Monday, September 1, 2014

The abject failure of the Institute of Public Affairs


Following on from Alan Moran's sacking from the Institute of Public Affairs for anti-Islam tweets, John Quiggin sticks the knife in by comparing the IPA to their American counterparts, the Heartland Institute.
Finally, there’s the question of how long the IPA can avoid the fate of Heartland, which has lost most of its corporate sponsors (except for a few diehards from the fossil fuel sector) and is a shell of its former self. the IPA has already gone a fair way down the same track, and is now, in large measure, a private plaything of Gina Rinehart. In return for her bounty, she has demanded the most humiliating obeisances, most notably support for Northern dam projects like the Ord River scheme. Until recently the IPA was a reliable critic of such boondoggles.
Similarly, Andrew Elder details the flimsiness of Dick Warburton's review into the Renewable Energy Target, and how the agenda from the right is to abandon economic rationalism in favour of killing off entrepreneurialism and disruptive innovation of companies like Silex and ARENA, and handing money over to established monopolists.
The government's anti-RET position means that current electricity provider(s) will be able to buy the intellectual and other property rights for the proposed solar facility at a fraction of the cost that it would have been worth as a going concern. This means that the incumbency of existing providers will be maintained without them having to do the hard work and take the risk that Silex/ARENA took, while reaping the rewards properly due to Silex/ARENA. 
Are we starting to see a pattern yet? How about the cost-benefit analysis of the National Broadband Network, yet another rubbish report prepared by expensive external consultants to produce exactly what the government wants to hear: specifically, that the Internet doesn't have exponentially expanding bandwidth demand and Australians aren't going to want any more bandwidth in ten years than they already do now. This is patently stupid, but nothing more than can be expected from the Minister for Ill Communication, Malcolm Turnbull.

David Walker at Club Troppo runs interference for Turnbull, which is understandable because Turnbull pushes all the buttons of a high-level wonk. The Minister sounds like he's well briefed and in command of all the facts; a cursory glance at the Delimiter story stream on Turnbull - culminating in an apology by Renai Lemay for ever thinking Turnbull was on the level - shows that his position is a Potemkin village that only impresses those who don't know the hollowness of the Liberal policy platform. Just as Henry Ergas believes his economics credentials qualify him to blog about politics without justification, David Walker thinks that as a journalist, consultant and policy wonk that he can grok broadband technology just like that, and wave through Turnbull's cunningly constructed consultancy conclusions.

Now, allow me to set out my credentials in this one: I was originally a technology journalist, starting in 1997 on weekly newspapers and then moving to bi-monthlies including Internet World Australia where I covered a lot of ISP and Internet industry stories during the dot com boom. Additionally, I spent a year or two in the mid 2000s doing sales for Neighborhood Cable, so I have some direct knowledge of what regular customers want out of their broadband connections.

Walker's justification for agreeing with Turnbull is that we don't need broadband for anything other than pirating video content.
Trouble is, most of the innovations we have come up with recently don’t use all that much bandwidth. Facebook and LinkedIn and Instagram are only medium-bandwidth even at their most intensive. Twitter and smart electricity grids are low-bandwidth. Networked games like Halo 3 use surprisingly little bandwidth too, with local hardware doing most of the work. And beyond a certain point, the speed with which you see Web pages has little to do with bandwidth; it’s mostly about server responsiveness and network latency.
Most projected e-health applications, including your latest x-rays, won’t use that much bandwidth either. Even fairly decent video-conferencing for education and medical consultations and business meetings uses perhaps 2 megabits per second, according to the demand document. To the extent that something is limiting growth in the use of such technologies, that something is generally not bandwidth.
The real policy problem with the NBN is that high-speed broadband just isn’t that much of a revolution. And to justify the cost of universal provision, it needs to be.
There are all sorts of things wrong with this mode of thinking. Correlation does not imply causation; perhaps the applications recently developed are low-bandwidth because they have to deal with crappy networks that don't enable innovation of more bandwidth-heavy content?

The assumptions in the demand document are slanted towards broadcast media. For instance, the 2Mbps quoted for videoconferencing is just for one-on-one calls, yet videoconferencing is made for more than two callers at a time, for collaboration in business and family or party calls in private usage. The one-on-one model is a relic of the broadcast media era, and that's the revolution that the NBN promises: the disruption of the one-to-one or one-to-many modes of communication, and the enabling of many-to-many modes.

