Home > Politics (general) > Probity and economic liberalism

Probity and economic liberalism

June 26th, 2009

Coming out of the utegate/emailgate fiasco, I’ve seen a lot of variants on the claim that interventionist policies, like OzCar, are conducive to corruption, while economic liberalism reduces the scope for wrongdoing. I’ll just offer a few observations (readers with access to Google can fill in the details).

* If the standard of behavior implicit in criticism of Wayne Swan were applied to the Howard government, hardly any minister in that government could have remained in office. That particularly includes Howard and Turnbull.

* The Howard government breached standards of public probity on a scale never before seen with an Australian government, and approached only by the later years of Hawke-Keating and the worst of state governments. Not only did numerous ministers engage in activity that personally enriched them, and would have been regarded as corrupt in any preceding government, but the government consistently undermined the integrity of the public service, engaged in cronyism to an unprecedented extent and (Howard in particular) lied consistently and shamelessly. With relatively few exceptions, economic liberals didn’t complain about this.

* The Thatcher-Major, Reagan and Bush II governments were among the most sleazy and corrupt in the modern history of the UK and US (Clinton, Bush I and Blair were marginally better).*

In summary, the idea that economic liberalism goes with high standards of public probity doesn’t pass the laugh test.

* Defenders of economic liberalism may wish to disclaim one or more of these. But I’m not going to respond, except with derision, to anyone who tries to dodge the issue by any of the standard excuses familiar from apologists for the failure of Communism: never really tried, the fault of the individuals not the theory, etc.Meet the Browns film

Kruistocht in spijkerbroek psp

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  1. Lord Sir Alexander “Dolly” Downer
    June 26th, 2009 at 10:41 | #1

    Jack Strocchi will be furious and write several long responses. Is it necessary to provoke him?

  2. Lord Sir Alexander “Dolly” Downer
    June 26th, 2009 at 10:41 | #2

    (I meant regarding the Howard comments, rather than the post in total.)

  3. jquiggin
    June 26th, 2009 at 10:46 | #3

    I’ll be interested to see how Jack squares his regular praise of Howard’s Machiavellianism with a defence of “Honest John”. In anticipation, please, Jack, no references to claimed successful outcomes under Howard. Let’s take it as read that he had some, and leave debate on how many to another time.

  4. June 26th, 2009 at 11:09 | #4

    I would dispute some of the examples, but it would not be relevant to my objection.

    Nobody suggests that ‘neoliberal’ policies eliminate the desire for self-enrichment at public expense. Liberals have instead long-argued that while human nature is hard to change, institutions can be designed that either harness self-interest for other-regarding purposes (eg the market) or restrict the opportunity for improper conduct (limited government, checks and balances, etc).

    Nor can anyone seriously argue that neoliberalism was more than one influence among many in the last few decades, or that any major Western politicans declared him or herself to be a ‘neoliberal’.

    So I don’t think the post shows any causal connection between neoliberalism and the behaviour it complains of.

  5. June 26th, 2009 at 11:25 | #5

    PrQ,
    I do not think that I can be accused of ever defending “Honest John” – but to claim that Howard was anything other than a vintage old school centralising conservative is, IMHO, a bit rich. I, for one, have never recognised him as a liberal.
    On the bigger point, Latham, in the AFR last week, was right. While the politicians retain or increase the power to make industry policy then corruption of that policy will follow. Whether the corruption is in favour of the already wealthy, the union bosses or any other group of people is simply irrelevant. Rudd has been notably restrained by an inability to force things through the Senate but if, after the next election the Greens gain the balance of power that will change.

  6. Chris Warren
    June 26th, 2009 at 11:36 | #6

    The main support (or facilitator) of probity in any economic system is freedom of information.

    If all players have the same information it will be almost impossible to cheat one another.

    Armed with good information, any immoral or fraudulent proposition can be easily contested or exposed.

  7. Don Arthur
    June 26th, 2009 at 11:45 | #7

    John – Unless you offer some kind of definition of ‘economic liberalism’ this is just going to degenerate into partisan ranting.

    Does ‘economic liberalism’ mean the advocacy of policies ‘similar to those of Thatcher, Reagan Bush II and Howard’, or does it mean something else?

  8. June 26th, 2009 at 11:49 | #8

    Chris,
    That is true if it is a free economic system. Ours is not – there is a substantial degree of government power. It is no good knowing that the government is cheating you if they can pass legislation that forces you to agree to their terms. That is a fundamental difference between the government and other people in the market.

  9. Don Arthur
    June 26th, 2009 at 11:52 | #9

    Oh … and if you say that it’s not up to you to offer a definition I’d think that was dodging the issue.

  10. Chris Warren
    June 26th, 2009 at 12:04 | #10

    Andrew

    Bad politics can interfere. Greater freedom of information, and empowerment of mechanisms to ensure FOI, can counter bad politics over time.

    John Faulkner’s efforts in this regard to protect the intent of FOI against bad departmental decisions, is worth noting.

    I am not proposing a Ann Ryan or LeRouche view here – but a democratic counter-commercial privacy mechanism as much as a anti-big government.

    Today government and law may appear to “force” people to do things, but under capitalism or fuedalism, commerce can even be more forceful and detrimental.

  11. Chris Warren
    June 26th, 2009 at 12:08 | #11

    “Ayn Rand” NOT “Ann Ryan”

  12. June 26th, 2009 at 12:17 | #12

    Hardly, Chris.
    The use of force by government is not a question of appearence. A failure to pay taxes will not appear to get me arrested – I will be arrested.
    If I think that a company is behaving badly and cheating me I can choose not to buy their product today. With a government I have a choice of Turnbull or Rudd in, at most, three years. Risking unpopularity in the interim may well have some influence on government misbehaviour – I think our host here would argue that with Howard that was not enough, but I would argue a more general case that it is never enough.
    Which time scale is the better for correcting behaviour? I would think that behavioural psychologists would argue that an immediate sanction is better than one that is uncertain and carried out over a period of years. You may have a different opinion.

  13. jquiggin
    June 26th, 2009 at 12:19 | #13

    “Does ‘economic liberalism’ mean the advocacy of policies ’similar to those of Thatcher, Reagan Bush II and Howard’, or does it mean something else?”

    Broadly speaking, yes, but I’m getting a bit frustrated with these continuing calls to define terms. Seven years ago, I offered the following three point definition

    The core of the neoliberal program is
    (i) to remove the state altogether from ‘non-core’ functions such as the provision of infrastructure services
    (ii) to minimise the state role in core functions (health, education, income security) through contracting out, voucher schemes and so on
    (iii) to reject redistribution of income except insofar as it is implied by the provision of a basic ‘safety net’.

    and I’ve linked to it lots of times since. Of course, no particular politician exactly exemplifies the program, etc etc. but that doesn’t mean that there is any real difficulty in identifying what is meant by this term, or that it doesn’t have a real referent.

    Since people complained about neoliberalism I switched to “Economic liberalism”. A bit more here here linking to you.

    I would really, really like to get away from this definitional stuff.

  14. jquiggin
    June 26th, 2009 at 12:21 | #14

    To follow up, I should note that (as I’ve said lots of times) Howard abandoned economic liberalism after about 2004, except for the last flourish of WorkChoices, and Bush II was similarly inconsistent.

  15. Alice
    June 26th, 2009 at 12:36 | #15

    Chris – Ann Ryan..Ayn Rand…transposition of the characters. A sophisticated dyslexia – even accountants do it with numbers. Nicely juggled except you lost the d and gained an n – a better one would have been Andy Ran (and he might – youve got a good argument).

  16. derrida derider
    June 26th, 2009 at 12:51 | #16

    Whatever the case in developed countries, there is no doubt at all that in many developing countries the only check on govermental corruption is its weakness. In particular, all through Africa and Latin America the old import-replacement strategies of the dependista school led to an awful lot of informal “taxes” being levied.

  17. Alice
    June 26th, 2009 at 13:32 | #17

    Core 1) and core 2)as mentioned by JQ above has proved a disaster in infrastructure, health and education in Australia and core 3) has proved a disaster in the rise in inequality which contributed to the global financial crisis. Neoliberalism – I think it can be safely summed up as almost rotten to the core. The problem is also that any government function came to be seen as undesirable, core or non core…to wit, prior govt attacks on the ABC, national museums, public servants (” bungling bureaucrats”), universities (“leftwing hot houses”), public school systems (same), previously solid govt financial institutions (AIDC), dept of main roads, public rail systems..the list of government dept targets just went on and on getting bigger by the day.

  18. Don Arthur
    June 26th, 2009 at 14:04 | #18

    John – I think your definition is helpful here. On your definition of neoliberalism (aka economic liberalism) it’s hard to see how it would reduce the scope for corruption.
    .
    You say that one element of the core program is:
    .
    (ii) to minimise the state role in core functions (health, education, income security) through contracting out, voucher schemes and so on
    .
    It seems to me that shifting from direct government provision to outsourcing would create new opportunities for cronyism, corruption etc.
    .
    Followers of Hayek would say that economic liberalism relies on the application of impartial rules rather than arbitrary decision making by the executive. That’s true, but it raises your ‘never been tried’ objection.
    .
    Of course there are certain kinds of corruption and favouritism that flourish in systems of direct government provision (nepotism, the spoils system etc) but over time, governments in developed nations have found ways of minimising these opportunities.
    .
    In the same way it’s possible to develop systems which minimise opportunities for corruption and favouritism in outsourcing.
    .
    So, given your definition, I’d have to agree. There’s no reason to think that there would automatically be less wrongdoing under an economically liberal government.

