Behavioural economics: an excuse to tax and regulate

Few areas of study are as fashionable as behavioural economics — the integration of psychological factors into economic analysis.

No wonder.  Behavioural economics seems tailor-made for public policy.  If people do not act rationally and do not pursue their own best interests, then perhaps markets aren't that good.  From there, the case for government intervention seems pretty obvious.

Two of Australia's left-wing think tanks, the Centre for Policy Development and Per Capita, have released reports specifically on the implications of behavioural economics.  And it is a rare paper from the Australia Institute which doesn't discuss how market actors are riddled with biases, psychological flaws, and irrationalities.  Therefore, they all conclude, governments need more power.  There's hardly a regulation or tax that hasn't been justified by reference to the behavioural economics literature.

But the public policy implications of behavioural economics are more interesting than that.

The study of behavioural economics has largely focused on the irrationality of participants in the market.  Yet there are two sides to policymaking.  Regulators, bureaucrats, and politicians are just as affected by psychological ticks as consumers and businesses.

A newly published paper in the Journal of Regulatory Studies, ''Behavioural economics:  implications for regulatory behaviour'' makes the obvious point:  if the claims made by this field are right, then it should make us think just as sceptically about government action as consumer action.

After all, it would be no good to destroy the myth of Homo Economicus just to replace it with an equally pernicious myth of Homo Bureaucratus — a clearheaded and efficient policy designer.

There is no reason to believe that someone moving from the private sector to the public sector suddenly becomes more rational and unbiased.  The dispassionate, rational economic actor might be a convenient fiction dreamt up by modellers and theoreticians, but then so is the dispassionate, rational, unbiased policymaker.

The paper's authors, James C Cooper and William E Kovacic, look specifically at anti-trust law, where behavioural economics is commonly used to study business decisions to enter or exit markets, to merge with other firms, or split.  Cooper and Kovacic argue that the bureaucrats who regulate those decisions are likely to have biases that undermine the effectiveness of government intervention.

Regulators are like the rest of us.  They are over-confident, thinking they can understand complex behaviour.  Hindsight bias leads them to believe events are more predictable than they are.  And, unsurprisingly, they are driven by action bias — a tendency to favour interventionist solutions when faced with a problem.

In fact, regulatory biases could be worse than market ones.  Behavioural economics tells us that irrationality is everywhere.  But the marketplace provides firms and consumers with instant or near-instant feedback.  In a competitive market, psychological bias can lead to failure or loss of market-share.  With such feedback, market participants will change their actions.  Make a mistake, lose money ... do better next time.

By contrast, regulators receive little feedback at all.  They operate in a political world, not an economic one.  Regulatory or bureaucratic error is hard to pin down.  It's harder to allocate blame for errors.  It's even harder to quantify the costs of those errors.

Market participants learn from their mistakes.  But regulators are completely isolated from the consequences of their decisions, so it's much harder for them to learn.

Compounding that, confirmation bias — where the introduction of new, ambiguous information leads to the unjustified hardening of previous conclusions — may steer regulators and their political masters to believing a policy has been a triumph when it has not.

Indeed, even what constitutes success or failure in the public sector is debatable.  Few policies have defined criteria whereby we can determine if they have succeeded or not.

In the Centre for Policy Development's 2008 paper, You Can See a Lot by Just Looking:  Understanding human judgement in financial decision-making, Ian McAuley rightly points out that humans are susceptible to the fallacy of sunk costs.

''We find it very difficult,'' McAuley writes, ''to make decisions solely on the basis of future costs and benefits, particularly if it means implicitly admitting that we have made poor decisions in the past.''

This is true for private actors, but is especially true for governments.  Old bureaucracies never die — they just get renamed.  Subsidies survive long past their use-by date.  And taxes are stubborn things.

So far, the policy debate around behavioural economics has led with ideological conclusions — apparently offering those who believe governments should tax and regulate more a cutting-edge reason for doing so.

But if we want to fully understand the implications of behavioural economics, we'll have to recognise that the field offers an even harsher critique of government than it does of markets.  And the safe money says policy makers and bureaucrats will not enjoy the spotlight on them.

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Internet laws a sledgehammer approach to privacy

Legislators with little knowledge of internet privacy will do more harm than good.

The protest against the American Stop Online Piracy Act recently, where Wikipedia and 7000 other websites went dark for 24 hours, made two things plain.

First, online activism can be effective.  Before the protest, 31 members of Congress opposed the act.  After the protest, that number swelled to 122.  The bill died overnight.

More importantly, the protest emphasised that the internet is not the Wild West.  Domestic laws and international treaties pervade everything we do online.  And bad laws can cause profound damage.

The Stop Online Piracy Act (SOPA) is an example of legislative over-reach.  SOPA would have given the US government broad powers to shut down access to foreign sites that were suspected of hosting material that breached copyright.  This would have given governments the power to interfere with the internal workings of the internet.  Such a power would have been an unconscionable threat to free speech.

Yet SOPA is not alone.  The internet is surprisingly vulnerable to laws that, with good intentions or bad, have the potential to stifle online liberties.  Take for instance, the European Union's proposed ''right to be forgotten''.  Changes to data protection laws now being considered by the European Parliament would give internet users the power to force websites to delete information about them.

There would be privacy benefits from this law.  No question it would be lovely if we could make websites remove embarrassing photos or uncomfortable facts years after we uploaded them.

And yes, we need to keep pressure on social networks to protect our privacy.  Too many companies are reckless with user data.  Yet the EU's plan goes way too far.  A legislated ''right to be forgotten'' would be, like SOPA, a threat to freedom of speech.  These new rules would, according to the American legal scholar Jane Yakowitz, ''give EU residents an unprecedented inalienable right to control and delete facts that were once voluntarily communicated''.

In the age of social media we all happily put information about ourselves in the public domain.  A right to be forgotten is actually an obligation for others to forget things they've been told.

Apart from being unworkable (erasing stuff from the internet is a lot more complicated than politicians seem to believe), this new obligation would envelop the internet in a legal quagmire.

The law would turn every internet user into a potential censor, with a veto over everything they've ever revealed about themselves.  Every time media organisations referred to freely obtained information, they would have to be sure they could prove they did so for a ''legitimate'' news purpose.  This would create enormous difficulties for journalism.  Censorship to protect privacy is just as dangerous as censorship to prevent piracy.

But unlike SOPA, there has been no outcry about these new rules.  No blackout of popular websites, no mass petitions.

SOPA was driven by American politicians in the thrall of an unpopular copyright lobby.  The European data protection rules are being driven by social democrats claiming to protect people's privacy.  And, in 2012, privacy is a value that many people claim to rate above all others.

By contrast, free speech seems daggy and unpopular.  Even our self-styled civil liberties groups have downgraded their support for freedom of speech.  Now other rights — privacy is one, the right not to be offended is another — are seen as more important.  So these new laws could slip through with disastrous consequences.

Should Australians care what the European Parliament does?  Absolutely.  The big internet firms are global.  If a legislature in one country or continent changes the rules of the game, those firms have to comply.  The easiest way to comply is by making global policy changes, not regional ones.

And regulations introduced overseas have a habit of eventually being introduced in Australia.  Already our privacy activists are talking up the EU scheme.

Whatever the EU decides about a right to be forgotten, it will have significant effects on the online services we use in Victoria.

Free speech isn't the only problem with the EU's proposed privacy laws.  As Jane Yakowitz points out, people trade information with corporations all the time — for discounts or access to free services.  No one compels us to share stuff on the internet.  We share because we think we'll get something out of it.  The new right to be forgotten would make such trades virtually impossible.  It could cripple the information economy overnight.

Governments have always struggled to legislate for the online world.  Not only do politicians have little understanding of the technological issues, but the internet doesn't take very well to regulation:  according to one old tech saying, ''the net interprets censorship as damage, and routes around it''.  So legislators over-compensate.

The internet is complex, borderless and dynamic.  Laws are inflexible and heavy-handed.  Too many attempts to protect privacy or combat copyright infringement take a brickbat to freedom of expression and internet liberties.

Let European dogs lie

Australians will be surprised to learn that, apparently, the federal government now has responsibility to help the city of Athens pay for the feeding of stray dogs in the Greek capital.

Athens has a policy that ''in no case supports the sheltering or euthanisation of animals''.  Stray dogs are instead sterilised, tagged, let loose again and fed by the council.  During the anti-austerity riots in Athens last year one ginger mongrel, Sausage, became an international celebrity as he stood side by side with the balaclava-wearing protesters.

How countries deal with stray dogs is up to them.  But if a country wants to provide stray dogs that are sick with an individual dog house and constant veterinary care, other countries shouldn't be forced to foot the bill.  If the Greek government wants to set the retirement age at 50 it can, but it has to wear the consequences.

That's the issue at the heart of whether Australian taxpayers should contribute to an International Monetary Fund bailout of Europe.

Shadow treasurer Joe Hockey said a few weeks ago:  ''The government must explain to taxpayers whether it would be in Australia's national interest ... to fund any such contribution.''

