69 thoughts on “Monday message board”

  1. Finally got around to reading The Latham Diaries. ML is obviously someone with a head full of ideas (some densely mixed with verbiage of no consequence) who saw himself hemmed in by the ALP’s factional system as manipulated by trade unions. His hero was do-or-die Paul Keating because he was a ‘big picture’ politician. When ML became leader the constraints imposed by the factional system became more apparent and in his attempt to become the ‘big picture’ politician the preexisting conflicts shone through. The enemy according to ML is the factional system and adherence to raising the profile of one’s faction regardless of what is being offered elsewhere.

    The standard internal reform package suggested within the ALP (for at least 30 years as I can recall) is to give more power to branch members and less to unions. But ML sees the branch system as hopelessly corrupted by branch stacking with very low levels of grassroots interest in being an active and genuine member of a branch. In addition, to split with the unions would inevitably create two parties. Hence his general conclusion that the ALP is stuffed and cannot be repaired.

    I don’t come from ML’s side of politics but it does seem to me the points ML raises in the diaries are important. I notice John Howard was quick to attack the diaries. Partly because of some vicious attacks on him and partly because the general attacks ML makes on politicians reflect badly on the Tories as well as Labor. Its a broadside generally on those who attempt an active role in public life.

    Is factional politics inevitable in a pluralist democracy with a broad range of community interests? Maybe bargaining theory or game theory can suggest some answers here in terms of costs of coalition formation. How to reform parties such the ALP to make them work better? Why are ordinary citizens so resistent to becoming actively involved in politics?

  2. Various worthy religious leaders are making complete asses of themselves the way they are carrying on about the appointment of the head of the fair pay commission, Ian Harper. According to them, because Harper is a committed Christian, he shouldn’t have accepted the position.

    Fair dinkum, you’ d think he’d just been appointed as chief public executione.. These clerical ty

  3. I have flicked through the diaries myself and was surprised to see how much of it was constructive and thoughtful. It made me even more suspicious of the extent and unanimity of criticism levelled at them throughout the media. From what has been said you would think he had written a valueless and petty book filled with childish insults from start to finish but that does not seem to be the case. I guess he touched a nerve with the media/political elite. I intend to buy a copy when I can spare the change.

  4. Insightful comments HC.

    Latham’s personal shortcomings are emotional rather than intellectual.

    It would have taken a much better man than Latham to make any inroads at all into repairing Australian culture.

    The major contradiction, as you imply, is the severe mismatch between the pluralist nature of Australian society and Australian culture on the one hand, and the ability of the party machines to demand compliance from elected representatives.

    One solution might seem to be greater participation in branch-level politics. But that’s a circular argument, because absence of participation is the problem.

    Any change to the status quo is a challenge to the power of the political apparatchiks, and would have to be won over their dead bodies. Even assuming a popular victory over the stranglehold of the party apparatchiks, the vast majority Australians are so disengaged from politics, it is unlikely that they’d get involved in any large numbers under the present system of membership.

    But perhaps the present system of membership can be changed. Assuming a victory over the apparatchiks, a party brave enough to institute a US-style primary system, encouraging large numbers of members whose only qualification would be a desire to join up to vote in primaries, might steal a march by reconnecting with the voting public.

    The problem is, the Libs are happy dominating federal politics, so why change. And the ALP has the consolation prize of all the states, thus rewarding the careerism of many of those apparatchiks.

  5. Where was I?

    Fair dinkum, you’d think he’d just been appointed as chief public executioner, not was chief wages public servant. These clerical types should tone down their rhetoric. It makes them look even more ridiculous than usual, which is saying a lot.

  6. With preferential voting reform via creating a 3rd party or the rise of other left wing parties is an option in Australia. It seems extremely unlikely at the moment, but it just might be possible for the Democrats, Greens or a splinter Labour party to provide real competition with Labour forcing them to reform or lose competetiveness.

  8. Costello flirted with a flat 30% income tax rate with a low income rebate. While he abandoned the idea I think it has a lot of merit.

    http://finance.news.com.au/story/0,10166,16915440-462,00.html

    The rebate could be offered as an alternative to welfare. If you receive $5000 in welfare this year your rebate will be $5000 less. This would make for a smooth integration of the tax system and the welfare system.

    Another way to integrate welfare and tax would be to stop means testing welfare and make welfare payments taxable income.

    A third way would be to abolish welfare and have a form of negative income tax.

    Loads of options, not much action.

  9. My review of the diaries is here. It was a good read, although not quite what the doctor ordered for Labor or politics in Australia more generally.

