In the web of power

I’ve had some pleasant lunches with Peter Spearritt, who heads the Brisbane Institute[1], a local thinktank for which I do occasional odd jobs, such as speaking engagements and commissioned papers.

In all of this I never suspected that Peter was at the centre of Brisbane’s Web of Power. But that’s what Malcom Alexander of Griffith University has concluded, after performing an ‘interlocking directorships’ analysis of the kind popularised by C Wright Mills in The Power Elite. The most connected connectors are those who sit on the board of the Institute.

Among the features of interest are the small size of the elite. On the generous criterion of two board memberships, it contains only 314 people. From my interactions with them[2], it does seem that, within this group, everyone does indeed know everyone else. Brisbane is still that kind of place.

The other notable feature is the dominance of the public sector. Thanks to the ‘global city’ phenomenon, few large private corporations have head offices in Brisbane these days. All the noted by Alexander as being at the core of the affiliation network are in the public sector, with the exception of the Queensland Council of Unions. However, many of the members would also be directors of locally-based corporations.

To generalize this point, if, like me, you’re concerned about the concentration of power in global cities, and the potential for crony capitalism that it creates, this is an additional argument in favour of public ownership.

fn1. For those interested, I’d classify the Institute as non-partisan but mildly left of centre on balance. Its backers are more concerned with promoting Brisbane (and Queensland more generally) as an intellectual and cultural centre than they are about a particular policy agenda. As Australian readers will know, Queensland is in need of such promotion to offset the ‘Deep North’ image built up during decades of government by rural conservatives, and reinforced by the Pauline Hanson outbreak a few years ago.

fn2. I’m on the periphery of the Web,, being on the board of the Queensland Competition Authority which regulates, among other things, prices for infrastructure monopolies.

Four more years?

The announcement that Ralph Nader will again run for the Presidency raises the (almost) unaskable question -are there any circumstances under which we should hope for, promote, or even passively assist, the re-election of George W. Bush as against either of the remaining Democrat contenders? I feel nervous even raising this question, but I think it’s worth a hard and dispassionate look.

Regardless of their political persuasion, most people will agree, at least in retrospect, that it would have been better for their own side (defined either in ideological or in party terms) to have lost some of the elections they won. Most obviously, this was the case for the US Republican Party in 1928. Hoover’s victory, and his inability to cope with the Depression, paved the way for four successive victories for FDR and two generations of Democratic and liberal hegemony, which didn’t finally come to an end until the Reagan revolution in 1980. The same was true on the other side of poltiics in Australia and the UK, where Labour governments were elected just before the Depression, split over measures of retrenchment demanded by the maxims of orthodox finance and sat out the 1930s in Opposition, watching their own former leaders implement the disastrous policies they had rejected, but had been unable to counter.

So, is 2004 one of those occasions? The case that it is rests primarily on arguments about fiscal policy. Bush’s policies have set the United States on a path to national bankruptcy, a fact that is likely to become apparent some time between now and 2008. Assuming that actual or effective bankruptcy (repudiation of debt or deliberate resort to inflation) is unthinkable, this is going to entail some painful decisions for the next President and Congress, almost certainly involving both increases in taxation and cuts in expenditure. On the expenditure side, this will mean a lot more than the obvious targets of corporate welfare and FDW[1]. Either significant cuts in the big entitlement programs (Social Security and Medicare) or deep cuts in everything else the government does will be needed, even with substantial increases in taxes (to see the nasty arithmetic read these CBO projections, and replace the baseline with the more realistic “Policy Alternatives Not Included in CBO’s Baseline”)
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New on the website

I was getting badly behind on my website, so I called in some help from our local (UQ Economics) webmaster Craig Mosely. So far he’s eliminated the backlog of newspaper articles, putting up articles from September 2003 to January 2004. Responsibility for the uninspired webpage design is still mine.

Please visit , read the articles and give me comments, either on the substance of the articles or on the organization and layout of the site.

Don't believe the polls?

It’s not unusual for a politician, faced with an unfavorable poll result, to say something like “the only poll that counts is the one election day”. And we all know that poll questions can be slanted to give the desired result, and correspondingly dismissed by those who don’t like the pollster’s choice of question. But I can’t recall a previous occasion on which a pollster has dismissed the results of his own polling, particularly when we are talking about a margin of 72 to 9. Yet, if we are to believe the editorial in today’s Oz, that’s exactly what Sol Lebovic of Newspoll did when his polling produced a result unfavorable to his client’s campaing for lower taxes. (thanks to reader Jethro for pointingthis piece out).

As discussed in more detail below, when asked whether they preferred a tax cut or more spending on health and education, the answer was 72 to 9 in favour of more spending. The same poll found 50 per cent of respondents believing that the top marginal rate was too high. In an editorial with the astounding (in view of the data) heading, Cutting income tax is a political winner, the Oz calls this a conundrum and cites Lebovic as saying

voters may be giving the “socially acceptable” answer on what they want the Government to do with the surplus.

The Oz goes on to say

In other words, while their consciences may be uneasy about cutting back the welfare state, their gut instincts are telling them we should be cutting back taxes. Mr Howard and Mr Latham would be well advised to respect the voters’ instincts.

It’s not clear whether Lebovic would accept this gloss, which suggests that his poll results should be discarded whenever they disagree with someone’s gut instincts (note that the claims about the instincts of the voters are baseless – the Oz editorial writer is expressing their own gut instincts and those of the political elite).

