Haste makes waste in the carbon countdown

Countdown For Climate Change Vote is the banner on the ALP web site.  It explains that only five days remain before Parliament's climate change vote.

Canberra's Carbon Pollution Reduction Scheme (CPRS) would eventually require 90 per cent of electricity to be derived from renewable sources, with perhaps 10 per cent from gas.

It gradually outlaws the coal-generated electricity which provides 95 per cent of Victoria's supplies.

The Brumby Government is murmuring uneasily about the state's vulnerability to electricity shortages that this entails.  The state government is also conscious that the CPRS means closing the generators that provide the world's lowest cost electricity.

But it appears solidly behind Canberra in promoting that outcome.  Indeed, Victoria took the lead in seeking to displace coal-based electricity with the Victorian Renewable Energy Target (VRET).

Some argue that the carbon-abating taxes and charges on electricity to households in the CPRS are affordable.

This is based on a Utopian view that renewable electricity costs only twice as much as electricity from coal.

As poles and wire costs account for half of total electricity costs, the arithmetic might suggest that substituting renewable energy for coal means a mere 50 per cent electricity price increase.

The debate's leaders are comfortable with such an imposition on households.

Fanciful though it is to imagine that the electricity price would increase by only 50 per cent, and that this is acceptable, the major concern is not the increased price to households.

Far more important is the effect on the competitiveness of the industries using electricity.

Unless the carbon penalty is also adopted by Australia's rivals, the ETS means curtains for Alcoa's Portland and Point Henry aluminium refineries.

Although these employ less than 2000 people these are the most productive jobs in Australia.

And the low-cost aluminium from the smelters provides major exports as well as the foundation of the competitiveness of many manufacturing plants.

Forcefully substituting costly green energy for commercially produced energy increases business costs.

This means lower wages and lost jobs, which can, at best, be replaced by less well paid jobs to compensate for the increased energy costs.

Kevin Rudd has "pledged" to create 50,000 new green jobs through the CPRS.  This won't happen.

The state government said its own VRET subsidies would create new jobs in manufacturing windmills, but none emerged.

Spain, with the world's most heavily subsidised green economy, has lost 2.2 real jobs for every artificially created green job.  Spain now has the highest unemployment in the Western world.

With only five days left in the climate change countdown, Mr Brumby needs to talk quickly to his brethren in Canberra to head off Australia's electricity tax if he wishes to prevent the demise of the Victorian economy.

Mr Rudd says the Copenhagen conference in December will deliver a meaningful carbon reduction agreement.

If he is right and the world does move to reduce carbon emissions, that would dampen Australia's loss of competitiveness from a carbon tax

Waiting four months for that outcome before legislating for a carbon tax seems the obvious policy.

ADVERTISEMENT

Green jobs subtract value

One justification being given for the government's emissions trading bill is that it will provide tens of thousands of new "green jobs".  Our politicians, together with their colleagues across the western world, have discovered marketable new cliché.

The problem is that we voters have heard this type of argument before.  The idea that government can create viable and sustainable jobs has failed every test ever posed.  Yet these kinds of promises remain remarkably popular with the electorate.  Bryan Caplan has argued that the general public suffers from four economic biases;  an anti-market bias, an anti-foreign bias, a make-work bias and a pessimism bias.  The modern environmental movement suffers from all of these biases, while green jobs appeal to two of those biases -- anti-market bias and make-work bias.

The federal Treasury "guesstimates" of the cost of the government's climate change policy was published in December 2008.  In that analysis Treasury evaluated the impact of five policy options on the Australian economy.  The modelling, however, had an important omission.  It calculated deviations from expected GDP growth and the impact on investment and the like, but it did not include a separate labour market analysis.  Given the government keeps promising green jobs, and that Australians are not interested in GDP growth per se but rather on future employment for themselves and their children, one would think a labour market analysis should be the centre piece of any evaluation.

The modelling assumes that there might be some unemployment in the short-run (up to ten years) but there is no unemployment in the long-run.  This is an assumption of the modelling technique.  The Treasury have to assume that real wages will fall ensuring that labour markets clear and there is no involuntary unemployment.  The modelling indicates that by 2020 real wages will have fallen by between 2.5 percent to 5 percent relative to a do-nothing business as usual type base case.  In other words, the government doesn't know what will happen to employment, they simply assume that it won't be a problem.

An alternative explanation is that the government has other modelling results that carry an unhappy message regarding future unemployment, but has decided not to release the results to the public.

While the government has given no credible information, or at least no public information, as to what will happen to existing employment within the economy, they clearly recognise that the electorate may have some misgivings, and so "green jobs" are conjured to fill the vacuum.  But there are problems with the claimed green jobs that are already appearing in public debate;  for example, "what is a green job?"  And how does it differ from the work-for-the-dole scheme?  More importantly, what is the cost of these green jobs?

It has quickly become apparent that green jobs will require massive government subsidies to sustain them.  They do not create additional value and so cannot become self-sustaining.  The biggest question, of course, is to what extent will green jobs crowd out existing jobs?  In short what is the opportunity cost of a green job?

Professor Gabriel Calzada Alverez of King Juan Carlos University has investigated the Spanish experience where substantial government subsidies were provided for renewable energy.  He calculates two measures of the opportunity cost of green jobs.  The first measure is the ratio of the renewable subsidy per worker to the average stock of private sector capital per worker.  This ratio measures how many private sector jobs could have been created if the government spending on renewable energy had not been taxed away from the private sector, and had rather been left in the private stock of capital.  The second measure looks at the subsidy per worker relative to the average productivity per worker.  This measure calculates the productivity lost by investing in green jobs as opposed to leaving the money in the private sector.  Both measures suggest that the opportunity cost per green job is 2.2 non-green jobs.

Alverez' point is very simple;  relative to existing jobs, green jobs are expensive.  Consequently new green jobs cannot replace old lost jobs.  Furthermore, the resources used to create new green jobs will crowd out existing jobs.

This study has been severely criticised as being "simplistic" or just simply wrong.  Part of the issue is that Professor Alverez is not a native English speaker, and has not expressed himself clearly.  The second point to consider is that he has calculated an opportunity cost;  many of his detractors simply do not understand that opportunity costs are not easily seen or observed.  It is not enough to respond his analysis that Spanish unemployment is lower now than before -- unemployment could have been lower still but for the green jobs program.

The important thing to remember is this;  climate change policies are deliberately changing the structure of the economy away from efficient production techniques to less efficient production techniques.  That means that many existing jobs will no longer add value in future.  Those jobs will be lost.

It is a leap of faith to suggest that the government can create jobs that add as much value as those that will be lost.  If they could do so, why have they not done so already?  That is the fundamental difference between the current policies being proposed and previous economic reforms.  Previous Australian governments had proposed to make the economy more efficient.  This government proposes policies that will make the economy less efficient.

ADVERTISEMENT

Palm oil boycott will hurt impoverished farmers

Over the past few weeks New Zealand-based green groups and activists have called for a boycott on Cadbury products because of the use of Malaysian palm oil in its chocolate.

The boycott was prompted after Cadbury clarified using palm oil as one of the total vegetable oils used in its products.

And doing so has whipped activists into a tizz.  Opponents of palm oil claim that farmers burn forest in poor countries to create available land for plantations.

The claimed cost is less forest, and threats to endangered species that rely on the forest for survival.  They also argue that plantations have a lesser capacity as a carbon sink to offset carbon dioxide emissions.

Because of these allegations Auckland Zoo removed Cadbury products from its shelves a fortnight ago, and anti-palm oil activists have established a "Boycott Cadbury" Facebook group arguing "Only d*cks eat Cadbury".

But in doing so they aren't seeing the palm oil plantation from the forest.

Palm oil is a produced all across South-East Asia because it is a sustainable, high-yield product that helps small farmers lift themselves out of poverty.  It is also a vital food supplement which can deliver up to a third of a person's daily Vitamin A requirements.

The benefits are so great that the anti-poverty Asian Development Bank (ADB) has a strong repayment rate from palm oil producers who take on loans.  And growing palm oil provides an export industry for developing economies like Malaysia into markets like Australia and New Zealand.

But international NGO, Friends of the Earth, has campaigned against the ADB's support for palm oil because it actually helps alleviate poverty.  According to a recent report they're "sceptical" about "a broad-based economic growth model lead (sic) by the private sector".

Rather than having evidence that growing palm oil won't increase living standards, FOE's reports expose that their agenda is motivated by ideology, not practical environmentalism.

And FOE's claims and motivations cannot be trusted.  According to a 2007 press release the palm oil industry is involved in "illegally logging rainforests, setting forests on fire and violating the rights of local communities".  The evidence they provide is a photo of a hilly area in Indonesia that "proves" a forest fire.  The problem is that the photo shows no flames amongst the trees, and based on the angle of the sun's reflection the photo was taken at either dawn or dusk, and the "smoke" could just be mist.