    People working in public life almost always are transformed with the help of the media into receptacles for blame and recrimination. Instead of honouring the good work that is done by our elected public servants, the media and consequently a lot of everyday people tend to focus almost remorselessly on the negatives of public life. Whose fault is it that I pay too much tax? Whose fault is it that my local school isn’t as good as the rich one in that other suburb? Etc, etc.

    When politics is so associated with negativity and blame, you’d have to be something of a masochist to get really involved in mainstream politics, wouldn’t you?

  10. A question for all the bright sparks.

    Should the minimum wage be higher in areas where the cost of living is higher? Or to put it another way should the minimum wage be lower in places where the cost of living is lower.

  11. ” If you receive $5000 in welfare this year your rebate will be $5000 less.”

    Wouldn’t work, Terje. Welfare is paid to families, based on family income. Income tax is paid by individuals, based on individual income. This is why is it’s so difficult to integrate the tax and welfare systems.

  12. Dave is correct which is why conservative types like myself are fans of family tax credits but they are expensive however they do increase the participation rate.

    Dave,
    Who are criticising Harps?

  13. Homer, from The Age website (Saturday AM edition).

    THE new head of Australia’s Fair Pay Commission should face a crisis of conscience between his faith as an evangelical Anglican and his role determining the wages of the lowest paid, says the head of the Uniting Church.

    Dr Dean Drayton, president of Australia’s third-largest church, said yesterday the commission’s mandate was to keep wages low, rather than assess what workers needed to live a decent life, and that this was incompatible with Christianity.

    Anglican and Catholic leaders also expressed reservations over the appointment of Professor Ian Harper, a leading economist, to head the body that will replace the Industrial Relations Commission. A prominent Anglican, Ray Cleary, called the appointment “politically savvy, but inappropriate”.

    Thursday’s announcement prompted speculation that Prime Minister John Howard had deliberately selected a strong Christian to placate church critics of its industrial relations changes, particularly Sydney’s Anglican Archbishop Peter Jensen.

    Professor Harper, of the Melbourne Business School, refused to respond yesterday, except to say that he did not share Dr Drayton’s view.

    Earlier, in a radio interview, he said his job was not to keep wages down. “This is not a covert exercise in cutting wages at all,” he said. “This is an exercise in trying to ensure that we have the best possible conditions among the most vulnerable in our community.”

    But Dr Drayton said the commission’s task was to put economic prosperity ahead of people’s needs.

    “Christians are called to challenge systems and structures that breed hate, greed, oppression, poverty, injustice and fear,” he said. “Anything less than this is a watered-down expression of our faith.”

    Warning against “religious politicisation” of the appointment, he said it seemed the Prime Minister was disturbed by the questions religious leaders were asking.

    He said the Uniting Church feared that appointing a Chris- tian could lead people to believe that the churches endorsed commission decisions.

    Dr Cleary, the Anglican’s social responsibilities spokesman, agreed with Dr Drayton. “Professor Harper is a man of integrity, but he would not be my choice to head the commission,” he said.

    The professor had never shown any interest in issues relating to labour relations or disadvantaged people, and the role required a judge or more independent person, he said.

    “It’s a very politically savvy move,” he said. “It’s more than accidental.”

    Catholic Church spokesman John Ryan said the problem was not so much Professor Harper as the commission itself.

    Professor Harper told ABC radio yesterday that his Christianity gave him a set of values that emphasised the best interests of the poor and vulnerable, but he understood the distinction between church and state.

    Asked whether his appointment might reassure church critics, he said he wanted to hear from the churches in his work on the commission.

  14. Thanks Dave,
    I had a feeling the same old names would turn up.
    I do note that NO criticism has come from Sydney Anglicans from where he got most of his teaching from.

    Harps is one very smart cookie and no government lackie.

    I would have thoughy one of the most highly tohught of economists in Australia who does not leave his christian beliefs at home would be an ideal candidate.

  15. Ian Harper is both a fine economist and a very decent person. But the requirements of the position might make it impossible to display these qualities. I think at least some of the comments cited above are saying this.

  17. I don’t think its true to say that factions are just politics. There is a difference between a faction and a tendency. In a tendency you mostly support other people who agree with you on most issues, but retain your consience. In a faction you always support the factional line even if you disagree. This includes supporting someone for preselection you know is hopeless, because they are a member of your faction not the other one.

    The ALP’s problem is that the factions have hardened to such an extent, and gained so much power. A party can work with factions, as long as there are enough people who are not factionally aligned that they can control the worst excesses. The ALP has lost that.

