recent Catholic import, a product of the King's Star Chamber, which had recently been abolished (1641), and which had been the principal opponent of the Protestant Parliament.  In reality, licensing had been introduced, first by clergy in the 1520s, and then formalised by Henry VIII in 1538, in response to the explosion of printed material in the wake of Gutenberg and Caxton, material which often stimulated religious debate and conflict.  Although, at the time of publication, Areopagitica did little to halt the practice of licensing, it would be viewed later as a significant milestone and one of the most eloquent defences of press freedom.  The system of licensing publications remained until 1694, when finally publication was allowed without the accompaniment of a government-granted licence.

The case of John Wilkes in the 1760s demonstrated that the issue of freedom of speech was far from settled in England, even for the privileged, such as members of parliament.  Angered by the actions of the Prime Minister, Lord Bute, in denying him advancement, Wilkes established a paper called the North Briton, which created several controversies, culminating in a strongly worded attack on the King's message to parliament.  A warrant was issued ''to search for authors, printers and publishers'', and Wilkes was arrested, but a week later, he was released by order of the Court of Common Pleas on the ground that his privilege as a member of parliament afforded him immunity from arrest.  However, further charges led to his expulsion from the House of Commons, and he was found guilty in the courts and, because he was absent when sentenced, he was pronounced an outlaw.  A few years later, Wilkes was elected as member for Middlesex and there ensued a series of contests without parallel in English history as the electors constantly returned him only for the Commons to reject the result.  The cause of ''Wilkes and liberty'' became a rallying cry for all those concerned with the promotion of freedom, specifically the freedom to espouse views the government found offensive.  In 1774, Wilkes was accepted by the Commons, a landmark win for freedom of expression.

Two decades later, an important further step on the path towards freedom of speech came when, in 1792, the parliament passed a bill known as Fox's Libel Act, named after the great Whig politician Charles James Fox, which provided in sedition trials that truth must be accepted as a defence and that a jury, not a judge, must be the arbiter.

In the nineteenth century, the arguments in favour of freedom of speech were further developed by John Stuart Mill in On Liberty.  Mill stated that ''if all mankind minus one, were of one opinion, and one, and only one person were of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind''.  Mill understood that the supposed falsity being suppressed may in fact turn out to be a truth.  In his 1981 book Free Speech:  A Philosophical Enquiry, Frederick Schauer bracketed Mill with Milton as key figures in ''the argument from truth'' rationale for ''free speech''.  Other rationales have included ''the argument from democracy'', the need to hold politicians and government officials to proper account.

Schauer makes the point that both these arguments essentially ''derive their strength from some conception of what is good for society as a whole, rather than from any concern for the well-being of individuals in a narrower sense''.  He then assesses whether there are arguments that free speech is an intrinsic individual good.  He finds little evidence that this is true per se, but believes that ''Aristotelian conceptions of happiness present a stronger argument for freedom of speech as an intrinsic good''.  The good life can only be achieved through the ''complete use of the mind and the thinking process''.

As part of his assessment of this idea, Schauer cites F.A. Hayek's argument in The Constitution of Liberty that there is a tendency to overvalue the importance of ideas and communication compared to the freedom to actually do things.  Similarly tied to other freedoms is his fourth chapter on arguments in favour of free speech on the basis of individual equality and dignity.  An example of the argument here is provided by Locke's position in the Letter Concerning Tolerance when in Schauer's words he ''grounds much of his argument on the premise that solely the individual is authorised to decide questions of faith'' which applied to speech means that only the individual can determine what he or she is entitled to say.

By the time Mill was writing, England was in the final phase of liberalising its political freedom-of-speech laws.  Yet there remained controls on various forms of speech, outlawing sedition, blasphemy and private libel.  Later in the nineteenth century obscene publications became a new freedom-of-speech battleground.  Socio-moral reform organisations, such as the National Vigilance Association established in 1886, were at the forefront of attempts to ban the publication of items such as risqué postcards and to prevent their importation and, in the words of Deana Heath,

thus transformed the regulation of the obscene into a project of imperial hygiene enacted through the erection of a cordon sanitaire to keep ''unhealthy'' literature outside the geographical boundaries of both nation and empire.