  19. Monkey’s Uncle
    June 26th, 2009 at 14:11 | #19

    Prof Q, I would argue the Howard government abandoned economic liberalism prior to 2004. Probably after about their first three budgets or so.

    This is evidenced by, among other things, the fact that the Labor Opposition changed their critique of the government. In their earlier years of Opposition, Labor criticised the Howard government for being a bunch of mean-spirited economic rationalists. By 2001 they were criticising the government for being a high-taxing, high-spending government.

    I would cite the Howard government and Bush 2 as good examples in support of the thesis that higher government spending increases the risk of corruption and reduces public probity.

  20. jquiggin
    June 26th, 2009 at 14:35 | #20

    MU, It’s certainly true that high-spending rightwing governments are the worst of the lot in this respect. Having absorbed the view that public spending is inherently corrupt, they exemplify it in practice.

    Don, a similar point can be made about privatisation. It capitalises in one fell swoop all the opportunities for corruption/favoritism associated with an indefinite period of public ownership. And if, as with Telstra, the privatised entity requires regulation, the game restarts on day one.

  21. June 26th, 2009 at 15:18 | #21

    A private firm has never, I repeat never, given a job to someone because they’re a mate, or a son of the managing partner etc.

    What it comes down to is definitions, because if you privatise just about everything while simultaneously limiting the restrictions on ‘private’ parties, you are not going to see breaches of proper purpose, ultra vires, or improper benefit principles being invoked in respect of those private parties because they aren’t held to the same standards as public ones.

    To put it another way, a large chunk of day to day commercial operating would be a breach of probity or administrative rules if conducted by government. Remove government from those areas and you don’t get the issues. For example there would probably be no problem with the car dealers taking potential providers of private finance out to lunch, giving them free cars, etc, nor with those private financiers saying “look they’ve been good to us, this is a mutually beneficial relationship, let’s give something back”.

  22. Hermit
    June 26th, 2009 at 15:26 | #22

    It is disturbing that a lengthy process like the Garnaut review can be subverted by a few days of direct lobbying by vested interests. Seems like certain groups get two bites at the cherry; first a submission that has to stand up to level headed scrutiny then a face to face with the minister that includes veiled threats and emotional pleas for special treatment. Recall that Howard cancelled the trial of an injectable drug at the behest of the father of someone who had died from a drug in tablet form. Seems level headed thinking and the bigger picture go out the window when politicians overrule the advice of committees and bureaucrats. This is not altogether unlike Iran where the ayatollahs presume to know what is best.

  23. June 26th, 2009 at 15:29 | #23

    Armangy,
    There would be a problem if the private providers of finance were taking the cars for themselves and then handing out company money to the dealers. That, though, is the point. The private shareholders of the company concerned would be the ones to suffer – and they have a choice to invest or not to invest. They also have a choice to elect the Board and can (if 10% of them agree) call an EGM at any time to consider just about anything in relation to the company.
    With a government they would be handing out money acquired by force from all taxpayers and are subject to oversight from all of us only occasionally. Government can, by legislation, externalise all (or most) of their bad decisions. The ability of private companies to do so is much more limited. It is not zero, true, but it is severely limited.

  24. hc
    June 26th, 2009 at 16:01 | #24

    The post includes a series of politically-motivated, partisan sneers at the Howard government without any evidence to back up the impression created. In an earlier posting you described this government as utterly ‘corrupt’ so it would really matter what anyone in the current Labor government does it will always be guilty of a lessor sin than that created by, you claim, the Liberals.

    But it is all irrelevant from the perspective of Swan’s problems. Even if it were true that the Howard government was utterly corrupt (I think it was one of the best governments we have ever had so I don’t agree) this says nothing about Swan’s attempt to hand out favours to mates.

    If Turnbull has illegally handed out $10 million to a mate then prosecute him in the courts and destroy him politically. But don’t use unproven allegations to avoid forcing Swan to own up to what he did. The point has more general force than this – poor policies by Labor cannot be excused on the grounds of what the Coalition did or did not do.

    Your general point that economic liberalism does not foster less corruption is in a sense false by definition. Corruption opportunities increase when handouts exist that can be corruptly allocated. The fact is, as you note, that the Howard Government was too timid to pursue policies of economic liberalism so that at least using recent Australian data you cannot test the hypothesis.

  25. SeanG
    June 26th, 2009 at 16:08 | #25

    Corporatist or statist policies tend to lead to political corruption whether or not it is intended. I know of developers who have given literally tens of thousands in donations just before they receive approval by local or state governments to build another block of apartmets.

    When you have a government that dishes out money then it is just in the nature of man than mistakes will occur and that nepotism/corruption will rear it’s ugly head. Subsisides will be given to those who have given donations to the party. Business that speaks out against the government gets nothing compared to those that a silent (think of Combet’s attack on the mineral industry).

    I think your argument is built upon your refusal to accept any problems with government intervention in the economy. It is built upon the false premise that corporatism/statism programmes are run by the smartest, the most honest and most perfect individuals otherwise your broad-side attack against liberalism falls flat.

    One other thing. Economic liberalism is against cash given to companies while your ideas are about selectively dishing it out. Which programme has the greater potential to breed corruption?

  26. June 26th, 2009 at 16:24 | #26

    “That, though, is the point. ” It is? I thought the allegations against Swan fell more in the area of ‘extra attention for mates who assist your own enterprise’, something mostly legal in the corporate world.

    I also disagree, respectfully, that in a political economy where most functions have been moved from the ‘public’ to ‘private’ spheres, the people affected by such corruption are always confined to shareholders.

  27. Lord Sir Alexander “Dolly” Downer
    June 26th, 2009 at 16:27 | #27

    “A private firm has never, I repeat never, given a job to someone because they’re a mate, or a son of the managing partner etc.”

    Oh dear, the family who owns the corner store might disagree. And so might the Packers, the Murdochs, anyone whose ever done any networking …

  28. jquiggin
    June 26th, 2009 at 16:29 | #28

    hc, SeanG: These a priori arguments are all very well, but you appear to have ignored the service provided by Google. Can I suggest that you try the following search terms

    AWB, Manildra, Wooldridge+RCAGP, Reith + tenix, Phonegate, Reith + balaclavas, Haneef, Alston + Switkowski, Parer + “family trust”, “Stan Howard”, Children overboard, WMD (I can keep going more or less indefinitely)

    When you’ve finished feel free to provide more logical arguments proving that economic liberalism = probity “by definition”. I will happily supply equivalent arguments about the merits of communism.

  29. SeanG
    June 26th, 2009 at 16:38 | #29

    Thank you for giving me this opportunity.

    Economic liberalism is about removing the sphere of government from how the marketplace is meant to act except to enforce contracts and provide minimal regulation. Corporatism or statism is about an active government management of the economy through the use of subsidies, specific tax treatments, and waivers from high regulation in order to selectively grow business ie. “pick winners”.

    In any political system where large government has a flexible use of subsidies for corporations but where the “political masters” are reliant on donations, then the system begins to be corrupted because patronage to companies invariably becomes linked to patronage by politicans. How often do we hear of NSW Labor getting into more strife because developers who have donated hundreds of thousands just so happens to also get planning approval for massive developments? What about the latent extent of political corruption in Europe where big business and big government are mates and put together bailouts that devy logic.

    Corporatist or statism, which is your preferred model, eventually becomes crony capitalism because it is built upon state largesse.

    Now economic liberalism is about removing the state from the affairs of the marketplace. Political donations cannot secure favour in a system built upon the government only intervening when laws are broken rather than intervening when subsidies are requested.

    What we have today is the government dishing out money left, right and centre. Business knows that it can get its worth by either remaining silent with bad legislation, by donating to the party in power or by complaining that they will “lose jobs” forcing timid politicans to ride with a package.

    I hate to mention something else. We have never had genuine economic liberalism in Australia. We have moved in that direction but we have never achieved it. So your argument about linking Howard to economic liberalism to corrupt practices only works if you decide to ignore government largesse and intervention during his 11 years in power. A large number of assumptions on your part in putting this post together.

  30. matt
    June 26th, 2009 at 16:56 | #30

    Yes, so privatising state assets so your mates can buy significant shares in them isn’t a corrupt aspect of neo-liberalism at all…

  31. jquiggin
    June 26th, 2009 at 17:01 | #31

    “I hate to mention something else. We have never had genuine economic liberalism in Australia. ”

    Then don’t mention it. As I said at the outset, this is an all-purpose excuse for failure, worn out by its use in defence of communism.

  32. Tim Dymond
    June 26th, 2009 at 17:01 | #32

    ‘I hate to mention something else. We have never had genuine socialism in the Soviet Union. We have moved in that direction but we have never achieved it. So your argument about linking Brezhnev to socialism to corrupt practices only works if you decide to ignore the absence of worker democracy and capture of collective property by the party bureaucracy during his 18 years in power.’

  33. jquiggin
    June 26th, 2009 at 17:03 | #33

    Snap!

