Saturday, November 16, 2002

SA State of the State Report:No.1
The Advertiserran a front page story on Saturday by Greg Kelton, the State Political Reporter, that was headlined 1200 jobs, $100m a year.It was a news item about the Rann Government launching a bid to establish Adelaide as the nation's shipbuilding centre as the Federal Government moved to rationalise the warship repair and building industry because there are too many shipyards competing for too little work.

Presumably the aim of the SA Government is to build up a cluster of defence technology and science related industries with the research-orientated Defence Science and Technology Organization. Defence is a central strand in SA 's attempts to build a high-tech knowledge society after the false start of fostering the space industry at Woomera, science/technology parks and the Multi-Function Polis (MFP). Such a high-tech cluster is seen as vital to the state's future economic growth in a globalised world. If Queensland is creating a biofuture through the bio-science/technology cluster, then SA is creating a future on the defence industry.

The article is publicity for the Rann Government. It shows that this Labor Government is doing something by way of being a sound economic manager---that it is effective because it has a good handle on the issues confronting SA society. It is publicity for its creditionals as a 'sound economic manager' that goes beyond inflation, interest rates and balancing the budget to employment and boosting the state's poor economic growth.

But a ship repair and building facility for the nation's navy does nothing to further the strategy that SA has to export if it is to prosper in a globalised world; the key strategy that was identified by the Economic Development Board in its recent State of the StateReport.

The government's spin doctors and policy advisors would say that the central demonstration of economic mis-management in the past two decades is unemployment. They would say that the Rann Government has taken the political opportunity to show that it is a good economic manager as it is creating 1200 jobs.

If SA is to become a knowledge-based society, survive and propser on its skills and capacities in a global world, then there needs to be a central emphasis on research and development. Research and development is not mentioned in the publicity about the SA bid to establish Adelaide as the nation's shipbuilding centre, nor is even a loose connection made to Adelaide's 3 public universities. Even though these public institutions are becoming more corporate, and are increasingly commerialising research as they adapt to the global world, they are fringe players in this attempt by the state government to create a knowledge-based society. The development of higher education is not seen as playing a significant role in the state's science and technology policy. In a clever state the government's publicity machine would focus on the research and technological development activities of shipbuilding, not just the jobs or the money.

What is happening here is that though the Rann Government extols the values of fairness and enlightened development (in contrast to its "slash and burn privatising" Liberal opponents), it is being locked into a system where it is unable to formulate policies that pronounce such values. It is impeded from adopting such policies.

Energy is the classic example. The Olsen Liberal Government's privatising of the state's run-down electricity infrastructure has been a failure. Instead of the promised lower prices for consumers we have a 25-30% increase in prices starting in 1993. The Rann Government recognises the problem---it made great mileage out of the frequent summer blackouts---but its response is to work within the neo-liberal policy horizons and introduce retail competition in a monoply market currrently controlled by AGL.

This response basically says that the reform process has stalled, leaving us halfway between a government owned monoply and a fully competitive market. Whilst a national market for electricity has been established, the conditions necessary for the effective operation for the market are still missing. So the Rann Government is making demand side reforms to ensure retail contestability and developing interstate interconnections to increase supply and the scope of competition between generators in different states

This is not good governance nor the government we need. The Rann Government's fundamental policy settings do not reshape the regulation of the electricity market to encourage more electricity supply through the development of the technologies of renewable energy tailored to the needs of the people in the state. The Rann Government is still thinking in terms of big, coal-fired, centralized generating plants connected to a transmission and distribution network or grid, rather than decentralized electricity production from small renewable sources of energy. Thus Pat Conlon, the State Energy Minister, has defended the national electricity market in terms of it enabling SA to become fully connected, accessing cheap NSW power from its coal-fired power stations and reducing electricity prices in SA. This is a big improvement on the isolated state market.

Pat Conlon implies that this should be seen as being sensible economic management as it is finding better ways of doing things and better ways of meeting consumer wants. Microeconomic reform along the lines of National Competition Policy is good for SA is the message. This tacitly works within the National Competition Council scenario of cheaper prices and better services through the efficiency gains from increased competiton improving living standards, with increasing incomes enabling increased leisure, improved health, education and social welfare. (Competition Policy is the pathway to happiness is the fool's interpretation of this political message coming from North Terrace).