While elements of English society were trying to prevent the corruption of Victorian values by Continental obscenity, in the previous two centuries progress on free speech had been slower on the Continent than in England.  However, in the eighteenth century, the French Enlightenment played an important role in expanding the notion of freedom of speech.  The best-remembered aspect of this is the oft-quoted phrase of Voltaire's, ''I disagree with what you say but I will defend to the death your right to say it''.  Now, Voltaire did not actually say these words-they were a biographer's summation of his views-but his and similar views were reflected in the French Revolution's seminal document, the Declaration of the Rights of Man and Citizen of August 1789:

The free communication of ideas and opinions is one of the most precious of the rights of man.  Every citizen may, accordingly, speak, write, and print with freedom, but shall be responsible for such abuses of this freedom as shall be defined by law.

In the same month, James Madison introduced the United States Bill of Rights into the House of Representatives of the First Congress.  The first of the ten amendments to the Constitution stated that:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;  or abridging the freedom of speech, or of the press;  or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

While some may think that a very clear statement of intent, the fact that First Amendment issues have been the source of constant debate for the past two centuries demonstrates that the limits of free speech are never settled.  As early as 1798, a Sedition Act was passed which included punishment for ''any false, scandalous and malicious'' writing about the government and led to the prosecution of several Republican editors for criticism of the Federalist administration of John Adams.  The Act lapsed in 1801 and all those prosecuted were pardoned by the incoming President Jefferson.

In the middle of the nineteenth century, freedom of speech was an issue both in the lead-up to the Civil War, when many southern states passed laws making the advocacy of abolitionism illegal, and then during the war itself when both sides had to consider what to do about internal critics.  Overall, the Union was tolerant of its critics, known as Copperheads, who generally were able to criticise the Lincoln administration without sanction.

In the twentieth century, several landmark cases in the US Supreme Court grappled with the limits of free speech.  In 1919, Justice Oliver Wendell Holmes, speaking for a unanimous court, upheld a conviction under the 1917 Espionage Act of a man who circulated an anti-draft leaflet during the war and, in doing so, Holmes uttered his famous line about shouting fire in a theatre.  In 1964, the case of New York Times v Sullivan extended First Amendment protection to those who defamed government officials, unless the official could prove that the statement was made with ''actual malice''.  Numerous free-speech issues arose from the threat of communism, particularly in the McCarthy era.  At the end of the century, whole new types of hate speech were being assessed for their legality.  Yet, as the constitutional historian Michael Kent Curtis commented in 1995:

When they ignore free speech history, advocates of restriction have plenty of company.  With a few notable exceptions, American legal education has paid too little attention to either the history of liberty or of free speech.  In the past powerful interests have sought to limit speech by use of the bad tendency test, by use of ad hoc balancing, by treating political speech as libel, and by demanding protection from emotional distress caused by speech.  From the Sedition Act to the crusade against slavery, to the opposition to wars and the draft, elites have advanced such doctrines as justifications for suppression of speech, including political speech.

Of course, the debate about freedom of speech is not just about political speech.  In the third quarter of the twentieth century a lot of the debate about free speech in many countries related to the removal of censorship of previously banned works, in England most famously relating to D.H. Lawrence's novel Lady Chatterley's Lover.  On the fiftieth anniversary of the 1960 trial Geoffrey Robertson wrote that of all Old Bailey trials ''none has had such profound social and political consequences as the trial in 1960 of Penguin Books for publishing Lady Chatterley's Lover'':

The verdict was a crucial step towards the freedom of the written word, at least for works of literary merit (works of no literary merit were not safe until the trial of Oz in 1971, and works of demerit had to await the acquittal of Inside Linda Lovelace in 1977).

Australia followed a similar pattern to England and the United States, with greater controls being legislated in the 1880s, and then a similar path towards liberalisation of censorship laws in the 1960s, particularly in the period of the Gorton government when Don Chipp was Minister for Customs and Excise.  Chipp removed the existing bans on many novels and allowed the sale of Playboy magazine.  He also oversaw the introduction of the R certificate for films in 1970, which allowed previously banned films to be shown to adults.  Yet, as Peter Coleman explained in his landmark history of the topic, Obscenity, Blasphemy, Sedition, Australia had a much longer history of control of political speech, ''arriving in effect with the first printing press''.