A spokesperson for Treasurer Wayne Swan then accused Hockey of undermining ''half a century of Australian governments meeting their responsibilities''.

Last year, when the Coalition first started to question why Australia should contribute additional funds to the IMF, Labor claimed the Coalition was being ''xenophobic''.  Opposition Leader Tony Abbott subsequently retreated, claiming:  ''I never said that Australia should fail in its duties of international citizenship.''

Abbott and the Coalition shouldn't back down.  They should refuse point blank to support Australian taxpayers paying money to the IMF to help pay the debts of Greece, Italy, Portugal, or any other European country for that matter.  The Gillard government should be forced to explain exactly what is Australia's ''responsibility'' to Europe.

There are times when Australian taxpayers should financially support the governments and citizens of other countries.  But Europe in 2012 is not one of those times.

Europe's debt crisis is not an act of God.  It is not like the 1997 Asian financial crisis, which was caused by a series of external shocks and which was stabilised relatively quickly.  In 1997 it was entirely appropriate for Australia to take a leading role managing a crisis in our own region.

Europe is different.  Its problems are the result of deliberate decisions taken over decades.  The economics of Europe and the euro are broken and the continent's political system is fatally flawed.  Bailout money, whether from Germany, Australia, or China, can't give Europe what it really needs.  Europe needs something more than other people's money.  It needs a governing class focused on economic growth, not rule-making.  And it needs democracy.

Daniel Hannan, the British member of the European Parliament who will be in Australia in the next fortnight, has described it well.  ''The EU, run by its 27-member politburo, is barely more democratic that the German Democratic Republic.''

Hannan makes the point that the EU's so-called ''democratic deficit'' and the lack of accountability was essential to the design of postwar Europe.

''Having lived through the 1920s and 1930s, the [EU's] founders had little faith in democracy — especially the plebiscitary democracy, which they saw as a prelude to demagoguery and fascism.  They were therefore unapologetic about vesting supreme power in the hands of appointed commissioners ... the euro was the culmination of their scheme.''

There's not much Australia can do about Europe.  It's probably a waste of time to even try.  Only the Europeans can fix Europe's problems.

There is a place, though, where Australia can make a difference.  It's in Papua New Guinea, a poverty-stricken country of 6 million people 150 kilometres to our north.  On any measure Australia's economic and security interests in PNG are vital.

Unfortunately, Port Moresby is not as glamorous and just a bit more dangerous than the capitals of Europe.

We know where the priorities of Australia's Foreign Minister are.  Last week, as PNG lurched from constitutional crisis to attempted military coup, Kevin Rudd was at a conference in Munich discussing cyber security with Henry Kissinger.

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It's time to bring back the thrift

Ted Baillieu plans to shave 3600 jobs from Victoria's bloated public service.

The state of Wisconsin in the US, with a population similar to Victoria, is the battleground for rolling back excessive public service spending.

Recently elected Governor Scott Walker realised that the state was going broke.  Eight years of a union-friendly Democratic Government had seen a massive expansion of the public sector and public-sector wages.  Earnings were independently estimated to be 30 per cent above those in like-for-like private-sector jobs.  And that excludes the value of very high level of job security public servants enjoy.

In the face of vicious opposition, Governor Walker reduced remuneration levels by requiring public servants to pay a portion of their superannuation.

Victoria has also seen a surge in public-servant wages and numbers.

Since June 2008, average earnings per public-sector employee have risen by 18 per cent, easily outstripping the average private sector increase of 13 per cent.

During the same period, private-sector employment could manage only a 4 per cent increase but state public servant numbers increased by over 12 per cent.  Moreover, undoing all the economies of the Jeff Kennett era, local governments have seen a 27 per cent growth.

EVERYONE welcomes new job creation and higher wages but these have to be accompanied by productive output.

This happens automatically in the private sector where businesses need to persuade customers that they are providing services competitively.

Only then can they earn the revenue to service a higher wages bill.

In the public sector this test is absent.  Employment levels and wages are set arbitrarily.

Recently, Fair Work Australia awarded wage increases of 23-45 per cent to low-paid service-sector people largely funded by state governments.

This is typical of benefits granted by expert bodies who do not pay the costs themselves.

Though these workers perform valuable services, such increases without matching productivity improvements would send commercial businesses broke.

Senior public servants are especially adept at winning high levels of remuneration.  The head of the Premier's Department in Victoria gets $600,000 a year.  That's twice the level the Premier himself receives, (and actually four times that of Wisconsin's Governor).

Top public servants win such awards from arbitration bodies by pointing to supposedly equivalent high-paying private-sector jobs.

But private-sector executives, unlike public servants, quickly find themselves unemployed if performance is not maintained.

Moreover, remarkably few top public servants offer their services to the private sector.

UNIVERSALLY, the creation of sustainable and productive jobs in the private sector opens the door to maintaining and improving levels of prosperity.

An important key to this process is lower government cost burdens on businesses and consumers.

Victoria needs to be especially frugal in its public spending since we have fewer of other states' advantages in minerals and other natural assets.  But frugality was absent in the decades to 1992 and, following cost-cutting under the Kennett government, after 1999.

Since its December 2010 election, the Baillieu Government has done little to reduce the deadweight burden of government costs accumulated by the previous Bracks/Brumby administration.  Hopefully, a start is finally being made.

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We'll huff, we'll puff, we'll blow the budget into surplus

Bill Clinton famously said, ''It's the economy, stupid''.  So it is.  Unsuccessful politicians might be inclined to argue, ''It's the stupid economy''.  Either way the economy is important.

Both political parties want to argue about the economy this year.  The Government believe they have a good story to tell;  to which Tony Abbott said ''Make my day''.  Policy wonks will be in heaven — the general public not so much.

The fact is, with politicians arguing at each other over the economy, both parties have good stories to tell.  Australia has enjoyed a long period of good economic performance with either party in government.  That is unsurprising — despite what they say, the prime minister does not run the country or the economy.

So while we can expect to see a blizzard of facts and figures it remains that it is the future and not the past that voters most want to hear about.  End goal rhetoric is remarkably similar.  Both parties want to balance the budget and run modest surpluses.  Good.  Both parties want to boost productivity — whatever that means.  The difficulty is in how that rhetoric will be realised.

The problem facing government — any government — is debt and deficit.  Sure we can argue that government debt is small compared to other OECD economies and short periods of deficit were necessary during the global financial crisis.  But that argument isn't as comforting as we'd like.

In an intriguing analysis of Australian exceptionalism Possum found that some countries, like Ireland, had done well over long periods of time.  They also quickly became economic basket cases.  When things go wrong, they have a habit of going wrong quickly.

The first priority of government is to get the budget into surplus, then to start paying down debt, and cutting taxes.  The challenge here is that both parties like to spend.  As much as politicians would like economic growth to drive budget surpluses, they will have to cut spending.  Tinkering at the margins won't be enough.

That brings us to debt.  Here we're seeing all sorts of argument over net debt, gross debt, public debt, private debt ... the jargon never ends.  First thing to note is that private debt doesn't matter for public policy purposes.  As long as politicians resist the temptation to nationalise private debt during a crisis and let troubled firms fail, we should never worry about private debt.

We shouldn't confuse public debt and private debt either.  A corporation with little debt can be characterised as having a lazy balance sheet.  That is not a criticism of government.  At the same time, however, government should have some debt.

People tend to think about debt only as a form of finance.  But it also has other characteristics.  Trade in government debt creates what is known as the risk-free rate in financial markets.  This price is very important in asset pricing and capital budgeting and is widely used in practice.

In the early noughties the Howard government had a team of Treasury officials canvas the notion of entirely shutting down the Australian government bond market.  At that time Treasury was forecasting strong budget surpluses and net debt was expected to be negative.  If the government didn't need to borrow money then Australia didn't need a government bond market.

Many academics, and even some market practitioners, agreed with the logic.  A common argument was that private instruments could be used to ''back-out'' a risk-free rate equivalent to that generated by government bond markets.  I argued then, and still believe now, that market prices can't be faked.  Further, the empirical financial economics literature points to the importance of deep and liquid bond markets in promoting efficiency in the real economy.

So zero gross debt isn't good economic policy.  That isn't to say, however, that our current position is any good.  Right now government is borrowing because it needs the money;  because spending is too high.  Ironically the best time to issue public debt is when government does not need the money.

In the area of taxation we do see some substantial differences between the Government and Opposition.  The Government has introduced (or plans to introduce) new taxes or increase existing taxes.  Mind you the carbon tax will cost more in the initial years than it raises in revenue and I doubt the mining tax will raise much revenue at all.  The Opposition proposes abolishing those taxes and cutting existing taxes when the budget is in surplus.

Of course, all that presupposes the budget will return to surplus sooner rather than later.  Here the pressure is on Treasurer Wayne Swan.  He promised, come hell or high water, that the 2012/13 budget would be in surplus.  In May he will have to deliver a credible projected surplus and by December we'll have a good idea as to whether he has actually delivered.

