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Which Road to Serfdom?

April 13th, 2010

Both here and at Crooked Timber, libertarianism is getting a bit of a run. So, can anyone find me a copy of Hayek’s prescient 1944 book, The Road to Serfdom, which predicted that the policies of the British Labour Party (policies that were implemented after the 1945 election) would result in relatively poor economic performance, and would eventually be modified or abandoned, a claim vindicated by the triumph of Thatcherism in the 1980s? This book, and its predictive success, seem to play an important role in libertarian thinking.

Despite a diligent search, the only thing I can find is a book of the same title, also written by an FA von Hayek in 1944. This Road to Serfdom predicts that the policies of the British Labour Party, implemented after the 1945 election, would lead to the emergence of a totalitarian state similar to Soviet Russia and Nazi Germany, or at least to a massive reduction in political and personal freedom (as distinct from economic freedom). Obviously this prediction was totally wrong. Democracy survived Labor’s nationalizations, and personal freedom expanded substantially. Even a defensible version of the argument (say, a claim that, Labor’s ultimate program included elements that could not be realised without anti-democratic forms of coercion, and that would have to be dropped if these bad outcomes were to be avoided) could only be regarded as raising a hypothetical, but unrealised, cause for concern.. Presumably, this isn’t the book the libertarians have read, so I assume there must exist another of the same title.

  1. BilB
    April 13th, 2010 at 09:42 | #1

    Maybe the book has been rewritten, along with the history surrounding it.

  2. TerjeP (say tay-a)
    April 13th, 2010 at 09:50 | #2

    Sorry I can’t help out. I haven’t read either book. I have been meaning to but life gets busy.

  3. Chris Warren
    April 13th, 2010 at 10:27 | #3

    What is going on here? Randism writ large?

    … anti-democratic forms of coercion, and that would have to be dropped if these bad outcomes were to be avoided

    Commentators, enjoying the inherited benefits of Enclosures, racist slavery, global colonialism and racist mass murder in Australia NOW want to criticise “coercion” ?????

    The wealth and machinery that Hayek relied on to produce a book “The Road to Serfdom” was produced only by a long history of —- serfdom.

    These vulgar libertarian people really have no understanding and always try to force everyone to live under capitalism and its unique forms of —– coercion.

    Ayn Rand is a classic example.

  4. Uncle Milton
    April 13th, 2010 at 10:29 | #4

    Very good JQ.

    Probably an even more egregious case is the claims made by those who support free markets uncritically, citing Adam Smith as an authority, and what is in the Wealth of Nations.

    But, if one must be fair, one could say the same thing about the following pairs: {Keynesians, The General Theory), {evolutionary biologists, the Origins of the Species}, {Christians, the New Testament}.

  5. Mr T
    April 13th, 2010 at 10:37 | #5

    Is this post sarcasm or Irony? I can never get the definitions correct.

    In any case, tone in written communications is very hard to convey.

    But I appreciated the post.

  6. April 13th, 2010 at 11:25 | #6

    Well, here’s the book: http://books.google.com.au/books?hl=en&lr=&id=eTve6XEUbYIC&oi=fnd&pg=PR7&dq=hayek&ots=zNRMRwLHis&sig=PhZUpyubCn8fzzI-UwRluoFtM5Y#v=onepage&q&f=false

    As to the difference between the “two books”, I suspect most libertarians have not read it, but think they understand Hayek’s arguments by reading blog posts about it.

    Like many climate deniers get their “science” from Andrew Bolt and WUWT ;)

  7. James
    April 13th, 2010 at 11:28 | #7

    I suggest that JQ follow up “Zombie Economics” with “It’s The Road 2 Serfdom, Sheeple!” – the complete text of the book referred to in the first paragraph, as deduced from internet postings about it.

  8. April 13th, 2010 at 11:28 | #8

    Uncle Milton :Very good JQ.
    Probably an even more egregious case is the claims made by those who support free markets uncritically, citing Adam Smith as an authority, and what is in the Wealth of Nations.
    But, if one must be fair, one could say the same thing about the following pairs: {Keynesians, The General Theory), {evolutionary biologists, the Origins of the Species}, {Christians, the New Testament}.

    Not sure what you mean reference to Darwin’s Origins? Surely one cannot question evolutionary science: multiple lines of evidence support and over 100 years of research support the theory. I don’t think you can mention “The Origins’ and “The New Testament” in the same breath :)

  9. Neil
    April 13th, 2010 at 12:32 | #9

    Piling on wrt to the claim about Origin of Species. It is a mistake – the mistake encapsulated in calling those who are not deluded about evolution ‘Darwinists’ – to think that evolutionary biology = Darwinism. Most evolutionary biologists haven’t read Origin, nor need they (do you think physicists need to read Newton?) Evolutionary theory has its origins in the synthesis of Darwin and Mendel, which immediately relegated Darwin to status of historically important. It is rare for a scientist to need to read anything more than five years old.

  10. AndrewD
    April 13th, 2010 at 13:09 | #10

    True, Neil, but these discussions are not about science but polemics – where the phrase “hide the decline” is far more important than the actual paper published or the data behind it. Hence, the continuing importance of Mann’s Hockey Stick paper and Darwin’s book or, indeed, deathbed confession.

  11. April 13th, 2010 at 13:30 | #11

    See David Levy, Sandra Peart, and Andrew Farrant’s very nice work on the topic. Hayek’s argument required that British socialists preferred totalitarianism to capitalism; otherwise, they’d just retreat from planning (like they wound up eventually doing anyway). No wonder the Brits got so sniffy about it! European Journal of Political Economy, December 2005, “The spatial politics of F.A. Hayek’s Road to Serfdom”.

  12. Freelander
    April 13th, 2010 at 13:30 | #12

    Like Nostradamus, the prescience of ‘Road to Serfdom’ is highly dependent on interpretation, and a definitive prescient interpretation can only occur after the events. That has always been the way for all great religions, and is why belief’s ability to overcome unfolding (apparently contrary) evidence has always been the cornerstone of religion. I imagine it would be interesting to compile a history of various libertarian high priest’s (re)-interpretations of ‘Road to Serfdom’ as they have developed over the years, beginning, of course, with Hayek’s.

  13. Joseph Clark
    April 13th, 2010 at 13:31 | #13

    John,
    Have you read the book? I’d be interested to hear your take on it.

  14. Freelander
    April 13th, 2010 at 13:42 | #14

    Great to get the occasional perspective from across the Tasman. After all, New Zealand was the poster child for ‘world’s best practice’ libertarian policies long before libertarians were taking credit for that most recent ‘miracle’ economy – Iceland. Libertarian policies yield one success story after another.

  15. Freelander
    April 13th, 2010 at 14:20 | #15

    Like libertarianism, Christianity is a great example of the triumph of hope and belief over reason and evidence. Christ was supposed to be the Messiah which at that time meant earthly King of the Jews leading them to great things. Instead he met an ignominious end, crucifixion.

    Rather than treating this contrary evidence as a setback, extinguishing their hypothesis, the spin doctors stepped in. Christ was not intended to be an earthly saviour; he was, in fact, the son of God, and his crucifixion not a falsification, but all part of his divine plan, not for a kingdom in this world but the next. That is, all had previously been misinterpreted.

    All rather bizarre but the great unwashed and easily led brought it. Not to leave the spin simply verging on the ridiculous, and not even tenuously credible, the messiah was then given an immaculate conception and virgin birth – one better than Leda’s impregnation by Zeus the Swan. Of course, the recycling of myths simply shows how environmentally friendly Christianity really is. And child friendly to boot.