However, the First World War was the catalyst for increasing censorship and when the Hughes government lost its wartime powers it beefed up the Customs Act to keep out subversive political works.  This manner of control via Customs reached its apogee in 1933-34 when well over 100 political books freely circulating in Britain were banned in Australia.  As in the United States, the threat of communism created much of the freedom-of-speech controversy in the middle decades of the twentieth century in Australia.  One of the most celebrated cases was that of the Czech communist writer Egon Kisch, who was refused permission to enter the country by the Lyons government in 1934.  The government tried to declare him a prohibited immigrant because he failed a dictation test in Scottish Gaelic, but this was subsequently ruled invalid.  As so often happens, the move to silence Kisch only added to his celebrity.  The Australian Dictionary of Biography sums up the situation:

While relatively few Australians had any sympathy for communists, the ''Kisch Affair'' created widespread fears that, by using the Immigration Act to curtail free speech, the government was resorting to tactics similar to those undermining democracy in Europe.

Robert Menzies, who was the Attorney-General in the Lyons government at the time of the Kisch affair, tried unsuccessfully as Prime Minister in the early 1950s to ban the Communist Party.

Also in the Menzies era, the federal parliament took the extraordinary step of summoning the editor and publisher of the Bankstown Observer before the Bar of the House to defend a charge that they had breached parliamentary privilege by publishing an article alleging that a member of parliament was involved in an immigration racket.  The parliament voted overwhelmingly to incarcerate both men and they ended up spending three months in Goulburn jail.  Frank Browne provided an eloquent defence of his position, when he addressed the House, placing the parliamentarians' actions in an historical context:

I say that, if this Parliament establishes a precedent and takes the right of punishment into its own hands, the rights that have been fought for since 1215, and even before, are seriously endangered.  The right of free speech is endangered.

Fortunately, while Browne was right about the threat that the parliament's action posed to free speech, it has not established a precedent, at least not a direct one.

Yet journalists themselves have not always been paragons of virtue when it comes to free speech.  The 1970s and 1980s saw attempts by sections of their profession, particularly in Britain, to make journalism a closed shop.  At Barnsley in Yorkshire in 1977 some members of the National Union of Journalists tried to ensure that representatives of other unions did not provide information to non-union journalists.  In the same year, printing unions tried to prevent the publication of articles they considered anti-union.

The same article which reported these threats to freedom of speech actually felt 1977 had been ''the best year for free speech since Queen Victoria grudgingly accepted the abolition of the newspaper stamp tax in 1853'', on the basis that an election in India had enabled 600 million Indians to again read uncensored newspapers.  There have regularly been wins and losses in the battle for freedom of speech.

So, while in Australia 2011 was a bad year for free speech, at least the debate about it might lead to a greater understanding of the issues involved.  A good place to start would be getting recognition that fighting for freedom of speech has meant fighting for freedom from state control, not using the state as umpire to regulate speech to some communally accepted standard.  The ability to verbally attack one's rulers, and other citizens with whom one disagrees, is the product of almost three millennia of thought and struggle by advocates of the most basic human freedom.  Their efforts need to be defended as vigorously as possible.


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Thursday, January 05, 2012

What your bookie is predicting for 2012

It is that time of year when people get asked to make a few predictions as to what will be happening in the coming year.

The problem with this exercise is if people were any good at forecasting the future they'd be forecasting the winning lottery numbers.

The future is both risky and uncertain.  Risky in that more things can happen than are actually going to happen.  Uncertain in that some things that do happen will be completely unexpected.

Going into 2012 we know that something very interesting will be happening in Europe, the United States and, of course, here in Australia.  That's not to say that nothing else interesting will be happening, but we know where to start looking.

The Europeans face some challenging political economy problems.  Their societal organisation structure is financially unsustainable.  They work too little and spend too much while the tax burden they impose on themselves is too high.  People have known this for a long time, but as Adam Smith famously said, ''There's a lot of ruin in a nation''.  What has brought the problem to a head is the single currency, the Euro.  Our European friends face an old-fashioned debt crisis.  They have borrowed too much in what is effectively a foreign currency.