Julia Gillard and Wayne Swan can huff and puff as much as they like about the Coalition's economic plans being vague, they, however, are in government and actually have to perform.  The pressure in 2012 is on them.

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Farmers feeling the squeeze of marketplace realities

We are a pessimistic bunch.  Apparently no-one will win out of the supermarket price wars.

The farmers will lose:  Nick Xenophon claimed that ''short-term gain will be followed by long-term pain for farmers — and, ultimately, consumers''.  Bob Katter said the price of cheap food will be ''the broken backs of our farmers.''

Consumers will lose:  Supermarkets are ''businesses, not benevolent institutions,'' warned the self-styled consumer group Choice last week, ''we may see longer-term impacts that work against consumers' interests''.  A writer in the Courier Mail claimed that ''we should not be delighting in the promise of lower prices'', in a column titled ''We'll pay for this price war''.

Even the supermarkets will lose:  market analysts were sternly telling the business pages that '''persistent acute food deflation posed a risk to this financial year's margins.''

One news story even initially reported ''supermarket giants have been given the green light to continue with aggressive discounting, with worse to come''.  Yes, that's right:  ''worse to come''.

If you ever needed a demonstration that producers have a lock on the public debate, look no further.

Declining prices and aggressive competition is an absolute, unbridled, unvarnished good for consumers, yet we only seem to hear how much discounting could hurt.

Sure, supermarkets should be able to defend themselves.

But our apparent sympathy for producer interests over consumer interests has — and has had — some terribly unfortunate consequences.

One analyst described to RN's PM program what he imagined was the consequences of price competition:

The very consumers that they're selling their products at lower prices to are employees of the companies that are going broke because they're not making enough money selling to Coles and Woolies.

In other words, a vicious cycle of cheap goods where we all end in poverty.

That is a complete fantasy.  If buying more for less led to economic collapse, we'd have no economy to speak of anymore.

An alternative theory is that consumers are bringing enormous competitive pressure on supermarkets to reduce the price of grocery staples, which the supermarkets respond to by trimming administrative fat, reducing margins, and getting better deals out of suppliers.

You know, a competitive market working in exactly the way a competitive market should.

It's exactly the sort of aggressive pricing dynamism that we want from the marketplace.

But producers don't like that sort of dynamism and competition.  Satisfying consumers is stressful — it's a never-ending process of innovation, refinement and creative destruction.  Markets are uncomfortable and uncertain.  And competition is destabilising for established firms.

No wonder farmers don't like the pressure being applied from the retail end.

But why should we give their complaints such credence?

Adam Smith wrote in his Wealth of Nations,

Consumption is the sole end and purpose of all production;  and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.

We work so we can eat.  We labour so we can relax.  We don't consume in order to produce, we produce in order to consume.

Smith continued to say that this ''maxim is so perfectly self-evident, that it would be absurd to attempt to prove it''.  Apparently it is not.

Protectionism is based on the belief that producer interests are more important than consumer interests.  Australia was the richest country in the world at Federation.  Ninety years of protectionism later, we had dropped to 15th.

When Australia embarked on economic liberalisation, it was a reorientation of the economy towards consumption.

But we did not similarly reorientate our political culture.  The howling of rent-seekers after such an unambiguously pro-consumer price cut has been deafening, and reported uncritically.

There's an important reason why producer interests dominate the public and legislative debate.  Only producers have enough incentive to lobby in their interests.

The benefits of producer-favouring regulations are concentrated.  Producers who believe they can get a commercial advantage out of regulatory protection have an enormous incentive to lobby for new laws.  Farmers feeling squeezed by the demands of the supermarkets email their local MP and call sympathetic journalists.

There is no equivalent dynamic on the consumer end.  Who would spend days, or weeks, or months, of their life defending ever-so-slightly lower prices?  The benefits of cheap goods are dispersed across all consumers.

When Adam Smith was writing in the 1770s, his targets were the mercantilist states of his day.  In the 18th century, governments had created cartels and monopolies in order to dampen ''troublesome competition'' and deliver political favours.

But troublesome competition is what has made us in the 21st century wealthier than at any other time in history.

Yes, consumers always demand that producers make things better and cheaper.  And not all firms can meet those demands.  This is exactly how the system should work.

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It's not sexist to be critical of Julia Gillard's performance

Political commentary has some fairly regular and predictable trends.  In an average electoral cycle the consumer of political news is almost guaranteed to hear that political parties rely far too much on opinion polls, that media outlets are biased, that politicians either aren't paid enough or are paid far too much, and that journalists are either the solution to or cause of all political problems.

Julia Gillard's period as prime minister has introduced a new trope:  that Australians are a bunch of terrible sexists for evaluating her leadership harshly.  This week Bob Brown is leading the charge, somewhat unsurprisingly pointing the finger at the media, specifically its ''male commentators''.

Brown's characterisation of Gillard's critics is somewhat disheartening, not least because we heard this same tired argument a few months ago.  By suggesting that a subconscious sexism pervades all criticism of Julia Gillard's leadership, Brown has effectively denied that there is any legitimacy to claims that Gillard has been a less-than-effective prime minister.

It is important to recognise that as a woman, and especially as a childless, unmarried woman, the prime minister is subjected to more scrutiny than her male predecessors.  Part of this is because her position is new.  Australia hasn't seen a female prime minister before, and unfortunately, there are sections of society for whom Gillard's femaleness is her defining characteristic.

There's a sort of women's magazine mentality to much of the commentary about Julia Gillard;  almost as if an invisible editor somewhere has decided that news consumers — and particularly female news consumers — aren't interested in reading about the prime minister unless her femaleness is touted as unique and reinforced by constant references to the clothes, shoes and make up she wears.  This is not confined to the prime minister;  other women in politics, like Julie Bishop, Sarah Hansen-Young and Kate Ellis, are still subjected to disappointingly inevitable ''oh look, a woman in politics'' stories, as if femaleness and political activity were still largely incompatible.

That is a legitimate example of subconscious sexism in political commentary.  Until we are able to refer to women in politics as ''politicians'' instead of ''female politicians'', women will remain a strange and slightly suspect quality in the eyes of some political consumers.

But when Bob Brown states that Julia Gillard comes in for unfairly harsh criticism because she's a woman, he is reinforcing her femaleness in the most unhelpful way.  It is not an invalid or gender-based criticism to claim that the Gillard government has not performed to the standard that many would've hoped.  Suggesting that criticisms of the Gillard government are inherently sexist reinforces the idea that we can't talk about women in politics outside the context of their gender.

There are very valid criticisms to be made concerning Julia Gillard's performance as prime minister.  Her government has allowed itself to be defined by leadership tensions;  Gillard has not proved effective at banishing the spectre of Kevin Rudd — his potential ambitions and intentions seem to have paralysed effective government communication to the electorate.

In addition to having a communication problem, the Gillard government has a policy problem.  The prime minister has retreated from policy positions that previously took on the importance of an essential, unshakeable pillar of government reform, such as mandatory pre-commitment for poker machines.  Political commentators and consumers sense that this is a government without a clear, planned policy vision for the future.

Criticising the Gillard government's disappointingly narrow policy ambitions has nothing to do with sexism or gender.  It is a continuation of the same observations made about the Rudd government:  all spin and no substance.  However, the Gillard government also falls short on the spin.  If the criticisms of Julia Gillard surpass those levelled at Kevin Rudd during his term as prime minister, it is because Gillard is operating the same policy-free government, with the added burden of an inability to communicate.

There is enough sexism in politics without having to invent it.  The real problems with the Gillard government are a lack of vision and policy commitment, and a breakdown in communication to voters.  These are problems that need to be addressed if the Gillard government wishes to be even vaguely competitive at the next election, but these issues are being obscured by yet another predictable and depressing focus on the prime minister's gender.

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Scientific research drowning in a sea of alarmism

Last week, almost 400 people attended a public meeting in Newcastle to learn about the scientific evidence that underpins sea-level change.

The meeting was prompted by strong public discontent with Lake Macquarie City Council's new coastal planning regulations designed to accommodate a science-fiction prediction of a 91cm rise in sea level in the district by 2100.  This prediction comes from the NSW government, which in turn sourced it from a UN political body, the Intergovernmental Panel on Climate Change.  As with its unnecessarily alarmist projections of global warming, the IPCC's estimate of future sea-level rise derives from speculative computer models.

Where, then, should the government get its advice about sea-level change instead?

Prior to the advent of global warming alarmism in the late 20th century, governments and councils drew their advice from statutory authorities involved with harbour and tidal management, and from scientific research groups such as the CSIRO.

With the IPCC's formation in 1988, which was tasked to ponder on global warming, the focus of governments shifted from sea-level change as a ports, harbours and beaches issue to it being seen as a more general environmental issue related to hypothetical, human-caused global warming.

At about the same time, attention shifted from basing public policy on the use of measured tide gauge records to basing it on the theoretical projections of computer models.  By the end of the 1990s, Australian governments and councils were basing their sea-level planning almost entirely on IPCC advice, that is, on unvalidated computer predictions that are in no way tied to accurate local sea-level measurement.

