June 14, 2015

Big Ideas

ABC Radio National

Lionel Shriver (1957):
My politics … are libertarian …
I don't like being told what to do.
Actually, deep down inside, I'm a 10 year old child with a problem with temper tantrums.
(Lionel Shriver on free speech, identity and the future of the US, 19 September 2016)

Bryan Stevenson [Professor of Law, New York University]:
Each of us is better than the worst thing we've ever done.
(The fight for racial justice in America, 19 March 2015)

Augustine (354 – 430):
The good Christian should be wary of mathematics and all those who make empty prophesies.
The danger already exists that mathematicians have made a covenant with the Devil to darken the spirit and confine Man to the bonds of Hell.

Jane Gleeson-White:
[The] logic that drives the modern corporation [privileges] financial capital over every other value on earth, including the value of nature and of human beings and our communities.
While Wall Street booms and nations stagger, we continue to tear apart the earth and effectively enslave ourselves to financial capital — money — to fuel our fixation with economic growth.
The polar ice caps melt, extreme weather becomes the norm, species become extinct, the financially rich nations of the earth are plagued by depression and obesity and the impoverished nations are haunted by homelessness and hunger.
And yet we remain blind to their interconnectedness and their cause. …
The daily operations of business are destroying the planet and human societies and they do so because they are governed by one sole legal obligation: to maximise profit.
(Six Capitals, 2014, p 280)

Jane Gleeson-White

Death by Numbers

In 1977 the Ford Motor Company used a cost-benefit analysis to weigh the relative merits of adding, or not adding, a safety device to its new Pinto car.
This involved assessing the cost of safety parts versus the cost of lives lost.
Where the cost of lives lost is the dollar value of men, women and children killed in the potentially unsafe vehicle. …

An internal company memorandum estimated that if the Pinto was sold without the $11 safety feature:
  • 2,100 cars would burn every year,
  • 180 people would be hurt but would survive, and
  • another 180 would burn to death.
The safer car would save 49.5 million dollars worth of human pain, suffering and death, but it would cost 137.5 million dollars.
Clearly the costs of the safety device far exceed its benefits in numerical terms.
And so, naturally, Ford decided not to spend the money on the safety feature …

(Michael Sandel, Justice: Putting A Price Tag On Life, February 2011)

In the 6 years that the Pinto was on the market 500 hundred people [were] burned to death …

In July [2013], Portugal's finance minister resigned over the austerity measures required for its 78 billion euro bailout.
Greece still can't pay its debts.
Italy's budget deficit is expected to rise to some 4% of GDP.
On the other hand, Europe's largest bank, HSBC has just announced its half-yearly profits have risen 10% to $US 14.1 billion …

When the English philosopher Roger Bacon [1214 – 1292] tried to promote Arabic maths in the 13th century, he was charged with magic and condemned to life imprisonment.

(Numbers rule the world, 3 September 2013)

Costa Rica Leads the World

Not only have Costa Rica's forests and natural areas been protected since the launch of [their Payments for Ecological Services] program in 1997, but large tracts of ruined land have also been restored.
In the late 1980s, only 21% of Costa Rica was covered by forests: by 2010 that had risen to 52%.
This was accompanied by improvements in the country's living standards and energy savings.
In 1985, only half of Costa Rica's energy came from renewable sources.
By 2010, this figure had risen to 92%.
(p 72)

The Cost Of Doing Business

{In 2010, eighteen Foxconn workers attempted suicide.}

[When, in March,] seventeen-year-old Tian Yu threw herself from the fourth floor of her factory dormitory at Foxconn's Longhua facility … spine and hip fractures [left her] paralysed from the waist down.
[After public pressure forced its hand, Foxconn (Apple's primary supplier) gave] her 180,000 yuan (approximately US$29,000) in compensation so she could return to her rural village, which she had left one month earlier to earn money for her impoverished family. …

Yu threw herself out of the window after working two seven-day weeks straight, more than twelve hours a day, and finding she hadn't been paid for her month's work because of an administrative bungle.
The wages she was owed for two seven-day weeks and two six-day weeks with overtime amounted to a quarter of the cost of a new iPhone 5.