Okay — so what is going to happen in 2012?  The Europeans can continue to muddle through with more of the same — even more spending and promises of fiscal responsibility and so on — the kinds of things that got them to the current impasse.  Or some member states could begin to exit the Euro.  This is a largely a problem involving risk.  We can imagine an outcome — exiting the Euro — and then assign a probability to that outcome.

The question is how to assign that probability?  You can give a guess, or follow the wisdom of the crowd and look at betting markets.  Markets are pretty good at collating information and establishing prices.  Betting (or prediction) markets provide pretty good guesstimates as to the probabilities of events occurring.

Looking at one of the better known prediction markets (Intrade), there is a 32.5 per cent probability that, at least, one country will exit the Euro in 2012.  That figure rises to 51 per cent by the end of 2013.  To my mind that suggests, on current expectations, that Europe will continue to muddle through.  The market also suggests a 78.4 per cent probability that France will lose its AAA credit rating by June 30, 2012.  On the other hand the probabilities of Germany or the UK losing their AAA ratings are in the low 30s.  On those figures, I don't see any resolution to the European crisis in the short-run.

The Americans are having a general election in November.  This is a risk problem — something must happen on the first Tuesday (after the first Monday) in November.  Either Barack Obama will be re-elected or his Republican challenger will be elected.  According to Intrade there is a 51 per cent probability that Obama will be re-elected.  Right now, it's fairly clear who his Republican challenger will be;  Mitt Romney has a 79 per cent probability of securing the nomination.  All other contenders — despite all the excitement about Newt Gingrich and Ron Paul — are in single figures.  The joint probability of Romney both being the Republican nominee and winning the White House is 40.6 per cent.

It is very early days in the US presidential race.  The thing to watch will be the performance of the US economy.  If the economy doesn't improve — dramatically — Obama will find it difficult to get re-elected.  Sure he inherited a poor economy but, rightly or wrongly, American voters judge the incumbent on economic performance and I expect that the probability of Obama winning will decline over the year.

That then brings us home to Australia.  Our local betting markets and the New Zealand ipredict website provide a lot of useful information.  Ipredict, for example, places the probability of Kevin Rudd departing as Foreign Minister before July 1 at 43.2 per cent.  The probability of Julia Gillard departing as Prime Minister before July 1 is 29.5 per cent.  By contrast Centrebet has a 53 per cent chance that Gillard won't be ALP leader at the next election — that honour goes to ''Any other candidate''.  Those two results can be reconciled by the expected date of the next election — according to Centrebet it is most likely to be in the second half of next year (2013).  When that election does occur, there is almost a 70 per cent probability that the Coalition will win.

What's happening to interest rates?  Well ipredict has slightly more than 51 per cent probability that rates will come down by at least 25 basis points in February, and again in March.  The ASX Interbank cash rate futures market suggests rates will be down to 3.25 per cent by November.  That isn't actually good news — if the Reserve Bank is lowering rates to that extent this year, the economy will be in serious trouble.

Keep an eye on the debate about fiscal responsibility — 2012-13 has been promised to be a budget surplus year come hell or high water — and there will be a debate about raising the Commonwealth debt ceiling.

While looking at prediction markets is very informative, and fun, it is important to remember that market prices can change very quickly, and new price-sensitive information comes along at random.  So a price today is today's best guess of the future.  By tomorrow that best guess could be horribly wrong.

The prediction markets, however, don't tell us the important things in life.  This year many babies will be born, loved ones will die, heterosexual couples will get married (homosexual couples will have to wait), children will start school, some will start work, others will retire and, despite the challenges and excitement of a new year, people will get on with their lives.


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Tuesday, January 03, 2012

And you, sir, are no libertarian

Last week, the New York Times editorialised the Ron Paul newsletters could ''leave a lasting stain'' on libertarianism and the libertarian movement.  Who knew the Newspaper of Record was so concerned about the reputation of small government and individual liberty?

Yes, the newsletters matter.  Libertarians mustn't pretend they don't reflect poorly on Ron Paul himself.  But, no, the actions, or even views, of a presidential candidate 20 years ago don't discredit a philosophy of government.