The CSIRO and the Bureau of Meteorology, at official level, have consistently supported the IPCC sea-level projections as valid and accurate, as indeed has the government-appointed Coasts and Climate Change Council.  To make matters worse, the IPCC sea-level predictions are for an entirely notional statistic, global average sea-level.

Astonishingly, the predictions have been adopted uncritically as the basis for local planning.  This is equivalent to introducing new housing regulations for the heating and cooling of Australian dwellings based upon global average temperature.  Well, now that we have learned about the unsuitable nature of its sea-level speculations, what else do we know about the IPCC?  Does it have form?

My word it does.  As long ago as 1996 a former president of the US National Academy of Sciences, Frederick Seitz, commented on its second assessment report on global warming that "I have never witnessed a more disturbing corruption of the peer-review process than the events that led to this IPCC report".

Subsequently, successive scandals have engulfed the IPCC, and destroyed the credibility of its claimed "gold standard" of science summary and peer-review.

These scandals are well described in several easily accessible publications, and include such things as statistical chicanery related to the global temperature "hockey stick" (a faulty analysis of ancient tree ring measurements used to reconstruct global temperatures), a biased and dysfunctional peer-review process, the Climategate affair (leaked emails from Britain's Climatic Research Unit that contained abundant evidence of scientific malfeasance by leading IPCC scientists), the Glaciergate affair (inaccurate anecdotal evidence about Himalayan glacier melt in an IPCC report) and the infiltration of IPCC advisory panels and authors by environmental activists and partisan researchers.

Public reaction to these scandals has included calls for the IPCC be disbanded or that its chairman, Rajendra Pachauri resign, with former German chancellor Helmut Schmidt even recommending an IPCC audit be undertaken because "some of their researchers have shown themselves to be fraudsters (betrueger)".  In such circumstances, that Australian governments still use IPCC advice about sea-level change as their guide for coastal planning is hard to understand, when site-specific measurements of actual Australian change are readily available.

Well-qualified independent scientists have repeatedly drawn public attention to the existence of a body of official agency sea-level measurements (now maintained by the BOM), and peer-reviewed research papers based on these and other empirical data, which demonstrates conclusively the four following facts.

First, that rates of sea-level change vary around the Australian coast.  This means any new coastal planning regulations (if and where they are needed) should be based on the appropriate local sea-level measurements rather than a hypothetical global average.

Second, the longest east coast tide-gauge record, from Fort Denison (Sydney), records an average rate of rise over the past 100 years of about 1mm a year (10cm a century).

Third, that other tide gauges, scattered around Australia as part of the national tidal network, mostly record rates of long-term rise between about 0.5mm and 2.5mm a year with no change in behaviour in the late 20th century that might reflect a human (global warming) influence.

And, fourth, that the Sydney tide gauge, as well as other long tidal records from nearby (Fremantle, Auckland) and overseas, exhibits a slowing rate of sea-level rise over the past 40 years.

All of which leads directly to the three following money questions.  Why do Australian governments still draw their advice about sea-level change from the IPCC, a discredited international political agency that is now known to flout conventional scientific and peer-review procedures in favour of promulgating environmental activism?

Why have governments adopted the irrational policy of basing Australian sea-level planning on theoretical computer-generated projections of global sea-level change?

Last, why do Australian authorities ignore the solid base of empirical measurements, and the more than 100 years of peer-reviewed local and international research, that contradicts completely the alarmist views of the IPCC;  and that also provides the accurate, site-specific records of local sea-level change that are the necessary basis for achieving sensible coastal policies in Australia?

The good folk who live around Lake Macquarie, and doubtless tens of thousands of other coastal residents upon whom new planning regulations are now impinging, deserve an explanation;  and it needs to be a good one.

Who'll drag us free of our heavy debt burden?

While most Australians were tanning themselves at the beach during their summer breaks, the federal opposition and the Gillard government traded blows over what will be a key political issue this year:  financial management.

Opposition finance spokesman Andrew Robb depicted Australia's gross public debt growth as ''Icelandic'' in scale, consigning taxpayers to significant fiscal risks in the event our terms of trade moderate as a result of a global economic slowdown.

Pointing to recent economic growth and low unemployment, assistant treasurer Bill Shorten dismissed the claim of profligacy in government borrowing, stating our only connection with highly indebted Iceland is that ''we are both an island''.

At home, government ministers have made a political virtue of pointing to Australia's relatively low levels of public sector debt compared with Europe and the US, whose debts in some cases exceed the size of national economies and which have experienced recent credit rating downgrades for their sovereign bonds.

International Monetary Fund financial statistics confirm the low proportion of debt as a percentage of GDP for Australia compared with other advanced economies.  However, the data also shows Australia has engaged in an activist approach towards accumulating public sector debt.

From 2007, one year prior to the global financial crisis, to 2010, the inflation-adjusted gross public debt of Australian federal, state and local general government sectors increased by 131 per cent to $253 billion, or 21 per cent of GDP.

This figure places us in the top four of the international debt splurge during the last quarter of the past decade, following Ireland (gross debt growth of 213 per cent), Luxembourg (189 per cent) and Iceland (181 per cent).

Governments have been able to significantly increase their borrowings, partly through their efforts in relaxing legislative constraints.

Since late 2007, the commonwealth has raised its legislated gross debt ceiling from $75bn to $250bn, with the prospect of more increases in the near future as the dollar amount of commonwealth securities on issue approaches the upper limit.

When relatively liquid financial assets of Australian governments, including cash and their holdings of bonds of other governments, are taken into account, our net debt position at first glance looks eminently more appealing with the net debt-to-GDP ratio standing at about 4 per cent in 2010.

That said, the argument that governments across all levels in Australia during recent years have engaged in a debt spree is sustained when it is recognised we had an overall negative net debt-to-GDP ratio prior to the GFC.

These figures are also generous to present governments in that they understate the level of sovereign debt, as they do not include the borrowings of semi-autonomous government trading enterprises and other off-budget public sector entities.

The debate over the actual magnitude of debt is situated within a broader discussion concerning how and to what extent public debt — and its size — matters for a country's overall economic performance.

Proponents of a greater role for government in economic activity, including Keynesian economists concerned with stabilising macroeconomic aggregates, have recently made two key arguments to delegitimise concerns about the use of debt to finance government expenditures.

The first is that the economic effects of government borrowings are benign for as long as economic activity remains subdued, implying crowding out of private investments through higher interest rates is unlikely to materialise as a major concern.

However, there are numerous ways in which governments crowd out private economic activity, such as in instances where debt is being used to finance public consumption where the economy-wide benefits, if any, are exhausted within a short period of time, rather than financing long-lived productive assets such as economic infrastructure.

It is worth noting that during the GFC, Australian governments conceded debts were being raised to cover shortfalls in taxation revenues and hence maintain consumption, and in recent years the quantum and rate of growth of borrowings by the general public sectors of all governments has exceeded their capital investments.

While it is conceivable that governments have dedicated borrowed funds to their growing array of special economic and social infrastructure funds, the ability of governments to raid these funds for recurrent spending purposes poses an ever-present threat to the efficient use of funds, and also to political accountability more generally.

Governments, just like households and businesses, need to meet their gross debt obligations, but unlike households and businesses, who repay principal and interest on loans through incomes acquired through mutually consenting market transactions, governments will compulsorily impose taxes that impose efficiency and other burdens upon households and businesses.

Even in cases where governments use borrowed funds to invest in activities yielding future streams of benefits, the growth in the size of government that public debt facilitates implies the displacement of private sector decision-making by less-efficient political decisions over resource allocations.

Second, arguments are made that the incidence of public debt should not be a matter for policy concern since we owe the debt to ourselves in our capacities as members of the community.

However, the domestic or foreign bondholder who voluntarily purchased the government security is not necessarily the same individual as the domestic taxpayer who bears the burden of the debt.

This point is particularly pertinent in the cases of existing minors yet to enter the workforce and pay taxes, and indeed unborn future generations, who have not politically consented to the additional tax burdens resulting from governments' debt-financed public expenditures.

Since 2007, Australia has joined with other advanced economies in a co-ordinated splurge in government borrowing, increasing public sector size while enervating the productive private sector and risking the living standards of future generations.

To argue that we are better off because others are sinking in a fiscal sea of red ink faster diverts our focus away from the common underlying cause of government overspending that requires remedial attention, rather than empty promises and intergenerational buck-passing.

With Opposition Leader Tony Abbott differentiating himself from the Rudd-Gillard deficit-and-debt record by signalling an intention to reduce the size of government, securing a reputation as to who will be the best financial manager is now well and truly up for grabs.

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Renewable energy rules lose traction

Energy policy in Organisation for Economic Co-operation and Development countries is spurred by concerns that gas and oil are becoming scarcer and that fossil fuel emissions must be curtailed.