This application of competition policy by Pat Conlon does not address the negative externality of encouraging more electricity production leading to the combustion of carbon-based fossil fuels and greenhouse gas emissions. What we have here is less the failure of competition policy per se and more a failure of the Rann Government to incorporate environmental considerations into the policy settings. The weighting of the policy settings are towards economic efficiency (competitiveness, efficient allocation of resources and economic development) not ecological sustainability. Competition is seen as desirable and when the value of competition conflicts with other values--- such as sustainability----the policy presumption and bias is in favour of competition. It is presumed that the competition serves the public interest unless it can be shown otherwise.

I mention the soft renewable path for a clever state because it is advocated by Amory B. Lovins from the Rocky Mountains Institute, who was in town last week, with the visit partly funded by the Office of Sustainability at the SA Environment and Heritage. Lovin's book, Small is Profitable, is an account of how the making of electricity resources the right size can minimize their costs and risks and capture unexpected sources of profit and advantage. (Ideal reading for econocrats I would have thought, even if they thought that going green would make SA an economic backwater).

Why is the Rann Labor Government impeded from adopting sustainability policies that express its values of better development? Well, it recognizes the problem of conflict between market competition and efficiency, equity considerations arising from the negative impact on the community from structural adjustment, and the need to shift to a more sustainable mode of development. But it is too locked into neo-liberal economic policies to adopt the active facilitation of renewable energy along with ongoing economic reform.

The Rann Government's concern for its reputation for good economic management is understandable given the long shadow cast by the State bank debacle. But it lacks the courage to challenge the assumption of neo-liberalism that competition will lead to good environmental outcomes. Its political past and conservative economic management impedes it from being an ethical government. So we have economic management not statecraft.

Thursday, November 14, 2002

Bloggers as public Intellectuals?

Are they? This question is posed to crystalise a currrent in the conjunction between three events. These events are the recent blogs on the freemarket and equality by Ken Parish in Rapping on inequality and Don Arthur in Markets and the myth of equal opportunity; a book I'm 'reading' by Richard Posner on Public Intellectuals: A Study in Decline) and the comments about Oz blogging in the media, as reported by Gareth Parker in Margo wins another fan.

I raise the question because there is a current of good thinking and writing going on in the public sphere of the Oz blogsworld that is different to what is happening in the media. This new writing is more than academics writing outside their field of specialized knowledge, as we have the formation of critical commentary for a non-specialist audience on matter of broad public concern. It may be a niche role, little more than a walk on part in the play of politics culture and society, but it is something new in the public sphere. This 'something' is different from fast talkers seeking the limelight of the public stage in order to achieve fame, notoriety or name recognition (such as a Miranda Divine or a Janet Albrechtsen?) It is different from modest extensions of academic work by academics moonlighting as journalists, even though it includes the writings of academic intellectuals.

Nor is blogging a simple extension of journalism (eg., senior journalists such as a Alan Ramsay, or a Margo Kingston, or a Michelle Gratten), given the irony of Hot Buttered Death and the satire of the crew at Tug Boat Potemkin. Blogging is a different kind of (experimental?) writing with a variety of genres that is in formation; and it is one that has affinities with the republican idea of citizens thinking for themselves and engaging in a civc dialogue in a functioning democracy.

I introduce the term of public intellectual to highlight the content of this current. I want to counter Margo Kingston's tacit view of blogging as a public commentary that is equivalent to the work done by journalists. Margo's view was that the quality of the blogging by Ken Parish and John Quiggin was as good as, if not better, than the commentary by journalists. Margo is right. There is an overlap here for sure--- both bloggers and journos are knowledge workers writing in an accessible style for a general public on public affairs. The difference I want to highlight is between a writing as an interpretative observing and writing as a process of defamiliarisation ----social criticism, oppositional thinking, a disputing of prevailing values, or a disturbing of mental habits----that aims to go beyond a coterie of specialist readers. This can, and does, include journalists, since some certainly are scoffers and/or gadflys and naysayers.