  34. hc
    June 26th, 2009 at 17:17 | #34

    John, I agree let’s be a bit specific.

    Peter Reith advised Tenix after he left government. Hardly evidence of corruption while he was in government. The AWB inquiry found no evidence of political corruption – for most Australians it was a non-event anyway – the AWB was trying hard to sell wheat in a notoriously tough market…..Claims that there were WMD in Iraq hardly evidence of corruption as the UN and most governments of the world thought it was true. A former head of the Dept of Foreign Affairs in told me he was sure it was true because the Americans had supplied Iraq with the technology! Alston gave Ziggy a leg up for the job at Telstra – was this corruption or picking a pretty decent man.

    I could go on just as you say you could. The cases you cite are part Labor mythology and part just unproven allegations. You can assert these things and a few rabid Labor supporters will cheerfully go ‘Hear! Hear!’. But most of the community (including most Labor supporters) don’t make their political judgments based on these sorts of claims. They are not generally believed which is why Howard held office for so long and was thrown out by only a few voters in a hundred switching their allegiances.

    By the way you didn’t clarify how these unproven claims (even if they were proven) justify improper actions on part of Labor. Can a citizen claim immunity from prosecution for rape on the grounds that at least he didn’t murder his victim. I really don’t understand this attitude – partisan politics aside good government will never be achieved if wrong actions are excused because others are claimed to have done worse.

  35. SeanG
    June 26th, 2009 at 17:29 | #35

    Matt #29

    Privatising state assets via floating them on the sharemarket does not correspond to dishing out massive subsidies because companies and individuals pay to be owners.

    ProfQ #30

    Well professor then your logic is faulty – how can economic liberalism be inseparable in terms of corruption if we never had it in the first place after 2004 (or some argue the rot started earlier)? You make a sweeping statement based upon the actions of a previous government which was well known for their largesse.

    I know you dislike the idea of economic liberalism – after all, who does not like governments spending taxpayer money on selected groups for maximum electoral advantage but you are flying in the face of history, and of commonsense. Corporatism corrupts because it is the disperal of money to individual groups by politicans.

    Can you at least have the courage to acknowledge that where there is a large goverment dishing out billions to industry then there are the conditions for political corruption? Or a you so enraptured by the concept of big government that you fail to see any problems of having a large government?

  36. Ernestine Gross
    June 26th, 2009 at 17:33 | #36

    IMO, the critical challenge in #27 is: ” When you’ve finished feel free to provide more logical arguments proving that economic liberalism = probity ‘by definition’. ”

    This critical bit remains unanswered. Maybe the adjective ‘more’ can be taken out to make it technically easier to judge the answer.

  37. SeanG
    June 26th, 2009 at 17:36 | #37

    So far I have not heard the arguments why social democracy in a moden democratic setting – Corporatism/Statism – is inherantly superior when it comes to political probity especially considering that there is far greater scope for corruptive practices under a corporatist model than under a liberal model.

  38. Jim Birch
    June 26th, 2009 at 17:39 | #38

    Economic liberalism is about removing the sphere of government from how the marketplace is meant to act except to enforce contracts and provide minimal regulation.

    Alternately:

    Economic liberalism is about reducing the sphere of government down to enforcing a minimal set of contact laws in the belief that the sum of individually preferred actions within those legal constraints must somehow mysteriously produce the best overall result, and, even if it doesn’t, and things screw up really badly, we’ll still always be able to tell you we are right and point to the abundant failures of alternate systems because no one will ever be stupid enough to fully institute our vision.

  39. SeanG
    June 26th, 2009 at 17:44 | #39

    Jim,

    A nice definition for people who believe in the benvolent power of government despite history showing time and again that such belief is misplaced. I do not argue that the markets are perfect but within economic liberalism there is less scope for corruptive practices than under a corporatist or statist model. We have had economic liberalism before the Second World War, by the way, you might be interested in knowing a thing or two about that. A great period of technological and intellectual development, but that is besides the point.

    In this debate we are asking: which system has the greatest scope for corruption? You and people who tend to agree with you have failed to put together a cogent answer to the question because the facts are stark and they are irrefutable. In a system where government decisions about subsides, taxes etc are made by a few for reasons that are hardly transparent then you increase the scope and opportunity for corruptive practices to feather the bed of ministers and individuals within governments. Do you not have the courage to accept that?

  40. June 26th, 2009 at 18:09 | #40

    Unless you offer some kind of definition of ‘economic liberalism’ this is just going to degenerate into partisan ranting.

    Can a partisan rant degenerate into a partisan rant?

  41. June 26th, 2009 at 18:10 | #41

    @jquiggin
    But “health, education, income security” are definitely not core, unless you are starting from a position that builds them in (like social democracy). Compare and contrast those with Gibbon’s “… the three principal objects of a regular police [polity], safety, plenty, and cleanliness…” (Chapter XVII, Decline and Fall of the Roman Empire). Clearly plenty and cleanliness are prior to and necessary for income security and health respectively, but they stop short of those, and education is nowhere – while your list omits anything relating to safety in general. And indeed, I for one don’t see your list as the proper preserve of governments, in that in a properly functioning system they would be practically accessible to individuals anyway. To me, the larger issues are to do with getting things working right rather than supporting people in a mess, while leaving the mess (though I wouldn’t want a transition in which support was removed before people could manage on their own – perhaps my major point of difference with the other polarity, after not wanting their preferred state support for things that suit them).

  42. Lilli Tembarton
    June 26th, 2009 at 18:19 | #42

    Going back to today’s newspaper article re Turnbull and his neighbour Matt Handbury – is this the same Handbury who is, or was, part of the Murdoch clan? If it is, perhaps the favour was being done for a newspaper proprietor who formerly supported some urgent action on climate change. This is supposition as I have no way of checking if indeed my understanding is correct.
    Again regarding Opposition interest in “the email”, I found it interesting to go to Hansard for 4th June (the day the matter was first raised in Parliament after lunch) and consider carefully the tone of Eric Abetz’ questioning of Godwin Grech. It appears to be based on some prior knowledge even at that point, so the claim currently made that the focus now only arose after the Senate hearing last Friday lacks credibility once again.

  43. nanks
    June 26th, 2009 at 18:22 | #43

    It won’t make any difference what system you put in place if power is allowed to concentrate ‘in space and time’. If power can reside in individuals for any length of time then individuals who seek only power and only the advancement of their particular interests will gravitate towards control of those positions that allow them to further their interests and their interests alone.

  44. June 26th, 2009 at 19:00 | #44

    Pr Q says:

    I’ve seen a lot of variants on the claim that interventionist policies, like OzCar, are conducive to corruption, while economic liberalism reduces the scope for wrongdoing. I’ll just offer a few observations (readers with access to Google can fill in the details).

    [insert here interminable shopping list of Right-wing political vices]

    In summary, the idea that economic liberalism goes with high standards of public probity doesn’t pass the laugh test.

    In one sense Pr Q seems to be missing the point, confusing political parties with politico-economies. “Economic liberalism” is a politico-economomic philosophy that prevailed in the early 19th to mid-20th C, which more or less constitutionalised a small public sector.

    Since the public sector was fairly small and boring, there was not much at stake with most public policy. Hence instances of companies bribing or compromising public officials were fairly minimal.

    So up until WWII, at least in economically liberal Anglophone states, there wasnt alot of money to be made in politics. And most politicians of that era seem almost charmingly naive and honest. Hughes ran a farm to supplement his income. Curtin and Chiffley were both men of modest means. Menzies, although rather grand in his carriage, did not even own his own house.

    The one exception was vice, which proves the rule. Here public officials regulated at sizeable sector of the economy and were naturally a target for black-market criminals. Therefore you had Chicago.

    But in another respect I couldn’t agree more. Contemporary “economically liberal” politicians appear to vigorously practice what they preach. They seem to have a keen eye for the main chance. Although, in this respect, its hard to see the special villainy of the late L/NP govt. Both Hawke and Keating became multi-millionaires through their political connections.

    More generally, Pr Q hits the nail right on the head. Contemporary (or what I call post-modern) economic liberalism in the provision of natural state functions, such as public utilities and community services.

    It is an open invitation for graft and jiggery-pokery because of the politicization of what should be professionally run public services. There are vast sums of money at stake and plenty of opportunities for patronage to favoured commercial tenderers or vendors. Pr Q’s article, retrieved from dusty cyber archives, explains how the the growth in privatization led to rent-seeking:

    Microeconomic reform was supposed to end rent-seeking. Instead, it threatens to produce a situation where government policy is put up for sale in the same way as any other public asset.

    In the bad old days of the 1970s, the lobbying industry in Canberra consisted of a couple of small firms, a dozen or so individual consultants, a scattering of industry associations and some customs agents moonlighting as lobbyists. Today, the Canberra phone directory lists dozens of self-described lobbying firms as well as scores of PR agencies specialising in government work, and economic consultancies employing large numbers of professional staff.

    Thanks to microeconomic reform, however, many more firms have direct individual interests in government policy. The provision of public transport reduces profits for the owners of nearby toll roads. Decisions on telecommunications policy can transfer billions of dollars from Telstra to its competitors, or vice versa. And so on.

    And there is massive evidence of private sector rent-seeking between consenual capitalist actors, what with the growth of rock-star CEOs, cronyistic executive remuneration committees, lavish expense accounts and so on.