FOE might be right, but the evidence they provide is more of a misting, than smoking, gun.

And FOE's ideological opposition to the use of palm oil won't deliver environmental benefits.  The palm oil sourced by Cadbury is certified by GreenPalm -- an organisation that certifies the oil has come from sustainable sources.  And Cadbury is a member of the Roundtable on Sustainable Palm Oil which was founded in part by international environmental NGO World Wildlife Fund.

The supposed impact of palm oil on Malaysia's forest is questionable.  Of Malaysia's forest 16 per cent is zoned protected with sixty per cent of the country's total land mass allocated as forest.  By comparison the United Nation's minimum zoning target is 10 per cent and Europe's allocation of land mass to forest is only 25 per cent.

It is easy to be an armchair environmentalist from Australia or New Zealand.  What consumers are missing is that the financial saving of not buying a block of chocolate is costing Malaysian's their livelihood.

According to their corporate website Cadbury introduced palm oil to "soften (their) chocolate and maintain affordability".  Cadbury did so because it offered better value-for-money and that's good for business.  But their decision is also providing a development dividend for the world's poor.

If consumers don't like the taste of chocolate with palm oil then they can vote with their wallets.

But by boycotting palm oil what activists are actually doing is shutting down the industry in developing countries, and with it their opportunity to raise living standards and increase wealth.  And if you think you can do without chocolate because it goes straight to your hips, imagine the cost to an impoverished farmer's family who can barely afford to eat.

ADVERTISEMENT

Glenn Stevens' high wire act on rates

The Reserve Bank of Australia has begun softening up the public for interest rate rises.  Given that the official rate is at 3 per cent, it's not surprising that rates will soon begin to rise.  So why the need to soften up public opinion?

Unemployment is still expected to rise and increasing rates under those conditions may seem counter-intuitive to many Australians.  Last week the RBA governor Glenn Stevens got asked whether he considered himself bound by a "precedent" to not raise rates while unemployment was rising.

His reply was rather sensible:  "I have never heard nor I have never seen written down a rule of thumb that says we wait until unemployment has peaked before we lift the cash rate".  It is a bit rich to argue there is a precedent simply because the RBA has never before undertaken such an action, especially given that the RBA has only been nominally independent of government since the mid 1990s.

But there is a problem with Governor Stevens' response.  The Reserve Bank Act of 1959 sets out the functions of the Reserve Bank Board in section 10.  Section 10(2) is of particular importance.  The Reserve Bank is required to conduct monetary and banking policy "directed to the greatest advantage to the people of Australia" -- whatever that means -- and three functions are specifically highlighted:

1. the stability of the currency of Australia;
2. the maintenance of full employment in Australia;  and
3. the economic prosperity and welfare of the people of Australia.

The RBA has a rather uncomfortable balancing act.  To be fair to Governor Stevens he probably wasn't thinking about his legislative duties when answering the question.

How the RBA trades off its obligations, especially in the current economic environment, is going to be a matter of great public interest and debate.  But it is not just the RBA that needs to step up.  After all, the RBA is an instrumentality that is wholly owned and controlled by the government.  Senior management of the bank are appointed by the government and section 11 of the Reserve Bank Act allows the government to overrule the bank on monetary policy.  In other words the elected government of the day is responsible for the conduct of monetary policy.  Of course, this is not to say that there are no advantages to having a nominally independent body managing monetary policy, but that independence does not absolve the RBA or the government from accountability to the electorate.

It has been 18 months since Wayne Swan was asked in the Parliament whether he could specify what the non-accelerating inflation rate of unemployment (NAIRU) was;  in the old days that was called the natural rate of unemployment.  Treasurer Swan didn't know then and to the best of my knowledge hasn't specified a rate since then either.  Yet how can Australians form an opinion as to the effectiveness of monetary policy if we have no idea what constitutes full employment?  This is no minor quibble;  the maintenance of full employment is a legal obligation that falls on the Reserve Bank board.

ADVERTISEMENT

A Treasury trove of errors

We now have the OzCar scheme to add to the list of Labor's failed grand designs.  But OzCar won't be remembered as another of the federal government's botched programs.  Instead, OzCar will be famous for potentially costing Malcolm Turnbull his job as Opposition Leader.

If the Canberra press gallery could somehow be a little less fascinated with Turnbull and a little more interested in the performance of the government, the Australian public would be much better served.  At the moment it looks like there's not much chance of that happening.

If you want to know why Kevin Rudd shouldn't run hospitals, look no further than his track record.  Thankfully the consequences of bungling things like the "education revolution" and the national broadband network aren't as serious as leaving someone unattended on a hospital trolley for seven hours.

The so-called education revolution gives schools gymnasiums they neither want nor need.  The broadband network is already year behind schedule and is becoming a more remote prospect by the day.  The government can even muck up announcing good news.  Last week, when the Rudd announced the creation of 50,000 "green jobs", it emerged these were not jobs at all -- they were places in training programs.  No wonder the Minister for Employment Participation, when pressed for specifics, confessed he didn't "have all the details".

In the aftermath of the OzCar affair it's not Malcolm Turnbull who should be under pressure to hold his job -- it should be Treasury secretary Ken Henry.  In the past few days Treasurer Wayne Swan has been demanding that Turnbull explain his actions.  Swan should be busy explaining what his own department has been doing.

OzCar was originally going to be a $2 billion program to bail out car dealers who had lost access to finance.  It was a program of not insignificant size.  To put it into some sort of perspective, $2 billion equates to about 10 per cent of the entire budget of Western Australia.  Yet the whole OzCar scheme was managed by one person -- Godwin Grech -- who, according to the auditor-general, "operated largely on his own".  According to Grech's own evidence, which on this matter hasn't been contradicted, when he was on sick leave for three weeks in February "nothing happened on OzCar -- the project came to a complete stop".  Presumably no one in Treasury noticed that the person in charge of a $2 billion program hadn't been in the office lately.

The auditor-general documented numerous other management failures.  Treasury hired financial advisers to the scheme before the department had obtained a quote of what their services would cost.  As the auditor-general says, such an "approach seriously weakens the commonwealth's negotiating position and provides little comfort that the commonwealth is receiving value for money in agreeing to the contractual arrangements".  Only a government department could get away with being so cavalier with other people's money.

Ken Henry is now running a review of the country's tax system.  Instead of inventing new ways to get money from taxpayers, maybe he should concentrate on how to better spend the money he already has.

The auditor-general also noted that when quotes for services were obtained, Treasury "did not document the basis on which it was satisfied that the engagement terms represented value for money" (which was a breach of the federal government's financial management and accountability regulations).  Furthermore, Treasury "gave insufficient priority to documenting the engagement terms, resulting in extended delays in contracts being prepared and signed".

If a public company ran a $2 billion project the way Treasury ran OzCar, there would be a shareholders' revolt and the board would be sacked.  Luckily for them, ministers operate according to a different set of rules to anyone else.

The media coverage of the auditor-general's report into the OzCar affair conforms to the pattern established with the Rudd government's election.  Practically the entire focus has been on the opposition and its leader.  There was scant coverage of the damning findings about the way the government makes policy and delivers programs.  To some extent it is understandable.  It's more interesting to psychoanalyse Grech than analyse the minutiae of the government's financial management systems.

The problem with an obsessive if concentration on the opposition is that the opposition is not actually running the country -- the government is.

ADVERTISEMENT

The soprano state

The latest scandals gripping the Bligh government reveal the damaging consequences of a growing public sector with its tentacles of influence stretched across the state.

The catalogue of shady dealings between former Labor ministers, staffers, business interests and the current government shows that there has been no better time to be a lobbyist than the present.

The former state Treasurer Terry Mackenroth and former federal minister Con Sciacca were reported to have shared a $500,000 "success fee" for helping BrisConnections secure a contract to build the Brisbane airport road tunnel.

The chair of BrisConnections, Trevor Rowe, was recently forced to resign due to conflict of interest concerns with his additional role as chair of the state-owned Queensland Investment Corporation.

These are also on top of the conviction and jailing of former minister Gordon Nuttall for corruptly receiving payments totalling $360,000 from mining interests.

Now questions have emerged about the role of current state ministers and the Premier's chief-of-staff, Mike Kaiser, in lobbying for a $1.5 billion resort development on the Sunshine Coast.

On the twentieth anniversary of his landmark report on corruption in Queensland, Tony Fitzgerald summarised the problems:  "Access can now be purchased, patronage is dispensed, mates and supporters are appointed and retired politicians exploit their political connections to obtain "success fees" for deals between business and government."

The damaging consequences of these insidious practices for Queensland's reputation as a destination for private investment cannot be stressed enough.

Businesses that choose to pay a lobbyist for special access to ministers risk diverting their entrepreneurial energies and incomes into a veritable minefield of uncertainty, not to mention scandal if caught out.