Posner's argument for the claim that the public intellectual is in decline is that due to the rise of professionalism and specialization of knowledge in the modern university. This has shrunken the ranks of the independent intellectual as gadfly and counterpuncher. The demand for such public intellectuals is now filled by academics on holiday from the academic grind, and who display the irresponsibility of the holiday goer or tourist. His emphasis is on 'independent'.

I pretty much want to sidestep this familiar American argument ( eg., Russell Jacoby, The Last Intellectuals: American Culture in the Age of Academe) to highlight the innovation in the Oz bloggosphere and the debate and discussion that is going on across a wide variety of topics. This is point made by Ken Parish at the Parish Pump. His post In Margo's good books says that blogging ---as well as Margo's Web Diary----'has made a significant contribution to opening up genuine participatory civic dialogue in Australia'. This ongoing dialogue in which we learn something from our opponents is helping to foster a deliberative democracy.

Maybe some of our public universities can shift beyond their mission statements and develop their social conscience or community responsibility by helping to train graduates to be public intellectuals. Who knows? Maybe pigs will fly?

Wednesday, November 13, 2002

Casting an Eye over the Victorian State Election
It is difficult, if not impossible, to follow the on-the-ground state of play in the Victorian election from here in Adelaide, South Australia. What we get is a big picture: eg, the Bracks Government Snowy initiative; or the Bracks Government showing little vision, having no sense of urgency or passion, or having little in the way of a second term agenda.

This is problem, since the devil is in the details as they say. From my Adelaide perspective the interesting action will be in the regions outside of the Melbourne electorates. What will these regional electorates do: stay with Bracks, jump to the Independents, or go back to the Liberals? Will they make or break the Government? Being a good republican [philosopher] I am hoping for more independents to keep the Bracks Government on its toes. (I am presuming the status quo).

I had been hoping that the immitable Alan McCallum would blog on the topic from his eastern Victorian perspective. But he has kept his opinions to himself so far. So I will take a plunge. What I see is depressing. Here are some comments to justify that judgement from the one eyed perspective of green politics.

From all accounts the drought, water and Snowy flow debates don't really swing much for the political strategists. These are bush issues that will come down to micro-campaigns in individual seats. We hear nothing about the individual seats in Adelaide. So we rely the judgements from journalists in pieces like Regional campaigns hold key to the country.

It does seem that Labor's big move of 'saving the Otway Ranges' in the first week of the campaign was a publicity stunt to show the punters that Labor-just loves-the-environment so much. Some of the punters were not pleased----for a hostile reaction from western Victoria, see Bernard Slattery ANOTHER WIN FOR THE LIARS. Fair enough. An interpretation of the political tactics and strategies of the Bracks Government can be found in Margo Kingston's Rage in the suburbs.

The point of the publicity stunt is to tie up the solar powered green preferences in the inner city. The assessment by Bizarre Science is More blue collar jobs down the tube. Conservatives may not like it, but the Greens are on a roll and their votes count.

The conservatives can rest easy since a Brack's Government that 'listens then acts' is about greenwash. It has been very low key on saving the River Murray ---apart from another stunt of flying into Murray Bridge to announce 30 gigalitres of water to show cooperative federalism at work with the Rann Labor Government. The Labor states would get the job done, so all you greenies get on side and muffle your criticisms.

The Bracks Government does have a Victorian River Health Strategy ---SA has nothing remotely like it. Victoria does needs to do something about its rivers because the Goulburn River is not looking good and the Glenelg is taking a hammering. (SA's Marne, Angas and Bremer Rivers in the Eastern Mt Lofty catchment, which "flow" into the Murray, are in an even worse condition). Victoria's rivers have been basically treated as agricultural drains. Hence the need for a Healthy Rivers Strategy. Since the Bracks Government has been unwilling to find the money to implement this strategy there is no substance to the strategy. What money there is (eg.,$50 million announced last week for the Goulburn Valley) has gone towards subsidies to irrigators and to irrigation system efficiencies.

This is a good move. For instance, the Glenelg's flow has been reduced by 70%, with most of the water sent to the Wimmera Mallee channel system where 90% of it evaporates. So piping the old channels makes good public sense at a time of drought.