    As Kinsley says, “the scandal is whats legal”.

  45. June 26th, 2009 at 19:32 | #45

    In the post at 23 HC refers to criticism of a total of $11 million ($10 million plus $1 million GST) being paid to a company run by Matt Handbury, who besides being Rupert Murdoch’s nephew, was a member and contributor to Turnbull’s re-election committee in Wentworth in the 2007 election, for unproven Russian rainfall technology which was announced during the second week of the election campaign.
    HC says of this: “But don’t use unproven allegations to avoid forcing Swan to own up to what he did” which he earlier describes as an “attempt to hand out favours to mates”
    The burden of HC’s remark about Malcolm Turnbull’s amazing grant on Russian rainfall technology was that if “Turnbull has illegally handed out $10 million to a mate then prosecute him”.
    Let us turn this around and see what HC is really saying in relation to Swan: “if Swan has illegally handed out nothing to a mate, then prosecute him.”
    Obviously, one cannot prosecute Swan when there was no consideration involved. Perhaps Turnbull could have been prosecuted, but somehow I think HC would have been leading those shouting “Government intimidation”
    In his post HC is saying the sin of Swan was attempting to hand out favours to mates.
    HC apparently does not know that the Liberal claim against Swan was that he was doing favours for the alleged “mate” of Prime Minister Kevin Rudd.
    The evidence against Turnbull is that in the second week of an election campaign he announced an actual grant, totalling $11 million, with the beneficiary being someone who was on Turnbull’s re-election committee and a donor to his campaign.
    Unfortunately, HC it is probable this was not illegal, just immoral. By contrast, nothing Swan did was either illegal or immoral.
    The difference is Turnbull’s mate apparently received a total of $11 million while the PM’s (or Swan’s) mate received nothing.
    But unlike Swan, Turnbull made his decision without any chance of contemporary Parliamentary scrutiny, while all Swan’s action have been scrutinised and he supplied extensive details to Parliament of his dealings with Grant and other car dealers.
    What details did Turnbull provide to Parliament for his actual grant to Handbury’s company?
    To summarise, Turnbull approved $11 million to the Matt Handbury company without scrutiny. Swan has not approved any money to John Grant, and this fact has received considerable scrutiny.
    Matt Handbury is a neighbour and direct financial supporter of Turnbull. John Grant is not a neighbour or direct financial supporter of Swan.
    The only thing that makes sense in the HC post at 23 is “Corruption opportunities increase when handouts exist that can be be corruptly allocated.”
    There were no handouts approved by Swan to John Grant. There was a considerable handout approved by Turnbull to Handbury.

  46. SeanG
    June 26th, 2009 at 19:36 | #46

    I found this quote from ProfQ interesting:

    “(ii) to minimise the state role in core functions (health, education, income security) through contracting out, voucher schemes and so on”

    Does the good professor think that tax-paying parents are too stupid to know which school is best for their child? Does ProfQ want the government to dictate available schools to the very people who pay taxes to keep the machinery of public service operating? Isn’t this a patronising view to take on parents and their judgements about schooling for their children?

  47. Martin
    June 26th, 2009 at 19:47 | #47

    @Armagny Is anyone seriously asserting that private companies are less corrupt that government? Have they worked for both? Are they claiming that managers in private companies never take, er, associated rewards for, say, purchasing from one supplier rather than another, or approving a loan?
    Governments generally are officially aware of corruption and take steps to detect it and address it (not always successfully but it cuts the extent). Private companies in my experience just do not have any profile for detecting corruption in their own ranks. Of course, they have performance measures, but these just keep the corruption down to traditional levels.
    Also governments are subject to public scrutiny and private companies are not. To be sure, governments will try to claim that contracts with suppliers are ‘commercial in confidence’ and the like, but even so information is generally available at some level. When two companies make a deal, there is no reason to provide any information.
    I realise that I am speaking very generally here but that is inevitable for this level of discussion.

  48. TerjeP (say tay-a)
    June 26th, 2009 at 19:50 | #48

    The essence of JQs argument is that if you support a smaller state you support the Liberal party. If you support the Liberal party you are condoning corruption. If you condon corruption then clearly support for a smaller state is evil. It’s partisan and philosophical rubbish. Like who cares if the Liberals die in opposition anyway? They are hardly the great white knight that libertarians dream of. The fact that the ALP is crap does not mean the Liberals aren’t. And likewise the fact that the Liberals are crap does not mean that the ALP isn’t (which is what a lot of partisans here are trying to promote). A pox on both their houses. The government sucks and voting Liberal or Labor won’t change that.

  49. Tom N.
    June 26th, 2009 at 19:57 | #49

    MORE STRAW ECONOMIC MEN TICKLE-TORTURED TO DEATH BY Q’s LAUGH TEST

    Q’s attacks “the claim that interventionist policies, like OzCar, are conducive to corruption, while economic liberalism reduces the scope for wrongdoing” by pointing to the corruption associated with various politicians that he labels economic liberals, including Howard, Thatcher, Reagan and Bush II.

    Q also complains about demands (such as the one I made over on Andrew Norton’s blog, and have made here previously) that he be rigorous in his use of definitions, and notes that he defined neoliberalism (which he is now equating with economic liberalism, apparantly) some seven years ago.

    Yet when one goes back to that earlier blogpost to find out what neo/eco liberalism is, we find this:

    With this definition, a reasonably pure form of neoliberalism (except for some subsidies to favored businesses) is embodied in the program … [in essence, US Republicans, Bristish Conservatives and Australasian Liberals] (emphasis added)

    The emphasised point in brackets is crucial. The reason some people (such as Mark Latham, and SeanG above) have been arguing that neoliberalism involves less scope for corruption than interventionist policies such as OzCar is that it does not involve the provision of “subsidies for favoured businesses”.
    So, in effect, Q was arguing that neo/eco liberalism involves more scope for corruption than interventionist policies by pointing to the corrupt activities of people who, by Q’s own admission, engaged in the very interventionist policies that neoliberalism does not provide the scope for!!!

    I understand that one can get too bogged down in definitions and miss the larger picture, but the discussion of “neo/economic liberal/rational/anything-else-I-don’t-like ism” on this site suffers the opposite problem.

  50. Don Arthur
    June 26th, 2009 at 20:30 | #50

    I think it would more useful if people ignored party politics and focused on which policies and policy frameworks encourage corruption and special favours.

    Then you could ask whether the benefits of those policies outweighed the increased risk of corruption.

  51. jquiggin
    June 26th, 2009 at 20:45 | #51

    Tom N, I’ll repeat my offer made to you over at Andrew Norton’s. I’ll agree that your favored ideology, whatever you want to call it, has never been implemented and therefore can’t possibly be blamed for anything, if you’ll agree not to sully its purity by engaging in policy discussion of any kind. Otherwise, see #30 and #31.

  52. SeanG
    June 26th, 2009 at 21:02 | #52

    Prof Q,

    If you say it has never been implemented then how can you attack it on the basis of corruption?

    Also, we can argue pre-WW2 there was a liberal government and set of public policies.

  53. fred
    June 26th, 2009 at 21:06 | #53

    Well, what a refreshing OP.
    The obvious stated with humour.
    And while I’m handing out praise what a neat and overdue comparison of 2 recent ‘scandals’ [the latter barely qualifies] by JohnL at #44.

  54. Tom N.
    June 26th, 2009 at 21:37 | #54

    RETURN TO SENDER

    Repeat away John, but since I don’t have a favoured ideology – that seems to be more your kind of thing – your offer doesn’t interest me. What I am interested in is some rigour around these debates because, as I have pointed out previously, in pursuing these “nasty narrow-minded New Right neoliberal economic rationalists” (or whatever the label is today), you send some reputational external costs my way.

    But back to this thread, you might like to return to the issue I raised above (#48)and defend your earlier argment in view of the apparant contradictions unearthed. Specifically, when the argument is about the merits of interventionist policies such as OzCar vis-a-vis a neoliberal alternative (theoretical or otherwise) of no such policies, how does pointing to people who engaged in the former policies, and by your assessment are very corrupt, should that the latter policies provide more scope for corruption?

  55. SJ
    June 26th, 2009 at 21:50 | #55

    Armagny Says:

    A private firm has never, I repeat never, given a job to someone because they’re a mate, or a son of the managing partner etc.

    What it comes down to is definitions, because if you privatise just about everything while simultaneously limiting the restrictions on ‘private’ parties, you are not going to see breaches of proper purpose, ultra vires, or improper benefit principles being invoked in respect of those private parties because they aren’t held to the same standards as public ones.

    This isn’t true. It’s just as wrong for employees of a private company to do this as it is for members of a government. See for example: CRIMES ACT 1900 (NSW) – SECT 249B

    Corrupt commissions or rewards
    249B Corrupt commissions or rewards

    (1) If any agent corruptly receives or solicits (or corruptly agrees to receive or solicit) from another person for the agent or for anyone else any benefit:

    (a) as an inducement or reward for or otherwise on account of:

    (i) doing or not doing something, or having done or not having done something, or

    (ii) showing or not showing, or having shown or not having shown, favour or disfavour to any person,

    in relation to the affairs or business of the agent’s principal, or

    (b) the receipt or any expectation of which would in any way tend to influence the agent to show, or not to show, favour or disfavour to any person in relation to the affairs or business of the agent’s principal,

    the agent is liable to imprisonment for 7 years.