    For a new party the way to avoid this situation is to ensure they have enough active members who think for themselves, relative to the number of winnable spots, that behaviour such as branch stacking can’t occur without engendering a powerful backlash.

    The ALP has lost that opportunity. They need something different. A US style primary system where huge numbers of inactive people vote might help, although it has its own problems. Another alternative would be to turn the unions from a hinderance to a help – have the union positions on committees and preselection decided not as a block by the factional heavies, but proportionally by the members. Many would still go to the factional heavies, but if the union members voted for even a few indpendent souls it could start the process of turning things around, particularly if done in conjunction with various other reforms.

    The problem is that for this to happen the factional bosses need to accept that change is needed.

  18. There are many people who say that it’s not possible to be both a fine economist and decent person, but it’s not the sort of argument I would expect to see from Quiggers.

  20. I’m mystified about the reports in the press saying that the RB may raise interest rates because of inflation due to recent oil price hikes.

    Help me out here.

    The last time I studied economics was in VCE… well, to be honest, HSC (that’s how long ago it was – I’m in Victoria). Anyway, clearly everything has changed since then, because I was taught that inflation can occur when costs of inputs rise (“push”) or when demand goes up and puts pressure on scarce goods (“pull”). I was also taught that the reason behind the manipulation of interest rates was to reduce peoples’ spending power. When interest rates went up, or so I was led to believe, inflation would be mitigated because higher interest took pressure off demand for goods. In other words, it was meant to work on the “demand pull” inflation.

    So how would raising interest rates work on the “cost push” inflation, like a rise in the price of oil? It simply doesn’t make sense to me.

    If they said the RB was thinking of raising interest rates because people are still consuming too much on borrowed money based on a too-optimistic idea of home equity, then that would make more sense, although it’s a bit unfair to punish the rest of us who are trying to avoid that behaviour. But to raise interest rates because of an oil price rise… is there any reason to this?

  22. StephenL
    You are right about the difference between factions and tendencies. The factional system in the ALP is now absolutely dysfunctional, and has produced the worst crop of duds at every level that can be imagined. The excuse usually given for factions is that the alternative is politics based on personalities. What we have now is the worst of both worlds. ‘Factions’ that revolve around personalities, which are allowed to harden and fossilise into unrepresentative cabals resistant to new ideas and any reforms which might make a difference. In reality there will always be groups of people who tend to agree on a number of issues, but what we have now in the ALP are groups of people who believe that their interests stand above the interests of the party as a whole. It has got to change.

  23. Ian Harper’s appointment to the Fair Wages Commission (Orwell would be green with envy) is indeed miraculous.

    Howard has delivered a saviour of the Australian economy without resort to messy, uncertain, and often deeply unpleasurable legislation.

    Verily, it’s Howard’s emulation of the Virgin Birth.

  24. In my view, a major reason for the elimination of the grass roots in Australian politics is compulsory voting. Over generations the parties have learned to ignore them, since they are no longer needed to get the vote out. But clearly that’s not the only factor, nor would voluntary voting give rapid improvement.

    And the criticism of the system for increasing dependence on the public service is one thing, quite different to the Sisyphean task it imposes on public servants. Their efforts don’t redeem it.

  26. Is the correct minimum wage for Grafton the same as the correct minimum wage for Sydney?

    Wouldn’t it make more sence to have minimum wages determined at a local government level?

  27. Dave Ricardo
    “There are many people who say that it’s not possible to be both a fine economist and decent person, but it’s not the sort of argument I would expect to see from Quiggers.”

    Which is probably why you haven’t seen it!

    (In fact, I mentioned that Ian H is in both categories).

  28. If minimum wages were determined at local government level then we would quickly see a “beggar my neighbour” approach where one council would run a very low minimum wage to attract businesses. Other councils would be forced to match or beat it to keep up. The minimum wage would soon be effectively zero, which of course some people would prefer.

    That isn’t an arguement against varying it depending on expenses in the area, and idea I think may have merit, but if you allow it to be set by councils (rather than a formula or one central panel) all it takes is one council to decide they want to set it at $2 an hour and it becomes futile for any other council to maintain a higher rate.

  29. You are right Helen, I couldn’t believe my ears. “High oil prices hurts? Let’s let ’em rip into a real recession!!”

    If it cheers you up, high oil prices are something like a rate raise in and of themselves, since they reduce disretionary spending and, probably to an even greater extent, confidence. So the mere fact of higher oil prices ought to keep the housing market slowish, and thus forestall actual rate raises.

    I’ll go so far as to say that the next movement will be down 25 basis points – for now the housing market looks flatish not slowish, and recent predictions of lower employment growth coupled with continued global and regional uncertainty should do the trick. All, of course, depending on China and America.