    No one seems to be suggesting to them “You’re just making all this stuff up!”

    Hell! The Vatican has always had a policy of full disclosure and immediately turning any evidence of clerical wrongdoing over to the appropriate civil authorities.

    Likewise, ‘The Road to Serfdom’ has been nothing but the definitive narrative through which to interpret the history of the last sixty-six years.

  16. April 13th, 2010 at 14:20 | #16

    @Freelander: NZ’s not done too badly, all things considered. The 80s were a complete mess in terms of outcomes, but anybody who expected an entire economic system to be able to turn around on a dime and keep chugging without big transitional costs would be overly optimistic at best. We picked up nicely through the 90s and early 00s.

    Open question for libertarians whether shock therapy followed by public opposition and some reversals (NZ) is preferable to slow and steady reform with little backtracking (Aussie).

    I’m not sure that NZ could do fantastically well even if it had absolutely perfect policies, with perfect being defined only as “those policies most conducive to economic growth” (libertarian if you think those are best for growth, whatever else if not). Fixed costs matter a lot, and they here loom very large; agglomeration effects can never kick in properly with smallish cities. Internet has reduced some fixed costs but magnified others (something like Netflix has a minimum efficient size, for example).

  17. Freelander
    April 13th, 2010 at 14:21 | #17

    @Eric Crampton

    Yes. Hasn’t done too badly at all. Lets all go over there. I think Australia’s had it!

  18. Freelander
    April 13th, 2010 at 14:23 | #18

    @Eric Crampton

    Wait. Better still, lets all go to Iceland. Weathers fine, and you could wish for a sounder economy.

  19. Freelander
    April 13th, 2010 at 14:23 | #19

    Sorry, you couldn’t wish for a sounder economy…

  20. April 13th, 2010 at 14:37 | #20

    @Freelander: Umm… did you read what I wrote? NZ’s not doing great in absolute terms and it’s not doing great relative to Australia, but relative to its constraints, it’s not doing too badly. Imagine whatever perfect set of policies you think would make for the absolute bestest of whatever you think matters most, and NZ will still have a hard time doing well on aggregate stats given its constraints. We did very very well for a while with massively protected access to Britain – when the trade distortion went away, not so much.

  21. Chris Warren
    April 13th, 2010 at 14:37 | #21

    Freelander :
    @Eric Crampton
    Yes. Hasn’t done too badly at all. Lets all go over there. I think Australia’s had it!

    I am not sure whether you know much about New Zealand.

    But workers are extremely impoverished. Did you know that the minimum wage has only just be increased to just under $A 9.80 per hr.

    You can easily fix up a capitalist economy by cutting wages.

  22. jquiggin
    April 13th, 2010 at 14:42 | #22

    I’ve written a fair bit about relative outcomes in NZ and Australia

    http://www.uq.edu.au/economics/johnquiggin/JournalArticles06/Hazeldine&QuigginAJPS06Nomorefreebeer.pdf

    Shorter Hazeldine&Quiggin: While NZ had some disadvantages relative to Australia, it compounded them through radical reforms that were in many cases misconceived, and almost always implemented in a ‘crash through or crash’ style, leading to many crashes.

  23. Freelander
    April 13th, 2010 at 14:44 | #23

    @Chris Warren

    But all my libertarian friends told me, for so many years, that an NZ Nirvana was just around the corner for that ‘tiger economy of the South Pacific’? Do you mean to say they weren’t right? (Must admit they did go a bit silent on NZ toward the second half of the nineties.) Oh. Duhem-Quine thesis. Policy experiment was right. Wrong outcome. Other factors to blame. Right….

  24. April 13th, 2010 at 15:19 | #24

    @Jquiggin: Thanks.

    I’m not convinced as yet that distance really is decreasing though, or at least not relatively. If all of the arguments for internet reducing costs of distance to nil were right, New York would have massively depreciated in value over the last 20 years relative to Kansas; instead, the opposite has happened. It’s starting to look more like all the internet tech is a complement to agglomeration rather than a substitute for it. That’ll affect both levels and rates.

    Certainly something worth having more work done on though.

  25. paul walter
    April 13th, 2010 at 15:35 | #25

    No one has mentioned Popper?
    But yep, a great thread.

  26. Cynic
    April 13th, 2010 at 16:30 | #26

    “It has frequently been alleged that I have contended that any movement in the direction of socialism is bound to lead to totalitarianism. Even though this danger exists, this is not what the book says. What it contains is a warning that unless we mend the principles of our policy, some very unpleasant consequences will follow which most of those who advocate these policies do not want.”

    - F.A. Hayek, 1976 preface to “The Road to Serfdom”

    HT: Catallaxyfiles

  27. Rationalist
    April 13th, 2010 at 17:24 | #27

    The unions in the UK made it as bad as a totalitarian state in the 70s and 80s.

  28. Jim Birch
    April 13th, 2010 at 17:32 | #28

    @Rationalist

    Too true, a friend of mine did about eight years in the Cornwall gulags. He hates fish and chips now.

  29. paul walter
    April 13th, 2010 at 18:05 | #29

    Rationalist, had governments, particularly Thatchers and its big business supporters, been prepared to lead from the front, am sure the problems with unions in the seventies and eighties would have been a fraction of what some claim them to be.
    But when Thatcher, announcing neoliberalism said, “there is no such thing as society”, everyone, including workers, knew that all bets were off and every rat for herself.

  30. April 13th, 2010 at 18:50 | #30

    @Jim Birch

    ‘e were looky … when ah were but a wee lass, my auld man used to slice all the bairns in two wit’ bread knife and dance about on our graves singin’ allelujah …

    You tell the yung kids ‘a today that an’ they wornt believe ya …

  31. Chris Warren
    April 13th, 2010 at 18:50 | #31

    @Rationalist

    No Thatcher made it into a jingoistic militaristic police state relying on anti-union provocation.

  32. paul walter
    April 13th, 2010 at 19:16 | #32

    Fran, ” thoo shol ov a fishy.
    On a little dishy,
    When the bwoat comes in.”

  33. Alice
    April 13th, 2010 at 19:28 | #33

    @paul walter
    Paul – beg to differ…Im just out of quarantine.
    ““there is no such thing as society”, everyone, including workers, knew that all bets were off and every rat for herself.”

    you of course mean himself…and no Im not being sexist! I dont think us women stood much of a chance in the rat race judging by the income gaps that still abound.

  34. Alice
    April 13th, 2010 at 19:46 | #34

    I know I shouldnt be posting two posts in one thread in one day JQ…but can you excuse me? (because this is the obvious thread heading and I havent posted anywhere else)…

    But I just heard the most interesting story from one of my foreign students…from Dubai. Apparently Dubia is some sort of strange society…even though you may have been born there (and all your relatives) ..that in itself does not justify citozenship. The economy is built as some sort of temple to construction and foriegn firms (needless to say foreign financial firms as there is no tax at all).

    Carpenters earn the equivalent of $300 per year, despite the contruction booom. They can only feed themselves, but not house themselves. The suicide rate since the GFC has esaclated alarmingly amongst Dubai’s underclass of morlocks. The middle class has beeen decimated by the recnt GFC. With no government safety net they were the first victims of the GFC. Quite simply they were sacked as foreign firms desterted Dubai. The middle class no longer exists. Without the means to pay of their houses and cars – they simply drove to thye nearest airport and ambandoned their expensive cars there and fled to other countries. They could not pay off their houses and cant return.

