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August 14th, 2003

Ken Parish links to my post on the ethanal business (it ought to be a scandal, but it clearly isn’t) and says

I regard the Howard government as possibly the worst Australia has ever seen, certainly since the Second World War.

on account of its corruption and continuous reliance on divisive wedge politics. I’ll leave wedge politics for later and focus on corruption.

On this score, my fear is that the Howard government will turn out to be “average: worse than the last one and better than the next one”.

Standards of probity, honesty and public integrity declined markedly in the Hawke-Keating era. It was Hawke in 1983 who initiated the tradition of discovering a budget ‘black hole’ and announcing that all promises are inoperative. Howard took this one to a new level. He was asked before the election what would happen if, as everyone expected, the deficit turned out to be worse than Kim Beazley had admitted, and he said that his promises would be implemented regardless. This statement became ‘non-core’ within days of the election.

Similarly, the practice of former ministers taking up jobs that relied on their political connections became prevalent in the Hawke-Keating period. However, it was not until recently that this became overtly corrupt, with favors in office being traded for sinecures on retirement. On this score, I should note that, for his first year or so in office, Howard did raise standards of ministerial behavior, and several junior ministers lost their jobs over minor misdeeds. It was only when Howard crony Warwick Parer fell foul of Howard’s code of conduct that he abandoned it, upon which the descent was rapid and, as far as I can see, still accelerating.

The sale of political favors, for electoral donations used to be a staple of state and local politics but was, I think, unheard of at the Commonwealth level until the present government. (I admit though, that there were always well-connected people like Reg Ansett and Kerry Packer who seemed to get more than their fair share of the goodies). In addition to the ethanol business, the government has managed to set up a system through which favorable treatment of migration applications can be bought, even though plausible deniability is maintained at all levels up to and including the Minister.

Finally, the politicisation of the public service can be traced back to the Whitlam government, but has accelerated dramatically under Howard. On any controversial issue today, a statement by a senior public servant, either of fact or opinion, must be treated in exactly the same way as if it had been made by a Liberal Party official. If the truth does not serve the interests of the government, it will not be told.

The fact that Howard has merely extrapolated the trend towards corruption does not excuse him, but it does call for some explanation. In my view, the widespread acceptance of public choice theory has been a major contributor to the growth of corruption. The behavior I’ve described is exactly what public choice theory predicts, and the first step towards corruption, the treatment of electoral commitments as disposable, is positively welcomed by most supporters of public choice theory, who view elections as a dangerous distraction. If the intellectual atmosphere is dominated by the idea that politics is a matter of naked self-interest, it is scarcely surprising that reality will come to match the theory.

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  1. Uncle Milton
    August 14th, 2003 at 20:33 | #1

    There at least 5 current departmental secretaries who have doctorates in economics. I don’t think any of them were students of Buchanan or Tullock, but still, do you think there might be a connection?

  2. jp
    August 14th, 2003 at 22:23 | #2

    average: n. the mean value or quantity of a number of values or quantities. Worse than the last one and better than the next one.

    Precisely. Although only if we are talking about open processes of change in unchanging in space and time.

    So, then, how is it that time-series econometrics and economic micro theory have so misrepresented the satirical and ironic nature of time and its metrical moments?

    (Have they not read their George Shackle?)

    Not serious question John, but nevertheless posed seriously…

  3. August 14th, 2003 at 23:02 | #3

    If that’s an economist’s joke I can’t think why they ever called it the dismal science.

  4. Observa
    August 14th, 2003 at 23:37 | #4

    John has presented a fairly pessimistic view of the trend in Federal Govt here, but how accurate is this assessment?

    On the ethanol business, might it simply be the case that a Coalition Govt wanted to help it’s rural constituency(cane-growers in particular) with ethanol in city-slickers tanks and at the same time be a bit green. Kills two birds with one stone, until they realise cheap imports could scupper the policy on one important count. Now the fact that ethanol production in Aust is largely dominated by one Co, shouldn’t necessarily lead us to cry foul, any more than any change to media laws is almost always seen as sucking up to media barons. It may be the case but it aint necessarily so.