Published in the late 1980s and 1990s under titles like The Ron Paul Survival Report, they purported to be written by their namesake.  Some of them are foul.  They're racist and homophobic and shrill.  Like ''We can safely assume that 95 per cent of the black males in [Washington DC] are semi-criminal or entirely criminal''.  Or ''I miss the closet.  Homosexuals, not to speak of the rest of society, were far better off when social pressure forced them to hide their activities''.

There's a lot more of those quotes.  They're no better — often worse — when read in context.

Until recently libertarianism was a niche philosophy.  Its tenets have been held by few, and professed by even fewer.  The content of Paul's old newsletters reflects a strategy by some libertarians in the 1990s to build a coalition with cultural conservatives — to bring those cultural conservatives to radical free market economics.

This paleolibertarian strategy was formulated by Lew Rockwell and the economist Murray Rothbard, both friends of Ron Paul.  Writing in 1990, Rockwell said the ''Woodstockian flavour'' of contemporary libertarianism was off-putting.  It was time for libertarians to abandon the ''Age of Aquarius'' and ground themselves in religion, the family, Western culture, and the middle class.  Libertarianism and libertinism are not the same thing;  paleolibertarianism was supposed to sever whatever connection there was between the two completely.

That was the theory.  The practice was the reactionary racism seen in the newsletters.  Many libertarian commentators believe Rockwell ghost-wrote the most incendiary material.  It is fairly well established Paul did not, and few believe he holds — or held — any of the views attributed to him by the newsletters.

Yet that isn't quite an excuse.  Paul may not have written the newsletters personally, but he signed off on the paleo strategy, gave his name to it, and handed his byline to its advocates.  He didn't write them, sure, but they went out with his blessing.

Strictly, libertarianism is only a philosophy of government.  It does not offer a vision of the good or moral life.  A libertarian can, in theory, hold any social belief they like.  All they have to do is oppose the government forcing those beliefs on others.

Yet it is hard to square the racism of the newsletters with the understanding of human worth that underpins libertarian philosophy.  It does not make sense to place individuals at the centre of your politics then to denigrate people based on their group membership.  Ayn Rand famously said racism is the most primitive form of collectivism.

And libertarians have always emphasised the role of markets promoting toleration, because toleration is a good thing.

So the paleo fusion was awkward.  Re-read the quotes at the start of this column.  They're not remotely libertarian.  Society was better off when all gay people were in the closet?  How do you reconcile that claim with a belief in the moral autonomy of free individuals?

And as a political strategy, it didn't work.  Libertarianism isn't now popular because Lew Rockwell decided to play on white resentment.  It is popular because it is the only philosophy of government that takes individual liberty seriously across all policy areas.

The issues animating the libertarian resurgence in 2012 are ''cosmopolitan'', not paleo.  Keynesian economics and the response to the global financial crisis.  Drug law reform.  The expansion of presidential power.  Just last week Barack Obama authorised the indefinite detention without trial of US citizens suspected of terrorism.  Not even George W Bush did anything so draconian, yet Ron Paul is the only presidential candidate opposed.

As Ed Crane, president of the Cato Institute, wrote in the Wall Street Journal on Saturday, Paul is the sole contender who believes in constitutionally limited government.  All candidates have talked big about small government;  only Ron Paul means it.

And Paul's arguments on civil liberties (on, for example, the Bradley Manning case) have meant that his political base is now college students, not survivalists.

Paul's most questionable policy views are the ones calibrated to the latter audience.  His opposition to the North American Free Trade Agreement is less about the virtues of bilateral trade deals and more about ''sovereignty''.  In 2006 he claimed NAFTA was a stalking horse for a North American Union that would have a common currency, international bureaucracy, and ''virtually borderless travel''.  This is conspiracy theory stuff.  The newsletters are full of it.

Views like those detract from the seriousness of Paul's other messages.  A recent feature on the Daily Beast of ''10 Outrageous Ron Paul Quotes'' lumped his NAFTA allegations with his support for property rights and drug reform, as if they were all equally crazy.

It's disappointing that Paul's run crowded former New Mexico governor Gary Johnson out of the Republican debates.  Johnson doesn't have a paleo bone in his body.  He has none of Paul's baggage.  In many ways he is also more libertarian.  Johnson switched to the Libertarian Party in December.

I wrote earlier that the past actions or views of a candidate don't discredit a political philosophy.  That's not quite true.  It's never the scandal that hurts, it's the cover-up.

