The Central Flaw in the Henry Review

John Quiggin61 Comments

Because the government ignored most of the Henry Review, I put off reading it until I had a bit of free time. I expected to find myself in agreement with most of it, and in fact, I agreed with a lot. But I found one big problem, as I discuss below (previously posted at Crikey)

As Ross Gittins observed recently, the Henry Review will set the agenda for taxation reform for a long time to come and most of its recommendations will probably be implemented sooner or later. It’s important therefore, to give it some close and critical scrutiny now, before it acquires the status of holy writ.

There’s a lot of good sense in the Henry Review. In particular, its central recommendation, to get rid of the many inefficient taxes and imposts that have accumulated over the years, and replace them with broad, efficient taxes on four bases: personal income (comprehensively defined), business income, private consumption expenditure and economic rents from natural resources and land. On most points of detail, it’s sensible and well thought out, though there will no doubt be room for disagreement.

There is however, a fundamental flaw in the reasoning of the Review, which undermines its whole approach to the appropriate balance between the four tax bases defined above. That flaw is the assumption that the primary goal of economic policy should be to promote economic growth, as measured by GDP (along with other objectives such as equity and sustainability).
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The Oregon Petition: A case study in agnotology

John Quiggin185 Comments

One problem with the recent discussion of epistemic closure (or, in my preferred terminology) agnotology ( (that is, the manufacture and maintenance of ignorance) on the US[1] political right is that a lot of it has been discussed in fairly abstract terms. However, there is a fair bit of agreement that climate change is both a key example, and that the rightwing construction of a counternarrative to mainstream science on this issue marks both an important example, and a major step in the journey towards a completely closed parallel universe of discourse.

Climate change as a whole is too big and complicated to be useful in understanding what is going on, so it is useful to focus on one particular example, which does not require any special knowledge of climate science or statistics. The Oregon Petition, commonly quoted as showing that “31000 scientists reject global warming” not only fits the bill perfectly but was raised by Jim Manzi in his critique of Mark Levin.

So, it provides a useful test case for understanding the agnotology of the right.

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The mountain labored …

John Quiggin61 Comments

… and brought forth a mouse

That’s my initial reaction to this ABC report of government’s response to the Henry Review of Taxation. All that effort, five months of waiting and we get a Resource Rent Tax and some tweaks to superannuation and company tax. Just about everything else has gone into the too hard basket.

An intriguing exception, it seems, is the proposal for congestion charges to replace existing road user charges, which has been neither accepted nor ruled out. Judging by the speed at which the Bligh government ran from the idea, I’d have thought this one would be very much too hard (if not as much so as the most sensible measure in the whole list, replacing existing burdens on homebuyers with a land tax paid by homeowners). I can’t see that happening, but I’m surprised to see it still a live option.

The Resource Rent Tax is a step forward, especially in the current environment where a booming minerals sector is placing all kinds of pressure on other sectors. And, I guess, it wouldn’t have been politically feasible a year ago, when the miners looked to be in trouble. So, I guess the delay hasn’t cost too much, and the Henry Review gives future governments an agenda that will last them a while.

When I get a bit more time, I’ll try and respond properly to the Review. Obviously, there’s no rush.

Stephen Long has a similar view

May Day

John Quiggin155 Comments

I’ve been arguing for a while that, after a long defensive struggle, the left/labour movement needs to start thinking about how to respond to the opportunities created by the intellectual collapse of the right and the economic failure of market liberalism. In a lot of areas, such as those of the welfare state, and community services, the defensive struggle was reasonably successful, and the question now is how best to move forward.

That’s not true of worker and union rights, where the left has lost much ground over the past few decades: drastic declines in union membership, a declining wage share, and the expansion of managerial power and managerialist ideology. On May Day, the traditional day of celebration of the trade union movement it’s natural to focus on the question of how best to push back against these forces, and where we should be going. I don’t have a lot of answers, but I’ll throw in a few points (not all that well worked out) and open up for discussion.

Among the recent successes of the worldwide labor movement, the ACTU’s “Your Rights at Work” campaign was one of the most notable, not so much for its concrete achievements (which included a significant contribution to the defeat of the Howard government, and the partial repeal of its anti-worker laws) but for the way it turned the debate around. It was entirely successful in posing a rights-based argument that workers do not (or should not) have to trade away their human rights for a job. The government’s “WorkChoices” rhetoric proved utterly unappealing to most Australians. And, while the Rudd government has disappointed in many respects, it not only scrapped the worst of WorkChoices (following some backdowns under pressure by Howard), but pushed forward with initiatives like parental leave[1].