This view is being punctured by technology allowing massive new resources to be developed from shale and coal seam gas.  Waiting in the wings for a technology breakthrough is methane hydrate, natural gas that is locked in ice, which is the world's largest source of hydrocarbons.

These developments have not prevented energy policies being dominated by carbon taxes and their uglier sibling, renewable energy requirements.  The former put a price on carbon either through direct taxes such as those introduced by the Gillard government or indirectly, as with the European Union's cap-and-trade approach.

Renewable energy requirements mandate a share of renewables such as wind and solar within total electricity supply and sometimes also stipulate generous feed-in tariffs for solar.  Governments also subsidise low carbon emissions through their budgets.

But the legislative steamroller of carbon taxes and regulations preventing low-cost energy is crumbling.  Spain was among the first to fall.  The former socialist government had already started dismantling the web of renewable energy subsidies, and the new conservative government has accelerated this.

In an ominous portent for local superannuation funds that have invested heavily in supposedly assured returns offered by wind farms, Spanish subsidies have been cut on new and existing facilities.

Now Germany is waking up.  A recent survey shows one-fifth of its companies considered shifting to other countries because of high power costs arising from renewable energy obligations.  Subsidies to solar power were more than $10 billion last year.  The Finance Minister is calling for subsidies to be phased out, and the Environment Minister has agreed to a scaling back.

Removing the renewable energy subsidies should be straightforward for the Australian government.  Now that the carbon tax is in place, the subsidies are superfluous imposts on the consumer, costing $3 billion a year by conservative estimates.

The opposition's $3.2 billion "direct action" scheme is its greenhouse policy centrepiece.  Aimed at getting the best emission reductions per dollar of spending, it also makes high-cost renewable energy schemes redundant.

Savings are available by cutting superfluous policy and relying on the carbon tax or its Coalition counterpart.  But this assumes the political parties' plans are based on achieving the goals set rather than being simply political exercises.

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Danger of new thickets of gas regulation

Peter Roberts' ''Globalised gas pricing has local costs'' (Talking Point, January 30) applauds the commonwealth's National Energy Security Assessment, which advocates using export controls on gas.

The objective of this is to ensure that domestic consumers obtain supplies at less than the world price.

Roberts argues that dedicating a proportion of gas supplies for domestic use will allow more jobs by diverting exports of gas for electricity production for gas allocated to industrial processes.

In supporting this protectionist approach, Roberts fails to make the connection with the carbon tax, which penalises domestic but not overseas users of local supplies of coal and gas.  This places a far greater penalty on Australian domestic energy supplies than any advantage that export controls could offer.

Moreover, he says we can say goodbye to $4 a gigajoule gas at a time when the United States price has dropped to under $3.  Technology is unlocking formerly inaccessible coal seam and shale gas and is creating a glut.  Australia has valuable gas resources in coal and shale, but so have many other countries.

If we insist that project approvals should be conditional on diversion of supplies to local users at preferred prices, this cost imposition will reduce Australian development in these highly prospective fields as well as confronting investors with new and unwanted thickets of regulation.

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Yet another flipping flop

Credibility is draining away from Julia Gillard as if from an open wound.  The effect of a year of mounting mistrust in the nation over the carbon tax, along with the recent porkies over pokies and controversy over the Australia Day security scare, is destroying the Prime Minister's authority.

More than a few Labor partisans think she is politically finished.  Even those who rule out a change in leadership rally around Gillard with no hope.  Theirs is a contemporary charge of the Light Brigade.

Gillard's problem stems not, as many people suggest, from her stabbing a prime minister in mid-2010, which sparked a cycle of revenge knifings in the form of malicious cabinet leaks.  It has more to do with the fact the Prime Minister has no core convictions.

The flip-flops are staggering:  carbon tax, uranium sales, problem gambling, offshore processing, cash for clunkers, even the US alliance.  (Contrast her cringing, forelock-tugging to the Americans — choking up before Congress, fawning over the President, marching in lockstep with US forces in the depressing and endless war in Afghanistan — with her call in 2005 for an ''independent foreign policy'', which is left-speak for snubbing Uncle Sam at every opportunity.)

The dramatic turnarounds merely breed more doubts in people who wonder where she is coming from.  Even the Labor Left cannot be sure she is one of them.

Now, one could argue that a volte face, like bias or beauty, is in the eye of the beholder.  It can reflect an alert mind, one that adjusts to changing circumstances, or it can reflect ruthless ambition without any principles.  The latter all too often defines Gillard's leadership.

It's difficult to abide the policy and philosophical U-turns.  But when style and soul are accounted for, it's even more difficult to say how she is substantively different from the man she assassinated and for whom a few people pine.

Several commentators seem to suggest Labor's troubles would disappear if only Kevin Rudd replaced Gillard.  But although it may initially lead to a poll boost, it would ultimately fail to revive the party's electoral fortunes.

Why?  Because Rudd shares with Gillard a credibility problem:  they lack deep conviction, gut instinct and will power.

That is why they lead no movement, are spokespeople for no cause and have no cheer squad.

Rudd at least won office in his own right but his evident belief that he could be all things to all people cost him power and should disqualify him any right to get a second chance.

In 2007, he seduced the voters — particularly the battlers in Queensland's sun-belt seats and Sydney's western suburbs — with his wonderful alternative of Howard-lite:  fiscal prudence and tough border protection, both packaged with evangelical talk about saving the planet.

From the outset, however, his leadership was an exercise in bad faith.

This was a man who campaigned as an ''economic conservative'', committed to low public debt and free-market reform, but who, in government, pushed a big-spending and interventionist agenda that would have made Whitlam proud.

A man who pledged to ''turn the boats back'' in 2007 but who disbanded the Pacific Solution in 2008, before preaching a ''hardline'' policy against ''evil'' and ''vile'' people-smugglers in 2009, then warning Labor not to ''lurch to the right'' on illegal immigrants in 2010.

A man who claimed global warming was ''the great moral challenge'' but who, in a changing climate — the rise of Abbott, collapse of Copenhagen, defeat of US carbon legislation — scrapped the unpopular emissions-trading scheme.

Meanwhile, the experiment was frankly weird.  When the bloke sitting next to you at the pub starts talking about ''fair shake of the sauce bottle'' and ''detailed programmatic specificities'', you excuse yourself and leave quickly.

The contrast with John Howard is striking.  Even in his darkest days when, according to polls, so many voters said they did not approve of the job he was doing, about as many people nevertheless said they respected the man himself.

Howard was, of course, authentic and, as the distinguished journalist Michelle Grattan put it, represented the ''awesome ordinariness'' of middle Australia.

Just as important, the public had faith in the broad consistency of his conservative principles, agree or not (and I disagreed with him over Iraq).

He recognised that, if one had thought through one's policies and had argued them with sound logic and deep conviction, there was a chance they would prevail in the battle of ideas.

This was the Howard phenomenon and it helped make him the greatest prime minister since Menzies.  It is also a standard against which political leaders should be judged.

What the nation needs is someone who can lead.  This does not mean someone who can read the opinion polls and focus groups and flip-flop when the moment of truth arrives.  Real leadership means standing for something.

GOP's first-rate foreign policy chaos

Distinguished US commentator Walter Lippmann once wrote what is arguably the single most important sentence written on foreign policy:  ''Without the controlling principle that the nation must maintain its objectives and its power in equilibrium, its purposes within its means and its means equal to its purposes, its commitments related to its resources and its resources adequate to its commitments, it is impossible to think at all about foreign affairs.''

That truth, alas, has been comprehensively ignored by the US Republican presidential candidates who have won the first three caucuses/primary contests:  Rick Santorum (Iowa), Mitt Romney (New Hampshire) and Newt Gingrich (South Carolina).

For the former Pennsylvania senator, Massachusetts governor and Speaker of the US House of Representatives give classic expression to the dissociation of ends and means.  On the one hand, they champion balanced budgets and smaller government.  On the other, they demand assertive US global leadership and intervention across the world.

They make the downsizing of the federal government a priority.  But they also preach an ambitious foreign policy inspired by vision and a sense of mission, a policy that has been instrumental in building up the power of the federal government since the outset of the Cold War.  They want to slash the $US14 trillion-plus debt, but do so without applying the knife to the defence budget.

Romney declares in quintessential neo-conservative language:  ''I will insist on a military so powerful no one would think of challenging it''.  Never mind Nixon's realist warning 40 years ago:  ''It is when one nation becomes infinitely more powerful in relation to its potential competitor that the danger of war arises.''

Rick Santorum believes the Iranian threat is so dire that a preventive strike on Tehran's facilities is justified.  But surely the lesson of Iraq is that the tried-and-tested policy of deterrence can keep Iranian President Mahmoud Ahmadinejad in his box.  After all, a terrorist can run and hide, but even a rogue state has a mailing address.  If the mullahs use WMD against the US or its interests in the region, it would guarantee retaliation.

Gingrich describes himself as a ''cheap hawk''.  That is, someone who wills the end, but baulks at providing the means.  This is one of the most irresponsible and dangerous things one can propose in foreign policy.  When political figures speak in these terms, it is clear they have not thought seriously about what they are saying.  F. Scott Fitzgerald once suggested ''the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function''.  Perhaps.