On the other hand, investors that refuse to toe the line of jumping on the "mates merry-go-round" risk facing significant regulatory delays and other policy obstructions affecting their ventures.

Whichever way one looks at it, business loses out as does the interest of promoting market-led development in the state as a whole.

For her part, Premier Anna Bligh has announced a grab bag of measures designed to clamp down on perceptions that the sunshine state is turning into the soprano state.

These include banning success fees for lobbyists, withholding state Labor MPs from pay-per-view meetings and fundraising events, referral of certain allegations of impropriety involving former ministers to the Crime and Misconduct Commission (CMC) and a green paper concerning political fundraising and ministerial codes of conduct.

Even so, the initiatives appear to smack of the "too little, too late" syndrome, coming after years of political denials that the unseemly connections between certain business and government interests ever existed.

It seems optimistic to think that these problems, as significant as they are, can be resolved completely by pushing through even more laws and regulations.

If certain interests think that it remains possible to entice government to make more expedient decisions in their favour, and weak government ministers and officials are willing to oblige them, graft risks re-emerging in new and unforseen forms.

Premier Bligh's proposals appear to address the symptoms only, and not the fundamental causes of the problem -- the growing size and scope of government, and the opportunities they present for interests to gain specific privileges at public expense.

Government spending in Queensland has ballooned from $16.4 billion in 1998-99 to $36.4 billion last financial year, with more of the same expected over time as the state budget goes into deficit freefall.

The number of pages of legislation in Queensland -- a common proxy for the amount of regulation faced by business and the community alike -- has grown from 2,584 pages in 1988 to 4,675 pages in 2008.

What this public sector growth effectively means is that the potential for influence-peddling and back-scratching deals dramatically increase over time.

The risk is that practices such as fast-tracked regulatory approvals, selective procurement contracts, customised tax concessions, streamlined project permissions and pork-barrelled spending become more commonplace as government becomes larger.

The best way to stamp out corruption in all its forms is to heed Lord Acton's age-old warning that "power tends to corrupt;  absolute power corrupts absolutely", and accordingly reduce the size and power of government.

With far fewer regulations, taxes and expenditure programs at the disposal of government ministers and their officials to dispense political favours, Queenslanders would have far greater comfort in knowing that their state is a clean one.

ADVERTISEMENT

PM's national broadband plan really is no net gain

Has there ever been a major Commonwealth program more hastily conceived than the national broadband network?

After it was clear their previous $4.7 billion broadband plan was a dismal failure, it was reported Kevin Rudd and the Communications Minister, Stephen Conroy, dreamt up this $43 billion plan while on two flights between Sydney and Canberra in April.

That's not just policy on the run.  That's policy desperately sprinting from a horde of angry zombies while trying to pretend that the bite mark on its arm is nothing to worry about.

This latest iteration of the great broadband plan is three months old and already behind schedule.  The Tasmanian leg -- supposed to be available to consumers from this month -- has been pushed back until mid-2010.

The project's conception is still at an embarrassingly early stage.  The Government's financiers haven't yet been consulted about exactly how the funds for the project will be raised, as a Senate committee heard last month.  It's veiled in secrecy.  The Government has told the Opposition they'll have to cough up $24,000 to see the documents which were supposed to have recommended the Government build the network.

And, unsurprisingly for a project entirely developed by two career politicians in the brief time while the seatbelt sign was off, the broadband network's business case is supremely flawed.

The economist Henry Ergas has calculated it would have to cost individual subscribers at least $215 a month for the network to pay off its investment, and only if almost every broadband customer in Australia -- 80 per cent -- signs up.

Furthermore, the Government is discovering to its surprise that it can't untangle the telecommunications industry's dense knot of competitive rivalries and regulatory quagmires just by waving around a giant novelty cheque.

Yet to argue that the great broadband plan is perhaps just a tad undercooked is to invite accusations of Luddism.  This seems to be because a lot of people view the broadband network as less an infrastructure project, and more the first tranche of broad social and economic revolution -- the opening set-piece for the utopian-sounding "digital economy".

So we're repeatedly told it is a tragedy that Australia's broadband take-up rates are somewhat lower than in other developed countries like Korea, because ... well ... think of all the cool things you can do online!

For these supporters, the technicalities of the national broadband network are just technicalities -- what really matters is the internet's sheer awesomeness.

So, fittingly, the Communications Minister's pronouncements about broadband are rarely little more than a checklist comprising of a few key terms:  "smart infrastructure", "digital education revolution" and the more mundane "mobile banking".

Those are all wonderful, of course.  Who isn't looking forward to "e-Government"?  But most e-Gov ideas are usually either stunningly obvious (such as more government information being provided online) or fashionable but pointless (the vapid, machine-written "blogs" of Stephen Conroy and Kevin Rudd).

Another commonly cited benefit from the Government's broadband plan is its potential to revolutionise Australian hospitals with "telemedicine".

But hospitals have been the recipients of a decade's worth of special government programs to deliver them the best internet available.  It seems silly to have to point this out, but Australia's hospitals aren't on the same ADSL plan the rest of us are.

Sure, your internet connection might have frustratingly capped just before you finished downloading that handicam copy of Transformers.  But that doesn't mean surgeons at St Vincent's have to wait for another doctor to finish downloading x-rays before they can start the next heart bypass.

The most common argument for government-sponsored broadband is productivity.  But the national broadband network isn't going to be a magical productivity switch.  There just aren't many potential Australian entrepreneurs having their innovative business plans stymied because their broadband isn't fast enough.  Some businesses might find a faster internet connection useful, but few people seriously think our present internet speeds are what's holding the economy back.

Anyway, our hunger for ever-greater productivity might be better satisfied by allowing the private sector to build the network.  (As much as four years ago Telstra was begging the government for a regulatory reprieve so it could build a new broadband network by itself.)

Hell, if it's productivity we want, perhaps the Federal Government could just reduce a few taxes.  That'd give the economy a bit of a kick-along.

Of course, faster broadband for everybody would be delightful.  But so would government subsidies for sunshine, flowers and walks on the beach.

Just because everybody loves the internet doesn't mean that this $43 billion government-owned national broadband project is good public policy.

The (confused) Future of (a) Liberalism

The Future of Liberalism
by Alan Wolfe
(Random House, 2009, 352 pages)

Delivering a paper to the University of Oxford in 1958, Isaiah Berlin talked of two concepts of freedom -- "negative" liberty, the absence of restraints, and "positive" liberty, the liberty which empowers an individual to act on their desires.

In his new book, The Future of Liberalism, the prolific and influential American political scientist Alan Wolfe talks only of one.  The Future of Liberalism is a manifesto for "liberalism" (in the American sense of the word) in the age of Barack Obama.

There is nothing inherently wrong with approaching political philosophy from a "centre-left" perspective -- centred on what Berlin would have categorised as "positive" liberty -- except that Wolfe is unsure as to whether any such distinction can exist in the first place.  At one point during the first chapter Wolfe acknowledges the possibility of speaking "of many different liberalisms", but concludes that "this is a suggestion that ought to be resisted".

By focusing on only one of liberalism's meanings, inconsistencies can be avoided.  But there is also a significant cost to be paid:  liberalism loses the appeal that did so much to make it the dominant political philosophy of modern times.

This argument demonstrates an enormous inconsistency in the book as it tries to be both a history of ideas and a forward-looking polemic -- the title after all is The Future of Liberalism.  But this near-impossible balancing act means it is anything but tightly argued.  At times it is simply a mess.

The best way to approach this book is to grant Wolfe his focus on American liberalism.  This makes sense after all, as the opening quote Wolfe chose to begin with was John Locke's -- "In the beginning, all the world was America".

Indeed, Wolfe has more than a passing interest in American affairs.  Consider the titles of his other books;  America at Century's End;  America's impasse;  Christianity and American Democracy;  Does American Democracy Still Work?;  Return to Greatness:  How America lost its sense of purpose and what it needs to do to recover it;  and One nation, after all:  how middle-class Americans really think about:  God, country, family, racism, welfare, immigration, homosexuality, work, the right, the left, and each other.

Understanding this makes it easier to understand the book, but only just.  It is probably why Wolfe is able to make such a smooth transition from a discussion on Rousseau's romantic critique of "civilisation" to a discussion on Jerry Falwell's critique of American society, or why he moves so briskly from a description of the "Romantic militarism" of the poets Wordsworth, Coleridge, and Byron to the "romantic imagination" of Ronald Reagan and the neoconservative movement.

Indeed, Romanticism makes a frequent appearance in The Future of Liberalism, and it's interesting that Wolfe should associate it so strongly with the modern conservative movement.  It is especially interesting considering Isaiah Berlin's argument that positive liberty derives itself from the Romantic thinkers -- a contention that would seem contradictory to Wolfe's hearty endorsement of positive liberty.