Yes, many progressives have jumped on the newsletters to attack Paul while excusing the appalling civil liberties record of the Obama administration.  Such is politics.

But if those who support Ron Paul in 2012 pretend the newsletters are no big deal (or worse, try to rationalise them) it will suggest to others intrigued by the philosophy of freedom that there is a relationship between racism and libertarianism.

There isn't.  And libertarianism is about more than Ron Paul.


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Obama still on the ropes

You'd never know it from his recent visit to Australia, but with the US presidential election 10 months away, Barack Obama should be in serious political trouble.  That ''hopey-changey stuff'', to coin a Palinism, has not worked out as planned.  Unemployment remains stubbornly high.  The debt mountain is of Himalayan proportions.  Home foreclosures continue to swell.  And polls show widespread pessimism about America's future.

The Democratic Party base, meanwhile, remains annoyed at Obama for his failure to shut Guantanamo and to implement a carbon tax.  His hawkish attitude to Afghanistan and drone strikes has sent some left-wing bloggers into a complete lather.

No wonder the President's job-approval rating has been languishing in the low to mid-40s range — well below the levels George W. Bush, Bill Clinton and Ronald Reagan had a year before they were re-elected.

Yet the Republican contest for the right to face Obama later this year remains highly volatile.  And most seasoned observers in Washington say the President's weaknesses are softened by the flaws of his opponents, which have become increasingly evident in the lead-up to tomorrow's Iowa caucuses.

They're uncharismatic, uninspiring, gaffe-prone, scandal-plagued, serial flip-floppers:  all these barbs have been hurled at a plethora of unorthodox candidates that reminds one Washington Post columnist of ''that famous bar scene in Star Wars''.

In reality, this primary race has always been a contest between two competitors:  Mitt Romney (the front-runner and GOP establishment candidate) versus Anybody But Romney (the right-wing insurgent who doles out ideological red meat to the rank-and-file warriors).

All the available evidence indicates that, in an election against Obama, the smart, handsome and malleable Romney would have the best chance to win over crucial independents in swing states.

But his candidacy carries risks in the primary bouts, and not because of his Mormon faith.  (He once rebutted accusations of supporting polygamy by pointing out that he's the only GOP candidate to have had just one wife.)

Romney's problem is that the Tea Party conservatives won't stomach him.  When he was Massachusetts governor, for instance, he signed into law a state healthcare plan not dissimilar to ''Obamacare''.

The Anybody-But-Romney candidates have included former House speaker Newt Gingrich, pizza company executive Herman Cain, Texas Governor Rick Perry, Minnesota congresswoman Michele Bachmann and even, at one point, property tycoon and reality TV show host Donald Trump.

All have effectively crashed and burned, although the twice-divorced Gingrich could redeem himself in primaries later this month in South Carolina and Florida where he remains popular.

The way this campaign has cycled so rapidly from one candidate to another means that another ABR contender — Rick Santorum, a Christian conservative and former Pennsylvania senator — is now surging in the Iowa polls.

There is one other complicating factor:  Ron Paul, the Texas congressman who sounds like Noam Chomsky when he rails against neo-cons, a Pax Americana, the Iraq invasion and any pre-emptive strike against a nuclear Iran.  (He also defends WikiLeaks founder Julian Assange.)

His low-tax and civil libertarian views, combined with his anti-war activism, may resonate with a solid group of young limited-government advocates in Iowa.  But it will spook the GOP faithful with the prospect of turning the party over to fringe elements.

Paul can be safely ruled out of winning the nomination, though there is always a risk he may run as a third-party candidate in the election.  Any independent candidacy, of course, will likely help Obama by sucking away votes from Republicans.

Despite all this, Obama is still on the ropes.  Why?  Well, for one thing, any field of primary opponents always looks weakest at precisely this moment when the infighting is at its worst and nobody looks really presidential.

That could change, as it so often does, during a long election year.  Trial by fire, as Obama himself remembers from his 2008 duel with Hillary Clinton, can make a candidate stronger.

We've all heard the 1992 campaign mantra, ''It's the economy, stupid''.  That is especially true in 2012.  The economy is very weak and, given Europe's fiscal crisis, it's unlikely to experience a robust recovery by November.