  31. We have a minimum wage – it is called welfare. there is no need for anybody to set wages when the welfare system sets a safety net level of income.

  32. Unfortunately, Razor, welfare systems also remove people from the workforce and so lower GDP. In this they are unlike Negative Income Tax or my preferred variant, Professor Kim Swales’s scheme for offstes to GST. These allow employers to pay a much lower minimum and still have access to the whole workforce without actually immiserating them (until a country hits Malthusian constraints, at any rate). But welfare has to be paid from the very GDP that it reduces…

  33. Not wanting to get into a high faluting argument, but please don’t start bringing Malthus up for Christ’s sake.

  34. Fairly obviously, it IS possible to set local wages at a local government level – that’s how it’s down it an least some states in the US.

    I’m not sure the race to the bottom argument is necessarily valid – slashing the minimum wage might please employers but it’d anger the low-paid and unemployed. guess who’re likely to have the most votes.

    You have to wonder though how this’d work with a mobile labor force capable of commuting long distances – Toorak might actually set an extremely low minimum wage since msot of the people likely to be earning it would come from outside the local government area.

  35. Razor Says: October 17th, 2005 at 4:38 pm
    We have a minimum wage – it is called welfare. there is no need for anybody to set wages when the welfare system sets a safety net level of income.

    Very good point Razor

  36. Thank you Roberto.

    Ian Gould, I think that you will find that the largest interest group by employment category is those employed by government at all levels, including QANGOS etc. I think it is a bit over 30% of the population – that’s why it is so damn hard to cut back on the size and growth of spending – too many snouts in the trough at all levels and most of them vote left. It would be interesting to see what the voting pattern would be if you cut these people out of the picture, would it not?

  38. Observa, I’d say that that minimum wage behaviour isn’t characteristic of a minimum wage structure as such but of minimum wages enforced via fiat and regulation or similar things like threats to take contracts elsewhere. It’s not a feature of Kim Swales’s approach, which works much more like a Pigovian wage subsidy (though it isn’t a true subsidy as there is no funds flow from the government). That only hits problems from the M word which – I now realise – might get censored if I were to use it again. (I only brought it up to show that, yes, you can’t take even this approach to the extreme of getting something for nothing, not even theoretically.)

  39. Katz, virgin birth ,indeed. An appointment similar to a ,proposed, American High Court Judge who believes ,Dubbya, “is the most intelligent man I ever met”.

    Ian Harper proposes to consult with the “unemployed”, in the Orwellian, “Fair Wages Commission”. Does it go like–

    Kev of the unemployed ,”the dole is crap,mate,and how come those bastards at MacBank get 5 million a year?”

    Ian, “thanks for input,Kev,but that is beyond my guidelines.”

  40. Its interesting that yesterday Mr Beazley rejected attempts to reform Labor’s factional system saying that significant groupings were ‘inevitable in an essentially two-party system’. I think StephenL’s comments bear on this claim. There is a difference between a faction which always supports members of its own clan and an ideological tendency.

    Barry Jones claims that Beazley’s Shadow Ministry consists of 16 apparatchiks, 10 union officials and 4 others compared to Hawke’s 1983 ministry of 4 solicitors, 4 academics/teachers, 4 retailers, 3 union officials, 2 farmers and 1 barrister, 1 doctor, 1 clergyman, 1 cop, 1 economist, 1 accountant, 1 industrial advocate, 1 research officer, 1 engine driver and 1 shearer.

    In rejecting proposals for reform Beazley claims that if Labor wins the next election people will notice how much like Australia his front bench is. But this claim is unlikely to be tested since he is mostly unlikely to win. And it will not be because of Liberal scare tactics but because of accurate public perceptions that (among other things) his team is not up to it.

  41. Razor,

    You do realise, of course, that that 30% figure includes doctors, nurses, teachers, firemen, police, soldiers, research scientists and employees of corporatised profit-making government-owned businesses,

    The contempt for your fellow man which leads you to dismiss 30% of them as “snouts in the trough” probably says more about you than it does about them.

  42. yes, but they ‘all vote left’ so are worthy of scorn!

    How do they all vote left? The greens and the leftie fringe dwellers get about ~8% of the vote, the democrats are centralist, labor are populist, where are all of these votes going?

