Balneus

Australian Lefty on Politics, Governance, Science and Info Management

Andrew Norton unfortunately kinda right

Posted by Dave Bath on 2009-01-28


There are some economic liberals, who promote their perspective with interesting information easily overlooked, and without hip-pocket self-interest, so are worth reading.  Andrew Norton is one, and there is much to ponder in his recent piece "Is trust in government declining" (2009-01-26), answered in the negative, to ponder.

I’ll quote and summarize bits of his post, but it’s worth reading in full.  To me, it starts off dry, but gets punchier as it progresses.  After that, I’ll give my reactions.

While he answers in the negative, it seems there is a subtext in the rest of Andrew’s post that indicates his personal opinion is different from the polled public opinion in some cases.  If so, I agree with him.

Andrew’s opinion: 

Norton cites polls of the wider population to show that when the "political" classes (which I assume could mean the "chattering classes" of both left and right persuasions) report increasing distrust of government and specific politicians, they are inappropriately projecting their own opinions onto others.

Good data.  Point taken.  Thankfully, my mates aren’t representative of the general demographic or there’d be a storm in the coffee-shop.

He then opines on the unprecedented corporate (not elector) pork and the lack of comment in the media (he is probably talking about the MSM):

"… while the last few months have seen the worst outbreak of corporate pork since the economic reform era began in 1983 – just this week Rudd offered billions of taxpayer dollars to help banks and commercial property developers – I have seen no stories on whether these organisations are donors to the ALP."

(A recent comment by Andrew on his post says “On a quick examination of the last disclosures (most recent due next week), none of the major car manufacturers donated any money to political parties.  Of course the car unions did to the ALP.  Construction companies are generous donors.  I think this is all bad policy, but I don’t think that donations have much if anything to do with it.”)

He then points out the hypocrisy of many voices who argue for cleanup of political donations, but voice no disapproval about the flood of cash to big companies from Canberra:

"It’s part of the strange disconnect surrounding political donations laws.  Many in the political class believe that disclosing political donations is very important, yet they have little interest in whether or not actual examples of corporate handouts are in the public interest."

My reaction: 

Some quibbles and questions on definitions:

  • There is a huge difference between trust and trustworthiness: a superb liar is trusted, but not trustworthy.
  • When Andrew mentions "political classes", does he mean the "chattering" classes of left and/or right, those who are part of political machines, or politically active (whether as individuals or non-party groups)?  I’m taking his meaning as being the "chattering classes", unless, of course, the party-machine types don’t trust themselves (heh, heh).
  • Andrew only talks about registered donations, but these are at party level, not smaller donations to individuals that get under the wire, particularly if a group of individuals donate individually with the intent to avoid disclosure.  It doesn’t count promises of gifts of jobs or cash after an MP leaves office.  It doesn’t include brown paper bags, whether to elected representatives, or backroom influence-peddlers.  It probably doesn’t include trust funds.
  • Andrew’s use of "pork" is probably more limited than mine.  I’d also include…
    • Intentionally sloppy (thus easily rorted) or generous contracts, or use of massive tenders (that could easily be divided) so only the biggest players or consortia can win them.
    • Withdrawal or limitation of funds for sectors competing with big interests (e.g. solar power, public transport).
    • Generous non-monetary largesse, such as found in the Emissions Trading System.
    • Sloppy and easily rorted regulations.

I can understand why Andrew, a lover of hard and verifiable figures, doesn’t include these, but many in the "chattering left" can estimate stench in the air, especially if it is so strong that orthodox jews are worried about whether breathing is kosher.

So, because it’s hard to quantify, I’d say Andrew might be wrong on the pork being unprecedented … it’s probably on a par with what has been going on in Victoria for some time: consider the windfalls to the gaming industry, or rezoning land as residential that developers had bought recently, despite those lands being zoned as non-residential until 2030!

Even with better disclosure of political donations, or maybe because of them, those in parties who influence policy can be pleasured by sponsors with accountants having much creativity and few scruples.

But these quibbles don’t invalidate Andrew’s opinion in that post.

And the public benefit?  The beneficiaries of the pork, or (probably "and") in the case of plans for guaranteed loans, the administrators, are largely transnationals.

There do not seem to be any guarantees that the pork will not be used to cover for losses outside Australia.  There do not seem to be any guarantees that the loans backed by the government will be additional to the funds the banks would have loaned within Australia anyway.

It’s very similar to the Emissions Trading Scheme, and others around the world, where offsets are available for green projects that would have gone ahead anyway.

I think many economic liberals are angry about the process, although perhaps more from how this pork distorts the market, and (from their philosophical position), thus the general good.