True, there are a few tentative signs that the bleak unemployment outlook could improve.  But the jobless rate stands at a lousy 8.6 per cent.  And few economists believe it will fall fast enough to reach the 7.4 per cent rate that prevailed in 1984 when Reagan was re-elected in a landslide.  Not since the Great Depression has a president faced worse unemployment.

Add to this the fact that the key independents who favoured Obama in 2008 have turned against him in key battleground states such as Florida, Ohio and Pennsylvania, and it appears that the President's prospects are perilous.

To be sure, Obama is in the enviable position of having no real intraparty opposition and his team has plenty of campaign cash to help run a negative campaign against the Republican nominee.  Still, whoever wins tomorrow, it would be foolish to overstate the President's re-election prospects.

Sunday, January 01, 2012

The good news is, the news is getting better all the time

Europe is on the brink of collapse, the Arab Spring has taken an illiberal turn, Chinese growth might be faltering, and North Korea's future is questionable.  But there are a lot of reasons to be optimistic about 2012.

Bad geopolitical news and economic indicators cloud good news and omens.  Disasters — whether economic, social, environmental — are rarely as bad as predicted.  And there is no reason to believe that our long-term trajectory of higher living standards, better wellbeing, and more riches will change.

Better health alone should give us reason to be optimistic.  The World Health Organisation says global life expectancy has increased by two years for men and three for women in the past decade.  The poorest countries have seen the greatest increase.

Fewer newborns are dying:  from 29 per 1000 live births in 2000 to 24 in 2009.  Maternal deaths have decreased from 3.4 per 1000 to 2.6 in the same time.

There is less tuberculosis and HIV.  Malaria has taken a dive.  Recession or not, things will improve — we now have seven billion people to develop cures and prevention.

Wars are getting rarer and less violent.  Actually, it's better than that.  In his book The Better Angels of Our Nature, Steven Pinker makes a bolder claim:  globally, violence itself is declining.  There is less corporal and capital punishment.  Less torture.  Less crime targeting gender or sexuality.

In 1993, there were 55 countries classed by Freedom House as ''not free''.  Today there are 47.

Since 2005, 19 million people have migrated from one country to another.  This is great.  They've found new opportunities and more work.

Half of the world's population now lives in cities.  Urban environments offer stronger job prospects, more accessible services, cheaper transport, and more varied human relationships.

Humans are getting better at coping with natural disasters.  Food prices are going down after recent highs.  The prices of rare earth metals — used in virtually every electronic device — have fallen too.

And in 2011, people had more of what they want.  Ignore the prattling about consumerism.  Surely the fulfilment of human desire is a good sign.

Small medical clinics can now buy a hand-held ultrasound machine, connected to a smart phone, for about $7000.  A team at Stanford University has learned to ''program'' the cells in living organisms to act as computers.  Implications range from fighting cancer to managing fertility.

Google is testing a self-driving car.  Fifty million people now use Twitter every day, forging bonds across the world.  E-books have made reading cheaper and easier.

Even economic crises have their upsides.  Productive people kicked out of jobs are forced to be creative.  Sure, a cloud with a silver lining is still a cloud.  But economic turmoil can spark innovation from those compelled by circumstance to take risks.  Less foreign aid has spurred economic reform.  Africa is now the world's fastest growing continent;  Ethiopia grew by 7.5 per cent last year.  Many analysts claimed the developing world would suffer most from the economic crisis.  They were wrong.

Humans tend to equate short-term problems with long-term ones.  If there is an economic downturn, we imagine it indicates a deeper, systemic problem with society and capitalism.  If food prices go up, we imagine it's the end of cheap food.

In the early 1990s recession, the United Nations held a conference in Rio de Janeiro where it was claimed that ''humanity stands at a defining moment in history'', and the world is ''confronted with a perpetuation of disparities within and between nations, a worsening of poverty, hunger, ill health and illiteracy''.

Yet, as Matt Ridley writes in his recent book The Rational Optimist, the next decade ''saw the sharpest decrease in poverty, hunger, ill health and illiteracy in human history''.

So, yes, the euro is stuffed and China might sneeze.  Both would be bad.  But there's still every reason to be optimistic.


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