It is worthwhile comparing Berlin's influential essay with some of the arguments made in Wolfe's book.  By far the most noteworthy section in The Future of Liberalism is the author's extraordinary attack on "evolutionary psychology", which he calls "the single most illiberal current of our time".

This is no light charge to make.  One might have otherwise considered something more threatening than applied evolutionary theory -- perhaps Islamofascism or some other ideology that encourages acts of terrorism against peaceful civilians.

Wolfe argues that it is the implicit deterministic nature of the evolutionary argument that makes it so incompatible with the liberal ideal.  He talks of thinkers "united in their contempt for the quintessential liberal idea that human beings have the capacity to create that monument of artifice called 'culture', which, in turn, enables them to bring meaning and direction into their lives."  Wolfe contrasts the "self-help" nature of religious books which advise people on how they ought to live, with

books written by scientists or by those popularizing science ... [which] characterize how we actually do live -- indeed, once we understand the science involved, how we must live.  Reading the former, we aspire to do better.  Reading the latter, we learn why we cannot.

This kind of existential crisis experienced on paper by Wolfe is not new.  In his 1958 paper, Isaiah Berlin described two distinct worlds conceived of by thinkers more neurotic than us.

The first world was physical, determined by scientific laws, and the second was "spiritual", or "moral", where humans could create their own ideals or imagine the physically impossible.  The struggle for freedom was seen by some as the struggle between the ideals developed in the spiritual world and their attempted application in the mechanic world of the physical.  This is why Berlin argued that the Romantic thinker believes "freedom ... consists in dominating the matter which obstructs his free-realisation".

Just as the Romantic thinkers were concerned about the limitations presented by the laws of nature in the physical world, Wolfe resumes the fight against reality one more time.  But what is especially irritating is that Wolfe provides no real attempt at arguing against these scientific hypotheses in any real way -- he simply dismisses them as "highly speculative" and concentrates most of his attack on why the implications are bad.  This is akin to the religious debater ignoring the question of whether or not God exists only to focus on what the implications of His (or Her) absence would be.

Wolfe is not ignorant of Berlin's arguments, but he may be unaware that his version of liberalism is a textbook example of the kind Berlin sought to criticise.  To the author, dependency is the greatest threat to liberalism, defined by Wolfe as where "as many people as possible should have as much to say as is feasible over the direction their lives will take".

This is how Wolfe is able to reconcile the great divide between so-called "classical" liberalism and "modern" liberalism in America.  If it is dependency we are to focus on, argues Wolfe, then clearly the laissez-faire approach of the nineteenth century classical liberal was more conducive to liberty when feudalism was the norm, as opposed to today, "where people are too poor or too much the objecrs of invidious discrimination to develop sufficient autonomy".

Dependency is a big deal in Wolfe's vision of what liberalism should be.  He doesn't like us being dependent on the laws of nature, as his contempt for evolutionary theory demonstrates.  Nor does he like us being dependent on the laws of "the market".  Indeed, there is really only one solution to combating the dependencies of today:

In seeking to bypass the dependencies associated with both markets and private charity, the welfare state aims to give individuals the autonomy they need to make their own choices about the kind of life they wish to leave.

It would be worthwhile to get Wolfe's views on how welfare policy has handled the dependency issue in many of Australia's indigenous communities -- surely one of the great policy failures of modern times.  But these complexities are not addressed in this book.

Indeed, there are moments where it feels as if Wolfe hasn't properly engaged in the material on which he is writing.  His comments on Hayek's influential essay "The Use of Knowledge in Society" are downright confusing,

He argues that because individuals make decisions under conditions of imperfect knowledge, any form of social order, because it arises spontaneously from the uncoordinated actions of so many, cannot be designed to reach a predetermined course.  It is in that sense not just socialism to which Hayek objects but the fundamental premise of modernity.

In other words, Wolfe characterises Hayek's argument as "planning is unachievable because purposiveness is impossible".  It is a criticism that is strikingly similar to his attack on evolutionary psychology and the threatening prospect of somehow not being masters of our fate.

But Hayek was not talking about "our" fate in the collective sense.  He described individuals as signalling their own values to others so that institutions are developed "spontaneously" from this harmonisation, rather than being directly designed.

Wolfe's holistic approach to understanding liberty means lhat he misses this fundamental distinction.  Instead he writes that "we are quite capable of deciding what moral purposes we want our societies to serve and then designing our economic arrangements accordingly."  But what does this mean?  How do we design our economic arrangements?  Through government?  What if our "moral purposes" are different?  It's as if public choice theory never existed (it's certainly not considered in this book).

When Berlin described the motivations for positive liberty he wrote of "an attempt to impose something -- himself, his way of vision, his methods of operation, his ideal his purpose -- upon the foreign and indeed hostile outer world of matter or other persons".

He might as well have been describing Alan Wolfe.

Spectators hold placards at the 2009 Minnesota Tax Cut Rally in St. Paul, May, 2009

The third world's underground education economy

The Beautiful Tree:  A Personal Journey into how the World's Poorest People are Educating Themselves
by James Tooley
(Cato Institute, 2009, 268 pages)

Are private schools for just for the rich?

James Tooley is a professor of education policy at Newcastle University in England, and his research specialty is low-cost private schools for the poor in the third world.  Tooley s latest book, The Beautiful Tree:  A Personal Journey into how the World's Poorest People are Educating Themselves, is a memoir of his travels and research into such schools across Ghana, Nigeria, Kenya, China and India.

William Easterly, author of The White Man's Burden, describes James Tooley's detailed research uncovering private schools for the poor as if Tooley was revealing "a major undiscovered planet".

Easterly's description is poignant on a number of levels.  As Tooley finds, government officials and development experts deny the very existence of these non-government schools -- with even one Chinese bureaucrat suggesting that the existence of private schools for the poor was a "logical impossibility".  Such is the hostility to his work that, after presenting his findings at a conference about private schools serving the majority of poor school children in India and Africa, the conference chair, a professor at one of England's top education departments, took Tooley aside and said:  "You're silly, very silly, saying all of that.  You'll never get another job.  Be sensible, old chap."

Given the miserable quality of most government schools in the third world, ultra-low fee private schools form a crucial and thriving sector in the poor areas of third world countries.  As a consequence, in all but two of the areas Tooley has studied -- East Delhi, India and Gansu, China -- the majority of students in poor areas are being educated in private schools rather than government schools.

On one occasion Tooley decided to explore the Nigerian shantytown of Makoko, and visit the public schools on the edge of the shantytown with a BBC film crew.  What he saw was something he'd seen many times, but which he never believed he would actually capture on camera:

A young male teacher was sleeping, sprawled at his desk, while a girl in his class tried to teach her peers from a tatty textbook.  Picture the scene:  The BBC cameraman, producer, and director arrive in the classroom.  The children shoot up, boisterously as always to greet their visitors.  They sing out, "Welcome to you, BBC crew".  Still the teacher sleeps.  A pupil, embarrassed, tries to wake the teacher.  Still he sleeps.

But teachers sleeping in class is a minor problem compared with the deep problems infecting the many government school systems.  Tooley, drawing from his own research and reports from development experts, argues that the problems with government schools has its roots in a lack of accountability.  Those working in the government school system have a job for life.  There is simply no incentive to cater to the educational needs of children.  As a result, teacher absenteeism is rife, and children in Kenyan government schools can expect not to be taught for over 40% of the time they are in the classroom.  Furthermore, because of a lack of incentives and powerful teachers unions there is little supervision of teachers.  Tooley recalls a conversation with a very candid government official in charge of basic education in Ga, Ghana, where the official said:

It's always the same story ... If teachers or principals are caught in child abuse or alcoholism, then all we can do is transfer them elsewhere.  And then they continue with their abuse.

In private schools, proprietors rely on fee revenue to survive, and they know that parents, if not satisfied, can simply pull out their children -- and their fees along with them.  So private school operators make sure that their teachers turn up to class, otherwise the offending teacher will get the sack.

More generally, Tooley finds that corruption is a way of life when dealing with government in many third world countries.  Some government school teachers deliberately teach poorly to increase the demand for private tuition after hours, a practice which is apparently quite common in Vietnam.  Private schools are not immune from the corrupt environment either.  Often government inspectors extract bribes for noncornpliance with absurd government regulations such as not having a one acre playground in the middle of shantytown.

The candidness of some of the government officials that spoke to Tooley was quite amazing, with the District Education Officer in Hyderabad openly answering Tooley's question about bribery:

Everyone gets bribes.  Sometimes the inspectors give me bribes, sometimes the schools.  And I know that if I don't give them what they want, then they will go above my head and bribe someone else -- a politician, my boss, whoever -- so I might as well take the bribe and give them what they want.