    But apparently all is wll in teh modern day version of Sodom and Gommorah. The government stayed very (extraordinarily rich because it owns a lot of the constructions), foreign firms are rtuening and already they find themsleves short of labour so Britans are flying in now because of labour shortages and because taxes are low and wages are high (except for the carpenters who are committing suicide at alarming rates).

    The middle class was wiped out in one fell swoop. Now refugees who must start all over again but it appears the place is only for the very rich….and the extreme underclass. So I have a young man from Dubai who knows nothing about economics but he knows enough to know in his place of birth…not all is right.

    I suppose this is what you call a free market…nice place, but I wouldnt want to live there.

  35. paul walter
    April 13th, 2010 at 19:54 | #35

    Alice, am sad at your reprimand, when I was attempting to employ non gender specific terminology. Had I said “his”, feminists would surely have been offended that one did not include them as members of the workforce.
    Back to the substance, yep, ALL sections of the workforce suffer under eco rationalism and women, the young and vulnerable or inexperienced always come off worst.
    And it must have been unendurable hell for the wives of coalminers back in the eighties, even more than their men, when so much statist physical thuggery was employed against working communities.

  36. Alice
    April 13th, 2010 at 20:21 | #36

    @paul walter
    All the same Paul…is our society with its taxes and social safety net…not far preferable to that of Dubai?

    (modern day Sodom and Gomorrah IMHO with its apprently entirely tax free environment and its fly in fly out flexible workforce ….. except, of course for the desperate underclass of morlocks too poor to even leave..along with its “prepare to be decimated middle class – if things go wrong”?

    All I can picture is the hundreds of luxury cars abandoned at the airport after the GFC and the homes abandoned…hundreds of jobs gone and lives ruined and assets lost to creditors with only the shirt on their back and a pocketful of savings to get them somewhere else…and let the creditors fight over their home).

    With my big lefty heart all I wanted to do is acknowledge why this young man from Dubai, with no citizenship, in his late teens seeks an overseas qualification and perhaps the chance of immigration to here from a place called hell.

    Id take him as an immigrant to Australia and Id send a free market adherent to Dubai to take his place.

  37. Freelander
    April 13th, 2010 at 20:25 | #37

    As the British experience showed, FU Economics of the kind practiced by libertarians is fine for those doing the economising, not so fine for those being economised.

  38. wilful
    April 13th, 2010 at 20:31 | #38

    Neil, to disagree with you, I think that the overwhelming majority of practicing evolutionary biologists would ahve read the origin of the species. And I disagree that it’s been completely overtaken (implied overturned). In broad and general terms, Darwin’s central thesis is still very very solid. And you’re mistaken about the role of Mendel, he provided the mechanism, the tool, but not the theory or the deep understanding of what it meant.

  39. paul walter
    April 13th, 2010 at 20:36 | #39

    Alice, #35:
    “…is our society…not preferable to…Dubai?”
    Depends.
    Not if you are an Arab oil shiek with a Western armed and sponsored palace guard and an endless flow of circumcised women from Africa.
    According to one party about THIS place recently, Daggett , of all people, is” a free market adherent”.
    We should exchange him, perhaps for another former rightist militia commander, since these are apparently , most welcome here over recent years?

  40. Alice
    April 13th, 2010 at 20:39 | #40

    @paul walter
    Dagget…a free market adherent? I know we get to listen to lots of distortions but if Dagget is a free market adherent…I am the Queen of England! Dagget is my best friend..after you Paul! I have to go…dont make me go over the limit!

  41. paul walter
    April 13th, 2010 at 21:11 | #41

    Your Majesty…
    Actually, after the debacle presented on 4 Corners this week about the Hunter Valley, I’d proffer Carmel Tebbutt as a candidate, on the basis of her negative response to calls for an inquiry.
    Lots of new Bernie Bantons, all so unnecessary, but (NSW govt, this time) don’t want know this time, funny thing.
    No photo ops one supposes, as it’s not election time.

  42. TerjeP (say tay-a)
    April 13th, 2010 at 23:01 | #42

    In my view Thatchers statement about there being no such thing as society is a silly fallacy. Unless of course it is taken in context in the spirit in which it was intended in which case it is pure gold and even today it is easy to identify with her point. All she was really saying is that at the extreme collective responsibility is a complete oxymoron.

    Her quote in context:-

    “I think we’ve been through a period where too many people have been given to understand that if they have a problem, it’s the government’s job to cope with it. ‘I have a problem, I’ll get a grant.’ ‘I’m homeless, the government must house me.’ They’re casting their problem on society. And, you know, there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations. There’s no such thing as entitlement, unless someone has first met an obligation.”

  43. csning
    April 13th, 2010 at 23:22 | #43

    Maybe it’s just me, TerjeP, but it still doesn’t sound all that good in context.

  44. paul walter
    April 13th, 2010 at 23:29 | #44

    Yes, the
    Thatcher family.
    What a pack of freeloaders, Denis, Mark and Margaret.

  45. Cynic
    April 14th, 2010 at 00:38 | #45

    Aren’t all politicians freeloaders, Paul? Someone told me there was an article in the paper recently showing that wages and admin costs in Australia amount to around $1m per Federal MP. What an absolute joke, on us the taxpayers, except it isn’t funny.

  46. Nabakov
    April 14th, 2010 at 01:20 | #46

    “that wages and admin costs in Australia amount to around $1m per Federal MP. ”

    Umm, let’s see here. Most Australian electoral divisions have between 60,000 to 90,000 voters. Assuming the bottom bound, you’re looking at $16 dollars annually per person per year to pay for your representative in Canberra. And if you don’t like what they’re doing, you get a good opportunity to sack ‘em every three years. Still cheaper and more accountable than their private sector oppos with a similar spread of responsibilities.

    And remember what you call pork barrelling over there is bringing home the bacon in your electorate.

  47. paul walter
    April 14th, 2010 at 01:24 | #47

    All of it is distinctly unfunny, Cynic.
    Even criminals in jail don’t even cost this and they are not even in a subsidiary league, compared to politicians, as to dinkum criminality.

  48. April 14th, 2010 at 04:37 | #48

    @Cynic

    Aren’t numbers fun?

    Apparently in the US the 25 top fund managers earn as much income as teachers who cater to 13,000,000 American students.

  49. paul walter
    April 14th, 2010 at 04:57 | #49

    Numbers can be fun…
    Just come from a US site that is claiming that one tally has the US now at the $trillion dollar mark for its vile intrusions into West Asia. Add to that all the money handed over to the sort of creatures Fran talks of, after 2007 and am put in mind of a figure some years old now, that suggested that most of the world would now have fresh drinking water, if only $50 billion could have been spent in the ‘nineties providing fresh water, including throughout the Third World.

  50. jack horner
    April 14th, 2010 at 07:59 | #50

    Terje #41 “There is no such thing as society” (M Thatcher)
    Thanks for giving the original of this, which I had not seen before.

    Even allowing for context, I think she stands condemned from her own mouth almost as much as by any hostile paraphrase.

    “There’s no such thing as entitlement, unless someone has first met an obligation” So where does that leave children, the mentally ill, the lame and halt, folks who are ‘down on their luck’ etc etc. Selling matches on streert corners? The core feature of a civilised society is that we do stuff, out of a sense of community, for people who can’t pay us back.

    And of course the internal contradiction – a prime minister of all people saying this. What did she think she was the prime minister OF? The UK? What is the UK? A group of people bound by communal ties larger than individual or family, perhaps?