    (2) If any person corruptly gives or offers to give to any agent, or to any other person with the consent or at the request of any agent, any benefit:

    (a) as an inducement or reward for or otherwise on account of the agent’s:

    (i) doing or not doing something, or having done or not having done something, or

    (ii) showing or not showing, or having shown or not having shown, favour or disfavour to any person,

    in relation to the affairs or business of the agent’s principal, or

    (b) the receipt or any expectation of which would in any way tend to influence the agent to show, or not to show, favour or disfavour to any person in relation to the affairs or business of the agent’s principal,

    the firstmentioned person is liable to imprisonment for 7 years.

    (3) For the purposes of subsection (1), where a benefit is received or solicited by anyone with the consent or at the request of an agent, the agent shall be deemed to have received or solicited the benefit.

    Armagny Says:

    To put it another way, a large chunk of day to day commercial operating would be a breach of probity or administrative rules if conducted by government. Remove government from those areas and you don’t get the issues. For example there would probably be no problem with the car dealers taking potential providers of private finance out to lunch, giving them free cars, etc, nor with those private financiers saying “look they’ve been good to us, this is a mutually beneficial relationship, let’s give something back”.

    No, again, this isn’t true.

    We have plenty of examples of employees stealing from companies, where the companies take action against the employee. What we do have is a major problem with agency, where shareholders are not able to take action against the executives or the directors for diverting monies to themselves.

    Theft is theft, regardless of Andrew Reynold’s attempted distinction between theft from compulsorily acquired government funds and voluntarily contributed shareholder funds.

  56. melaleuca
    June 26th, 2009 at 22:04 | #56

    Well Harry Clarke another example of Howard era corruption was the rural grants scheme. Even News Ltd reported on this:

    “PRIME Minister John Howard’s re-election chances have been dealt a blow by a damning report which finds the regional grants program has been used for pork-barrelling in coalition electorates.

    Just over a week out from polling day, and with a new poll showing little reduction in Labor’s lead, the coalition’s reputation for economic management has been called into question in a scathing report by Auditor-General Ian McPhee.” http://www.news.com.au/perthnow/story/0,21598,22765447-948,00.html

    Other examples of utter filth are the deportation and internment of Australian citizens deemed to be illegal aliens, Bill Heffernan’s bizarre attack on Justice Kirby and the despicable Jackie Kelly fake election pamphlets scandal that was deliberately aimed at provoking ethic tensions.

    Howard was a dirty dog and we should all thank God his own electorate booted him out of the kennel.

  57. Chris Warren
    June 26th, 2009 at 22:05 | #57

    TerjeP

    Of course the Liberals are corrupt. Although it does take a lot of experience to find the Liberals to be truly corrupt. But after

    1 So called “truth overboard”,
    2 missing Iraqi weapons of mass destruction,
    3 the Lindsay fake document,
    4 the fake Liberal letters that led to the Ralph Willis affair 1996,
    5 Senator Heffernan’s attack on Kirby,
    6 South Australia’s Hamilton-Smith fake documents, and
    7 Fake ALP website in ACT setup by Liberals.

    You generally have to wake up and recognize the reliance on corruption for the Liberals.

    You can also find right-wing corruption in the ALP

    1) The infamous WA Inc (ALP Right)
    2) Richardson’s Marshall Islands (ALP Right)
    3) Ros Kelly’s distribution of sports grants (ALP Right)
    4) Bashing of Peter Baldwin (ALP criminal Right).

    You can also find corruption in right-wing trade unions.

    I do not think an objective observer can come to any judgement that the Liberals represent high corruption, but they are not alone.

    However when you get Rightwing corruption, combined with a Latham or Turnbull maniac ego, real threats to democracy can emerge.

    I just hope Turnbull gets bumped off the stage asap.

  58. jquiggin
    June 26th, 2009 at 22:25 | #58

    Tom N, I’m lost by now as to what your point is. If you don’t, in general terms, support the policies that have been pursued in Australia for the last twenty-five years or so, what do you care what name I choose to give to them? And why are you upset when I point out that the governments that introduced them (and in particular the last one) had much lower standards of probity than their predecessors?

    Perhaps if you could spell out your substantive concerns more clearly we could get away from this tiresome definitional stuff.

  59. SeanG
    June 26th, 2009 at 22:29 | #59

    ProfQ,

    The problem with your argument is that you make a broad-based attack on economic liberalism using the Liberal Party and previous Government as examples and then turn around and state that economic liberalism has never really been implemented in Australia. There are some logical fallacies with your argument.

    You refuse to debate the liberalism vs interventionist issue. If we have a system that is abouting distributing money and largesse (interventionist) and a system that disagrees with it (liberalism) then there is far greater scope for corruption under the former rather than the latter system.

    However you refuse even to debate that.

    So not only do you fail to give an adequate definition of liberalism and neoliberalism but you even refuse to debate the substance of interventionist vs liberal methods of governing.

  60. melaleuca
    June 26th, 2009 at 22:39 | #60

    For goodness sakes SeanG PrQ gives a concise definition of economic liberalism that Don Arthur has accepted as reasonable.

    “If we have a system that is abouting distributing money and largesse (interventionist) and a system that disagrees with it (liberalism) then there is far greater scope for corruption under the former rather than the latter system.”

    That’s poppycock, Sean G. There is always scope for corruption when a service like public transport is tended out.

    In the US we routinely see Republican and Democrat pollies slide into million dollar plus jobs with private firms that have done very well out of tendering, deregulation etc… Think Cheney and Halliburton for example.

  61. Alice
    June 26th, 2009 at 23:39 | #61

    Sean, Tom …this insistence on definitions that Prof Q has already given both of you numerous times is trite and diversionary..you have google and can form your own. The definition is well understood by most people in this discussion except by those who now want to blame the failings of neoliberalism on the fact that we didnt take all regulations away including those designed to protect well functioning markets. I know what you will say…markets dont need regulation to protect them. And maybe markets dont, but people do. They need protection from markets.

  62. SeanG
    June 27th, 2009 at 00:03 | #62

    Alice,

    Maybe you like to filter what I have written when you read it but I specificaly stated that economic liberalism which is about removing government’s economic power to distribute largesse has a lesser scope for corruption that your preferred model. Stop making this debate just about definitions and start debating the type of government or are you afraid that the corporatist model which you so laud will be shown to be prone more corruption than the liberal model that I believe in?

  63. SeanG
    June 27th, 2009 at 00:07 | #63

    Alice,

    History has shown that people need protection from their governments and that everyone makes up the marketplace.

  64. June 27th, 2009 at 00:25 | #64

    melaleuca,
    If you are tendering out a monopoly on public transport (or anything else) then of course you create scope for corruption. If, OTOH, the government simply steps out of the arena the scope is substantially lessened. This is not new or innovative – I was reading a biography of Elizabeth I and this point was made frequently to her about the monopolies she granted to her favourites.
    While we, as a nation, keep doing this we will have to deal with the resulting corruption. The more we do it, the more we centralise the decision making power the more corruption. The less we do it and the more we trust the people to make their own decisions rather than relying on the government to make them for us the less corruption there will be.
    Not tricky, but many seem to miss that.

  65. Bingo Bango Boingo
    June 27th, 2009 at 00:35 | #65

    Not even Prof. Q believes the OP. He can’t possibly.

    The point being made by economic liberals is that government intervention provides an opportunity for corruption of a particular kind, namely the secret appropriation of public monies for private purposes that are inconsistent with accepted principles of good public policy (e.g. equal treatment, transparency, etc.) This position ought to be beyond criticism. The claim isn’t even close to controversial (Prof. Q himself alludes to examples). Therefore, the absence of government intervention means the absence of the opportunity for corruption of the abovementioned kind.

    But here Prof. Q finds himself in a difficult position: clearly there will be situations in which the absence of government intervention will result in less corruption, if not abolishing it altogether (since of course there will still be scope for corruption involving purely private actors, for example garden variety secret commissions). This implies a benefit of economic liberalism, to which Prof. Q is opposed on ideological grounds. So, he has to find a way to muddy the waters. “A ha!”, he says. “I know some politicions who from time to time espoused economic liberalism. Every now and again they actually implemented it! And from time to time, those politicians were corrupt, or deceptive, or what have you. I’ll just mention the two together, ignore the precise point being made, and hey presto!”

    Prof. Q’s final, comically transparent, attempt at misdirection is just icing on the cake: “In summary, the idea that economic liberalism goes with high standards of public probity doesn’t pass the laugh test.” Err… the point, Prof. Q, of which you are no doubt acutely aware, is that with economic liberalism, ‘public probity’ is neither here nor there, it being irrelevant to the outcome.

    BBB

  66. jquiggin
    June 27th, 2009 at 06:07 | #66

    BBB, see #30 and #31

  67. June 27th, 2009 at 06:30 | #67

    Of course the Liberals are corrupt.

    Where did I say otherwise?

  68. SeanG
    June 27th, 2009 at 07:28 | #68

    ProQ,

    If we ask which system is more prone to corruption, which one do you think?

    A) Economic liberalism where the government has a minimal role to play in steering the economy.