Whereas development experts insist that the solution to all these problems of government schooling lies in even more government schooling, Tooley draws on his field work in India, China and Africa to show that a free market composed of thousands of educational entrepreneurs not only exists, but also pre-dates government school systems, and has been greatly more successful in educating the poor.  Even after controlling for background variables, Tooley finds that private school students academically outperform their government school counterparts -- despite private schools having less per student expenditures than government schools.

Tooley is a good storyteller -- The Beautiful Tree is both enjoyable, and informative.  Its one main lesson is that a free market in education is not only possible but can be highly successful.  The education sector can harness the decision-making capacity of millions of individual families and educational entrepreneurs who want to relentlessly create and innovate to give people what they want.

School in Mali.

Pearson's long consistency

Up From The Mission:  Selected Writings
by Noel Pearson
(Black inc, 2009, 416 pages)

On a personal level, Noel Pearson loses me on page 336.

It is at this fairly late stage in this collection of his essays that he expresses a "complete perplexity about the point of Australian Rules Football".  Pearson comments that he finds nothing in it but "boredom", and thinks that, if soccer takes over as the national sport, "Australian Rules should be folded up".

But despite this highly questionable judgement (Pearson is a Rugby Union follower) his diatribe against Australian Football is not entirely gratuitous.  He uses it to make a powerful point about what he calls "layers of identity".  In this debate he shares Amartya Sen's rejection of the notion of people having a single identity based on their ethnic group.  The fact that many indigenous Australians love, and indeed excel at playing in the AFL, does not make it part of Pearson's identity.  Yet he does feel "some remnant connection" to the town in Bavaria from which the Lutheran mission in which he grew up on Cape York was launched.

Labelling consecutive sections "Fighting Old Enemies" and "Challenging Old Friends" neatly captures how the issues Pearson has chosen to highlight have positioned him in the political debate.  Unsurprisingly, most essays in the former section date from the 1990s;  most in the latter from the 2000s.

In the 1990s, Pearson appeared to have many of the views of what most would regard as a typical Aboriginal activist -- rejoicing in the Mabo judgement, marvelling at Paul Keating's Redfern speech and attacking the incoming Howard Government in virulent language.  This decade, we read what we now think of as typical Pearson -- lamenting the abuse of children in Aboriginal communities, crusading against passive welfare, and attacking the incoming Rudd Government in virulent language.

Pearson makes very clear that he has not abandoned the rights agenda of the 1990s, but in recent times has felt that conditions of dysfunction and abuse have made the responsibility agenda far more urgent.  He also makes the point that where some people see a contradiction between his support for both native title and mainstream economic participation, he sees creating a model of Aboriginal modernity as the means to their cultural survival, citing later 20th century Japan as an example of achieving modernity while maintaining cultural identity.

Linking rights and responsibilities, Pearson argues that "the right to self-determination is ultimately the right to take responsibility".  His disgust with both the Right's opposition to the rights agenda and the Left's opposition to any suggestion that Aboriginal Australians should take responsibility for their own lives, has lead him to develop his own political paradigm which he dubs "The Quest for a Radical Centre".

One of the key arguments that Pearson has in favour of the Mabo judgement is that it was the product of the common law, an import which, incidentally, he rates with cricket and Earl Grey tea as England's best three contributions to Australia.  He lauds the common law's "capacity for logic and justice and balance and change", and is confused that many conservatives pushed for legislation to overturn a common law decision.  He argues that this desire to remove property rights from Indigenous Australians "would have horrified Friedrich von Hayek" as he claims it involved "the very legislative discrimination and government appropriation of property that von Hayek stood firmly and clearly against".

Pearson began running his now well-known arguments on responsibility because he felt there was a huge gap in the debate on Aboriginal policy, especially when it came to a topic such as malnutrition among Indigenous children.  All the discussions were about Aboriginal rights and government responsibilities.  However, no-one seemed to be querying why -- when parents were receiving welfare payments and with ample food available in local stores -- children were still not getting a decent feed.

Pearson is scathing of "the prejudice, social habits and thinking habits of left-leaning, liberal-minded people that make them unable to deal with the real factors behind our disadvantage".  He also attacks "the patronising double-standard" of those on the center-left who have strong self-regard and ambition, but who feel such traits should not be encouraged in Aboriginal communities, or indeed in other disadvantaged social groups.  Pearson continues "to put it crassly:  poor people need to become at least as greedy as those who are not poor".

Those readers seeking to understand what has gone so wrong in Aboriginal communities are provided with a clear explanation of how Aboriginal culture has gone from self-sufficiency to passivity in a couple of generations.  Kinship relationships have become distorted to the extent that refusing to provide money to a cousin to buy alcohol is seen as denying one's Aboriginality, whereas ensuring that one's family eats properly is seen as trying to act like a European.

As early as 1987, in a paper written with Mervyn Gibson, Pearson argued that it was "time to stop portraying the contemporary Hope Valley alcoholic as a passive victim of colonisation".  He thought Aboriginals themselves had lost sight of how much their previous generations had achieved in maintaining their dignity "in the face of dispossession and colonisation".

Pearson is a fan of Shelby Steele's analysis of United States race relations which argues that white guilt was a key factor in turning the positives of the civil rights movement into the negative victim politics of recent decades.  In the Australian context, Pearson sees the 1967 Referendum, anti-discrimination legislation and land rights as "seminal achievements", but feels that progress was derailed by the fact that "the politics of 'victimhood' became the predominant methodology of black advocacy and the reigning paradigm of public-policy thinking".

For Pearson race is not destiny.  Racism should not become an excuse and "black consciousness" should involve striving for success, not wallowing in "the victimhood and false separatism of post-60s black leadership".

He cites a number of factors which contributed to new victim mentality, headed by the availability of passive welfare, but also including:  the equal pay ruling leading to the almost complete departure of Indigenous Australians from the pastoral industry;  the interference of legal aid lawyers undermining the authority of elders;  and the impact of alcohol and drugs.

To accept what the causes of the current problems are is not necessarily to agree with the Pearson solutions.  However, honest discussion about the causes of the problems is itself a massive step forward from the restricted assumptions of much of the discourse on Indigenous issues in recent decades.

Pearson makes some acute observations about the political process.  He argues that both politicians and media tend to exaggerate differences in policy positions, whereas he has found that "the distance between good and bad policies is most often very fine".  The example he provides is policing where there is a fine line between police harassment on one hand, and zero-tolerance policing on the other.  The latter is opposed by the Left, despite the fact that "it would be truly progressive to restore social order to disadvantaged neighbourhoods".

Pearson also has a neat metaphor that gets around the traditional idea that idealism and realism hang out at opposite ends of the politician's linear spectrum.  Pearson prefers a pyramid metaphor with idealism and realism on the sides and "the quality of leadership dependent on how closely the two sides are brought together".

Even if one accepts Pearson's argument that his basic views are unchanged, when reading a collection spanning more than twenty years the reader does get an insight into how Pearson's ideas have developed over that period.  Given his contribution to changing the nation's discourse, it is actually surprising that this is the first collection of Pearson's writings.

The only original piece in the book is the Introduction, which begins with a discussion Pearson had with John Howard about rating Australia's Prime Ministers.  While their assessments are highly debatable, what their friendly chat illustrates is the outcome of Pearson moving from "visceral antipathy" to "abiding respect" for Howard.  That sounds like reconciliation, and is a good practical example of the words with which Pearson ends the Introduction:

Freedom for our people will not come as a result of progressive governments giving us our rights back or enacting "social justice".  We will be free when we take back our right to take responsibility.

The danger of forgetting again

The Forgotten Man:  A New History of the Great Depression
by Amity Shlaes
(Harper Collins, 2007, 480 pages)

The quick deterioration in the economic fortunes of western countries seems to have taken many by surprise.

The latest federal government budget expects real GDP growth at -0.5 per cent for 2009-10, after predicting three per cent growth in the budget released a year ago.  If Treasury officials had their remuneration determined by the accuracy of their forecasts, they'd receive a hefty pay cut by now.

Naturally, this turnaround has spawned a flood of research interest by academics and commentators in an effort to uncover its chief causes, and seeking answers about what to do about it.

When the state of the world's economies looked particularly ugly late last year, commentators were openly talking about a re run of the 1930s Great Depression.  Walk into any major bookstore even today and one can see a proliferation of books variously titled Depression Economics, Back to the Depression, and How to Survive the New Great Depression.

With so many pundits likening current economic conditions with the Great Depression, it is of no surprise that serious treatments about this particular episode in history have emerged in recent times.

One of the more heralded analyses of the Great Depression in the United States was the work by economic historian Amity Shlaes titled The Forgotten Man:  A New History of The Great Depression.

At the centre of Shlaes' account of the decade long Depression is the competing conceptions of the "forgotten man" narrative, and how this played out in terms of actual policies during that era.

Prior to his inauguration as US President in 1933, Franklin Delano Roosevelt said in a radio address that he would act in the name of "the forgotten man at the bottom of the economic pyramid".  In the view of FDR, it was for the sake of this individual that the government should spend, tax and regulate.