  51. April 14th, 2010 at 08:10 | #51

    @TerjeP (say tay-a)

    In which case Terje Thatcher’s comment was simply an incoherent ramble. Mutual obligation, if it exists, is a manifesatiuon of society. Conversely, if there is no society then we have no neighbours, at least, in the sense that we owe them any duty of care.

    If it is an incoherent ramble, then we are entitled to read it for sentiment, and the dominant sentiment is that in practice, one owes nobody else any obligation at all, whereas the comment about one’s neighbour is merely a metaphoric figleaf. Like Prince Philip passing the Statue of David, we all know what lurks behind the delicately placed strip of cloth and Thatcher’s harpies did too.

  52. TerjeP (say tay-a)
    April 14th, 2010 at 08:35 | #52

    Jack – children, the mentally I’ll etc are quite screwed if nobody has any obligation towards them. That’s the cultural poin being made. We can’t bang on about the rights of children or the rights of the mentally ill without talking about obligations and duties. Who’s duty is it to raise functional children with the confidence to thrive as adults? If we simply say that it is up to society then nobody is on the hook.

    In Australia after decades of resistance we now have both major parties accepting the mutual obligation concept. I think there is still too much resistance towards the notion of personal responsibility (the opposite of the oxymoronic collective responsibility) however there has been progress in this debate. And Thatcher was on the right side of the debate even if in hindsight her words could have been chosen a bit better. She was one of the 20th centuries great reformers. Not perfect by any means but still great.

  53. Cynic
    April 14th, 2010 at 09:05 | #53

    @Fran Barlow
    Numbers, yeah.

    $2.45billion: house insulation
    4 deaths
    120 house fires
    6,000 jobs lost
    $450million (at least) to undo the damage
    154 public servants diverted to fix this mess

  54. Chris Warren
    April 14th, 2010 at 09:20 | #54

    TerjeP (say tay-a) :
    In my view Thatchers statement … taken in context in the spirit in which it was intended is pure gold…

    OK so TerjeP is now waving a Thatcherite hammer.

    The whole point with Thatcher was to keep the wealth with her class and not let those being kicked out of their jobs by the boom-and-bust to gain compensation from taxes which as we now know are there to subsidise and bailout executives.

    She forgot that the government actually belongs to, and is funded by the people and is meant to serve the people.

    Thatcher pretended the government was there primarily to use taxes and revenues to build the economy.

    If there is any obligation – then it is on business to provide a living wage for all citizens who want to work.

    So they had to kick the Thatcher out once she exposed herself.

  55. April 14th, 2010 at 09:42 | #55

    @Cynic

    $2.45billion: house insulation

    That could turn out to be cheap. How long will it take for the householers in question to collectively save 2.45 billion in energy bills? If it is less than 10 years, then that is worthwhile, especially when one considers the employment benefits.

    4 deaths

    Unfortunate, but hardly a consequence of supporting insulation. Shonky business folk broke relevant laws. Really, this highlights the problem of letting the private sector do stuff. A much smaller government-supervised program would have been better value for money as an energy-saving measure but this program was designed to soak up anticipated pools of underemployed semi-skilled labour that would otherwise have been drawing benefit. It did that pretty successfully. Regrettably, when you let private enterprise have a free hand, and you fast track things, there are human costs.

    120 house fires

    Again, see above. Properly licenced electricians would not have done this. It seems that part of the problem was not the installations themselves but the pre-existing condition of the houses, which would have required remediation. That said, as Possum shows over at Crikey, the rate of housefires in houses that were insulated seems to be quite low. As we saw the other day too, not all housefires in insulated houses are the indirect result of the government program. How many were is something we’d like to know.

    6,000 jobs lost

    Again, one can hardly complain if one objected to the program in the first place and then raised an opportunistic hue and cry about how dreadful it all was. The opposition got its way and amidst the hysteria they raised, the program was suspended. As it goes, these people will probably find work elsewhere until it resumes because the worst of the downturn may be over, thanks in part, to programs such as this.

    $450million (at least) to undo the damage

    That is to be determined. Yet even if it is this much, so what? Much of that money is expenditure in gainful employment in states where economic growth is flat. I don’t see that as money poorly spent.

    154 public servants diverted to fix this mess

    Carping. This is what happens when the private sector messes up. Really though, expenditure of this sort is far more useful than boondoggles getting car races into town or the Olympics, or submarines or joint strike fighters.

  56. April 14th, 2010 at 10:08 | #56

    Fran,
    Unfortunately it is fairly easy to tell when there will be benefits in bills: never. There is a fair amount of research that indicates that once insulation is put in the bills do not drop (by much, if any) as all that happens is that people respond by heating or cooling the house by more.
    .
    On your second and third points – you have countered your own argument very effectively. As you said, “…this program was designed to soak up anticipated pools of underemployed semi-skilled labour…”. In other words, it was designed to put semi-skilled people in our ceilings. Not qualified electricians or others – the semi-skilled. Businesses responded as you claimed the program was set up for them to do.
    .
    The real problem on jobs is simple – the effects of the program were to replace long term jobs for qualified installers with short term jobs for the semi-skilled. Once all those houses were done quickly, the number of houses left to be done by the remaining people were a lot less than would otherwise have been, turfing the experienced out of work. Great outcome.
    .
    Your last two are really unworthy. Both of these represent a clear dead-weight to the economy – if the program had not been implemented then the funds could have been used for more productive purposes – like not being taxed in the first place. Using the money to reduce the tax burden on the poorer would have resulted in genuine productive expenditure. This was just a waste..
    .
    On your anti-Thatcherite scree – I am never sure if this represents a genuine or just feigned misunderstanding of what she said. Assuming it was genuine – what she meant (and has restated many times since then) is that society itself cannot act except through individuals. Everything to be done has to be done by one or more individuals. Society is, therefore, an artificial construct. It is a useful construct to be sure, but we must never forget that ultimately society (or for that matter government) cannot do anything – it always comes down to a person doing (or refraining from doing) whatever needs to be done.

  57. Chris Warren
    April 14th, 2010 at 11:01 | #57

    Andrew Reynolds :
    … what she meant (and has restated many times since then) is that society itself cannot act except through individuals. Everything to be done has to be done by one or more individuals. Society is, therefore, an artificial construct. It is a useful construct to be sure, but we must never forget that ultimately society (or for that matter government) cannot do anything – it always comes down to a person doing (or refraining from doing) whatever needs to be done.

    So does this mean that Thatcher would have opposed using government funds to bailout corporations?

    Would she have told them that there is no society and that – “it always comes down to a person doing (or refraining from doing) whatever needs to be done”.

    Unfortunately it seems to me, that our bankrupt corporations needed a society to save their souls.

    So is it the case that (under Thatcher-theory) “society and government” is there when capitalists go cap-in-hand, but not there when the people are needy.

  58. April 14th, 2010 at 11:18 | #58

    @Andrew Reynolds

    There is a fair amount of research that indicates that once insulation is put in the bills do not drop (by much, if any) as all that happens is that people respond by heating or cooling the house by more.

    I find that doubtful, and there would be ways around that in the design of climate control systems, but even if that were so, it would still be a benefit. In effect, people are getting more heating and more cooling for the same price or slightly less.

    Of course I believe in a serious price on emissions, which would mean that people would be encouraged to to use their electricity less frivolously. Under that system they would be using less but getting the same quality of climate control and paying about the same while reducing their footprint. If we ever get low carbon-emitting energy, then they could have more for the same price.

    you have countered your own argument very effectively [...] In other words, it was designed to put semi-skilled people in our ceilings. Not qualified electricians or others – the semi-skilled. Businesses responded as you claimed the program was set up for them to do.