To advocate two dramatically opposed and incompatible policies at the same time is merely the evidence of first-rate confusion.  Foreign policy realism — with its emphasis on the balance of power, national interests, spheres of influence and recognition of limits — has shaped the thinking of Republican presidents from Eisenhower to George Bush Sr.  Sadly, this tradition is alien to today's Grand Old Party.

As Francis Fukuyama, author of The End of History? and a one-time leading neo-conservative, has remarked:  ''All of the Kissinger-era realists have gone away ... Today the party is just a wasteland.  They are total amateurs on foreign policy.''

The true origins of anti-paternalism

Opposition to government paternalism wasn't always a conservative or libertarian thing.  Indeed, the use of the word ''nanny'' to describe state interference in individual choices originally came from the left.

In a 1960 article in the New Statesman, the magazine set up by members of the Fabian Society, nanny was deployed to attack the British Board of Film Censors.  ''Novels and the Press get along, not too calamitously, without this Nanny;  why shouldn't films?'' asked a New Statesman columnist William Whitebait.  Nanny ''exercises a crippling drag on the growth of a serious and healthy British cinema.''

Eight years earlier, the American journalist Dorothy Thompson (and one time wife of Sinclair Lewis, the Nobel-winning socialist writer) was using nanny to describe British imperialism in the Middle East.

Western empires, Thompson wrote in her syndicated column, have ''filled the role of headmaster, or Nanny-governess''.  The West does not treat the inhabitants of its colonies as equals.  She continued:

It is an amusing notion that comes to me that, with the retreat of empire, Britons are turning Britain itself into a Nanny-state, perhaps out of a long habit in persuading or coercing natives to do what is good for them.

Anti-censorship and anti-empire.  These are not typical conservative positions.  But both were drawn from the same anti-paternalism that drives the modern resistance to public health regulation — a belief that a powerful class should not impose their own values on the rest of society.

Colonial masters instructed their subjects in the best way to live their lives — lessons given force by military domination.  And 20th century censors claimed to be protecting the less refined from the crude excesses of popular culture — judgements only moral superiors could make.  Whitebait made much of the fact the British censors were aging aristocrats.  Sir Sidney Harris, 83, was being replaced by Lord Morrison of Lambeth, 72.  Who were they to tell Britons what they could or could not watch?

Of course, this is not how public health activists record the history of anti-paternalism.  I gullibly took their claims at face value in May last year when I wrote in The Drum that ''nanny state'' is first found in the Spectator in 1965.  This is more than a decade after Thompson used it.

According to this story — told by the Australian public health luminary Mike Daube in a 2008 paper in Tobacco Control — it was coined by the former Conservative minister of health Iain Macleod, who later died of a heart attack.  (Macleod was a deeply ill man, suffering from an inherited weakness for gout, a war wound, and a chronic inflammatory disease.  But Daube and his co-authors imply it was just smoking that did him in.)

Does nanny's origin matter?  Yes, insofar as it demonstrates that anti-paternalism is not — or at least was not — the exclusive preserve of the right.

How would the readers of those words in the New Statesman have responded to the claim by the British Labour leader Ed Miliband last week that the Tories had failed to stop the sale of discount chocolate oranges to the masses?  Yes, Cameron complained about the same thing when he was in opposition.  But, as our New Statesman readers might say, Cameron is a Tory.  You'd expect a bit of Tory paternalism from him.

Or how would those who nodded along with Dorothy Thompson's distaste of imperial paternalism feel about the recent Australian complaints that Aldi is selling cheap alcohol?

Rejecting eight out of Aldi's 20 liquor license applications in New South Wales, the chairman of the state liquor regulator said last week that ''I don't know if there are areas that have too many bottle shops but certainly there are areas that have enough''.  Are there?  That seems a call best made by Aldi and its customers.

One could even go so far as to say that cheap is a good thing.  Recall that it was Aldi which consistently won the Rudd government's Grocery Choice competition.  Aldi is at once hero for selling consumers goods they want cheaply (food), and pariah for selling consumers goods they want cheaply (alcohol).  This doesn't have just a whiff of paternalism.  It has a stench.

And somehow such paternalism is even more obnoxious when it is petty, as it is with the Aldi licence rejection.  Sure, reports suggest Aldi's cheapest wines are rubbish.  This is no surprise at $2.49 a bottle (By contrast, a critic in The Australian suggests that the 83c beer is ''gluggable'').  But so what?  Cut-price bottom-shelf alcohol is already available at other stores.  Geographic limits on bottle shop numbers are designed to do nothing more than frustrate purchasers.  ''All this of course for our good,'' as Whitebait sarcastically told his New Statesman readers.

Those who seek to limit our choices usually have good intentions.

The film censors who banned Battleship Potemkin for three decades believed they did so in the British people's best interests.  The colonialists believed the same about the third world.  And those who would limit bottleshops in New South Wales also believe they are doing the right thing.

But the underlying philosophy is the same:  a deep paternalist belief that people must not be trusted to look after themselves.

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Lost in translation

As school returns for 2012, there are now more students learning Latin than Chinese.  Once we take out Chinese-born students and those who speak Mandarin at home, there are just 300 students learning Mandarin in year 12 in Australia, according to accounting body CPA Australia.  That is not how it was supposed to be.

In 2008, Kevin Rudd said he wanted 12 per cent of Australian students to be fluent in an Asian language by 2020.  An earlier program, launched in 1994, was supposed to have 60 per cent of all students conversant in Chinese, Japanese, Indonesian or Korean by 2006.

There has been a general decline in language education, but a catastrophic decline in Asian languages.  Korean is now virtually a dead language in the Australian school system, Indonesian is likely to disappear soon, and Japanese is sliding backwards.  Chinese survives — even thrives — but only because it is taught to Chinese students.

Never dissuaded, Julia Gillard commissioned a report in November into the ''Asian century''.  It is likely to recommend further investment in languages.  Deputy Opposition Leader Julie Bishop believes she can trump that and make Asian language studies mandatory for all Australian students — no exceptions.

But the idea that government should prioritise Asian languages is an unexamined faith.  Champions of Asian languages cite cultural benefits (increased understanding of our northern neighbours), economic benefits (ability to deal with trading partners in their language) and educational benefits (learning a second language helps with English literacy).

None of these is particularly convincing.  There's a reason Asian languages aren't as successful as advocates would like.  And it isn't only because the government hasn't spent enough money.  It's that not enough students want to study them.

Australian students aren't being irrational.  Language study responds to demand, and the rest of the world is learning English.  Ours is the global language, the lingua franca.

Language standardisation has come by necessity, not design.  Put Japanese, American, German and Saudi executives in a boardroom and the common tongue will be English — the language of business and treaties and translation.

We all know this.  So why does no one blink when policymakers imply otherwise?  One advocate of Asian language learning said on the ABC's 7.30 last week that expecting to rely on English in business negotiations with an Asian counterpart is daft.  Really?

If you think Australians negotiating with Chinese producers are at a disadvantage if they don't know Chinese, then imagine how much of a disadvantage Chinese producers have if they don't know English — the first or second language for virtually all their international customers.

Anyway, how many students today can we seriously expect to be business negotiators in Asia — and using the exact language they learned as school kids?  Trade is central to our lives, sure, but few of us personally negotiate trade deals.

That advocates use only extremely narrow cases where these languages would be useful does not inspire confidence.

English's dominance is something to be celebrated, not regretted.  The rest of the world is playing catch-up.  And the education curriculum is already stuffed full.  Choices have to be made.  If governments want to give every student an advantage in business, perhaps basic statistics and accountancy would be more helpful.

When people need languages, they learn them.  And the data shows most of our students are not choosing Chinese.  The language lobbyists may need to revisit their assumptions.

But they won't, because their goal has less to do with the economic and practical benefits of language education, and more to do with an ideological vision of the future of Australia.  It's about politics, not learning.

For those who argue that Australia must become an Asian nation, squeezing Asian languages into the curriculum is an easy way to turn that vague idea into something concrete.

Without a languages policy, the Asian nation philosophy would be revealed for the empty vessel that it is.  A policy to ''deepen engagement with Asia'' only makes sense in the context of international diplomacy.  The rest of us non-diplomats engage personally and commercially with Asia whenever we want through business, consumption and tourism.  No need for a government white paper to tell us to import Chinese goods or visit Angkor Wat.  If we want to appreciate Asia better, our expansive immigration program is already far more effective at building cross-cultural understanding than the memory of a few broken words of Mandarin learned at school.

Anyway, why should the education system be a plaything for the geopolitical and cultural imaginations of our politicians?  We shouldn't pretend that shoehorning this complex, ideological vision of Australian society in the 21st century into the secondary school curriculum is going to make good education policy.

One final justification for Asian language learning is that it taxes the mind and therefore promotes general literacy — it is a worthy educational priority for its own sake.  This may be true.  But why Asian languages?  Why not Arabic, or Greek, or Russian, or Cherokee?  And what's wrong with Latin?