With these things, it's always instructive to follow the money. Who stands to lose the most from the rise of the Internet and its disruption of existing businesses? If you look at the bandwidth usage, it's video content that eats up a lot of it. Foxtel is the major provider of paid video content in Australia. News Corp is the entity most at risk if the Internet is used to bypass its paywall to access content-that-wants-to-be-free. (In previous years I would have included Telstra in this part of the rant, though they don't really care as much as they used to about this stuff, since they have started to give up on owning content and focus on getting paid to operate the networks no matter what runs over it.)

I got questioned recently on why I don't join much of the rest of the left in bemoaning the supposed dominance of the IPA, its ubiquity on ABC platforms, its frequent appearances at The Conversation, its infection of Liberal Party processes, etc etc. My contention is that the original aims of the IPA - to be the intellectual arm of the Liberal Party and guide its policy development along ideological lines - have comprehensively failed. These days, as Quiggin rightly notes, the IPA is a cheerleading outfit for Gina Rinehart, Rupert Murdoch and the tobacco lobby, at the expense of any policy credibility they might once have enjoyed. As Elder goes through, the IPA is no longer a defender of entrepreneurialism, but a paid shill of crony capitalists. They actively lobby against Schumpeterian creative destruction, because they are paid by the people whose businesses' destruction would be caused by healthy capitalist competition. They have almost completely abandoned Menzies' founding principles, as evidenced by their recent dabbling with anti-Islam bigotry.

The reason I am ambivalent about this situation - the IPA's continued success of getting their message out to the public, combined with the poisonous nature of that message - is summed up by Harry Clarke in a comment on the Quiggin piece:
The IPA has been spectacularly successful at getting its extremist message across. I congratulate them. The difficulty is that people don’t like their message. I think the great Australian descriptor “ratbag” describes them well. Fundamentalist economics that perverts what economic theory instructs. I agree with you – the CIS relies more on reason.
In the words of John Williamson, Australians revel in our ability to "tell our leaders to go jump in the lake (but we'll never knock Australia, you make no mistake)". Yeah, we're fair dinkum in this country about recognising galahs when we see them. I believe in democracy, and the capability of the Australian public to work out who is on their side. The more the IPA's message is disseminated, the more Australians jeer and laugh at it. I know enough about the IPA to conclude that it is a failure, a folly, a flailing flinger of falderol, a figure of fun... the rest of the nation is just catching up on the news.

By the by, it should be pointed out that Moran's "sacking" from the IPA hasn't stopped him from posting on Catallaxy Files. This suggests a schism developing between John Roskam, still lurking about in the race for preselection for the Victorian seat of Hawthorn being vacated by Ted Baillieu, and Sinclair Davidson, who runs Catallaxy Files and has done nothing to stop its strong shift to becoming a secular freak show of anti-Islamic hatred, to the extent where Davidson ran a guest post this week tying a possible Australian conspiracy by public servants around a Rotherham-style Muslim child sex ring to the abandonment of the repeal push for s18C of the Racial Discrimination Act. The cognitive dissonance of holding the belief that the appalling Rotherham case presages a global epidemic of Muslim-on-white-teen rape after having defended the Catholic Church against allegations of a global epidemic of organised Catholic-priest-on-white-teen rape does not seem to bother anyone there. It is at the point right now where many Cat commenters would be welcome to speak at a Catch The Fire Ministries event, since their ideologies are functionally identical. With the abandonment of ideological principle, the IPA and its blog Catallaxy Files don't have much left to talk about, so they are in danger of descent into contagious conservative fear.

Tuesday, August 26, 2014

Paying politicians not to be corrupt


A very silly piece today by Sinclair Davidson - during day 2 of the apparent ban at Catallaxy Files on talking about the sacking of Alan Moran from the Institute of Public Affairs - about campaign finance. His contention is that public funding of politicians is a "great threat to democracy" because regulation to "protect" voters from political corruption ends up maintaining privileges of the elites.