    Misleading. One of the deaths was a completely untrained person with an intellectual disability put there by someone who had no idea. It was never the aim of the program for it to be deliovered by totally unqualified people. Rather, it was assumed that those delivering it would have been qualified installers who could comply with the relevant poertions of the state based OH&S regulations. Semi-skilled people working under the supervision of qualified tradesman would have been fine.

    Your suggestion that the shonky entrepreneurs involved were merely responding is simply politically self-serving cant, as well as being insulting to the legtimate operators who did a professional job.

    if the program had not been implemented then the funds could have been used for more productive purposes – like not being taxed in the first place.

    Ah … we get to your basic political fetish — that private money is more effetvicelty spent than public money. Apart from the tendency to redistribute income towards the top of Australia’s elite, lower taxes will simply lead to the purchase of more consumer goods most of which lead to very little employment and no longterm benefit. Is it really helpful if people buy more alcohol or techno junk or gamble more? Not unless most benefit from such expenditure in some way that is commensurate.

    I am never sure if this represents a genuine or just feigned misunderstanding of what she said

    It is very clear Andrew. Nobody misunderstood. What she wanted was the social equivalent of some survivor-style game show, in which the cream as she saw them would rise to the top and the losers would be discarded and trampled underfoot, or as she did with the miners, ridden over with horses. The phrase was meant to incite unbridled self-seeking in which desperate people would forsake all but entrepreneurial success. It’s worth recalling that the parliamentary expenses rorts in Britain, which have caused such angst were authored by her. She is remembered for the attempts to introduce the poll-tax, so as to disenfracnhise those on low incomes. Indeed, the very first thing for which she is remembered in 1974 was the attempt to remove school-supplied milk from children — hence the epithet Thatcher, the milk snatcher.

    She and Reagan were perhaps the two most venal and pro-elite politicians within the west in the last 50 years, and it is this reality which lends context to her cri de coeur against society, rather than the banality you proffer.

  59. Jim Birch
    April 14th, 2010 at 11:42 | #59

    @Andrew Reynolds

    Everything to be done has to be done by one or more individuals. Society is, therefore, an artificial construct.

    I thought that everything was that happens was due to the interactions of fundamental particles. The individual is, therefore an, artificial construct.

    A little excursion into neuropsychology might inform you of a similar set of problems with your hypothetical individual: it’s a kind of imagined “object” partly related to the organism, partly related to the brain and nervous system, partly derived from unreliable feelings, partly just made up. In the end, it’s a bit hard to tie down scientifically. This is what I consider to be the core problem with libertarianism, taking this mish-mash of stuff, unifying it into rock-solid theoretical concept, and placing it at the centre of a world view, elevated above everything else, then deriving a rigid political narrative from it. The “individual” might be intuitive and it might be useful for certain types of analysis but if you make it the fundamental component of your world view you become scientifically incompetent.

  60. TerjeP (say tay-a)
    April 14th, 2010 at 11:45 | #60

    Chris – she was a polititians so I can’t be certain but I suspect that the particular passage was a more general statement about culture and attitudes than a specific one about what government should and should not do. Even if you support a large government sector the point remains that positive rights are meaningless unless somebody has met an obligation. More government welfare means more tax. There is no government giving without a government taking. If you advocate the former you need to acknowledge the latter. If government giving helps the community it must be acknowledged that it also harms the community.

  61. April 14th, 2010 at 11:52 | #61

    @Jim Birch

    or to take up your suggestion, is society a complex of particles or is it more like a wave …? ;-)

  62. Chris Warren
    April 14th, 2010 at 12:16 | #62

    @TerjeP (say tay-a)

    I agree that there is no government giving without government taking, but when government gives to a community which may harm the community, it must be understood in context.

    Government gives welfare and assistance to one section of the community, using funds it has taken either on a progressive tax scale, or through means testing. This means it harms the rich to help the poor.

    Also when a government gives a general service to all – eg a police service or a hospital, who in a community would agree that “they are harmed”.

    All this means that dogmas such as:

    If government giving helps the community it must be acknowledged that it also harms the community.

    Do not reflect the complexity of real life.

    This is what destroyed Thatcher in due course.

  63. Ernestine Gross
    April 14th, 2010 at 12:29 | #63

    @Jim Birch

    I don’t want to come to the aid of Andrew Reynolds and his ideology. But, your statement is also not very helpful because, if I were to abstract from the person, named Jim Birch, and I abstract from all other persons who have contributed to science (not even confined to neuro-psychology), then I am left with no science at all. To give credibility to my first sentence, if there is only ‘the’ individual then there is no trade, there is no economic problem, there is no linguistic problem, there is no science and Andrew will do banking with himself.

    I suppose one could rename economic models of social systems, called agent models, economic particle models; not sure so that it would be helpful to anybody except wordsmiths.

  64. April 14th, 2010 at 12:43 | #64

    @Chris Warren

    Government gives welfare and assistance to one section of the community, using funds it has taken either on a progressive tax scale, or through means testing. This means it harms the rich to help the poor.

    Depending on how, of course one chooses to define harm, and how one values certain harms and benefits to come up with a net result.

    For example, societies that are peaceable tend to be very good not only for poorer people but wealthier ones as well. Wealthier people stand to lose more if there is disorder than do poor people because they have more to lose. In Colombia for example, rich people are kidnapped on a regular basis and ransomed. Not all of them make it back alive.

    Having the scope to walk the streets knowing you aren’t going to be assailed by desperate beggars is somewhat advantageous if you are wealthy. Having to fork out less to protect and insure your property is also useful. It’s also the case that restructuring industrial practice is easier when there is a welfare safety net. Having a health system is good for business too, as is an education system.

    It is almost certainly the case that except at the level of the most privileged everybody does better as a result of taxation, providing of course that the funds are spent roughly according to utility and the levies fall broadly on the shoulders of those best equipped to pay and are not excessive.

    So although upper middle class people may well pay substantial levies, they probably get at least this much in one kind of benefit or another.

  65. TerjeP (say tay-a)
    April 14th, 2010 at 13:34 | #65

    Chris & Fran – One can have an intelligent discussion along those lines. However once people start ignoring the consequences (and harm) caused by the creation of entitlements then they are lost. And at some point, as Thatcher said, people can be thinking too much only of entitlements. No doubt people will disagree on when that line has been crossed but the basic point remains.

  66. TerjeP (say tay-a)
    April 14th, 2010 at 13:39 | #66

    p.s. A poll tax is not something I support. I think Thatcher was wrong on this issue.

    When I lived in England I shared house with an ex coal miner who hated Thatcher for what she did and I can understand his perspective. However personally I think she was right to close loss making coal mines.

  67. April 14th, 2010 at 13:51 | #67

    Fran,
    1. There is still no real payback period, there Fran. Never mind an NPV. The simple facts are that the consequences of the spending were to cost a lot, produce no real benefits, killed some people, burnt down some houses, lost long term jobs and just made money for more lawyers involved in enquiries. Great outcome.
    .
    Not misleading – and not cant. As I have said many times before, where employers (or any one else) breaks the law they should be prosecuted for it. To me, though, where a government program is set up in a way that encourages (or even effectively mandates) misbehaviour then the relevant minister and government should bear much of the blame.