(Six Capitals, Allen & Unwin, 2014)

Would you like to know more?

June 9, 2015

Robert Manne

Green Army: Persons of Interest

Robert Manne (1947)

Editor, Quadrant, 1989-97

[At the my final board meeting as the editor of Quadrant] discussion was dominated by the question of … the Aborigines.
It became clear that, for half the board, the way the magazine had treated Aboriginal matters raised serious questions about my suitability to edit a conservative cultural magazine.
On the question of the Aboriginal dispossession in general, and the Stolen Generations in particular, I had crossed over to the enemy camp. …

[Following my resignation,] Padraic McGuinness was appointed as my replacement. …
Over the next three years Quadrant led a national campaign against the conclusions of Bringing Them Home and against the quest for indigenous-non-indigenous reconciliation.
Two anti-Bringing Them Home conferences were held. …
Keith Windschuttle's revisionist history was launched.
The McGuinness-led campaign was soon joined by the increasingly influential right-wing commentariat in the metropolitan press:
  • Andrew Bolt,
  • Piers Akerman,
  • Ron Brunton,
  • Michael Duffy,
  • Christopher Pearson,
  • Frank and Miranda Devine.
The cultural Right had clearly chosen the question of the Stolen Generations in general, and the apology in particular, as their key battleground in the Culture War. …

The campaign [contended that] these children had, in fact, been rescued [from neglect and abuse] and not stolen. …
Padraic McGuinness argued that the Aborigines who presented evidence to the Human Rights and Equal Opportunity Commission inquiry were suffering from … 'false-memory syndrome'. …

During the campaign, Sir Ronald Wilson [President of the Commission] was, we were told, [suffering from] "moral vanity" — a condition afflicting those who felt deeply about causes of which right-wing cultural warriors disapprove …
Other prominent white supporters of the Aborigines — like Sir William Deane ("Holy Billy") and Malcolm Fraser ("the sanctimonious prig") — also suffered from this condition.
[Such] white supporters of the Stolen Generations … were, in Michael Duffy's delightful phrase, 'white maggots'.
They fed upon concocted stories of supposed Aboriginal suffering.
They secretly hated their country. …
Was it not weird, Andrew Bolt reflected,
that some Australians wanted to believe racist whites — their own forebears — snatched children from despairing mothers' arms?
The members of the elites who were shocked by the stories revealed in Bringing Them Home were not merely politically correct.
They were un-Australian. …

[The] anti-Bringing Them Home campaign [marked] the emergence under Howard of … an authentic Australian version of an international movement on the Right often known as historical denialism. …

The authors of Bringing Them Home argued that, following Australia's signature of the Genocide Convention in 1951, Australian authorities had committed the crime of genocide in their Aboriginal-child-removal policies.
It is now generally acknowledged that they were wrong. …

[The national apology to the Stolen Generations that] Kevin Rudd delivered to the parliament on 13 February was, in my view and in the view of many others, one of the most important in the history of Australia. …
[He] delivered his speech in the presence of every living prime minister, except John Howard.

(Sorry Business, The Monthly, March 2008)

Just as stagflation fatally undermined the Keynesian social-democratic consensus, so too will the combination of the Great Recession and the growing recognition of the destructive role played by neo-liberalism in inhibiting an effective response to catastrophic climate change eventually discredit the idea at the heart of neo-liberalism: the faith in the magic of the free market. …
[However, there] are two important differences between the circumstances surrounding the end of the Keynesian era in the late 1970s and the present unravelling of neo-liberalism.
When the Keynesian consensus collapsed, a party-in-waiting existed, ready to seize its chance.
No equivalent anti-neo-liberal party exists today.
Old-style socialism is dead.
Left-of-centre neo-Keynesians are far less ideological, far more divided and far more cautious than their neo-liberal adversaries.