This notion of the forgotten man stood in stark contrast to that offered by the American classical liberal William Graham Sumner.  In his 1876 book, The Forgotten Man and Other Essays, Sumner wrote:

As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X.  Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X ... what I want to do is look up C ... I call him the Forgotten Man ... He is the man who is never thought of.  He is the victim of the reformer.

Inspired by collectivist economic models overseas and advised by staffers, some of whom met Stalin in 1927, FDR established a new wave of government interventions in the US economy.

These included the National Recovery Administration, which set prescriptive "codes of fair competition" for industry and employee minimum wages, and the Agricultural Adjustment Administration that gave taxpayers' dollars for farmers to reduce cropping.

FDR went even further, showing a penchant for make work programs such as the Works Progress Administration.  He also established the Tennessee Valley Authority that built dams and generated electricity covering up to seven states, but also crowded out existing private sector utilities.

He also secured for himself a reputation for experimenting with the economy, adjusting gold prices on a whim and ordering citizens to hand in their stocks of the precious metal to the Treasury under the infamous Executive Order 6102.

As the opening of each chapter of Shlaes' book illustrates, the outcomes of FDR's intrusions were underwhelming with the unemployment rate remaining at least ten percentage points above experienced during the prosperous 1920s.

FDR was playing havoc with Stunner's forgotten men -- the entrepreneur and the taxpayer -- with little to show by way of tangible benefit for the President's own forgotten men.

Does Shlaes' account of America's Great Depression some seven decades ago have anything to do with modern Australia?  Yes, plenty.

In its attempt to avoid the political fallout of two consecutive quarters of negative economic growth, the Rudd government has embarked on a Rooseveltian spending spree unlike any other seen in modern Australian history.

This spending made a major contribution to the expected federal budget deficit result for 2009-10 in the order of $58 billion.  In similar vein Roosevelt, who went to lengths proclaiming himself as a fiscal conservative prior to his first term in office, also presided over massive deficits because of New Deal expenditure.

Not prepared to slug taxpayers amidst a slowing economy, the government has also shown a preparedness to claim revenues from future generations of taxpayers courtesy of its $315 billion debt splurge.  Watch out, future forgotten people!

The lack of policy consistency by the Rudd government since November 2007 -- from fiscal conservative to fiscal Keyncsian, from inflation genie to economic cyclone -- was also seen by many as a defining feature of FDR's economic strategy.

As Shlaes indicates, even close allies of Roosevelt were baffled by the lack of consistency which would achieve nothing but erode investor confidence.

A former FDR confidant, Ray Moley, wrote that the puzzle that was the President

arose chiefly from the wonder that one man could have been so flexible as to permit himself to believe so many things in so short a time.  But to look upon these policies as the result of a unified plan was to believe that the accumulation of stuffed snakes, baseball pictures, school flags, old tennis shoes, carpenter's tools, geometry books and chemistry sets in a boy's bedroom could have been put there by an interior decorator.

The tendency of both leaders to be seen to "do something" on the economy seems to spring from what Bryan Caplan has labelled an "anti-market bias", or a tendency to underestimate the benefits of free markets.  This interpretation of the economy views people as victims, rather than beneficiaries, of markets, and depicts corporations as greedy, money hungry profiteers at the expense of consumers.

At the Democratic National Convention in July 1932, Roosevelt launched a withering attack against "an era of selfishness" driven by "the profits of speculation, the easy road without toil".  For FDR, "to return to higher standards we must abandon the false prophets."

Short of seventy-seven years later, Kevin Rudd wrote his infamous essay in The Monthly in which he castigated "extreme capitalism and excessive greed which became the economic orthodoxy of our time".

This bias manifested itself in a number of ways.  For FDR, this included regulation to prevent alleged "price gouging" by the private sector and intimidatory (but unsuccessful) legal sanctions against high profile entrepreneurs right through to small business owners such as the poultry farming Schechter brothers.

In modern Australia, the federal government has in mind a similar regulatory fix for those apparently evil corporations including in the areas of executive remuneration, business acquisitions and bank lending practices to name a few.

FDR and Rudd also appear to share a "pessimistic bias", or a tendency to underestimate the past, present and future performance of the economy.

In his July 1932 speech, Roosevelt said that the US had grown too fast in the previous decade:  "for ten years we expanded on the theory of repairing the wastes of the War, but actually expanding far beyond that, and also beyond our natural and normal growth."

As Shlaes noted in her book, the repetitious lowering of economic expectations by FDR led to many Americans believing that the prosperous 1920s were an aberration.  This played into the hands of an administration willing to use its policy levers to "distribute scarcity" favouring FDR's forgotten man on the bottom rung.

Contrast this pessimism with the words of Andrew Mellon, former US treasury secretary, entrepreneur and philanthropist, who stated in 1934 that "present conditions, however distressing, especially in terms of human suffering, reflect on a passing phase in our history."

To Mellon, the Great Depression was simply a "bad quarter of an hour".

A similar pattern of low expectations runs through the economic narrative of the federal government.

In February 2009, Prime Minister Rudd said "the global economic recession is the equivalent of an economic cyclone spreading from continent to continent, leaving wreckage in its wake, devastating economies, devastating jobs and crushing the dreams and the livelihoods of families across the world."

The almost celebratory mood of the government in response to an anaemic 0.4 per cent GDP growth during the March quarter 2009 underlined its underwhelming economic aspirations.

Even prior to the last election there was a distinct pessimist optimist divide between the two major parties.  The former opposition stressed the impermanence of Australia's good economic fortune by (incorrectly) suggesting that growth was fully attributable to a mining boom.

In a March 2007 speech at the Melbourne Town Hall, Kevin Rudd stated "while the mining boom has delivered our current prosperity, we won't always be as lucky".  Similar sentiments were shared by other key opposition figures such as Wayne Swan and Lindsay Tanner.

While leading figures in the former Coalition government, such as Treasurer Peter Costello, belled the cat on the looming financial difficulties in the United States the election slogan "Go for Growth" exuded an optimistic tone devoid of pessimistic bias.

Amity Shlaes' The Forgotten Man reveals much about an American past of interventionist Presidents, staffers sympathetic to economic collectivism, entrepreneurs hounded by government and ordinary people doing it hard.

However, the value of her work is in highlighting a general principle applicable to modern times and for all countries.  That is, the best stance of policy should be to provide a sound, stable framework for promoting the economic liberties of the forgotten -- the entrepreneurs and taxpayers who want nothing more than to just get on with their businesses and lives respectively.

Depression refugees from Iowa on a New Mexico highway, August 1936.
Farm Security Administration.

Personal tragedies under Stalin

The Whisperers:  Private Life in Stalin's Russia
by Orlando Figes
(Metropolitan Books, 2008, 740 pages)

It has taken historians in both Russia and the West a long time to get their minds around Stalinism.  Anne Applebaum's 2003 Gulag:  A History went a long way to shedding some of the misconceptions about the Stalinist system of repression -- most obviously on the left, where the history of the gulag has been shamefully minimised.  In The Whisperers:  Private Life in Stalin's Russia, Orlando Figes steps into the lives of individuals and families to expose the personal tragedies which are hidden behind the statistics behind Stalinist repression.

The tragedy of the individual under a dictatorship has been a common theme in the history of 20th century totalitarianism for more than fifty years.  But as Figes points out in his introduction, our understanding of the individual in Stalin's Russia has been shaped by the outpouring of memoirs by émigrés and intellectuals who have been eager to represent their deep yearning for liberty -- and the resilience of individualism -- under totalitarianism.  Autobiographies like Victor Kravchenko's I Chose Freedom contained many revelations but were extremely atypical of the average Russian.  Yet, for lack of better alternatives, during the Cold War the West treated high-profile intellectuals like Kravchenko or Solzhenitsyn as "the authentic voice" of repressed individuals under communism.

This has been compounded by a historiographical fashion to focus on resistance to authority, however isolated and atypical.  Since the opening up of many Soviet archives post-1991, historians treating the era have enthusiastically depicted the Stalinist period as a continuous duel between repressors and dissenters, seizing upon the examples of defiance against Soviet rule or stubbornly brave individuals.  Certainly this approach is an improvement on Cold War era historical investigation -- when the academic focus was on either Politburo politicking or the broad sociological studies of the Soviet "masses" -- but it has had the effect of understating the total-ness of Stalinist totalitarianism.

Resistance and dissent was not a viable option for individuals living in the early Soviet Union.  Almost everybody faced the stark choice between arrest and collaboration.

That choice, and the dual way of life it created -- between the fear of arrest and mutual denunciation -- is the source of The Whisperers' title.