    Nice selective editing, there. I indicated where I would prefer to see tax cuts and, presumably as you thought it would provide an easy counter, you ignored it. As I said -”[u]sing the money to reduce the tax burden on the poorer would have resulted in genuine productive expenditure.” Just sloppy by you, there.
    .
    On Thatcher – she has, many times, said exactly the opposite. I would also not be happy with such a system either. No-one is (or not many at least are) arguing for “…the social equivalent of some survivor-style game show…”. What I do argue for is personal responsibility and a substantially reduced role for the State. I do not see that the welfare state that we have built up around ourselves is necessary – at least not to the extent that we have it. The simple fact that most Australians are receiving benefits of some kind or another is, to me at least, obscene. To me, such benefits should be targeted at helping and educating children, assisting the disabled and other such activities, not providing welfare to all. For example – most of us could pay our medical bills through insurance, leaving the State to provide for those who cannot do so. I do not see that as “…the social equivalent of some survivor-style game show…”, I see that as mere common sense.

  68. April 14th, 2010 at 13:53 | #68

    @TerjeP (say tay-a)

    As you know Terje, as someone who is both a supporter of nuclear power and an opponent of coal combustion for energy, I have no problem with the principal of closing coal mines, loss-making or not. The fact that they were loss making was not relevant to her though. It was a get square for 1974, hence the in-your-face brutality of the exercise. She was attempting to intimidate the whole working population by showing what she could do to the miners, the better to facilitate their exploitation by the British ruling class.

    Where one stands on that derives from which sections of the populace you side with — the workers and producers, or the boss class? The Poll Tax has to be seen in that light.

  69. Neil
    April 14th, 2010 at 13:58 | #69

    @wilful

    “I have never met a biology undergraduate who has read The Origin of Species. Even scientists, familiar as they are with its contents (or what they believe them to be), honour it in the breach rather than the observance.” (Jones, J.S., “Almost Like a Whale: The Origin of Species Updated,” Doubleday: London, 1999, p.xxvii)

    Jerry Coyne (on his blog): “It’s surprising, actually, how many evolutionary biologists have never read the book.” In comments on the post, he clarifies that he is recommending reading it on historical, not scientific, grounds.

  70. Freelander
    April 14th, 2010 at 14:10 | #70

    “[A human being] itself cannot act except through individual [cells]. Everything to be done has to be done by one or more individual [cells]. A human is, therefore, an artificial construct. It is a useful construct to be sure, [to be sure,] but we must never forget that ultimately a human (or for that matter [a society or a government - another artificial construct]) cannot do anything – it always comes down to a [cell or groups of cells] doing (or [not] doing) whatever needs to be done.”

    Hmm… Very insightful?

    But wait there’s more [in the manner of KTel]… Maybe there are only atoms and collections of atoms, or maybe there are only quarks and collections of quarks… Maybe everything is an artificial construct – useful to be sure! Oh, now my brain hurts. Doh.

  71. April 14th, 2010 at 14:20 | #71

    @Andrew Reynolds

    The simple facts are that the consequences of the spending were to cost a lot, produce no real benefits, killed some people, burnt down some houses, lost long term jobs and just made money for more lawyers involved in enquiries.

    No, those are the simplistic facts. It costs a lot because putting insulation into a million homes costs a lot. It is already producing benefit in just the way Tony Abbott’s “direct action” would have. Were he not an opportunist, he’d have supported it at some level. It hasn’t “killed some people”. Reckless and shonky business operators have killed some people. They do that all the time and not just in insulation. Even some non-shonky people occasionally have workplace deaths. The program killed nobody. People in longterm jobs are unaffected because there will be an ongoing need for skilled electrical tradesfolk and builders. And if lawyers are making money, then again, that is hardly the government’s fault. We have a legal system and that’s how it works.

    Personally, as I’ve implied, I’d have preferred a far less ambitious program that was far better directed from the centre. Yet there’s no doubt that if I had had my wish, each installation would have cost more, and it’s unlikely we would have managed 50,000, so as stimulus it would have been trivial and thus a failure.

    To me, though, where a government program is set up in a way that encourages (or even effectively mandates) misbehaviour then the relevant minister and government should bear much of the blame.

    Oh I see … so if the Australian Tourist Commission promotes the benefits of the beach in Queensland, then every tourist who does in a marine accident there is the Minister for Tourism’s responsibility? If the government builds a road every death is at the feet of the Roads Minister? Gosh — what about those hospitals? Death traps! If people knew there were no hospitals, they’d be more careful. Cancer wards? Let’s scrap them — too many people die there and it just encourages people to get cancer. If the government permits cigarettes to be sold, isn’t it guilty of mass murder?

    What a strange and wonderful place you live in! And yet, you’re a libertarian? A believer in personal responsibility? How cute!

    -”[u]sing the money to reduce the tax burden on the poorer would have resulted in genuine productive expenditure

    Actually I addressed that point when I spoke of it leading to increases in spending on “consumer goods most of which lead to very little employment and no longterm benefit. Is it really helpful if people buy more alcohol or techno junk or gamble more?”

    What I do argue for is personal responsibility

    You might want to reconfirm that claim after re-reading your swingeing insistence that “the government is to blame” when businesses break the law.

    and a substantially reduced role for the State

    Well yes … that worked so well in insulation didn’t it? Actually, what that shows if anything is that there should have been a far greater involvement of the state. As it turned out there was far too much private enterprise and not nearly enough state control.

    I see that as mere common sense.

    Ah yes … that most vacuous and arbitrary of senses — the common sense. Not good sense, but simplistic, fundamentalist, populist, it-seems-so-obviously-reasonable, good old-fashioned my old man used to say common sense.

    Let me tell you Andrew, that which is sensible is rarely common, and that which is common rarely amounts to sense. Again you show that here.

  72. Cynic
    April 14th, 2010 at 14:36 | #72

    @Fran Barlow
    (I apologise in advance if the formatting is difficult to follow, I’m not familiar with this blog).

    It would be interesting to see whether this program actually leads to a reduction in energy use, but I doubt it. ISTM that the $1,600 per household rebate was actually a subsidy to households to consume MORE energy. IOW, the laws of supply and demand kick in: if the price of a particular commodity falls (energy bill) then quantity demanded (energy consumption) rises.

    As the following article claims, the government exaggerated the scheme’s capacity to cut greenhouse emissions.
    http://www.theaustralian.com.au/news/nation/emissions-figures-dont-stack-up-professor/story-e6frg6nf-1225839329853

    If this is correct, then the $2.5b of taxpayers’ money, the 6,000 jobs lost, the four deaths, the 100,000+ homes with substandard or dangerous insulation, and the 120 house fires yielded virtually no benefit.

    “Much of that money is expenditure in gainful employment in states where economic growth is flat. I don’t see that as money poorly spent.”

    This is just a regurgitation of Keynesian short-termism. Yes of course the govt can borrow lots of money, lower interest rates and inject funny money into the economy and create lots of jobs. Lets not concern ourselves about the longer-term impacts, we’ll worry about that after the next election.

    “Really though, expenditure of this sort is far more useful than boondoggles getting car races into town or the Olympics, or submarines or joint strike fighters.”
    No, this is just another boondoggle. The only difference is that it was designed to benefit different special interest groups, in this case, the greenies, the unemployed and the insulation industry.

    In relation to the shonky operators and fraudsters, they should be pursued and punished accordingly. That is the proper role of government.

    But let’s not forget, if the government had never interfered in the insulation industry in the first place, these crimes would never have occurred. The government must be held accountable for this debacle.