However, the water saved is to go to expanded irrigation and not returned to the rivers. In effect the public purse is being used to fund new and expanded irrigation developments. Just like it was done in the 1950s. Of course, these days it is always stated that some water would be returned to the rivers. But no guarantees are ever forthcoming.

Though the river healthy strategy is called Healthy Rivers Healthy Communities & Regional Growth, the emphasis of the Victorian Government is on water for growth. It is so keen that it is considering chanelling water from the River Murray to the Goulburn Valley where the money can be made. It is called selling the rivers out for short term gain; or pork barrelling that shortchanges the rivers. And the water that has been saved for the environment is seen as a slush fund for irrigators by water authorities in the Goulburn catchment.

Water for growth is the policy strategy not healthy rivers. Its greenwash. The anti-green conservatives can rest easy at night and feel safe and secure.

And the 'on-their-toes' Doyle Liberals? Their big Conservation and Sustainability policy launch has been and gone. This is committed to restoring the health of the Yarra River, but only the Yarra River. See Doyle floats river, parks revival plan. Poor old River Murray does not even get mentioned. There are not enough votes to warrant addressing its declining health. There is no point in the Libs. upsetting regional irrigator communities with talk about the overallocation of water, clawing backing water from farmers and increasing envrionmental flows. There are no votes to be gained in this during a big drought.

And the Victorian National Party? They launched their water policy yesterday in Kerang. In a Water Discussion Paper they acknowledge that a major political task facing Victorians is to balance consumptive use with the need to restore healthy river systems. A paragraph latter they say that agriculture 'accounts for about 80% of Victorian's annual use of water, and that this 'share should be permanently retained as the productive base of our irrigated food producing industries. The transfer of water away from regional areas is against the public interest because it erodes the food production base.'

This water for growth strategy is qualified by the statement that the State government should provide incentives to encourage rural water authoroities to make water savings to provide extra environmental flows for the Murray. The Victorians retain their regional water rights intact and any water transferred to other regions (eg., the Snowy and presumably South Australia) must come from savings in the irrigation distribution system. There is to be no clawback of water from irrigators.

I realize that many will consider my assumption very suspect. I am reading the election signs from a long-term sustainability perspective, when elections are short-term things. They are simply about getting the hands on the levers of power. Since that's all that matters, elections packages are designed to do this job by the political strategists and spin doctors. So I am misreading what is going on. My interpretation of the various texts is a little too freefloating. Free-floating interpretations smack of that postmodern stuff.

However, elections also give you a way into the strategic policy directions of a government. You can see bits of the policy gears ticking over in the tactical election machinery behind the staged photo opportunities and spin doctoring. This strategic machinery is not moving Victoria towards sustainability. The strategists are not thinking this way. And they are not even bothering to cover up their weaknesses.

Poor ole SA. What hope for Victoria to come to the party to return water to the river to keep the mouth open and the Coorong from cooking? The Victorians continue to remain indifferent, if not hostile, to finding water to ensure a healthy River Murray.
In the Archives: Economic Ignorance
I have been excauvating in the archives of the OZ bloggers to get a sense of history of whats been happening in this part of the public sphere. I came across this September post on water by Alex Robson Great Moments in Scientific Ignorance of Basic Economics, Part I.It is a response to Geoff Davies, an ANU scientist, who maintained that globalization and the trasnational private sector was a driving force for increasing water prices.

Alex responded by saying that the bad state of affairs is not caused by neo-liberalism taking over the world. Our water problems are caused by the 'fact that private property rights over water have not been established and enforced' and that an inefficiently low price of any resource leads to overconsumption and waste of that resource.'

Presumably, establishing market mechanisms to improve efficiency by setting prices that reflect the cost of supply and distributing water would be the first step toward sustainable water management.
More on this latter.

Tuesday, November 12, 2002

In the Archives: Philosoblog
By chance I came across this post in John Quiggin's archives sometime in June 2002, just after he had started his weblog. He says that he is reading The Consolation of Philosophyby Boethius. "This work", John says, which was " written when the author (a 5th century Roman noble in the service of the Gothic king Theoderic) was imprisoned and awaiting execution, is the inspiration for the recent popular book by Alain de Botton. Is philosophy really a consolation in times of suffering? I don't know, but I also don't know of anything better."