    As far as favourable migration outcomes goes, is this Govt any more culpable than previous ones? (I seem to remember a previous Labor minister jailed for this crime) With all the hundreds of thousands of migrants in the life of a Govt, wouldn’t it be remarkable if the odd case didn’t raise an eyebrow or two, given the Ministerial prerogative to intervene? Isn’t it a case of damned if you do and damned if you don’t in some marginal cases? Is it a case of us(and our media) always concentrating on the few outliers of a fairly well accepted system?

    On the politicisation of the PS, I agree with John that it was the Whitlam Govt that started the ball rolling on this one. However this was probably natural, considering the long preceding Conservative PS Whitlam inherited. Wouldn’t this be a similar inheritance for the Howard Govt. with the same outcome? Personally I think it’s about time we gave up the notion of a fearlessly impartial PS(at least for the upper echelon)and allowed incoming Govts. the opportunity to replace this upper echelon with servants it considers appropriate to get its mandate up and running. They would serve for the life of the Govt and be appropriately highly remunerated(in comparison with the lower bulk of apolitical, admin/research types who would receive lower pay and security of tenure)

    It is inevitable that this politicised upper echelon, would tend toward a bit of secrecy and spin(as John suggests it already does), but is this merely the natural tendency to guard against a wolf pack media, hell-bent on being the first with the next Watergate? On balance though, I feel our system has enough publicly available checks and balances to ‘keep the bastards honest’, yet give the incumbents the power they need to get things done.

  5. August 15th, 2003 at 02:04 | #5

    the widespread acceptance of public choice theory has been a major contributor to the growth of corruption.

    I think Pr Q is too quick to blame purely ideological causes. Surely, rather than obscure social scientific theories, it is the increasing admministrative and advertising costs of running media-heavy campaigns that is behind the pressure for political parties to grant special legislative privileges in return for party donations?

    Evidently “widespread acceptance of public choice theory” is not a necessary condition of political corruption, given that there has always been a deal of ruin in the rotten boroughs of the democratic nation, well before the public choice school had ever been heard of eg Mayor Daley in Chicago, Premiers Robert Askin and Joh-Bjelke Peterson, the old Richmond City council.

    But it appears that “widespread acceptance of public choice theory” has been a sufficient condition for increased tolerance of political corruption in the past generation.

    This is particularly evident in the increased visibility of industry lobbying groups and post-parliamentary sinecures.

    Hayek was against full democracy as he thought it would lead to special interest anti-market privileges being granted by the greedy short-term masses.

    Buchanan/Tullock et al argued that expropriating masses was the logic of democatic consent.

    These theorems implied that liberal governments were entitled to:

    ignore the expropriating masses in order to make liberal laws – hence only core promises kept to ensure a balanced budget

    make privilieged laws to compensate the expropriated elites, hence the various taxation exemption rorts

    Thus neo-liberal scientific “economic theories of politics” rationalised and legitimised the sale of public goods for private purposes. To that extent they have become self-fulfilling prophecies.

    Moreover the general tendency of conservative thought from Plato, including Machiavelli, onto Strauss, has been for the elites to deceive and hoodwink the masses in the public interest.

    Yet it is hard to square the notion of increased corruption going with the “widespread acceptance of public choice theory” with the political careers of those politicians most identified with the neo-liberal ideology behind public choice. Reagan or Thatcher were not in any way politically corrupt.

  6. Greg
    August 15th, 2003 at 16:31 | #6

    Bravo, Observa August 14, 2003 11:37 PM (see above)

    More cake, please. Where are the bread and circuses? Hang on … I just heard Jeff Clark got the sack yesterday, and they finally announced the capture of Hambali today …

    Observa, your comments are remarkably similar and contemporary with Graeme “Spin Monster” Morris’s hasty attempts at a ‘let them eat cake’-style patch-up line on Lateline last night at the end of the interview with Andrew Bolt and Tony Jones.
    See the link below. What is your dissembling question on this? “It’s entirely conincidental”?


    The Grahame Morris line is, “it was a policy to give Aussie cane growers a bit of ‘hope'” (subtext: “a sudden, new policy that we just thought up and implemented on the day we scuttled the ethanol shipment dockside in Brazil”). This line is particularly objectionable when you hear the account given verbatim by Barrie Jacobson of Trafigura. See the links to his interviews on AM and PM last Wednesday below.

    The questions this line raises are:
    1) Why the absolutely headlong rush to apply this policy, in a manner that can only be described as particularly cruel (listen to Barrie Jacobson below, particularly on the PM programme), to this one little shipment, and the first attempt at entry into the ethanol industry that we know of; and
    2) Why wait until now to announce this great new policy?