Lebovic is of course, correct to say that survey respondents often give socially acceptable, rather than accurate, answers. For example, surveys find that far more households take National Geographic than National Inquirer, but circulation figures tell a different story. Unfortunately for the Oz, it’s not a good basis for a political campaign if the viewpoint expressed is so socially unacceptable that only 9 per cent of people will confess to holding it. Moreover, voting is itself an expressive act. Someone who would secretly like a tax cut but doesn’t want to admit can’t actually secure the tax cut for themselves by voting that way – they only get the cut if a majority agrees with it.

A second problem, which undermines the idea of a ‘conundrum’ is that of the shifting majority. 72 per cent of people favored more health and education spending while 50 per cent said the top rate is too high – the number giving both responses could be as small as 22 per cent.

More importantly, there’s no necessary contradiction here. People might support cuts in income tax but think that health and education spending are more important. They could resolve the implied problem for the budget either by favoring a higher deficit, or by making up the difference somewhere else, for example through a higher rate of GST ( a suggestion raised in the previous comments thread by James Farrell) or lower defence spending.

Finally, it’s worth observing that the gut instincts of the voter have been tested in a number of recent state elections. Kerry Chikarovski went to the voters offering a literal fistful of dollars and was buried under a Labor landslide. Jeff Kennett cut services and was defeated by a Labor Party widely viewed as unelectable.

The Oz is grasping at straws when it claims that the overwhelming rejection of its policy line by respondents to its own poll is some sort of pretence. If I were Sol Lebovic, I’d be asking for more respectful treatment of my results.

Tax and spend

Reader Jack Strocchi, pointed out this Newspoll report in today’s Australian, concerning voter preferences on taxing and spending. Written by George Megalogenis, who usually gets things straight, it bears the marks of intervention designed to adjust the finding’s to the anti-tax line that has been running hard in the Oz editorial column for some time.

The problems start with the headline Top rate too high, say half of voters. It might be inferred that the other half say that the top rate is not too high. But despite the fact that the excessively high top rate is the central theme of the article, we never find out the distribution of the remaining 50 per cent between “about right”, “too low” and “Don’t Know”. Looking at the partial numbers, I’d estimate that the “Don’t Know’s” at no more than 10 per cent of respondents, implying that about 40 per cent of respondent’s rejected the view that the top rate is too high.

The really interesting news comes in the second paragraph. By the overwhelming margin of 72 per cent to 9 per cent, voters would prefer more spending on health and education to a tax cut. Even among those paying the top rate, most of whom think it is too high, the margin is 69 to 13. If the Australian wasn’t determined to push its opinions into the news pages, this would be the headline.

The implication is that, as regards taxing and spending, the electorate is overwhelmingly more social-democratic than the current government, and arguably more so than the current opposition. It’s no wonder that even mediocre Labor state governments have routinely crushed their opponents since the Howard government was elected.

There are some interesting framing issues here. The “top tax rate” question appears to be framed in a “free good” way – that is, respondents are asked whether the rate is too high, but the fact that a cut would have to be financed somehow is not explicit. By contrast, the tax cut vs spending question makes the trade-off clear.

What really interests me, but isn’t clear in the report is the sequence of the questions (the Newspoll site hasn’t yet been updated). The preference for spending over tax cuts would be even stronger if, as the Oz report tends to imply, the “top rate too high?” question was asked first. Conversely, if the tax cuts vs spending question had been asked first, the framing bias in the top rate question would be reduced.

UpdateIn the comments thread, Don Arthur advises that the paper-based version of the Oz story gives the numbers as 50 per cent too high, 34 per cent about right, 8 per cent too low. Bearing in mind the absence of any mention that reducing rates might mean giving up services, I don’t find this too surprising.

Further update 24/2Andrew Norton at Catallaxy has a post on the same topic, with the same title. and with much the same conclusion. The only difference is that he regrets the outcome and I don’t. A fine illustration of the positive-normative distinction.

What I'm reading

The Middle East: A Brief History of the Last 2000 Years by Bernard Lewis. Among much useful information, this book contains the interesting snippet that the name Palestine was imposed by the Romans after crushing the Jewish revolt of about 70CE and referred to the long-departed Philistines, and the claim that the first state religion, incorporating heresy hunts, persecution of unbelievers and so on, was Zoroastrianism in Persia.

I’m also rereading Climbing Mount Improbable by Richard Dawkins. I agree with Dawkins on a lot on the issues he disputes with, for example, Stephen Jay Gould. Nevertheless, and particularly in relation to human society, he reminds me of those economists who have been so dazzled by their exposure to the powers of the market mechanism that they are unwilling to recognise either defects in the mechanism or the possibility that many phenomena are better explained in other ways. The most obvious example, in Dawkins’ case, is the attempt to model the development of culture in terms of memes. As with, for example, public choice theory or the economics of the family, there’s enough going for the idea that it can’t be demolished in a sentence. But, again as with these examples, and depending on way in which it is applied, it either:

  • explains only relatively trivial instances of cultural evolution, like jokes and catchphrases
  • is rendered vacuous through the use of redifinitions that render the theory irrefutable, for example by making ‘memes’ synonymous with ‘ideas’; or
  • provides an account of important phenomena that is obviously wrong, for example by failing to observe that political ideologies like, say, Marxism or political sociobiology owe more to conscious design than to selection and recombination

The relative absence of this kind of stuff is one reason I prefer Climbing Mount Improbable to much of Dawkins’ other work.