I guess John allows a role for philosophy now at a time when it seems obsolete, superfluous and archaic in the corporate university. But he is unsure whether philosophy is necessary in a neo-liberal world. Just as there are many voices in economics so there are in philosophy.

Philosophy as consolation is one role for a humanities-orientated philosophy as distinct from a scientific-orientated one that is a part of, or integrated into, modern science. With the latter philosophy disappears---'the end of philosophy'---and is replaced by the social sciences. What hangs on in academia is usually made fun of by its detractors who convict philosophy of being the refuse of history or a dance of the bloodless categories. Philosophy under seige is part of the crisis, or failure of, the Humanities in the corporate university.

Philosophy as consolation is one variant of philosophy as a form of self-cultivation, self-formation, shaping the self as if it were a work of art or mastering one's life. If there is a postmodern ethics, then it roughly follows this option.

Philosophy as consolation times of suffering is not the only option on offer. We also have a literary conception of philosophy, a philosophy based on the interpretation of texts and associated with art/literary criticism. Marginalized since the nineteenth century as aesthetics this 'poetic philosophy' has been the main counter current to philosophy integrated into science. Nietzsche is the great exponent of the philosophy/literature relationship. In contrast, the literary critic Paul de Man, maintains that literary criticism and philosophy are not close and are doomed to remain far apart. Derrida's reconceptualisation of the relationship of philosophy to its writing is having an enormous impact.

We can also have the classical option of a therapeutic philosophy that cures us of poisonous beliefs and values that damage us, cause us to suffer and lead unhealthy lives. A therapeutic philosophy heals or eases human suffering through various strategies of argument to facilitate human flourishing. The ethical end or goal of the art of therapeutic is a certain sort of life, a flourishing life.

Another option is philosophy as critique, eg. of those, following Julian Simon who see environmentalism as hand-wringing, unswerving negativism. This form of negative thinking can be a critique of the univeralism of a modern enlightening science; of the modernist project of dominating nature through science and technology; of the grand narrative of progress; or economic rationality and growth. There is a lot of hostility to this modern conception of philosophy, especially in the political world, and a lot of effort goes towards dampening it down.

These various option enable philosophy to step away from the idea of philosophy as an academic discipline, speciality, or method that is favoured by professional philosophers and/or university teachers of philosophy. These options allow the practice of philosophy to escape its enclave within the corporate university and to step into civil society to find its feet as a reflective thinking reconnected with historical experience. It is a mode of comportment, a thinking for oneself, that recovers philosophy's roots in rhetoric. The danger here is that philosophy becomes idle talk or chatter.

Monday, November 11, 2002

In the Oz Blogworld Archives

It was so hot in Adelaide yesterday. It was just too hot to work or to sleep last night. So I cruised some of the USA blogsites (we regionalists do have one eye on international things) to check them out for some insights into how economists can help us solve our water crisis. But I spent most of the time looking at the fine work being done by our Oz bloggers. I was particularly taken by the freshness of zarook. So different to the weblogs produced by the men. I loved their Life in the cage. I have two young standard poodles of my own that are proving to be a bit of a handful.

I was cruising for insights. I was disappointed with a new book I was 'reading', C. Wheelan, Naked Economics: Undressing the Dismal Science. I took it to be a defrocking exercise from the title. Alas, it only described the workings of this social science for those who had passed Econ.101 but wanted to know about the big picture without the graphs, charts and equations. I wanted to go on with economics when a student, but I did not have a PhD in pure mathematics. Still, Naked Economicsis an ideal book for a fool, who has passed Econ.101, couldn't handle pages of mathematic equations about Platonic entities, and was tired of being treated as part of the Noah's ark of flat-earth advocates, protectionist trade unionists, romantics with fascist tendencies and yuppies looking for their 1960s fix.