Well, lefty me, and a fair few of my lefty friends, are very angry about the process of this largesse to corporations, wanting equity, and better regulations, and better enforcement of regulations, as a bare minimum, and preferably a say in corporate policy, in return for public largesse to private interests.  (I doubt whether Andrew would support the last bit.)

I think Andrew and I agree that the major incentive for largesse is votes, and that these will come from the general perception that jobs will be there for voters.  "Jobs" funded by largesse can be good: Andrew’s economic liberalism probably means that he’d like the largesse spread bottom-up, increasing the choices and economic activity, rather than distorting markets which can lead to inefficiences.

I’d argue (and have) that consumer confidence which drives economic activity is more likely when more people have confidence in employment, something much better provided by a larger public service with job security, rather than the face the probability of job cuts in the name of "efficiency gains".

Retailers, for example, don’t care if their customers are employed as public servants or in private enterprise… as long as those consumers have confidence their income is secure.  Thus, a larger percentage of the population in the public service, with modestly-paid positions but high job security, can be better for retailers than people with higher income but more likely to be lose work, especially if they are “self-employed” on contract.

Political parties, apart from a few decent MPs, would rather not disclose political donations unless their opponents are getting more than them.

Political parties, apart from a few decent MPs, seem to be more interested in improving the chances of re-election by either gaining large sponsorships, or at least, not making their opponents much more attractive than themselves to the same interests.

As I commented on Andrew’s post (and I expand here), political party membership is way down, about 10% of what it was 50 years ago, while the costs of running parties and campaigns have increased significantly in real terms.

Fewer people receiving more money – a great recipe for corruption.

Much more pork, to fewer, and much less representative companies – a great diagnostic of corruption.

Whether political donations are "official" and reportable, or more "discreet" doesn’t affect the opportunities and benefits of corruption.  The corruption may not actually be happening, but it is hard to ignore the stench.

I think Andrew is wrong, however, that the political classes (if he means the "chattering" classes of right and left outside the parliamentary rooms and back offices of the major parties) are quiet about the way the funds are being thrown around, even if they think government funds are needed.  Even fairly apolitical friends of mine are disgusted by it.

It intrigues me that the tone of the last half of Andrew’s post suggests that, unlike the general public, he may well have deep concerns about process, and if not, the way politicians gather, filter and use information and their intelligence.

I don’t believe the mainstream media is running the stories that address the concerns of the chattering classes, or, depending on the evidence they might collect, provide the wider public with information to allay or confirm the worries of the chattering classes.

When a lefty is inspired to respond to a righty, both apparently in agreement, both apparently angry at the same shenanigans, something is wrong, and hopefully a show like "Four Corners" can give us clues before it is too late.

The major parties have no interest in giving us answers.


See Also/Notes:

  • I hope I haven’t misrepresented Andrew Norton, who always writes very diplomatically, so he is not explicit about his opinion on what is going on in Canberra, merely (but still diplomatically) pointing to the hypocrisy or sillyness of the chattering classes, putting forth data, and asking questions.  As an avowed economic liberal, railing against ALP governments could be seen as partisan and more easily dismissed.  I might usually disagree with Andrew, but the information he provides is almost always useful.
  • On my point about the problems of national government pork to transnationals, see the following from Harvard Business School Working Knowledge, although these are framed more on how corporate managers can take advantage of nation states, but still useful for politicians for turning the tables:
    • "Where is Home for the Global Firm?" (2009-01-26)
    • "Decentering the Global Firm" (release 2009-01-26)
    • Here is a snippet describing the current situation (my bolding):

      "This paper describes recent changes in the relationship between firms and nation states.  Firms are typically linked to the nation in which they began and are considered to have fixed national identities.  While firms have reallocated various activities around the world in response to value creation opportunities, they have largely retained their national identities and their headquarter activities remained bundled in their home countries.  This characterization is increasingly tenuous.  Firms are redefining their homes by unbundling their headquarters functions and reallocating them opportunistically across nations.  A firm’s legal home, its financial home and its homes for managerial talent no longer need to be colocated and, consequently, the idea of firms as national actors rooted in their home countries is rapidly becoming outdated."

  • If you haven’t seen my annoyance about the recent increase in pork from Canberra, the way it could be used much better, and the increasing stench of corruption in Victoria, you haven’t been reading… there are too many posts for me to link back from here.
  • Apart from the twisted ETS largesse, apart from the cossetting of transnational carmakers, and in conjunction with the HBS papers mentioned, it’s worth reading KRudd and Swan’s media release on the latest (but probably not the last) A$4 billion of pork (2009-01-24)
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