    B) Economic interventionism where government actively intervenes with subsidies, taxes and regulations.

    Your choice, although you have conspicuously avoided making it thus far in this debate.

  69. Alice
    June 27th, 2009 at 08:47 | #69

    Sean
    I dont agree that an economic interventionist style has a greater tendency to corruption as you and BBB suggest. After the spate of obviously corrupt practices recently emanating not from governments but from private firms (tedious to have to mention it but Madoff is the standout model and he wasnt alone and then of course the extremely creative financial derivatives, the enrons, the junk bond kings, the CDO pandoera boxes of nasty risky loans, the unregulated gambling of “apparently” sound financial institutions).

    I also note in your post above you make only two choices available – the moral poles of a) and b) above. I would suggest there are many degrees of intervention as there are many degrees of economic liberalism between your “either/or…minimal/active” above from the point of view of reducing corruption. I would argue that by sheer dollar value of losses a) “minimal role for government” would demonstrate greater tendencies to corruption. How do you measure corruption if not by the dollar value of the damage done?. We could start with the GFC losses incurred by irresponsible deregulation and lack of regulatory oversight or the Long Term Capital Management crisis.

  70. Alice
    June 27th, 2009 at 09:00 | #70

    Sean – people need protection from fraud and greed in the private sector and as well they need protection from governments. There are entire questions concerning the degree of intervention you ignore. I do not find either pole terribly attractive and it seems pointless to argue that one extreme has a better record than the other in terms of reducing corruption. In fact the two extremes of a highly active interventionist approach and a highly uncontrolled economic liberal approach are likely to be the worst of all choices to reduce corruption.
    The liberal extreme is likely to produce greater dollar value losses and the active interventionist approach likely to produce greater inhibitions and constraints on individual freedoms.

  71. melaleuca
    June 27th, 2009 at 11:15 | #71

    Andrew Reynolds, other than in cloud cuckoo land, the Government can’t entirely “step out of the arena” in a range of areas including public transport, prisons etc..

    Also, America downsized its military and therefore needed to tender for services that many other armies would provide for themselves. This has led to significant scope for corruption as per Cheney and Halliburton.

  72. gerard
    June 27th, 2009 at 11:21 | #72

    The so-called “economic liberal” governments mentioned – Howard, Thatcher, Reagan etc., were never actually “economic liberal” governments, so we can’t judge “economic liberalism” on the basis of their records.

    OK, I know this is the type of blanket excuse for failure worn out by its use with communism, but actually it is a valid point.

    The New Right’s ideological pretence of “economic liberalism” was always a foil for a vulgar form of Marxism-in-reverse. It was never about the rollback of State intervention in the economy, but the redirection of State intervention toward serving the interests of the wealthy to the exclusion of the rest of society. Workchoices was just the extreme logical conclusion – using the powers of the State to criminalise the free association of working people.

    The true believing “economic liberals” who supported the New Right based on some sort of “libertarian” belief system were nothing more than what Lenin would have called “useful idiots” in the Class War – people who believed the propaganda of the New Right vanguard because they confused the rollback of the social-democratic welfare system with the rollback of state intervention in the economy in general.

  73. Donald Oats
    June 27th, 2009 at 11:27 | #73

    In a functioning democracy, I would have thought that the role of the government is at the very least to provide the spakfilla where markets fail to reach. That’s about as minimal as you can get and still be providing public benefit. However, people generally want a bit more: as an example, people like at least some insight into how our prisons operate, and they want to be reassured that there is some regulation as to what is tolerated/allowed and what is not.

    Privatisation of prisons (which I am generally against, but that’s a discussion for another day) is a good example as to the kind of issue where an utterly unencumbered market would probably have poor social outcomes. That’s not to say that a government controlled and operated prison system is fantastic. My point is simply that some rules on treatment of prisoners, and on what is acceptable guard behaviour, are required – but with a non-interventionist government who will set them? And to what end? If the unencumbered market is operating, it is hard to see how such things as the treatment of prisoners come into it. If a prisoner is bashed to death by guards – just a hypothetical – in a private prison, what mechanism would an unencumbered marketplace provide so that i) the fact of death is notified; ii) the cause of death is determined; iii) a judgement is made as to whether the death was “acceptable” or “unacceptable”? I see none, but I’m happy to be put right on this.

  74. melaleuca
    June 27th, 2009 at 14:11 | #74

    Another point that Andrew Reynolds et al should consider is vote buying. Most folk accept this is a much bigger problem in America than nearly all other western democracies and a lot of it is about economic liberalism. Big pharma for example buys votes to ensure its huge profits are never threatened by socialized medicine, restrictions on advertising etc…

    PrQ has clearly won this argument.

  75. June 27th, 2009 at 15:02 | #75

    You don’t have to look very far to see the foolishness of the notion that less government is always better. Taking melaleuca’s reference to big pharma, for example, it would be shattering to think of all the unready chemicals that would be unleashed on the public unless there were government regulations. Closer to home, how would we get regulations to fence in swimming pools for young children without it being done by government agencies? The list of necessary regulations by governments is, thankfully, large. I agree that Professor Quiggin has won the argument.

  76. June 27th, 2009 at 16:34 | #76

    Pr Q says:

    The Howard government breached standards of public probity on a scale never before seen with an Australian government, and approached only by the later years of Hawke-Keating and the worst of state governments.

    On the subject of the relative probity of the ALP I have two words for Pr Q: Andrew Theophanous.

    Oh and while we are at it, I have another two words on the cultural politics: indigenous self-determination.

    And to seal the case I have the final two words that tie them together: Al Grassby.

    Compared to that the L/NP’s serial crimes and misdemeanours look lame and inconsequential.

    No doubt the last L/NP govt was as bad as Pr Q says it was. I dont think I have ever denied its sins. Although on occasion I have defended some of them as politically justified.

    But the notion that the it is especially liable to moral outrages in comparison to the ALP is risible. Perhaps if one sticks to high-profile ministerial misdeeds a sharp man could tell the difference between the parties, to the detriment of the late L/NP. (Unaccountably Pr Q overlooks the worst transgression: Andrew Peacock as Boeing’s go-between on the F18 deal.)

    But that myopic focus only comes at the expense of ignoring the seamy underside. And the base of the ALP ice-berg is where the real “action” occurs. Its whole mechanism of branch-stacked pre-selection, factional wheeler-dealing and political patronage is just inherently corrupt.

    I speak with feeling, having lived in Sydney for better part of the nineties. And visited the NT on frequent occasions. I know at first hand what notionally Leftist political machine operators are capable of when given a free run of power.

    Some* may attempt to place a fig leaf over the federal ALP’s operations by quarantining it from the state branches. This is a distinction without a difference. The latter had a massive influence on the former, particularly in the crucial NSW case. (As the Mates say, “if you arent in Sydney you are just camping”.) Michael Duffy gives us a taste of Labor in power:

    For 11 years the Labor Party has run this state for the benefit of its members and their mates rather than for the public. NSW is the Mates’ State…Almost wherever you look here, in business or civic life or education or sport, you will find some Labor mate with his or her hand out for preferment.

    The Mates’ State has been well described by Ken Phillips…[he] believes NSW, far more than the other Labor states, is run on a tribal basis. It “is a disciplined system of insider believers who connect through a vast network of political, academic, legal, union and commercial power bases”.

    “Their co-ordination is highly developed, but by and large hidden from general view. It extracts finances from the state itself and from anyone who seeks to do business within the tribe’s sphere of influence. It is morally corrupt, but manages corruption by creating law that turns immorality into legality.”

    And the moral case against the ALP hardly stops with its more traditional Tammany-Hall machine operation. Pr Q’s focuses on economic rip-offs whilst overlooking cultural atrocities. But there is no good reason to ignore the latter, excepting of course the usual unworthy ones such as political correctness or partisanship.*

    In particular, the grotesque moral delinquency of the ALP, and its media-academia enablers*, in the area of cultural regulation stands out. Which, as any parent will tell you, has several orders of magnitude more effect on peoples lives than ministerial hanky-panky.

    Over the past generation the pre-Rudd’s ALP’s lurid record in this area of either administratively unleashing, conveniently ignoring or being complicit in a variety of capital offences such as political assassinations, hate crimes, ministerial extortion, child rape, ethnic gangst-aism is difficult to beat. The main reason why the Howard L/NP is not in the bad odour with the public that Pr Q feels it deserves to be is because it went along way to cleaning up this disgraceful mess.

    I have higher hopes for the current ALP, mainly because of the healthy influx of purer blood from QLD and VIC. But please, lets not indulge in partisan parlour games about the recent history of the parties. In the Baby Boom prime era it was more or less a case of a plague on all our houses.

    PS Oh, I almost forgot the MC of the Mates: Richo. “What Richo? No way, he’s as pure as driven snow. M-a-a-a-t-e!!! ” [said in classic Golden Mile used car salesman accent, with plenty of glad-handing, back-slapping and eye-winking, emphasis back-loaded]

    * I certainly dont intend to pepper Pr Q with these shot-gun blasts into a crowded room. He seems just too good-natured and trusting towards the True Believers to conceive of how bad the Mated-with & Mobbed-up Left can get when it holds the whip hand for any length of time.