  73. Chris Warren
    April 14th, 2010 at 14:48 | #73

    TerjeP (say tay-a) :
    Chris & Fran – One can have an intelligent discussion along those lines. However once people start ignoring the consequences (and harm) caused by the creation of entitlements then they are lost. And at some point, as Thatcher said, people can be thinking too much only of entitlements. No doubt people will disagree on when that line has been crossed but the basic point remains.

    This issue is of little weight.

    The question of entitlement, can be limited, if it only goes to provide common goods and services, and/or redresses the harm done by capitalist structural tendencies.

    The harm that must be addressed is a unilateral harm originated through exploitation.

    Example:

    Capitalist companies “maximising profits” may reduce wages: this leads to ===> justifiable increased welfare for the low paid.

    So the need for entitlement is limited to addressing the unilateral harm introduced by “maximising prodits”. But this is OK because, in a democaracy, the funds to acquit this need can come from the profiteers.

    So everybody wins.

  74. April 14th, 2010 at 15:12 | #74

    Fran,
    Again you ignore something merely because it is inconvenient. Nowhere, ever, have I said that businesses (or employees or anyone else) are blameless. I have said time and again that where people or businesses are to blame they should be prosecuted. You have ignored that statement time and again.
    That possible dishonesty on your part aside, I do believe that those who are organising the way in which money is spent should accept personal responsibility for the reasonably foreseeable consequences of that spending.
    For example – if someone dumped a billion dollars into the street and said “Go for it and if there is any left in one hour from now I will take it back” then, to me at least, it is reasonably foreseeable that people will get hurt. Those who trample over others to get to the money do (IMHO) deserve to get prosecuted for their actions. I would argue that the person who dumped the money is also at least partly responsible.
    The insulation scheme was much the same. A large amount of money was dumped into a small industry all of a sudden. It did attract some shonks (who – just to make the point yet again – deserve to be prosecuted for their actions if they were illegal) but, to me at least, it was foreseeable that this is precisely what would happen.
    Your continuing inability to see this is, IMHO, worrying. Do you habitually shout “fire” in a crowded cinema?

  75. April 14th, 2010 at 15:22 | #75

    @Andrew Reynolds

    It’s a question of where wrongdoing lies, Andrew. The government didn’t simply dump a billion dollars into the street. It provided a proicess for claims and made it clear that local workplace safety applied. Fraud was never part of the program and nobody could have supposed that it was. It was entitled to try such a program. As it goes, at worst, the rate of fires was acceptable per installation, especially since some would not have been connected.

    You wish to draw long bow to make an ideological point. You are the one who has to defend the causal chain leading to the state that you assert. You better fit the description of someone calling fire in a crowded cinema than do I.

  76. April 14th, 2010 at 15:26 | #76

    Fran,
    They as good as dumped a billion dollars in the street. The person mouthing the words “Oh – and please don’t hurt anyone” after dumping the money does not cut it either. Have a look at the basic step up of the program! – Time limited, huge industry expansion required to meet the targets set for the program and little or no money spent on regulating it.
    I am generally not in favour of regulating much, but if I were to dump a billion in the street (whether of my money or someone else’s), I would expect that my duty to others would require me to have some security guards already hired and ready to police it. The program had none of that.
    It was a farce from beginning to end. And a damned expensive one.

  77. April 14th, 2010 at 15:33 | #77

    @Andrew Reynolds

    Andrew, the “security guards” were the state governments and offices of fair trading and workcover and finally, the courts.

  78. April 14th, 2010 at 15:47 | #78

    …and, of course, all of them were ready, willing and able to cope with an industry that had to expand by many times in a very short period and would only be around for a short while. They had many fully briefed officers, experienced in looking after insulation matters and fully capable of doing what was necessary.
    They weren’t ready? Oh…
    .
    In reality, Fran, they could not hope to cope as the industry had got along very nicely for a long time without needing intrusive regulation. The businesses that had been doing it for a long time knew what to do and how to do it, had good reputations and qualified and experienced staff. Regulation was largely unnecessary.
    Chucking the money at the industry was bound to mean it needed a huge amount of regulation all of a sudden. It was also bound to destroy the existing players.

  79. April 14th, 2010 at 15:50 | #79

    @Andrew Reynolds

    Chucking the money at the industry was bound to mean it needed a huge amount of regulation all of a sudden.

    So market forces weren’t up to the job eh? Well how about that. Right-of-centre Libertarians can learn stuff.

  80. April 14th, 2010 at 15:54 | #80

    Fran,
    No, “market forces” cannot cope with an artificially huge amount of money being chucked at something. “Market forces” by their very nature work in an organic fashion, adapting and changing to the circumstances. If you create an artificial situation then you need some artifice to control it. I have never said that “market forces” can cope with every stupidity.
    This was clearly a big one.

  81. TerjeP (say tay-a)
    April 14th, 2010 at 16:03 | #81

    Fran – demand was not being driven by the forces of a free market, nor was it being moderated in the normal way by the price signal one would normally expect in a situation of constrained supply. A lowering of supplier quality was an inevitable consequence of the program.

  82. Jim Birch
    April 14th, 2010 at 18:29 | #82

    @Ernestine Gross

    (If I understand you correctly and I’m not sure that I do:) I’m not really arguing that the “individual” is a useless or redundant concept just that it has it’s limitations because it has a confused set of meanings. (Just like “society”.)

    There’s an individual as an organism that a fairly solid that (potentially) can be described reliably, but this isn’t really the political idea of individual which based on the intuitive introspected sense of our own minds. The trouble with this is that the human mind has been selected for energy-efficient operation rather than to being a reliable thinking machine with reliable insight into it’s own function. If you like, it’s a kind of virtual reality machine optimised for survival that includes a biased idea of a self with lots of key stuff missing. For example, we more or less know where our limbs are most of the time but we are entirely clueless about what parts of our brain recognises a face and decodes the emotions on it, or which process happens first. We have the crazy intuition that we could live on without our bodies. We believe that the sun rises and trees are green. Part of the VR story is that we are independent free-willed beings with a good grasp on truth. This might be a biologically useful illusion (and often fun) but it just doesn’t stack up with the actual evidence. Using this kind of stuff for a political philosophy seems pretty fraught to me. We’re not going to be rid of these illusions by merely thinking about it, and the illusions feel important to us so we should to take them into account, but I’d prefer something a bit more evidence-based for making real world decisions.

  83. Patrick Caldon
    April 14th, 2010 at 19:35 | #83

    Andrew Reynolds :
    Fran,
    No, “market forces” cannot cope with an artificially huge amount of money being chucked at something.

    What precisely is the difference between an “artificially huge sum of money” and a “sum of money”?

    When the Government/AOFM decided to spend $8bn odd on securitized mortgages in the last 12 months why did this “artificially huge sum of money” with minimal regulation not cause umpteen deaths?

    Or maybe it did. Maybe the work related deaths on construction sites with mortgages ultimately bought by the AOFM or funded by banks guaranteed by government money should be laid at the feet of the government. Because demand was not being driven by the forces of a free market, nor was it being moderated in the normal way by the price signal one would normally expect in a situation of constrained supply for mortgage funding. A lowering of supplier quality is an inevitable consequence of the program.

  84. Freelander
    April 14th, 2010 at 20:32 | #84

    My god! Market forces cannot cope with a huge amount of money being chucked at something. This must be an example of that mythical beast. No not the unicorn… market failure!

  85. Freelander
    April 14th, 2010 at 20:34 | #85

    And I thought money solved all problems? Isn’t it the most important argument in an indirect utility function?