In my wanderings I came across a piece from A Hail of Dead Cats circa 24 June 2002, that caught my eye. In A cocker spaniel's guide to human welfare Don Arthur wrote:

"Too many people with training in economics have little understanding about how controversial their assumptions are. Instead they think they're just being rational. They know little about the thousands of years of debate over what it means to live a worthwhile life or what a good society is. They don't know much about recent debates in the philosophy or the sociology of science (most still assume that there's a hard and fast distinction between fact and value). And they don't know how to have an argument about their own methodology and its ethical assumptions."

This pretty much states what I think about modern mathematical economics. This claims to be an even tougher, more systematic and rigorous form of scientific reason than a fundamental physics, which is in search of a theory of everything that could be written in a few equations on the back of a t shirt.

Then, in my wanderings, I came across the work of Alex Robson and his critical piece How to Argue with a Non-Economist, which is a review of a book by Lindy Edwards, the former advisor to former Democrats leader Natasha Stott-Despoja, called "How to Argue With an Economist". I was planing to read the book because of the title. What caught my eye was the deployment of rationality by Alex to show how hopeless the left are. It was aimed squarely at the fool's environmentalism I read on with interest.

Robson recycled the work of one Professor Thomas Sowell, of Stanford University, who wrote a book called The Vision of the Anointed. In this text he detailed the rhetorical methods that the Left use to support their views of social, political and economic issues to destroy Lindy Edwards. Alex says:

"Briefly, Sowell’s thesis is as follows: the articulate, well-educated anointed identify a particular “social problem”, and perceive that this is caused by the inadequacies of certain groups of individuals or social processes. The anointed then frame the problem as some sort of “national crisis” and, by professing superior knowledge and education about the issue, offer a categorical solution.

To identify the problem, create the crisis, and arrive at the solution, the anointed resort to argumentative means that are fallacious, meaningless and contradictory on multiple counts.

If the “solution” is actually implemented, the anointed then ignore evidence that it actually made things worse, and instead engage in self-congratulation merely because their “solution” was adopted."

The gap between the Don Arthur piece and that of Alex Robson is enormous. I was too tired and hot to think about the bridges last night or about the politics of compassion for those mowed over by competition, other than to think that there is little in the way of a dialogue going on here. My gut reaction was that Alex had set things so there could be no dialogue. The only ground acceptable was that of a freemarket economics whose well thought out policies for progress run into a brick wall of political opposition, corruption of minority interests and entrenched pork-barrel politics (eg. ethanol). I would leave the thinking for the morning when the cool south wind was blowing.

Let us take Sowell’s thesis about the rhetoric of the left identifying the problem, creating the crisis, and arriving at the solution, and apply them to the case I have been arguing about water online.

1. Robson says: 'The articulate, well-educated anointed identify a particular “social problem”, and perceive that this is caused by the inadequacies of certain groups of individuals or social processes.' WelI, I have identified water in the Murray-Darling Basin as a particular “social problem”, and I have perceived that this is caused by the bad practices of certain groups of irrigators and state government departments as well as the social processes of developmentalism. However, this is not just a "perceived" problem (in my head). It is a real one, and it is acknowledged as such by the Murray-Darling Basin Commission, the Federal Government the National Farmers Federation, and the Wentworth group of scientists.( For the latter see Wet about Telstra).

2. Alex would probably say that the ACF and Wilderness Society are the anointed, but it is hard to make a case that the above groups are the anointed. (Alex would probably knock out the Wentworth Group along the lines of the economists rejecting CSIRO science as dogmatic, not understanding markets etc.)

3. Robson says:' that the anointed then frame the problem as some sort of “national crisis”'. IWell, have framed the problem as some sort of “national crisis” --- an ecological crisis in the Murray-Darling Basin that has national implications because the Basin is the breadbasket of Australia. In this I am following the strategy of the Olsen and Rann Governments in SA.; the arguments advanced by David Kemp, Federal Environment Minister, in his Opening Address to the Murray Darling Association Annual Conference) in Whyalla (13 September 2002) and insights of Sharmon Stone, Parliamentary Secretary to the Minister for the Environment and Heritage, Opening Speech - National Water Conference) at the University of Tasmania (9 July 2002). It is enough of one for the Howard Government to launch a National Action Plan on Salinity and Water Quality a couple of years ago.