Let us apply this same thinking to Professor Davidson's own employment, since politicians and economists are merely two similar aspects of public service. Why should the public fund his position at RMIT, or that of Steve Kates, subtly indoctrinating economics students into their worldview of classical economics? The "lurks and perks of office" - in this case being the inculcation of a generation of economists to applying neo-liberal ideology which eventually results in lower taxes for supporters of libertarianism and right-wing thought in general - should be enough to fund Davidson and Kates through private means. If Sinclair believes in this so much, he should donate his wages from his professorship back to the state as a matter of principle, and draw his wage from Bond University or some other private educational institution where he is not compromised by hypocrisy.

No, of course I am being equally silly. Prof Davidson provides a valuable service to his students and to the community at large (not sure about Kates; evidence of the quality of his written rhetoric suggests he would be a poor lecturer). Sinclair's work for RMIT University does not actually constitute straight indoctrination to the ideology of Mises or Rothbard, since students can presumably follow Keynesianism in his subjects and still pass if they show enough skill and knowledge. There would be checks and balances put in place by public-funded institutions to curb such subversion of his role.

Equally, politicians who are funded by the public are also bound by conventions and regulations from not being corrupt, or corrupting others, in the course of fulfilling their elected obligations. Adherence to those societal norms is the main thing separating humans from animals. The public pay politicians to be subservient to them. Davidson's wish is that the pollies would dance to the tunes of those private citizens who paid them - or, as is often the case in America, restrict entry to the ranks of elected politicians to those who can afford to tip in millions of their own dollars.

I am open to hearing arguments against the current actions by the Greens, Labor and the Liberals to shut out other minor parties. Abolition of public campaign finance, though, is yet another one of those completely unworkable and untenable IPA wishes which never survive any sort of scrutiny. The uselessness of their platform is why they will never gain much in the way of real power in this country, no matter which politician is in office. The more a politician tries to fly their thought balloons, the more air is let out of the wingnut zeppelin.

Monday, August 25, 2014

Alan Moran sacked from IPA over anti-Islam tweets


Wow, what a bombshell for the right. The Australian reports that Alan Moran has been sacked as fellow of the Institute of Public Affairs:
Dr Moran recently engaged with left-wing activists on the issue of Islam and the sexual assault investigation into Labor leader Bill Shorten, which was dropped because of a lack of evidence. On August 17, Dr Moran accused federal Labor frontbencher Tanya Plibersek of backing the investigation into Mr Shorten for reasons of ambition. “Tanya Plibersek backs rape probe into unnamed senior Labor figure. Can only be ‘cus he is a rival for leadership?’’ Dr Moran tweeted. He sparked outrage when he tweeted this month: “Is there ever anything but evil coming from Islam?’’
IPA chief John Roskam confirmed that Dr Moran had left the IPA. Dr Moran told The Australian there had been concerns about his social media activity.
Catallaxy Files, the unofficial blog of the IPA, has been full of anti-Islamic fervour recently, as in this thread on the James Foley beheading. The usual suspects in the comments at the Cat routinely ascribe all sorts of hellish agency on every single member of the Islamic religion, without any guidance towards sanity by the lurking IPA reps. Yet, if the Oz is to be believed, the red meat that Steve Kates et al have been throwing to the Cats is actually against the IPA's financial interests:
It is understood there was particular concern about Dr Moran’s position on Islam, given the IPA receives donations from some ­Islamic individuals and seeks to engage with moderate elements of the Muslim community.
This is an explosive claim. This is exactly what Sinclair Davidson has been thrashing the Liberal Party about over their backdown on s18C of the Racial Discrimination Act: influence from the Islamic lobby undercutting right wing principles. Just as with s18C, it appears moderate Australian Muslims are having a direct effect on the right if they really are the reason why Moran has been boned.

The right have some questions to answer. Is this democratic centrism in action, as I said about the s18C backdown, or is the IPA really so cravenly mercenary that they will don burkas and recite the Quran if they get paid for it? How do the remaining IPA employees reconcile continued opposition to s18C with their newfound love for Muslim mullah moolah? Is this a new power coupling between Christian religious fundamentalist conservatism and Islamic religious fundamentalist conservatism in Australia, or is it just a case of filthy lucre? And do the Muslim donors also run tobacco companies?