Foreign languages are also a remarkably indirect way to encourage English literacy.  Again, the school day is short, and languages are hard.  Chinese is uniquely hard — for instance, about four times as hard as French.

Second languages should be a personal choice, not a tool for geopolitical realignment.  A recent book by Belgian philosopher Philippe Van Parijs argues that English so dominates the globe that non-English speakers should be compensated.  English speakers have an advantage;  therefore the world needs a ''language tax''.

This is obviously absurd, but Parijs has a point:  policymakers need to understand the historically unprecedented dominance of English.  Perhaps, by resisting the 20-year push for them to choose Asian languages above all others, Australian students already do.

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Has politics finally moved beyond the personal?

The Libertarian James Paterson

Politcians tax us too much, spend our money wastefully and regulate our lives.  So why do we spend so much time worrying about their personal lives instead of the things that really matter?

Newt Gingrich's expectation-defying persistence in the Republican contest for US president is one piece of evidence that American voters have moved beyond the personal.  Back home, there is no evidence Australians view Bob Hawke's time as prime minister any less favourably because of their knowledge of his personal relationships.

But despite voters' willingness to overlook politicians' flaws, sadly there is also no sign that the media in the US or Australia will let go of their obsession with their private lives.  What Gingrich is alleged to have said to his then wife Marianne during their marriage in the 1990s has no relevance to his capacity to serve as president today.  But that did not stop the television network ABC from interviewing her about their family life and broadcasting it days before a crucial primary.  Nor did it stop CNN from wasting the first question in its South Carolina debate by dwelling on the former House speaker's second marriage, instead of far more important matters.

The private lives of the NSW MPs David Campbell and John Della Bosca also had no impact on their ability to discharge their duties as ministers and representatives of their electorates.  Yet the media went into a frenzy after revelations about what they got up to after hours.

It's not as if there aren't plenty of other legitimate things to judge politicians on.  Many do a lousy job as ministers.  However, decent journalists should never find themselves short of material to hold governments accountable.  And let us not forget that many of those who write about politicians would struggle to meet the high standards by which they judge others.

The reality is that politicians — just like the rest of us — are flawed beings.  The sooner we recognise that they are fallible, the less disappointed we will be when they inevitably make mistakes.  Perhaps it will lead us to entrust them with less power over our lives, and to have lower expectations about their ability to fix every social ill our modern society is supposedly afflicted by.

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Labor's Texta moment

It's only January but we've already got the quote of the year.  ''We will be getting the butcher paper and Textas out and solving the country's problems''.  That's how an unnamed federal Labor MP described what will happen on Sunday at 2pm in the caucus room at Parliament House in Canberra.

The Prime Minister has called together all her 102 MPs for a ''brainstorming'' session.  Hopefully all the country's problems will be solved in time for the next federal election.

The last time anyone was let loose with butcher paper and Textas in Canberra was the 2020 summit three years ago.  The 1000 best and brightest Australians gathered to ''harness the best ideas for building a modern Australia''.  That turned out well.

In the end, participants didn't need their butcher paper.  Given Kevin Rudd and then Julia Gillard have acted on only about a dozen of the 1000 ideas from the summit, the best and the brightest would have done just as well with a couple of Post-It notes.  With suggestions like a 1 per cent tax on the internet, it's no wonder the summit has been ignored.

The 102 federal Labor MPs gathering in Canberra on Sunday hopefully won't be as far removed from reality as were the 1000 people at the 2020 summit.  Hopefully this time the Textas will be put to better use.

To be fair, back in 2008, the full extent of the global financial crisis was not known.  Back then there was still hope for a V-shaped recovery for the global economy and for the world's equity markets.  Four years on, we now have the International Monetary Fund warning of a ''1930s moment'' if the fund doesn't get $1 trillion to bail out not just Greece, but also Italy and Spain.  In 2009, Barnaby Joyce was laughed out when he warned of the consequences of the United States defaulting on its debt.  Now, not so many people are laughing at Barnaby.

If Labor's brainstorming session is like others of its kind, a ''facilitator'' is going to start by getting people to shout out words and phrases that sum up the party's predicament.

Then, once a note-taker has written down in red Texta all the federal government's problems, they will write down all the solutions in blue Texta.

You can imagine what MPs will be yelling out:  ''lack of vision'';  ''no clear message'';  ''no one trusts us any more because of all our broken promises'';  ''Kevin Rudd''.  There's validity in all these points.  And these problems are all largely self-inflicted.  But federal Labor is actually facing a much bigger problem.  It is facing the problem confronting all governments in the Western world.  This problem can be summed up in one word:  ''austerity''.

The shadow treasurer, Joe Hockey, got it right when he said on ABC Radio on Wednesday that Australians should prepare for two decades of uncertainty.

''The bottom line is that we are going to have a very volatile period, economic period, for the next 10 to 20 years ... And the best way to inoculate ourselves against that volatility is to ... reduce debt right across the board — in corporate Australia, in family homes and of course at the government level.''

On Sunday, no Labor MP is going to say ''maybe we should listen to Hockey''.  Maybe someone should.

The reality of austerity and the reality of what the electorate is doing every day as it starts skimping and saving and paying off debt runs completely counter to Labor's rhetoric, which is that spending kept Australia out of recession.

Voters aren't always stupid.  They know that Australia's government debt is nowhere near as bad as the rest of the world's, but they also know that the last Coalition government left Labor a budget surplus and almost zero government debt.  And as much as Keynesian economists like to pretend otherwise, voters realise that government budgets and household budgets are not very different.

In the long run, neither governments nor households can spend more than they earn, and debt, eventually, has to be paid back.

This is what Labor MPs should be talking about on Sunday.

All the debates the policy elites in this country have been having recently about productivity and industrial relations, sustainability, innovation, manufacturing and so on might not count for much at the next federal election.  The contest could rest on the basic issue of how the parties are perceived.  One side is for ''spending'', the other is for ''saving''.

The side that promises to spend more usually wins.  However, in the economic turmoil of the next 20 years, maybe this rule is about to be broken.

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Feminism: a shadow of its former self

Putting aside her tendency to namedrop personalities and organisations that the Australian left loathe the most, such as Sarah Palin, Elizabeth Humphrys has revealed just what it is about feminism that receives so much public scorn and disrespect these days.

Notwithstanding our clear ideological differences Humphrys and I at least seem to be in agreement that the term ''feminism'' has transitioned into what is now largely a dirty word, albeit for different reasons.

According to the third-wave feminist strictures of Humphrys, feminism as conventionally understood in academic circles today is inexorably tied up with patriarchy theory.  While this is an abstract, and rather contentious, basis for rejecting the feminism label, it is surely her right in a society that upholds freedom of conscience to adopt such a stance.

Earlier conceptions of feminism are also not to Humphrys' tastes since, it is claimed, they fail to adequately consider how race, religion, ethnicity and socio-economic status might serve to conflate the experiences of oppression still being felt by women.

The third, and final, key objection by Humphrys to the term feminism is that some women who subscribe to non-socialist thought have described themselves, in some form or another, as feminists.  Indeed, there seems to be no greater source of revulsion for leftists than to see classical liberals or even conservatives labelling themselves as a feminist.

So in response to all of these issues, what does Humphrys do?  She consigns feminism to the dustbin since it is tainted in her mind, embraces the possibly equally tainted second-wave feminist label of ''women's lib'' as her own, and then asks ''who is up for a fight for real emancipation from gender discrimination'' as any self-respecting third-wave feminist probably would.

No wonder why a number of commenters to her original piece expressed confusion!

By contrast she should be trying to restore that now-tarnished word to its former glory, because of what many women's libbers, second- or third-wavers today refuse to acknowledge:  feminism, properly so called, is inextricably linked with the great liberal aspiration of extending the bounds of human freedom more generally.

The early feminists from 19th and early 20th centuries, inspired by figures such as Mary Wollstonecraft, Voltairine de Cleyre and Suzanne La Follette, saw their primary objective as being to break down legal and other barriers preventing women from realising equality of opportunities alongside men in economic and social realms.

These and many other first-wave feminists saw governments as obstacles to the realisation of greater freedoms for women.  Accordingly, a number of influential feminists of earlier generations tended to be, although not exclusively, of classical liberal persuasion with a corresponding disposition against large, intrusive governments that restricted individual and group rights and freedoms.

Despite long and sometimes bitter campaigns the early feminists eventually earned hard-fought wins for freedom;  the legacy of which immeasurably benefits all women in advanced countries today.

Without diminishing the achievements of the early feminists, these pro-liberty gains were secured in part with the support of men sympathetic to the feminist cause.  I am not only referring to those important male philosophers and activists siding with the principles of feminism, such as John Stuart Mill in the 1800s and even John Locke as early as the 1600s.

In fact, women could not have won significant gains in equality of opportunities in education, marriage, property rights and work, for example, without the acquiescence of male legislators in often limited-franchise parliaments, who found the basic argument that ''women's rights are people's rights'' impossible to ignore any longer.