  43. Of Patents and Bird Flu

    Oh my god, sometimes the insanity of medical patenting and patent laws just can’t be captured with words. This below is from the blog Maxspeak – something to think about when your are gurgling your last pneumonic breaths a few months from now…

    One of the key issues is whether the government should be stockpiling large quantities of Tamiflu, the drug deemed most effective in combating Avian Flu. The major obstacle to large-scale stockpiling is that the drug is under patent by Roche, the Swiss pharmaceutical company. Roche has limited manufacturing capacity for Tamiflu, and would charge a high price in any case. Roche has been pressured to license the manufacture of Tamiflu to other companies, but has thus far resisted this pressure. Roche, with the support of the pharmaceutical industry, has claimed that forcing it to license Tamiflu would reduce incentives to develop new drugs. It has also claimed that the manufacturing process is so complex that it would take 2 years for other companies to get facilities up and running in any case.

    It turns out that the claim on manufacturing complexity is not accurate. The Indian drug manufacturer, Cipla, determined how to reverse engineer the drug in two weeks and is now prepared to begin making a generic version of the drug available in January. (For those not familiar with Cipla, it is one of the world’s largest producers of generic drugs and its products routinely meet the highest safety standards.) So, we are left with the prospect that millions of people in the United States could risk death because our government does not want to infringe on Roche’s patent monopoly.

  44. wilful – the ALP may be to your right on the political spectrum, but it is on the left relative to the majority that controls both houses of Federal Parliament, as voted for by the Australian people.

    Scorn! You want scorn? I haven’t even started.

    I was just pointing out that more than 30% of the population are on the Government teat – in fact if you included welfare payments, it is probably even higher. This is always going to maek it difficult to move away from the welfare/nanny/big-spending state that we have. The sooner we do the better.

    Snout in the trough is hardly contempt – for Christ sake I had my snout in the ADF trough for over ten years. Wasn’t paid nearly enough and that’s one of the reasons I left to start my own business.

    And another point about the number of votes – it doesn’t really matter how many of a certain voter there are – it is the distibution of swinging voters in marginal seats that is critical for elections. That is why political parties produce compromised policies that I find distasteful but are seen as being electorally wise.

    Once work place relations are improved, the next priority should be a complete overhaul of the tax/welfare systems – GST on all G and S. The libertarian 30/30 tax model is appealing, and legally recognised families should be able to split income and be treated as a unit for both tax and welfare. Less middle-class welfare with means testing on all entitlements.

  45. Just a note on the idea that welfare sets an impromptu minimum wage – the issue surely is the level of the resultant income. If benefits are too low, then we end up institutionalising barbarous wage levels.

    And if wages drop, then the welfare levels will follow them down too, since they have to be set effectively below the income from work or there is “no incentive” to take a job.

  46. *reads over comments* *catches keyword*
    Helen, back then the HSC probably taught and tested something other than the ability to regurgitate at high speed.
    [rantage] there are alternatives being suggested to the current state exams but from what i can see, the QCS is probably the most efficient form of assessment. having witnessed and experienced the amount of stress put on students to perform in one set of exams, i’m not entirely certain that basing 50% of one’s future – i mean mark – on 40 minutes’ worth of writing is, well, sane. here’s hoping one of the proposed newer systems of education imparts worthwhile knowledge to students. even the ’employability’ system sounds better than the HSC.. [/rantage]

  47. David Tiley: In that case welfare is already too high, for it is treated by many as a viable ALTERNATIVE to holding a job. Never having considered the dole a career choice, or as a default “job”, I am amazed to see a woman co-worker bitterly term the Australian government “evil” for refusing to allow her daughter to leave the country.

    Closer inquiry revealed that it was not that the oppressive soviet Howard regieme was denying an “exit visa” to the daughter, but that the dole is not paid to “recipients” who are outside the country.

    In an era when not only are people are paid to NOT work, & rejecting work in favour of welfare, but welfare recipients (supposedly on the breadline) are able to travel internationally, perhaps we should look at the wage structure & the amount of welfare.

  49. David Tiley: The idea is for the dole to NOT be an alternative form of earning a living, but a desperate stop gap soup kitchen/breadline method of avoiding starving to death if unable to find a job.

    Work ethic seems to one helluva lot better in countries without dole, perhaps our society would be better off without it.

  50. Dave,

    I can assure you, plenty of people can and do live on less than $200 per week.

    A typical budget looks something like this:

    Rent (sharehouse) – $80-100
    Food – $40-60
    Public Transport – $20
    Electricity Phone – $20

    All of which leaves you somewhere between 0 and $40 per week for clothing, medical expenses, entertainment and all other expenses.

    Steve: “Work ethic seems to one helluva lot better in countries without dole, perhaps our society would be better off without it.”

    Yeah this country’d be much better off with starving beggars on the streets, rampant crime and a thriving child prostitution industry.

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