Dr Moran has spent too much time among the reprobates and racists at Catallaxy Files. It is not the done thing to speak like them in public. This is what happens when you act like a Cat poster in polite society: the flecks of spittle tend to set the hoi polloi offside. The IPA's strategy has been to operate the Cat as a zoo, where the denizens are fed chunks of raw flesh to fight over while standing on dirt and grass roots, while the IPA employees wear nice suits to stroll carpets and represent their antediluvian interests on the ABC and in government with more acceptable language. Moran forgot that zookeepers shouldn't get in the cage and engage their primal screams.

UPDATE: I missed this on the weekend but this isn't the first IPA bod to be sacked over social media shenanigans recently. Aaron Lane was sacked from running as a Liberal candidate for the upper house in western Victoria for, you guessed it, offensive tweets. And for those of you out there who like to connect dots, IPA boss John Roskam is considering running for the Libs to replace Ted Baillieu in his safe Victorian seat. Is it any wonder that the IPA is now acting just like the Liberal Party in appeasing appealing to Muslim lobbyists? Still no mention of this shameful shift to centrism on the Cat.

Friday, August 22, 2014

Short Kicks: The People's Hamstring

- ASADA have convinced Cronulla Sharks players to take a plea deal to admit guilt over the Stephen Dank drug saga, which means they only miss the remaining few weeks of the current NRL season. The amount of games they will miss is equivalent to that if they all injured a hamstring. On one hand, ASADA gets to claim a victory and focus on the club giving them most resistance, in Essendon. On the other hand, the "win" is about as hollow as the head of an average Sharks player. Unfortunately for Essendon fans, the EFC hierarchy are unlikely to be offered such a deal because of their intransigence. Even if such a deal was put forward, they most likely wouldn't accept it because it would mean the sainted James Hird would have to be rubbed out for life, and captain Jobe Watson would have to lose his Brownlow Medal. The sideshow of the current Essendon court battle is only a distraction before we get to the third act in that tragedy.

- Bill Shorten has addressed all the rumours about being the Senior Labour Figure at the centre of rape allegations, which have now been confirmed as never going to go anywhere. While the media are asking questions of every Labor politician who bobs his or her head up today, the only real remaining question is whether the media is going to pursue the story well beyond its nominal shelf life, in particular by airing the allegations directly from the woman herself. Who am I kidding? After the Gillard era, nothing is too grubby for the "mainstream" media to run with.

- Liberal Party failure John Hewson is now advocating for a Tax Commission, to remove powers to set fiscal policy just as the RBA was created to stop the National Party dictating monetary policy from Cabinet. This would be a complete abrogation of responsibility by the Australian political class, an admission of incompetence on a grand scale. Just because Hewson can't explain GST on a birthday cake doesn't mean we should abandon the ongoing search for a politician who can build consensus for reform. It is all too easy to look at the gradual degradation of the skill level of our politicians at a federal level and conclude that economics should be left to the wonks. Even if the Tax Commission was a paragon of Keynesian orthodoxy, that ideology must be leavened with healthy doses of democracy lest it become just another tool of unaccountable elites.

Atlas Stevens while Abbott shrugs?


Stephen Koukoulas is on his hobby horse again about Glenn Stevens and the RBA not being loose enough with monetary policy. In his unofficial role as Australia's (partial) answer to Paul Krugman, he's bashing Stevens about refusing to lower interest rates in the face of a complete lack of interest from the fiscal side in doing the heavy lifting to rescue certain parts of the economy from the depredations of a globalised market.
In these circumstances with below trend growth, a high and rising unemployment rate, a currency that is hurting the traded goods sector and risk still a dirty word, why not cut interest rates?
The obvious answer is that there's not all that many basis points to go before we hit the zero lower bound of 0% interest rates, and as can be seen from the current US and European live experiments, that's not a position that you want to be in. The Kouk wants 50 points to take the official cash rate from its already historic low of 2.5% down to 2%, but it's rare for that to be the extent of a shift in policy. Once the RBA starts moving in one direction, it's difficult to reverse momentum.

No, just because other Western countries have made the mistake of locking in procyclical fiscal austerity and relying on the steaming new theory of market monetarism, doesn't mean we should follow suit. This is about as low as we want interest rates. As Greg Jericho says:
Perhaps we are asking too much of monetary policy.
Jericho goes through the arguments for and against macroprudential tools, as a way to lower interest rates without encouraging a bubbly investment in housing instead of support for solid, growth-producing business. He ends up cautiously endorsing the use of those tools, presumably in conjunction with further easing.