It seems to me that this is the right way to go. The old-style politics of class (with the working class represented by male manual workers, gathered in large, naturally solidaristic workplaces) is no longer relevant to the great majority of Australian workers. That doesn’t mean that class has ceased to matter, but it does mean that workers experience class and power relationships more in terms of individual experience than as collective interactions between classes. So, in particular, unions need to be seen more as mutual aid associations that protect their individual members against exploitation and unfair treatment than as vehicles for the mobilisation of the working class. The kinds of legal changes sought to reverse the generally anti-union trend of past decades needs to reflect this orientation.

We also need to go beyond national perspectives in responding to a globalised economy. Big business has been globalised for decades, and labour has been slow to respond, but the Internet has evened things up to some extent. Organizations like LabourStart do a great job, but we need a lot more.

More May Day thoughts from Mark Bahnisch.

fn1. Opposition leader Tony Abbott’s opportunistic attempt to outbid the government will make it difficult for any future Liberal government to reverse this advance.

The lost mid-week

John Quiggin54 Comments

I’ve been off the grid for the last few days, during which the Rudd government seems to have been making big decisions, or repudiating old ones, every day. The biggest, clearly, was the dumping of the ETS. In one sense, it’s hard to regret the abandonment of the failed deal with Malcolm Turnbull, which was probably worse than no policy at all. But the government should be negotiating with the Greens and holding the Liberals and independents to account, instead of caving in to the politics of fear, tribalism and ignorance.

On the positive side, the end of tobacco labelling is an important step forward in drug policy. It would be good to see drugs like marijuana treated in the same way as we are going with tobacco: legal but discouraged in every way possible.

A striking feature of these two issues was the appearance of the Institute of Public Affairs (long the paid mouthpiece of Big Tobacco and Big Coal) which was happy about the first, and critical of the second. Anyone who deludes themselves that they are “making up their own mind” to disregard the scientific consensus on the risks of tobacco smoking and climate change should realise that they have been sucked in by the IPA and similar hacks.

That’s all I have time for, and there’s the Henry Review and the Budget to come. Have a good weekend.

A journey of a thousand miles begins with a single step

John Quiggin120 Comments

My last post, arguing that the left needed to offer a transformative vision as an alternative to rightwing tribalism has drawn lots of interesting responses, and generated some great comments threads, both here and elsewhere (Some of them: Matt Yglesias,DougJ at Balloon Juice, Democracy in America at the Economist,Aziz Poonawalla at BeliefNet,Geoffrey Kruse-Safford |, and Randy McDonald).

Since my idea was to open things up for discussion, I don’t plan to comment on particular responses. I do want to respond to one theme that came up repeatedly, a combination of discomfort with words like ‘transformation’ and ‘vision’, and a feeling that a politics in which such words are employed is inconsistent with the pursuit of incremental reforms. Even though I stressed the need to learn from such critics as Burke, Hayek and Popper about the need for reform to arise from organic developments in society and to avoid presumptions of omniscience, the mere use of words like ‘vision’ set off lots of alarm bells.

To me, the difficulty of getting this right reflects my opening point in the previous post. After decades of defensive struggle, we on the left no longer know how to talk about anything bigger than the local fights in which we may hope to defend the gains of the past and occasionally make a little progress. But the time is now ripe to look ahead.

My main point in this new post is to reject the idea that there is a necessary inconsistency between incremental progress and the vision of a better society and a better world. (I’ll link back here to my earlier post on Hope, which might be worth reading at this point, for those who have time and interest.)

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High Penetration Solar Deployment

John Quiggin99 Comments

We’ve had a lot of discussion here of the difficulties of integrating solar PV (and wind) into an electricity network. Even leaving aside some obstinate reiteration of the baseload demand fallacy, I think it’s fair to say that most of us are arguing on the basis of very little information

Here’s a link to a US government agency studying High Penetration Solar Deployment. No results as yet that I can see, but this should prove interesting.

After the dead horses (crossposted from Crooked Timber)

John Quiggin24 Comments

We’ve had a bit of fun at Crooked Timber lately, pointing out the silliness of those who are supposed to be the intellectual leaders of the right, in its libertarian, neoconservative and Republican tribalist versions. But, as quite a few commenters have pointed out (including Jack Strocchi using the same phrase that occurred to me) the exercise does seem to savor a bit of flogging dead horses.

It seems to me necessary to go beyond this, which was one reason for my post on hope the other day. To make progress, we need to reassess where we stand and then think about where to go next. This is bound to be something of a confused and confusing process. Over the fold, I’ve made some (quite a few) observations, making for a very long post, which is mainly meant to open things up for discussion.

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