Even more importantly, at the moment of the neo-liberal collapse, humanity confronts the diabolical problem of climate change.
Those who inherit the post-neo-liberal world will be obliged not merely to strive to reconcile the hope for renewed prosperity with the quest for domestic and global social justice.
They will also be obliged to reconcile both these ambitions with the gravest challenge humankind has ever faced.
No one yet knows what the new era will look like or what it will eventually be called.
Only one thing seems, at present, reasonably certain.
At the end of the era of free-market faith, we will be in a far better position to turn our attention to the kinds of ethical and environmental questions which, for thirty years, neo-liberalism encouraged us to [ignore.]

(Goodbye to All That?  On the Failure of Neo-Liberalism and the Urgency of Change, 2010, p 36)

John Quiggin (1956)

Professor of Economics, Queensland University

The Productivity Treadmill: Doing More With Less

Productivity growth is seen by economic rationalists as a matter of using market forces to squeeze more production out of a given (or, if possible, reduced) number of workers. …
Despite the success of Keynesian economic stimulus in protecting Australia from the impacts of the Global Financial Crisis, economic rationalists remain fixated on the microeconomic reform agenda of the 1980s, centered on a combination of financial deregulation and competitive pressure aimed at forcing people to work [ever] harder.
(p 210)

[The National Competition Policy] was highly successful in bypassing democratic processes [and popular discontent] to introduce market liberal reforms, but it eventually produced a backlash.
The upsurge of Pauline Hanson's One Nation party in the 1990s reflected an inchoate mass of grievances among Australians who felt excluded and looked down on by urban elites.
(p 219)

[The Institute of Public Affairs] was established in the 1940s as part of the reorganization of conservative politics that produced the Liberal Party, and was, for many years, primarily a Liberal fundraising conduit for business.
It was intellectually revitalized in the 1980s under the leadership of the former Liberal parliamentarian John Hyde, but maintained its historical role as a paid lobbyist for business interests, notably including the tobacco and, later, fossil fuel industries.
In this role, the IPA routinely attacked mainstream science and propounded pro-cartel views on economics.

[The Centre for Independent Studies (CIS),] founded in 1976, was more libertarian in orientation and, at least in its early years, more intellectually rigorous and challenging than the IPA.
It is the Australian representative of the Mont Pelerin Society, established by Hayek and others in 1947.
(p 212)

A striking feature of [Paul Keating's new deregulated, market-oriented economy of the 1990s] was the rise to prominence of a group of corporate raiders and speculators, notably including:
  • Alan Bond [— Bond Corporation,]
  • John Elliott [— Elders],
  • Robert Holmes a Court [— Bell Group,]
  • Christopher Skase and
  • John Spalvins [— Adelaide Steamship. …]
A couple of years before [their] entrepreneurial empires collapsed in a heap of bad debts, criminal charges and fraudulent bankruptcies, a CIS study concluded that the activities of "raiders" …
"lead to more profitable uses of company assets, and as such they play a vital role in the capital allocation process."
In reality, the entrepreneurs were simply the latest illustration of the adage that "genius is leverage in a rising market."
They relied heavily on borrowed money.
When interest rates rose, their paper empires collapsed, revealing a tangled web of fraud and malfeasance.
Most of the entrepreneurs went bankrupt, and many ended up behind bars or on the run.
Some, like Alan Bond, eventually bounced back, finding mysterious sources of funding that had escaped the attention of their creditors, who were paid fractions of a cent in the dollar.
(p 217)

[In the mid-1990s, economic rationalists seized on] methods of estimating productivity growth that appeared, [at least for a few years,] to reveal a "productivity miracle" unparalleled at any time in our history.
In reality, the apparent increase in productivity arose from the increase in the pace and intensity of work produced by the combination of microeconomic reform and the adverse labor market conditions that followed the "recession we had to have."
[However, these] increases in effort weren't sustainable [and so] productivity growth slowed to a crawl in the 2000s.
(p 220)