My thoughts go back to one of the key reasons for the housing boom in America that led to the GFC: government intervening in the housing market to incentivise financial institutions to provide "sub-prime" home loans to people who often couldn't afford to pay them off. Now, I know the situation here is a lot different. The thread I see running though is the law of unintended consequences. We just don't know how those macroprudential tools would work in practice.

Perhaps more importantly, we DO know how well fiscal stimulus works, as we have decades of empirical data of successes to show for it, most recently in 2008/09. Expecting Glenn Stevens to be Atlas while Tony Abbott shrugs is too much to ask. The pressure should be on the government, not the wonks. We know what to do, the elites have to be told.

Monday, August 11, 2014

Hayek as the bizarro Lenin?

Brad DeLong has a regular series of Honest Broker posts, where he tries to frame an argument not necessarily in both-sides-do-it centrism, but applying the same logic to both sides of the debate. Thus in this piece at the WCEG blog, after depicting Adam Smith as being in dialectical opposition to Karl Polanyi on the subject of social democracy versus laissez-faire free markets, he tries to classify Friedrich von Hayek - much beloved of the classical liberal economists like those over at Catallaxy Files - as one of the lesser "channels" in a river "delta" of economics of the 19th and 20th centuries, along with Leninism and Keynesianism.
1. Lenin says the social democracy or democratic socialism is unstable. The bourgeoisie is hegemonic. It will turn the mechanisms of the democratic state to its own purposes. What is needed is aggressive communism to exterminate the bourgeoisie as a class. Only after the aristos and the bourgeoisie and the hep-men and the kulaks and the careerist bureaucrats have been eliminated can a properly-good society be built. 
2. Keynes says that we really need much less social democracy (or democratic socialism) than the main Polanyi current believes. Simply stabilize aggregate demand at a high level via clever central bank financial engineering, and people will not mind that the market treats the “fictitious commodities” like commodities. Moreover, the taste-making and the thrift-promoting virtues of the bourgeoisie sitting at the top of a fairly-steep socioeconomic pyramid are a feature, not a bug, for a good society. 
3. Hayek says that the problem with classical liberalism was that it was not pure enough. The government needed to restrict itself to establishing the rule of law and to using antitrust to break up monopolies. It was the overreach of the government beyond those limits, via central banking and social democracy, that caused all the trouble. A democratic government needs to limit itself to rule of law and antitrust–and perhaps soup kitchens and shelters. And what if democracy turns out not to produce a government that limits itself to those activities? Then, Hayek says, so much the worse for democracy. A Pinochet is then called for to, in a Lykourgan moment, minimalize the state. After social democracy has been leveled and the rubble cleared away, then–perhaps–a limited range of issues can be discussed and debated by a–limited–restored democracy, with some kind of group of right-wing army officers descended from latifundistas Council of Guardians in the background to ensure that property remains sacred and protected, and the government small enough to fit in a bathtub.
If Smith and Polanyi are to wear the clashing guernseys of Team Freedom versus Control FC, how do we assess these three other channels, if we are to do so? Perhaps DeLong would argue against such fastidiousness, but it seems to me that he has framed these three in order of... something. It's not in order of adherence to democratic principles, because all three credos are in some ways repudiation of the supposed depredations of democracy, from Lenin's mistrust of bourgeois institutions through Keynes' belief in minimalist efficiency to Hayek's railing against what is called these days the voters voting themselves "free stuff". In fact, the lack of faith in democracy is what unites all three, as DeLong tells it - but that's not what they differ on.

Apart from setting them all on an equally low rating for democracy, I would argue that the axis on which you would plot these three to correctly identify them is class: specifically, which class should be given the reins of government to ride roughshod over the other classes as glorified Guardians of the Galaxy. Lenin believes the exploited workers should rule, Hayek believes the rich and privileged should rule, and Keynes sits somewhere in the middle with the bourgeoisie.