    And please, if anyone attempts to answer these two questions, try to answer BOTH comprehensively and honestly and don’t let question 2 distract you. Would you like to get some staff to research the questions overnight? (for the significance of these last ironic comments you have to watch the Morris interview).

    ABC Radio ‘AM’Programme:Wed 13 Aug 2003 –

    ABC Radio ‘PM’Programme: Wed 13 Aug 2003 –
    Real Audio

  7. derrida derider
    August 15th, 2003 at 21:10 | #7

    A small point –
    “It was Hawke in 1983 who initiated the tradition of discovering a budget ‘black hole’ and announcing that all promises are inoperative.”

    IIRC he stole the trick from Neville Wran. And I’m sure Nifty Nev wasn’t the first either.

  8. Observa
    August 16th, 2003 at 09:52 | #8

    Don’t get me wrong on the ethanol policy. I personally think it is another typical, mild form of ‘pork barrelling’,in this case to the Govt’s rural constituency. As well the response to cheap imports confounding its aims, smacks of ‘policy on the run’ and should be judged as such, rather than as any conspiracy to line Dick Honan’s pockets. I could quite easily imagine this policy as the preserve of a Labor Govt. at the right place and time. I guess my point was, that bad policy is the right of goverment and should be judged as such, rather than going off on tangents and accusing them of being crooks.

    I should add that I am a ‘market green’ with some fairly radical views (probably Utopian) on tax policy, which should negate the need for such ridiculous intervention in markets, to achieve desirable social outcomes.

  9. Greg
    August 17th, 2003 at 12:12 | #9

    Observa, apologies if you found my remarks intemperate. They were very heartfelt. And thank-you for raising the important issue of political progress with your point, “… bad policy is the right of government…”.

    This surely is so, only to the extent that the ‘bad policy’ accurately reflects the wishes of >50% of the population, and that a separate programme is in place to maximize access to education and information across the population to facilitate sound opinion formation on a wide scale. And remember that ‘bad policy’ by aristocracies gave rise to the Roman republic back around 500 BC, and has been the cause of a number of coups and revolutions both before and since.

    Progress is being made on many fronts in the modern age. New knowledge is pouring out of every field of study; we are all about to invest in new widescreen digital TV sets (apart from Ethiopian peasant humans and the like). Yet here we are in 2003, stuck with all the same old weaknesses of Westminster Parliamentary Democracy (while, of course the Ethiopians and their ilk have no such ‘luxury’).

    Your remark refers to one of those weaknesses: Between elections, Australian governments can be as anciently nepotic, despotic, autocratic, feudal, etc. as they like (what we today might often call ‘crooked’). During that time, any coincidence between the expressed will of the people (a la modern opinion poll technology), and government policy is mere coincidence, depending upon which pressure group the government is currently making policy for in each case.

    The electors in whose name they nominally act and whose money they throw about with such careless abandon (increasingly as if it was their own to disburse) get to determine policy but once in several years.

    Even then, we have to vote for a few main policy packages, many of whose individual policies may be entirely unacceptable. And if there happens to be a single burning issue that over-arches all others, then the party whose policy on that issue corresponds to the will of the electors, will win. The rest of their package can be as ancient, feudal and costly as they wish, up to their estimated constellation of costs that the broad electorate is prepared to bear.

    The question has to be asked, what is the state of our knowledge, and of the research programme, with regard to improving the correspondence between an incumbent government’s polict and the democratic will of the people (ie, 51% of the electors) on a broader range of individual issues than we are able to do now? This seems to me to be one of our most pressing questions, but one not being addressed in a comprehensive, systematic manner carrying the potential to become a forceful public issue.

  10. Observa
    August 18th, 2003 at 12:49 | #10

    Perhaps the problem we’re all alluding to is a general criticism of ‘Incrementalism’ or the ‘Science of Muddling Through’. Without general agreement on any overriding goals or aspirations for our socio-economic system, there is a certain inevitability over outcomes. The people involved in policy are not particularly crook, but the environment in which they operate will probably produce some crook outcomes. Keeping ‘bums on seats’ may turn out to be the object of the game after a while, for any incumbents lacking over-arching principles.

    The problem for any incumbents is that we, the public, haven’t come to any agreement on the over-arching principles.

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