  77. melaleuca
    June 27th, 2009 at 16:52 | #77

    Jack Strocchi, I think as a general rule state governments do tend to be more on the nose than federal governments. Since the Libs have lost 95% of state elections over the past decade it isn’t surprising that we have plenty of contemporaneous examples of dodgy Labor state governments.

  78. Alice
    June 27th, 2009 at 18:01 | #78

    Jack _ I wholeheartedly agree re Grassby. I dare say his mafioso drug trade is still going – such that the libs have been beficiaries of their donation largesse – hence my comment in another thread..nothing warrants outrage and shock anymore especially when you consider Howards “mates” in cosy positions and benefitting from his federal govt leadership… and NSW Labor’s “developer mates” state run leadership. What are we saying. I dont think academia protects labor anymore than it protects the coalition – as it should be. There is too much that is on the nose with both major parties….perhaps its time to vote to destabilise both of them (Oh and by the way I am mighty ticked off about the lack of changes to competition regulation, the sell down on workchoices, the environment and excessive private school funding, and dropping grocery watch…just in case you think Im giving fed labour a tick – however of the two my tick still goes to fed labor because the coalition wouldnt have corrected any of these things…paltry it may be and unhappy I may be but would I have Howard and the libs back? No way. That was the party of right wing lunacy.

  79. Bingo Bango Boingo
    June 27th, 2009 at 18:10 | #79

    Here’s a little test: if we abolished OzCar, would the opportunities for Rudd, Swan and government bureaucrats to enrich their car dealer mates increase or decrease (leaving aside, for the moment, the more basic questions of propriety that arise whenever a government chooses to intervene on behalf of a select group)? According to Prof. Q, it would seem, the answer is ‘neither’ or the latter. Why? “Err…. umm… look over there! John Howard was corrupt!”

    Prof. Q, unless you are truly bereft of comprehension skills, #30 and #31 are obviously irrelevant to the point.

    BBB

  80. Alice
    June 27th, 2009 at 18:14 | #80

    Oh and I agree re Richo as well…. Best buddy with Renee R. Up to his ears in offset alpine and Rene’s dirty dealings and somehow spends the next ten years being every up and comers in NSW labor.. “Uncle Rich” labor party adviser and general know it all ??

  81. Bingo Bango Boingo
    June 27th, 2009 at 18:16 | #81

    Ok, I’ll make it easy for you, Prof. Q. I will concede, happily so in fact, that there is no reason why a government that is ‘economically liberal’ (as you have defined that term) will, in its administration of the many government interventions that will inevitably survive its election, be naturally less prone to corruption than, say, a social democratic government. Now, can we talk about economically liberal policy and the ways in which it diminishes the opportunity for corruption by public officials?

    BBB

  82. June 27th, 2009 at 18:47 | #82

    Jack Strocchi – I have two words for you Robin Askin. You know, he was the Premier who recommended knighthoods depending on a game of cards. The point is that when there is a long period in office by either Labor or Liberal in NSW, the result has tended to be the same – looking after mates at the expense of the public.

  83. Peter Evans
    June 27th, 2009 at 18:58 | #83

    Isn’t a large part of the problem that any party that’s been in power (state or federal) tends towards corruption eventually. Large corporates tend to see parliaments as the legislative arm of business (usually with a view to enacting laws that create a rent-seeking monopoly), so they’ll want to deal with whoever has the numbers. Usually, after a couple of election wins, whoever is on power starts looking impregnable, so business pretty much talks exclusively to them, funds campaigns, does deals on the post-politics lives of the incumbents, all the usual tricks. Funnily enough, no government is too serious about addressing this egregious, built-in form of corruption.

  84. June 27th, 2009 at 19:26 | #84

    A few more words for Jack Strocchi – Henry Bolte in Victoria and Joh Bjelke-Petersen in Queensland.

  85. jquiggin
    June 27th, 2009 at 20:22 | #85

    BBB, the problem with your approach is that it is an a priori argument for a conclusion which, as you’ve conceded is empirically wrong. Granting for the sake of argument that interventionist policies create more opportunities for corruption, we have to explain the observed fact that governments that adopt anti-interventionist free-market rhetoric have been more corrupt (in English-speaking countries over the last 50 years of so) than those that do not. A few possibilities
    (i) as discussed above, policies like privatisation and contracting out create more opportunities for corruption than direct intervention
    (ii) people who believe that governments are inherently corrupt (as indicated by the point at issue here) are more likely to participate in, or at least tolerate as inevitable, corruption when they are in office.
    (iii) the “useful idiots” thesis set out above, that talk about economic liberalism is always just talk

    I don’t believe (iii). While no political party or politician ever adheres perfectly to a stated ideology, the ideas that drove policies from the 1980s to the recent past were very different from those of the postwar decades, and the term “economic liberalism” is a reasonable description. So, I’ll go for some combination of (i) and (ii).

  86. Jill Rush
    June 27th, 2009 at 21:02 | #86

    “The wrong sort of people are always in power because they would not be in power if they weren’t the wrong sort of people. ” (John Wynne-Tyson 1924 – ).

    “Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.” (Lord Action 1834-1902).

    “Men in great places are thrice servants: servants of the sovereign or state; servants of fame; and servants of business.” (Francis Bacon 1561-1626).

    “Power corrupts but lack of power corrupts absolutely.” (Adlai Stevensonn 1900-1965)

    “In the past , those who foolishly sought power by riding on the back of a tiger ended up inside.” (President John F Kennedy 1917 – 1963).

    It seems that these experienced men didn’t need labels to determine that it isn’t parties or labelled schemes that cause corruption but the nature of politics.

  87. boconnor
    June 28th, 2009 at 07:21 | #87

    JQ said: “i) as discussed above, policies like privatisation and contracting out create more opportunities for corruption than direct intervention”

    NSW RailCorp has been keeping the ICAC very busy indeed with bribes and unethical conduct.It is wholly controlled and staffed by the NSW government. No privatisation there.

    Given that corruption can occur in both neo-liberal and other systems there seems to be no necessary link between an economic system and ethical conduct.

    The things that discourage or assist probity are more complicated than that. I suspect it is things like:

    - acceptance and nurturing of the rule of law, with laws applied without fear or favor
    - separation of courts from executive government
    - widespread education, independent of economic standing
    - reasonable distribution of wealth in the society
    - the indoctrination of ethical behavior at a young age

    Of course this is just a short and incomplete list. But I would think there are some interesting cultural and educational things going on that encourages ethical and moral behaviour in a society, independent of the economic system.

  88. June 28th, 2009 at 08:30 | #88

    #3 jquiggin June 26th, 2009 at 10:46

    I’ll be interested to see how Jack squares his regular praise of Howard’s Machiavellianism with a defence of “Honest John”. In anticipation, please, Jack, no references to claimed successful outcomes under Howard. Let’s take it as read that he had some, and leave debate on how many to another time.

    Once again I am flattered that anyone thinks my opinion of the late L/NP govt is worthy of a second glance. But cripes, talk about flogging a dead horse, not to mention a one-time (2001) backer!

    FTR, my correct views on everything*in relation to the political morality of the late govt are not very “interesting”, since not that different from the poser of that question. But, since Pr Q insists:

    Let us begin and carry up this corpse

    Singing together…

    First, I am in no way invested in the support of the L/NP’s ideology or defence of “Honest John” Howard’s integrity. I supported his cultural authoritarian policies and “call-a-spade-a-spade” politics. Thats about it.

    Second, I have never denied one single instance of the, sometimes extravagant, sins of the Howard-L/NP. FWIW if I am not the first I certainly the most insistent commenter to characterise Howard as Machiavellian. That adjective certainly implies he got dirty hands making his political living.

    Third, I make a distinction bw lying, dodginess etc for political v personal gain. In relation to lying for political gain, I’ve gone out of my way to acknowledge his monumental deceits, from ””core-promises” + “Beazley’s Black Hole”‘, “Children Overboard”, “Iraq + WMDs”.

    “Haneef” was not especially dishonest. More a understandable over-reaction, a little over-zealous prosecution combined with some typical bungling. I would put “Bali 9″ in the same category. Better safe than sorry after Bali and 7/7.

    SO I would rate Howard-ALP as the most politically dishonest federal govt in AUS’s post-war history.

    Will that do?

    Of course, being a Machiavellian, I believe that some of those political lies were justified. Especially in context of a political culture that is substantially depraved by political correctness.

    Fourth, in relation to lying, dodgy-dealing etc for personal gain, Pr Q’s litany of the Howard-L/NP govts lies and dodgy dealings seems, if anything, charitably brief. Agreed that “AWB”, “Manildra”, “Wooldridge+RCAGP”, “Reith + tenix”, Phonegate, “Reith + balaclavas”, “Alston + Switkowski”, “Parer + family trust”, ‘Stan Howard’” were all pretty shabby, if not utterly deplorable.

    I would add “Peacock + Boeing + F18” and “ABC Learning + Peacock + Anthony“, “”John “Mr 50%” Fahey’ + privatization” to that sordid roll call. So I will acknowledge that Howard-L/NP was the most venal govt in AUS’s post-war history.

    Are you happy now?