There are two words for "whisper" in Russian.  Shepchushchii means whispering out of fear of being heard.  As many urban Russians lived in communal apartments -- either buildings specially designed for collective living, or in large houses confiscated from their owners and subdivided into cramped living quarters -- there was an ever-present fear of being overheard saying critical things about the Soviet regime.  And the word sheptun refers to whispering or informing to the authorities.  In the cramped communal apartment, which often housed dozens of residents, it was easy for petty grudges to escalate into letters to a local party chief.

To tell his stories of private life under Stalin, Figes has amassed an impressive amount of unpublished memoirs and archival evidence.  But the true star of The Whisperers is the enormous amount of oral testimony he was able to accumulate -- more than one thousand individuals who lived under Stalin were interviewed.

And it is all the more important because this is a generation rapidly disappearing.  Figes notes that almost six per cent of the total sample died before the book was published.

In The Whisperers, the dominant unit is the family.  Idealistic Bolshevik activists envisioned the 1917 seizure of power as a revolution in not just economic and political terms, but as a revolution in family relations as well.  As Maxim Gorky wrote, "the new structure of political life demands from us a new structure of the soul".  While ideologists maintained that Soviet children were to be raised collectively, rather than in the now outdated family unit, the less appealing flip side of this was that it gave dedicated Bolshevik parents almost carte blanche to ignore their children.  If it takes a village, then parents are almost redundant.

Communal apartment, Moscow, 1930-64

Source:  Orlando Figes, The Whisperers, p178

One of the most striking illustrations of Soviet life is the Figes' discussion of the communal living arrangements and how they were so central to the communist experience.  Our modern image of the Soviet Union may be those lifeless identical and symmetrical apartment complexes rising up out of the Russia flats.  But in the Stalinist period, Russian accommodation was forged out of the existing, prerevolutionary housing stock.  In the mid-1930s, three-quarters of the population of Leningrad and Moscow were living communally in former apartments -- dozens of families squeezed into single dwellings, whole families living in single rooms.

One typical arrangement described by Figes consisted of an apartment revamped to consist of thirty-six rooms, each housing an extended family in a space of 12.5 square metres.  In one of those rooms, a former inhabitant related,

There was a table in the room, on which my grandmother slept.  My brother, who was six, slept in a cot underneath the table.  My parents slept in the bed by the door.  My other grandmother slept on the divan.  My aunt slept on a feather mattress on the floor with her cousin on one side, while my sister (who was then aged sixteen), my cousin (ten), and I (eleven) somehow squeezed in between them -- I don't remember how.  We children loved sleeping on the floor:  we could slide our bodies underneath our parents' bed and have a lot of fun.  I don't imagine that it was fun for the adults.

Kitchens, laundry facilities and bathrooms could be shared or allocated by individual families depending on the layout of the apartment but would always be utilised as more places to sleep.  These communal living arrangements were originally just to resolve a housing crisis created by the rapid industrialisation of the soviet economy (and the rural refugees created by collectivisation) but they quickly embedded themselves in the Soviet surveillance apparatus.

With 30 ot more families living virtually on top of each other and with often paper-thin walls, denunciations -- justified or not -- could be easily borne out of petty domestic disputes.

Work provided little relief.  One factory manager, in a letter to the Soviet president, described the perverse outcome of the Soviet bureaucratic system:

The problem with Soviet power is the fact that it gives rise to the vilest type of official -- one that scrupulously carries out the general designs of the supreme authority ... This official never tells the truth, because he doesn't want to distress the leadership.  He gloats about famine and pestilence in the district or ward controlled by his rival.  He won't lift a finger to protect a neighbour ... All I see around me is loathsome politicizing, dirty tricks and people being destroyed for slips of the tongue.  There's no end to the denunciations.  You can't spit without hitting some revolting denouncer or liar.  What have we come to?  It's impossible to breathe.  The less gifted a bastard, the meaner his slander.  Of course, the purge of your party is none of my business, but I think that as a result of it, decent elements still remaining will be cleaned out.

The most harrowing sections of the book when Figes looks at what he describes as "the great break", when the semi-liberal period of the New Economic Plan gave way to Stalinist five year plans, collectivisation and rapid coerced industrialisation.

The Whisperers reads at times like a catalogue of family tragedy, as the voluntary ideological family breakdown common in the first few years of the Soviet Union, quickly gives way into the now-familiar Stalinist pattern of arrest, imprisonment, release and re-arrest.

While not for the most part an interpretative history, The Whisperers is not totally disengaged from contemporary historiographical debates.  Figes disputes Robert Conquest's characterisation of the famine of 1932-33 as a "deliberately inflicted ... massacre of men, women and children".  As Figes argues, while the policy of collectivisation was undoubtedly the culprit of rural Russian suffering in this period, the scale of the famine itself took the Moscow government by surprise, and it had no reserves of grain ready to account for the shortfall.

But whether famine was a weapon of terror or just its consequence is surely beside the point.  If we cannot go so far to describe this period as a genocidal "terror-famine" as some historians have done, we can still agree that genocide did occur against the "kulak" population.  It was a deliberate policy of genocide which brought about the famines of the 1930s, even if the linkage between famine and genocide was not as deliberate as Conquest makes out.

Figes quotes one Komsomol activist describing the kulaks as "bloodsuckers" and "parasites":  "We were trained to see the Kulaks, not as human beings, but as vermin, lice, which had to be destroyed".  Ten million kulaks were expelled from their home between 1929 and 1932.  And this figure obscures the countless individual horrors which accompanied collectivisation.

Meeting of the elected management committee of the "New Life" collective farm, 1935
Office of War Information.  Overseas Picture Division.  Washington Division.

The Whisperers is not a book of macro-level statistics, but of intimate family and personal histories.  And at that level, terror and collectivisation were nearly indistinguishable from thuggery and murder.  One focus of Figes' narrative is the Golovin family from Obukhovo, a small town about 400 kilometres east of Leningrad.  The local Komsomol were little more than a dozen violent teenagers armed with pistols, and the Golovins, having been branded as kulaks, were at their mercy.  Ivan Golovin, visiting the family from a neighbouring town, was shot in the head when obviously drunk Komsomol activists started firing at the Golovin house during dinner.  In a later confrontation on the family doorstep, the Komsomol ring leader yelled at Nikolai Golovin, "I shall shoot you, just as I murdered your brother, and no one shall punish me".  Nikolai escaped from that heated exchange without being shot, but he was soon after denounced by the young activists, arrested, and sent to a White Sea Gulag.  The farms of Obukhovo were collectivised a few weeks later.

One important conclusion of The Whisperers is just how large the Second World War looms in the Russian memory.  As Figes writes, for all the excesses, hardships and moral atrocities of the Stalinist years, for a certain generation the war was the defining event of their lives.

It was a time of comradeship, of shared responsibilities and suffering, when "people became better human beings" because they had to help and trust one another;  a time when their lives had greater purpose and meaning because, it seemed to them, their individual contributions to the war campaign had made a difference to the destiny of the nation.  These veterans recalled the war as a period of great collective achievement, when people like themselves made enormous sacrifices for victory ...

But for the regime, the memory of the war years was a double edged sword -- on the one hand, Figes writes, "the commemoration of the Great Patriotic War served as a reminder of the success of the Soviet system", but on the other hand, the war was a period of de facto de-Stalinisation, as the instruments of repression took a secondary role compared to the war effort.

By the 1960s, Victory Day was a tightly controlled state celebration of the war effort, carefully integrated in the government's propaganda narrative.  But to a large extent the memory of the Soviet war effort defined the attitude of many Russians towards their Stalinist past.  This attitude was complemented by a tacit silence about what Vladimir Putin has coyly described as "some problematic pages" of Russian history.

Figes is one of the strongest historians of the Soviet Union and the Russian psyche.  His book on the Russian Revolution, A People's Tragedy anticipated his Whisperers methodology by telling the story of the revolution through a series of tightly examined interconnected individual narratives.  Both A People's Tragedy and his cultural history of Russia, Natasha's Dance won Figes a truckload of awards, and it is easy to understand why -- Figes presents his often highly specific and interwoven material in a uniquely engaging fashion.  While his earlier books are powerful and compelling, The Whisperers is undoubtedly his largest achievement.  Bringing together so many personal narratives, Figes is able to illuminate aspects of life under the Soviet regime which other historians, relying on more scattered testimony and the inherent biases of official archives, have not.

In the final pages of The Whisperers, Figes quotes a former prison guard who through a mixture of half-baked ideology and hard-learnt realism justified his own position in the Stalinist system:

What is Soviet power, I ask you?  It is an organ of coercion!  Understand?  Say, for example, we are sitting here and talking, and two policemen knock at the door:  "Come with us!" they say.  And that's it!  That's Soviet power!  They can take you away and put you in prison -- for nothing.  And whether you're an enemy or not, you won't persuade anybody of your innocence.  That's how it is.  I get orders to guard prisoners.  Should I believe these orders or should I believe you?  When you kill a pig you don't feel sorry for it when it squeals.  And even if I did feel sorry for somebody, how could I help them? ... In the camp I guarded mothers with sick children.  They cried and cried.  But what could I do?  They were being punished for their husbands.  But that was not my business.  I had my work to do.