Are any of these better than the others? It certainly puts Hayek in a bad spot, if he's just the other side of an anti-democratic Leninist coin - not so much an anti-Lenin as Lenin with richer mates. DeLong makes this criticism more explicit by later accusing Hayek of being an imperial apologist for the Habsbergs of his native Austria. Lenin's Two Stage Theory - where a temporary period of capitalism will somehow result in socialism - is thus the mirror image of Lykourgan Pinochet-style Hayekism, where a period of fascism will somehow produce a stronger, leaner, more Spartan society.

In the middle, Keynes is no less guilty of wanting to bypass this pesky notion of democratic accountability (according to DeLong's framing), which leads to what these days is called wonkism, or technocracy - and we can all see how that has worked for Europe. Put the eggheads in charge with no pitchfork-wielding constituency to keep them honest, and they will tend to protect their own mates elsewhere in the ruling classes. It is true that of the three, Keynesianism tends to be more democratically popular than the other two extremes, but that is mainly because 21st century society has a much larger middle class - it is a happy coincidence, not a feature.

But why does economics have to abrogate democracy? The framing by DeLong here bypasses the possibility of the coexistence of strong economic theory with a healthy democracy. I am not an expert on Trotskyism or other examples of the more democratic-imbued criticisms of the three channels of economic thought as presented by DeLong. There must be some synthesis, however, which doesn't require abandonment of the Magna Carta.

The new paternalism of Big Daddy


I have not blogged for a while, but I have an excellent excuse: my firstborn son is a month old today. Thanks for those who have already congratulated me, and those who may do so in comments. Everyone is well, if a bit tired and hungry, alternately.

As a  father, of course now I know everything there is to know about how the universe works, and wish to impose my unique insights into how to live onto others through this blog! In this, I appear to be of one mind with the current Prime Minister, who is treating the country as if he is its stentorian patrician. Voters are not as forgiving as his three daughters of his Pinocchio routine, however. 

Most of his thought bubbles since the interlude of MH17 have been either failures or annoyed his base: budget stuck in limbo so deep that Palmer is calling for a mini-budget, Medicare co-payment no chance of passing the Senate, PPL shelved, Newstart cruelness summarily dismissed by public backlash, metadata collection made a national joke by babbling George Brandis, s18C of the RDA retained despite IPA howls, Tory rumblings about links between abortion and breast cancer squashed. As a father figure, Abbott is becoming a figure of fun. Very little is going right for him, especially for those arguing from the right.

If Abbott wants to be Big Daddy to us all, he's going to have to be less of an Adam Sandler kind of Big Daddy by refraining from pissing on walls. Let's not mention the Bioshock kind of Big Daddy, that's just weird. No, Abbott is much more suited to the Big Daddy Pollitt of Cat on a Hot Tin Roof: Tony Abbott, the Pollitt politician, with a sequence of polls that firmly puts his leadership in "death's country". Those of us out in the masses of Team Australia are the Brick in this passion play, refusing to bow to Abbott's rules of morality or adhere to Abbott's vision of living as the patriarch deems worthy. 

On the Team Australia meme, it's peculiar that Abbott is invoking memories of Howard's nationalism without also actually immersing himself in it. When Howard donned the green and gold tracksuit or called himself a cricket tragic, he didn't have to say anything more about what team he was on. Sport is one of Australia's great melting pots, where ability is promoted regardless of race or creed. What is Abbott's vision of Team Australia, what are its intellectual underpinnings, how has he interpreted Howard's legacy? It's not a crime that the PM isn't a sport lover - plenty haven't been - but if he's going to talk about the country in sporting terms, merely pilfering the phrase from sporting jargon and Liberal history without also inhabiting the patriotic nature of sport means it loses as a serious talking point in the modern day.

Like the Big Daddy of Tennessee Williams's play, Abbott has a reputation for hating mendacity but is constantly guilty of it himself, as evidenced by his string of broken promises. One of the biggest lies is that his "base" - an Americanism that is creeping into local political discourse through the agency of Andrew Bolt - actually matters a jot to him. It's not a lie he has told, but the right is telling it a lot about him lately, 

With unemployment higher than it has been for a decade after years of failed attempts by the RBA to stop a high Australian dollar from gutting our non-resources export industries, we are not quite a banana republic yet but it does feel like Abbott wants to turn the joint into his personal cotton plantation. Thankfully, the electorate still enjoys universal suffrage in this country.