  86. Ernestine Gross
    April 14th, 2010 at 22:27 | #86

    Freelander :And I thought money solved all problems? Isn’t it the most important argument in an indirect utility function?

    No. Only in some models is money an argument in the utility function (and therefore in the dual), in other models it is wealth (setting aside the adjuective ‘most important’).

  87. Freelander
    April 14th, 2010 at 22:33 | #87

    Heresy!

  88. Ernestine Gross
    April 14th, 2010 at 23:31 | #88

    Good choice of word in the context of the topic of this thread.

  89. TerjeP (say tay-a)
    April 15th, 2010 at 00:57 | #89

    Freelander – are you suggesting that the Rudd government stimulated a market failure whilst trying to stimulate a market success? Would this be a case of a negative unintended consequency of government policy?

  90. Freelander
    April 15th, 2010 at 07:51 | #90

    @TerjeP (say tay-a)

    The market failure is more the fault of thirty years of neo-liberal nonsense at State and Federal level than attributable to Rudd; a systemic problem of insufficient regulation which is something we currently suffer from. Too much steering and not enough rowing.

    Currently, shonks can engage in serially shonky business practices, and set up serial shonky businesses. Harsh to say but you can’t just take the average untrained cretin off the street and have them poking about in your roof with sharp metal instruments without handing out a few Darwin awards in the process.

    The policy was reasonable enough. The execution within the context of a lack of regulation was somewhat inadequate, but there is so much libertarian (which is to say magical) thinking in the Canberra bureaucracy that you would expect poor execution. A great example of poor execution was the job network under howard which was a case of throwing a truck load of money at a problem with no real controls or checks that taxpayers got value for that money. [And that didn't have the rationale or benefit of being a stimulus.] All it did was give the unemployed a hard time, and make various ‘providers’ who sprang out of the ether, who should have been fully trained and perfectly able to do what should have been a complex task, very well off. That is, that truck load of money made the owners of the new ‘provider’ businesses very well off, not their employees and certainly not the unemployed. What was provided was process not value.

    Given that Canberra doesn’t really do very much, but shuffle money and manipulate the states, given that most things are state responsibilities, it is not surprising that the Canberra bureaucracy is less able at policy execution than State bureaucracies. State bureaucracies have their share of libertarian dreamers but having to deal with real world problems face-to-face takes some of the edge off their dreaming.

    In Canberra most are into steering, not rowing, most consider themselves the captain, and don’t consider any knowledge of the mechanics of what they are trying to do, or even simple knowledge of steering, is worth learning. Most of them in upper echelons of the SES don’t seem to have gotten there by being good at, or even able to do, their previous jobs, so why should their performance in their current jobs come as a surprise. Often they move around so quickly, their disasters are found in the wake behind them (in two senses).

    It certainly wasn’t always that way, but over the the period of the Howard government the SES just went down the toilet. There are still some outstanding people amongst them, and some with real integrity, but their numbers are fewer and fewer. And they are more often than not, not considered the ‘shakers and movers’. Unfortunately, as like hires like, don’t expect any change soon.

    Gordon Grech was really the archetypical modern member of the SES.

  91. TerjeP (say tay-a)
    April 15th, 2010 at 08:11 | #91

    So now your saying that Rudds wife was ripping off the taxpayer. Interesting.

    You seem to be warming to the notion that Canberra is a waste of money. Welcome to the club. And the line about Canberra being filled with libertarians is really amusing. I always wondered where they were all hiding.

  92. Chris Warren
    April 15th, 2010 at 09:30 | #92

    @Freelander

    Given that Canberra doesn’t really do very much, but shuffle money and manipulate the states, given that most things are state responsibilities, it is not surprising that the Canberra bureaucracy is less able at policy execution than State bureaucracies. State bureaucracies have their share of libertarian dreamers but having to deal with real world problems face-to-face takes some of the edge off their dreaming.

    Interesting thought, but a bit rough.

    While it is not relevant to this thread, it is true that a Canberra office is less able to deliver domestic needs to local communities, than State mechanisms.

    However Canberra is the best mechanism to deal with money supply, quarantine, immigration, foreign affairs and aid, Australian statistics, defence and so on.

    It is reasonable, in an age of massive white-collar crimes, that income taxation powers and associated data collection be centralised in Canberra.

    However Rudd’s pathetic release of a health scheme details to premiers last Monday, with an ultimatum that they agree by next Monday at COAG, was a crude, incompetant grab for GST cash, with no long term guarantees (beyond 4 years) of additional Commonwealth funds.

    Rudd is aggravating and exploiting public concerns over Australia’s health system.

  93. Freelander
    April 15th, 2010 at 09:33 | #93

    @TerjeP (say tay-a)

    She was simply availing herself of the opportunities that the ‘market’ presented. Good of you to pick that up. I was going to note that, but it goes without saying…

    Canberra is not necessarily a waste of money in the sense of a Federal government, which is needed, although artificially creating a capital because neither Sydney or Melbourne could be capital was a silly idea. Also having bureaucrats living in the artificial and stupidly designed city far from the real world is also a silly idea.

    The constitution was a mess though not as bad as the American constitution. Rather than wasting time on trying to get rid of the Queen real energy should be spent on working out a new constitution, and maybe doing away with states, although an appropriate transition needs to be thought of.

    As far as the Queen goes, there is merit in having the monarch. I would be passing a law though that if the Queen or any of her heirs or successors set foot on Australian territory the are to be immediately executed. That way we would have all the benefits of a consitutional monarch and none of the costs associated with those inbred hereditary bludgers. I would retain a governor general but theirs would be a part time job without accommodation, any pomp role, and a very small stipend. Governor generals come in handy for dismissing governments when they go troppo, as happens from time to time, otherwise, they have no real role, and you would not wish to give them any great legitimacy by calling them President or having them voted in. The selection of governor general would be changed so that they were not tied to any party and were thus able to boot a government out when it went troppo. If people object to the Queen as the constitutional monarch, then she could be gotten rid of and replaced by Mickey Mouse or Homer Simpson or some other imaginary being. But I may be digressing.

  94. Freelander
    April 15th, 2010 at 09:35 | #94

    @Chris Warren

    Yes I agree. A Federal government is needed but the present arrangements are less than optimal.

  95. Freelander
    April 15th, 2010 at 09:39 | #95

    As for Health, the proposed reform seems to be just reform for reform’s sake; simply a way of ensuring the great Rudd reform legacy. Pitiful really. But that’s politics and politicians. That is not to say that Health may not benefit from substantial reform, I am sure it would. But a reform based on a plan, reasons and objectives, not simply to carry the name of some ‘great’ man into the history books.

  96. April 15th, 2010 at 09:46 | #96

    @TerjeP (say tay-a)
    The place they seem to be hiding is the place where a libertarian dreams up more ways to tax and spend – i.e. in that social democrat bar in the basement of the Treasury.
    I am just fascinated with the idea that there are any libertarians in Canberra. lol.

  97. Freelander
    April 15th, 2010 at 09:49 | #97

    You are remarkably ignorant of the workings of government if you think the Treasury dreams up more ways of spending.

  98. TerjeP (say tay-a)
    April 15th, 2010 at 09:56 | #98

    They have a bar in the Treasury basement? How can that be? I thought the basement was full of gold and treasure. How can you have a treasury without treasure?

  99. Jim Birch
    April 15th, 2010 at 11:53 | #99

    Maybe they drink Goldschläger out of diamond cups?

  100. April 15th, 2010 at 14:38 | #100

    Freelander,
    Treasury comes up with more ways to spend money on Treasury.

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