    Undoubtedly sometimes supporters of the Right should have, in all fairness, spent more time digging dirt on these matters. Then again, turning the tables, I have jumped up and down and yelled till I am blue in the face about grievous Right-liberal policy sins and blunders, on financial deregulation, work choices, climate change etc. I wonder how much time Pr Q has spent on criticising Left-liberal cultural atrocities?

    I am “self-hating social-democrat“# so I make no apologies for focusing on the sins of “the institutionalised Left”. This well established Push has legions of slavish followers amongst the intellectual class. It can do without my “thin, small voice” in its amen corner for the time being. As Dr Knopfelmacher recalled, in a somewhat more serious situation, “one has to be harder on ones own side”.

    * Apologies to L. Kolakowaski for this impertinent allusion.

    # Acknowledgment to M. Kaus for this handy construction.

  89. Alice
    June 28th, 2009 at 08:53 | #89

    Re the problem of corruption in political parties. I still want one and a half votes. One for the party I want in power and the half vote goes to any individual I dont want to see in power in any party. There needs to be some mechanism to rid ourselves of the Grassbys, Richos, Askins, Bjelke Petersens, Boltes. We know who they are but we have no democratic way to oust them. They dont constitute a majority in the party but they do stick out like…

    There has to be a legislative way that voters can exercise a clean out of corruption by cleaning out individuals even perceived in this way, if parties wont (because for example the corrupt politician brings in donations thick and fast from some vested interest groups).

    Some lateral thinking on the election process wouldnt go astray here.

  90. Alice
    June 28th, 2009 at 09:20 | #90

    Boconnor says Railcorp is “NSW RailCorp has been keeping the ICAC very busy indeed with bribes and unethical conduct.It is wholly controlled and staffed by the NSW government. No privatisation there.”

    Wrong Bill – work is tendered out to private subcontractors. We dont have the legions of post war migrants who came and got a low paid job working for the Governments State rail yards or the waterboard anymore. In those days the government did actually do its own digging and ran ot all. Bits werent tendered out to private subcontractors and here is the rub – thats where the corruption in railcorp mostly occurs. Purchasing depts, the dirty public servants who take kickbacks from private firms because they are wooed. They know they shouldnt but hey – ever seen a pharma firm in operation when it gets a new drug or piece of equipment it wants registered? Wine, dine, enchant poor bored public servants who possess tick power.

    Its the misxing of public with private purpose that encourages corruption – either make state rail all public (govt does its own digging) or make it all private (potential for even greater expense refer Victoria).

    But dont make it half and half…like the tragedy that is Railcorp.

  91. Alice
    June 28th, 2009 at 10:01 | #91

    @jack strocchi
    Jack Strocchi – a pretty fine argument there…there are no real winners either side and I dont want the dangerous left or dangerous right….where does balance lie? Between yourself and Prof Qs views, it seems to me, I cant see much difference really except that you didnt mind Howards authoritarian approach (personally I couldnt stand it and found his “I know whats best for you people” approach tedious, like a belligerant bellicose school headmaster). But then you didnt support workchoices Jack and neither did I – I knew it would be mostly women who were turned into JH’s army of flexible workers and it was, seeing as they account for 70% of all part time workers, not to mention casuals. When my gender fares worse than yours under a political leader you will just have to excuse my disdain of John Howard.

  92. boconnor
    June 28th, 2009 at 11:48 | #92

    Alice said: “Purchasing depts, the dirty public servants who take kickbacks from private firms because they are wooed. …. Its the misxing of public with private purpose that encourages corruption – either make state rail all public (govt does its own digging) or make it all private (potential for even greater expense refer Victoria). But dont make it half and half…like the tragedy that is Railcorp.”

    Interesting points concerning those government agencies which use private contractors and salaried public servants. However I don’t think that goes to the core reason for corrupt behaviour or a lack of probity.

    The ICAC and the Auditor General have both uncovered instances where public servants (with no sub-contracting issues) have behaved corruptly. Instances have been uncovered in housing, corrective services, juvenile justice and other areas of government.

    It seems there are some common patterns. Where the agency is known for having strong unequal power between the clients of the agency and the staff of the agency then there is a greater possibility of corruption. So for example the clients of the juvenile justice system, or those of corrective services, or those of the police. This together with a lack of focus on performance seems to be a good breeding ground for corrupt or inappropriate behaviour. Those areas of government where managers are scared to address performance issues, or focus on media management rather than performance, seem also to be those areas that turn a blind eye to inappropriate behaviour.

    I am not at all saying that corrupt behaviour does not occur in the private sector. What I am saying is that the environment that encourages corrupt behaviour cannot be determined solely by whether it’s in the private sector, or whether there has been privatisation of government services.

    Inappropriate behaviour occurs as part of the culture in an organisation and how leaders respond (or indeed don’t act) to what they see and hear. And how they model good or bad behaviour to others.

  93. June 28th, 2009 at 12:32 | #93

    PrQ,
    I think the “observed fact” you are looking at is because you have narrowed your definition of corruption to only include certain types of abuse of power. If you only look at abuses that arrise from “government helps business” then there will possibly be more examples of the right helping business. Surely, though, that is not the only type out there.
    For example, left wing governments have historically biased industry, tariff and subsidy policy towards certain industries where the union movement, their big donors, are powerful. To me, this is at least as corrupt as handing out regulated monopolies to favoured businesses, in that it advantages big donors to the clear loss of the rest of us.
    There are plenty of other examples where governments have either made changes, or failed to act, where it favours a small but influential group to the clear detriment of the rest of us.
    All power tends to corrupt – and absolute power corrupts absolutely. The only real, long term way to reduce corruption is to decentralise power as far as possible – to the individual is the optimal level where possible.
    If you want to reduce corruption the solution is simple – abandon the concept of a strong centralised government. It is just a pity you seem wedded to this idea and are content to blame any individuals concerned. Sure – the individuals can and should be castigated for behaving corruptly. Where guilty of criminal misbehaviour they should face the full penalty of law – but to imagine a system where people will not behave corruptly (whether they proudly wear a badge proclaiming “I am of Teh Left” or not) is just fanciful.

  94. grace pettigrew
    June 28th, 2009 at 15:30 | #94
  95. Chris Warren
    June 28th, 2009 at 15:33 | #95

    …left wing governments have historically biased industry, tariff and subsidy policy towards certain industries where the union movement, their big donors, are powerful.

    Evidence ?????????????

    In Australia governments have historically biased industry, tariff and subsidy policy towards farmers, miners, film corporations and banks.

  96. Alice
    June 28th, 2009 at 16:23 | #96

    I agree Chris. Andrew is completely wrong on that one. Especially miners – if you look at ABS stats on industry subsidies.
    Bill OConnor – I take your point re leadership and probity in public institutions.

  97. Alice
    June 28th, 2009 at 16:24 | #97

    Sorry BOConnor

  98. June 28th, 2009 at 17:02 | #98

    So the entire Australian car industry has never benefitted from tariffs? The clothing industry similarly? Governments never helped the steel industry? Shipping has never been protected by Navigation laws? We never had a duopoly program in the airline industry? Nonsence.
    For a start, the mining industry and agriculture has been systematically impeded by the imposition of tariffs on their main import costs – machinery, processing inputs (ammonium nitrate for example) and just about everything else that goes into trying to do either successfully. The benefits of these tariff and subsidy programs accrued to the car, clothing, airlines and other favoured industries where (pure coincidentally of course) the union movement was strong. The losses hurt everyone else.
    Some may not see this as corruption, but the effects were at the very least as bad as some of the examples above.

  99. Alice
    June 28th, 2009 at 20:02 | #99

    Andrew – you are so far out (wrong) it isnt funny. Per ABS
    These are teh industries that are subsidised or pay no govt taxes.

    Coal Oil and gas,Iron ores,Non-ferrous metal ores,Other mining, Services to mining, (mostly beneficiaries of subsidies) Community services, Government administration, Defence, Education, Health services, Forestry and logging (zero taxes less subsidies) Water transport,Insurance, Rail, pipeline and other transport, Gas supply, Other manufacturing, Iron and steel, Other non-metallic mineral products (pay small taxes relative to other industries).

    Please gpo and look up table 5209.0.55.001 Australian National Accounts: Input-Output Tables – Electronic Publication 2004-05.

    You speak nonsense. The coal industry is heavily subsidised compared to ALL others.
    It HAS NOT been systematically impeded. Do you make this up? Mining and associated mining services is SUBSIDISED heavily in this country (relative to all industries).

    Look it up.

    http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5209.0.55.0012004-05%20Final?OpenDocument

    Andy – thats it. You are getting a promotion to Godwin Grech’s soon to be old job for your creative responses.

  100. Alice
    June 28th, 2009 at 20:18 | #100

    And Andy dont tempt me to get nasty and call in ABOM.

    For an economic liberal to turn a blind eye to the sheer dollar value of government subsidies that go to the Coal industry in this country is like asking someone to ignore the fact that a nanny is changing their nappies. Like one quarter of our entire GDP in government subsidies to the Coal industry? Get real – they can wear the tax on their machinery and its hardly what any sane person would call “impeded”.

    Its quite clear its the only value we have as a country left …is digging the damn stuff out and pouring it into global warming. Nauru here we come – thanks to the “nanny state” you economic liberals so dislike (but some of you, like Andy, like it less than you like benefits for the big end of town no matter who they are and where the benefits come from.

    Hypocrisy rules.

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