Moral Hazard

[The hedge fund Long Term Capital Management (LTCM)] looked for divergences between the margins generated by the markets and the values predicted by its computer models, then bet that the market would "correct itself" over time.
These bets paid off for a number of years, making big profits for LTCM owners and investors.
But, in 1997 with the Asian and Russian financial crises, all its bets failed at once. …

[Since] the leveraged investments made by LTCM had been financed by huge loans from major Wall Street and international banks [the] failure by LTCM ran the risk of generating a systemic collapse.
[Consequently, the] US Federal Reserve, under Chairman Alan Greenspan, orchestrated a rescue package. …
[In spite of needing a bailout, the] LTCM principals and investors escaped with much of the wealth gained from their earlier successful bets intact.
(p 56)

(Zombie Economics, Princeton University Press, 2012)

John Maynard Keynes (1883 – 1946)

[We] have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.
The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.

(The Great Slump of 1930, 1930)

[In the future, the] love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. …

The pace at which we can reach our destination of economic bliss will be governed by four things:
  • our power to control population,
  • our determination to avoid wars and civil dissensions,
  • our willingness to entrust to science the direction of those matters which are properly the concern of science,
  • the rate of accumulation as fixed by the margin between our production and our consumption;
of which the last will easily look after itself, given the first three.

(Economic Possibilities for our Grandchildren, 1930)

[The] ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.
Indeed, the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.
(p 383)

There is no clear evidence from experience, that the investment policy which is socially advantageous, coincides with that which is most profitable.
(p 140)

(The General Theory of Employment, Interest and Money, 1936)

Robert Skidelsky (1939)

From the start 'scientific' economics had been strongly normative.
By increasing understanding of 'economic laws' it hoped to shift actual economic arrangements towards the competitive ideal which would maximise the creation of wealth; hence the strong association between nineteenth-century economics and the policy of laissez-faire.
Adam Smith and his followers were chiefly preoccupied with the failures of government.
Their idea was that government should keep law and order, and get out of economic life.

By the last quarter of the nineteenth century the mood had changed.
  • The failures of laissez-faire were palpable;
  • the competence and the integrity of governments were much improved; [and]
  • the growth of democracy had increased the pressure on the state to 'solve' or at least [mitigate] social problems.

[The Age of Collectivism had] dawned.
Feeding the growth of collectivism was
  • the growth of the social sciences, and
  • the parallel emergence of an activist intelligentsia, claiming a right of direction, vacated by the aristocracy and the clergy, by virtue of superior intellectual ability and expert knowledge of society.
(p 455)

The central claim which emerged from the confluence of these two tendencies was that society was a machine whose working could be improved by deliberate action, with unintended side-effects being equally amenable to correction and control, much as a mechanic fine-tunes an engine.
It was the vision … that we can make of our lives and world the world what we wish.
(p 456)

(John Maynard Keynes (1883-1946): Economist, Philosopher, Statesman, One Volume Edition, Penguin, 2003)

Niall Ferguson (1964)

… John Williamson's original 1989 formulation [of the Washington Consensus advised policy-makers to:]

  1. Impose fiscal discipline;
  2. Reform taxation;
  3. Liberalize interest rates;
  4. Raise spending on health and education;
  5. Secure property rights;
  6. Privatize state-run industries;
  7. Deregulate markets;
  8. Adopt a competitive exchange rate;
  9. Remove barriers to trade;
  10. Remove barriers to foreign direct investment.

(p 308)

One recent study of [economic output] and consumption since 1870 has identified
  • 148 crises in which a country experienced a cumulative decline in GDP of at least 10% and
  • 87 crises in which consumption suffered a fall of comparable magnitude,
implying a probability of financial disaster of around 3.6 per cent per year.
(p 342)

(The Ascent of Money, Penguin, 2008)