The tragedy of Stalinism was that these sorts of justifications were common.  We might describe it as "Stalin's" Russia, but the totalitarianism of the early Soviet Union came from below, as individuals were forced to slot themselves into the system:  to whisper, or be whispered about.

Gulag prisoners at work, 1936

Russia and the parable of the rear gunner

The Rebellion of Ronald Reagan:  A History of the end of the Cold War
by James Mann
(Viking, 2009, 396 pages)

These days Ronald Reagan's leadership style has been given a name and there are whole books written about it.  It's called "leadership through narrative".

The idea is that leaders inspire by talking about things in a way that people most easily understand.  Facts and figures are abstract and vague.  Not too many people relate to per capita GDP.  But a good story can be personal, emotional, and can inspire action.  Reagan's most memorable descriptions of the Soviet Union didn't involve reciting the numbers of people Stalin had murdered or the number of prisoners in Khrushchev's gulags.  While "evil empire" wasn't a story so much as a description, it nonetheless had narrative power.  It allowed his listeners to draw their own mental images of what "evil" and "empire" conjured up.  Likewise "Mr Gorbachev, tear down this wall" wasn't a story but it painted a direct and immediate picture.

Politicians use facts and figures as "evidence" to support their case and to provide legitimacy to their cause.  But when was the last time you can remember a single fact or figure a politician has quoted?  Think about the things from politicians and leaders you recall and can repeat.  There'll be a few quotes from Reagan, there'll be "we shall fight on the beaches" and with a bit of luck there might even be a few snippets of the Gettysburg Address.  The most effective stories are the parables.

James Mann highlights this quality of Reagan in his excellent The Rebellion of Ronald Reagan:  A History of the end of the Cold War.  One of the reasons Reagan was a great leader was because he was a great communicator, and he was a great communicator because he told great stories.  By the time he became president Reagan had nearly fifty years of practice.  As a sports broadcaster in Des Moines in the mid-1930s he described "live" major league baseball games by reading and interpreting abbreviations of play from a telegraph.  He described over 600 games this way even though at the time he started in the job he had never been to a major league game.

To perform such feats required imagination, ingenuity, and stamina.  And then, between 1954 and 1962 Reagan was a spokesman for General Electric.  One of his tasks was to visit GE's 139 factories in forty states across the United States.  He gave lectures, presentations, and pep talks to the company's 250,000 employees.  Reagan later estimated that during his eight years with the company he had spent more than 4000 hours speaking in front of a microphone to audiences.  That's equal to talking for eight hours a day, five days a week, every week for two years.  Even if Reagan in fact only spent half as much time talking as he said he did, it's still a remarkable feat.

Reagan did so much talking and told so many stories that sometimes he would convince himself that what he'd imagined had actually occurred.  When Reagan died in 2004, the presidential speechwriter David Gergen retold the story of one of Reagan's most famous stories.

[Reagan] loved to tell the tales of ordinary people who did extraordinary things during the war -- heroes like Jimmy Doolittle in his daring raid over Tokyo and the "boys of Pointe du Hoc" who scaled the cliffs in the face of German machine gunners.

It didn't seem to matter whether all of his stories were completely true.  Celebrating Medal of Honor winners at a dinner, he told of a B-17 bomber flying over Europe.  German anti-aircraft fire hit the plane, and it started going down.  While the men up front jumped for safety, the rear gunner was wounded and couldn't get out.  He sat terrified, awaiting death.  Suddenly, an older man appeared, the pilot.  "Never mind," he told the injured gunner, "we'll ride it down together."  That story is recorded nowhere in military annals and may have come from one of the movies Reagan so loved, Wing and a Prayer.  But no one really cared.  Americans knew there were thousands of genuine heroes in those days, and Reagan gave them life through his stories.

Reagan told the rear gunner story many times.  One of the occasions was during the 1980 presidential campaign against Jimmy Carter.  Some reporters who heard it questioned how if both men died together how it would have been possible for anyone to know what had happened.  Various columnists later used the story to poke fun at Reagan and it seems his aides tried to stop him using it.  The aides were unsuccessful.

Garry Wills in his Reagan's America:  Innocents at home writes what happened when Reagan, as president, recounted the tale of the rear gunner to the actors Warren Beatty and Diane Keaton who were at the White House for a screening of the film Reds.  According to Beatty the president started talking about film:

Without missing a beat he [Reagan] said:  "You know what's really wrong with the Russians?  What's really wrong with the Russians is this."  He started to tell this long story from World War II, about a plane that is shot down, and the gunner is trapped, and the pilot, instead of parachuting out to save himself, cradles the gunner's head in his arms and they go down together.  It must have been the plot of some movie he saw, or made, or something.  I kept looking at Diane and she kept looking at me and we kept waiting for the punch line.  And there wasn't one.  And then we realized that he meant every word he said about the Russians.

That Reagan meant every word he said about the Russians is the point of James Mann's wonderful book.  Reagan was unique because he genuinely and sincerely believed that the Soviet Union was an evil empire, and because he wasn't afraid to say what he thought.  As Mann makes clear Reagan's views were very different from those prevailing in Washington in the 1970s and early 1980s.  Reagan was poles apart from the established wisdom, as expressed by the likes of Nixon and Kissinger.

Nixon's view of the Cold War as a geopolitical contest, with each side able to annihilate the other, implied that neither side could ever win.  For Reagan, however, America's contest with the Soviet Union was about economic systems and ideals.  When the Cold War was viewed in this fashion, it was conceivable to imagine that one side might fail and end up on the "ash heap of history."

A focus of The Rebellion of Ronald Reagan is the extent to which Reagan's belief that the Soviet Union could be defeated, and should be defeated was not just a rebellion against an existing paradigm, it was a revolution.  Even after Reagan had won a second presidential term in an electoral landslide, Kissinger complained in newspaper columns that anyone who thought the Cold War could be won was naïve.  According to Kissinger

There are no "final happy endings" ... Whatever they may agree on, the United States and the Soviet Union will remain superpowers impinging globally on each other.  Ideological hostility will continue.  Specific, precise arrangements can, indeed must be made.  But they are more likely to ameliorate tensions than to end them.

Conservatives who believed themselves to have a "realistic" view of the world continued their campaign against Reagan right up to the end.  As late as 1987 when Reagan and Gorbachev were negotiating the elimination of nuclear weapons in Europe, leading conservatives like George Will and Charles Krauthammer joined in on Nixon's and Kissinger's attacks on Reagan.

In retrospect those conservatives were not too different from conservatives like Erich Honecker, the East German leader who on January 19, 1989 -- Reagan's last full day as president -- announced that the Berlin Wall "will still exist in 50 and even 100 years".  By November, Honecker had been proved wrong.

Reagan's speech at the Brandenburg Gate on June 12, 1987 is a focus of Mann's book.  From the very beginning of the process of drafting the speech the State Department was opposed to the president saying anything that might upset the Soviet leadership.  One official even remarked that to say anything about the wall was "in bad taste".  But Reagan and his personal speechwriters persisted.  Eventually the battle over the speech came down to the specific words of "Mr Gorbachev, tear down this wall".  The foreign policy experts wanted the words out.  Reagan's speechwriter wanted the words in.  The speechwriter argued "That is the sound bite that everyone is going to grab".  In the end the White House deputy chief of staff Kenneth Duberstein took the dispute to the president.

Duberstein said he thought it was a great line, but that the State Department strongly objected on grounds that it might be too inflammatory.  Reagan asked Duberstein if he agreed.  The White House aide gave no direct answer.  "You're the president, he said.  You get to decide."  Reagan looked down at his desk, looked back up, and said, "I think we'll leave it in."

The Rebellion of Ronald Reagan demolishes two of the myths of the Cold War.  The first is that Reagan increased military expenditure and embarked on the Star Wars defence program knowing that if the Russians tried to match the Americans' spending the Soviet Union would go broke.  The second myth is that Reagan was simply lucky.  While there's some element of truth in both analyses Mann makes the persuasive argument that Reagan's achievement was to appreciate the weaknesses of the USSR and then have the United States respond in such a way as to allow and encourage Gorbachev to undertake the reforms that would bring down the regime.  Reagan was sensitive enough and smart enough to employ his leadership and his rhetoric as circumstances required.  The man who spoke of an evil empire was also the man assailed by the Republican right for believing the Cold War could ever be concluded.

The stories Reagan told always had a point and often had a happy ending.  Kissinger was wrong.  Even if you can't quite call the conclusion of the Cold War to be a "final happy ending" it's an ending nevertheless.  And Mann in The Rebellion of Ronald Reagan tells the story brilliantly.