However, not satisfied with the freedoms already gained for women to work, attain a worthwhile education, own property, set up a business, and vote, the second- and third-wave feminists of the late 20th and early 21st centuries fundamentally changed their strategic focus regarding their relationship with their historical enemy — the coercive, misogynist state.

Armed with new campaign slogans such as ''the personal is political'', feminists since the 1960s have increasingly moved away from advocating the abolition of old legislative obstacles to equality of opportunity to the imposition of new legislative obstacles on business, non-government organisations and other bodies to enshrine specific gender policy objectives.

This has been reflected across the OECD in the form of workplace gender composition quotas, gendered hiring discrimination, pay equity ratios, and the like, combined with affirmative action bureaucracies to monitor existing policies and devise new ones.

These initiatives have tended to operate against the best economic interests of women, for example by raising effective costs of their employment.

Government legislative edicts also exhaust opportunities for competitive, free markets to discover new and innovative ways of satisfying the economic and social needs of women, and insidiously perpetuate the false idea that women cannot thrive without the visible hand of government preferment.

As a result, feminism has become a shadow of its former self.  The movement diminished from being a liberatory, emancipationist cause into just another lobby group attempting to squeeze discriminatory favours out of government.

Contrary to the view of Humphrys the great deregulatory moments in modern history have shown conclusively that a transition to laissez-faire economic policy, typified by more private enterprise and less government control over employment and other market conditions, has worked to improve the circumstances of women and men at large.

It is for these reasons that I'll continue to argue for social and economic policy that does good for women, and all people, rather than call for larger government that hurts more than it helps.

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The dramatic collapse of trust in government

The real story of the financial crisis isn't bank bonuses, the impending collapse of the Eurozone, or the Occupy movement.

It is how, in every Western country, trust in government has suddenly, dramatically collapsed in the crisis' aftermath.

Gallup polls have found that a massive 81 per cent of Americans are dissatisfied with the way their nation is being governed.  This is the record.  Vietnam and Watergate did not induce such broad cynicism.  Dissatisfaction only peaked at 66 per cent in 1974.

Americans believe more than ever that the government wastes their money and that congress doesn't work in their best interests.  Even the poor old Supreme Court is taking a beating.

It is just as bad in Europe.  A Guardian survey of five countries in March 2011 found that 78 per cent of people did not trust their governments to deal with the problems facing the country.  Eighty-nine per cent of people did not trust national politicians to act with honesty and integrity.

Australia fares much better, but here the decline has been steepest.  Eighteen per cent of Australians now think that the most important problem facing the country today is ''better government'', according to an Australian National University poll in October last year.  In March 2010, that figure was just 5 per cent.

We're coming into an era of post-trust politics — where voters no longer offer politicians and governments an assumption of good faith.  Instead, voters now assume political promises will not be kept, that governments are hopeless unless proved otherwise, and, no matter how honest and charming they appear, all politicians are in it for themselves.

Those are, to be fair, reasonable hypotheses.

But we'll miss trust when it's gone.  The father of liberalism, John Locke, wrote that voters hand governments power with ''express or tacit Trust, that it shall be employed for their good, and the preservation of their property''.  Government relies on trust to justify its most basic legitimacy — a trust that it will at least try to govern according to the wishes of the voters who put it there.

Certainly, there's been a decline in trust across the board — no institution is immune.

But for the first time since they started asking the question, Gallup has found that in the United States satisfaction with the size and influence of the federal government is lower than satisfaction with the size and influence of big corporations.  Americans now think those faceless, amoral, profit-seeking corporations are slightly more sympathetic than the governments they vote for and who claim to act on their behalf.

And polls consistently show that, as loathed as business leaders are, they're not as loathed as politicians.  The Edelman Trust Barometer is a survey of educated people in 25 countries which this week recorded the biggest decline in its history.  It also found that while 27 per cent of people did not trust business leaders to tell the truth, 46 per cent did not trust government leaders.

Nor can we blame the financial crisis.  In the United States, trust was at record lows even before the economy tanked.

Anyway, in times of crisis people are usually drawn to government, not away from it.  After September 11, American faith in government surged — doubled, in fact, despite the obvious failure of the federal government to stop the attacks.  It is not simple enough to say that failure breeds contempt (even casual observers of politics know that failure sometimes brings support).

Governments are the biggest organisations in society.  In Western countries they consume between one-third and half of the nation's economic production.

They have their fingers in every pie.  They are relentlessly expansionary:  politicians and bureaucrats are always looking for more areas to intervene in.  Some people may feel this is not necessarily a bad thing, but it means that governments easily overstretch themselves;  they promise too much and deliver too little.  Politicians try to take responsibility for everything:  from interest rates to waist sizes to the price of milk, petrol and Apple products.

Sure, a government which promises to fix everything is briefly appealing.  But it is always, inevitably, a disappointment.  We saw this, in a micro way, with the Rudd government — where too much was promised too quickly and it all fell in a heap.  We're now seeing the same phenomenon play out in a macro way with the sovereign debt crisis in Europe.  Too much social support was promised for too long to too many people.

For a long time politicians have argued that they ''create'' jobs and ''manage'' the economy.  Paul Keating was speaking for all candidates and incumbents when he claimed that to change a government is to change a country.

Now, having taken responsibility for everything good, they suddenly have to take responsibility for everything bad.

The result is a massive decline in trust, and a challenge to the foundations of democratic legitimacy.

Distrust has its upside though.  Future politicians promising the world will be met with the cynicism they deserve.  Perhaps — perhaps — governments might focus on doing a few things well, rather than a lot of things poorly.

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Gingrich presses the right buttons

Winston Churchill once said of politics that it's ''almost as exciting as war and quite as dangerous.  In war you can only be killed once, but in politics — many times''.  No one personifies this dictum today better than Newt Gingrich.

The former speaker of the United States House of Representatives was a beaten man a week ago.  Once the Republican presidential front-runner, he fell so precipitously in the Iowa caucuses and New Hampshire primary that he was all but written off.

Gingrich persevered, however, bet all his chips on South Carolina and staged an astounding comeback to win the weekend primary.

So resounding was his victory that the same seasoned Washington observers who had written his political obituary only days ago now say that Gingrich could even beat establishment candidate Mitt Romney in the battle to challenge President Barack Obama.

How could this have happened?  After all, it has been said that the 68-year-old Gingrich has more baggage than the airlines.

He's arrogant, he's polarising, he's a flame-thrower, he's not likable, he overreaches, he violated congressional ethics rules, he had a fall from grace as the nation's legislative leader after unexpected Republican electoral losses in 1998, and he misread public opinion about the impeachment of then president Bill Clinton.

That's not to mention the man's character flaws — including infidelity (and three marriages), extravagant shopping habits (he once spent half a million dollars at Tiffany jewellers) and a stint as a Washington lobbyist (he earned up to $US2 million for mortgage broker Freddie Mac, which conservatives partly blame for the financial crisis).

In fairness to Gingrich, he co-opted welfare reform and a balanced budget — landmark legislative initiatives during the Clinton era.  He is highly intelligent, a prolific book writer and a brilliant debater.  By all accounts, he could go 10 rounds with Obama in prime time.

However, veteran US columnist George Will speaks for many fellow conservatives when he warns that Gingrich ''embodies the vanity and rapacity that makes modern Washington repulsive''.

Gingrich's revival, contrary to the media consensus, is not only due to Romney's failure to satisfactorily defend his record as a venture capitalist or his vacillation over releasing his income tax returns.

Instead, Gingrich's comeback is more due to his ability to spell out a populist pro-growth message while he doles out the ideological red meat to the conservative faithful.

Such tactics may not play well among more moderate voters who help swing general elections.  But they work a treat among the conservative rank and file in a Republican primary.

In two debates last week, Gingrich pressed hot-button issues on welfare entitlements and the war on Islamists while challenging the left-liberal assumptions of the moderators.  In one case, he slammed the ''destructive'' and ''despicable'' ''media elites'' — and in the process got standing ovations.  It was a great television moment.

The ''Grand Old Party'' base is deeply struck by this, not just because they agree with every word of it, but because they yearn for someone who has the guts to speak their language and express themselves unapologetically.

Politicians such as the instinctively moderate Romney don't like this debate.  It means they must come out fighting for something that conservatives regard as good and positive, but which political elites regard as narrow.

The Gingrich sceptics disparage the former House speaker as a discredited figure who's spent a long time in political exile.

But the same thing was once said of Winston Churchill, Charles de Gaulle, Richard Nixon, Robert Menzies and John Howard.  When they returned to the arena years after losing leadership positions, their critics gave them the kiss of death.  They all rebounded with tremendous force.

As it happens, Gingrich subscribes to historian Arnold Toynbee's theory of ''departure and return'' — the notion that some legendary leaders endure a long period in the political wilderness before returning to high office.  Say what you will about him, Gingrich rates high marks for sheer animal instincts for survival.