4. Robson says:'The anointed by professing superior knowledge and education about the issue, offer a categorical solution'. The solution that has been offered is sustainability, ie., ecologically sutainable development. However, I'm hardly professing superior knowedge or education ---I am but a fool in the world of public policy where the instruments of governance that drive water reform across the basin are primarily economic ones. All I am doing is asking questions ina Socratic spirit---scratching the back of the economic advisors to see where it itches.

5. Alex says:'To identify the problem, create the crisis, and arrive at the solution, [the anointed]resort to argumentative means that are fallacious, meaningless and contradictory on multiple counts.' In short the left is irrational. This is not so. The rhetorical strategy of the fool has been to work within the CoAG water reform policy and competition policy that is designed to create a more efficient allocation of scarce water resources. The fool then ask: does economic effciency produce ecological effectiveness? If so, then how? How will creating the foundations of free markets - private property rights, the rule of law, freedom of contract, and so on-- cut back the overallocation of water in the Basin or restore salinised landscapes?

What is being done by asking these questions is similar to that of Lindy Edwards. She says, in response to Alex Robson (refer to his blog), that the self stated goal of her book 'is to create a more productive dialogue between the advocates and opponents of free markets. It seeks to explain both sides of the debate, and to strip it of its jargon so that people can debate their ideas and values rather than simply sling mud from a distance.' This is important for policy people because they need to connect economics and politics, and secondly, political reason is a dialogic reason.

The Robson rhetorical strategy of deploying irrationality against those in politics does not work. To his credit, Alex offers a common ground between those in economics and politics, when he says:

"Without exception, behind every policy debate the issue is always the same: mercantilism and government intervention versus laissez faire and free markets. Some people look at the distribution of income and consumption and find that it is not what they think it should be, and want someone to do something about it. This is the way it has always been, the way it is now, and the way it always will be. "

The fool's argument is for the mecantilism/government intervention side. Intervention is required to rehabilitate the landscape, restore our rivers to health and to facilitate a more sustainable agriculture. To see what the powerful analytic tools economics can offer on water issues we can pick up Wheelan's Naked Economics. It is very light on environmental matters as you would expect, but it does suggest that the market can be used in imaginative ways to solve social problems. What it says is that we---governments---intervene to create a market in water, so that water resources are allocated through the pricing mechanism, and buying the right to water becomes a part of the cost of doing business. If we get the incentives right, then peole will have a reason to become more efficient in their water usage. What can then be spelt out is how prices work by allocating resources from low valued uses to high valued uses in the Basin.

This more or less is the CoAG strategy devised in the 1990s. Does this gives us sustainability? The section in Naked Economics ends with: "Markets don't solve social problems on their own (or else they wouldn't be social problems). But if we design solutions with the proper incentives, it feels a lot more like rowing downstream." (p.233).

This doesn't take us very far at all, does it? Maybe I will have to read How to Argue With an Economist after all.

Sunday, November 10, 2002

Note on Telstra/River Murray debate in public policy

Scott Wickstein's blog Telstra and the tale of the economists is a good response to John Quiggin's comment Gittins on Telstra. John's post picks up on Ross Gittens' critical response to some ministers in the Howard Government (eg., Nick Minchin) saying that it makes sense to sell Telstra and then to use the money to repair our damaged river systems .(For the comments by Gittens, see Government hobbyhorses as mental as anything). John says that Gittens is economically spot on with his mental as anything. I was a bit baffled by it all, I admit, but thats why I am a fool.

Scott, a staunch defender of the Howard Government, replies. He says that he 'must admit to being baffled by the government's public murmurings about the future of Telstra by the federal Finance Minister Nick Minchin. ( For Minchin's comments see my blog Ecologists vs Economists (9 11 2002) or BEFORE: Spend it on the rivers AFTER: Spend it on Debt).

Scott then asks: So why is Minchin "sprouting nonsense? Do I smell the wiff of pork pie in the wind? I love the smell of pork in the morning. It smells of politics". He comments:

"The government knows as well as anyone that you don't focus on debt reduction while interest rates are so low. They want that $30 billion for a raft of spending on vote-winning symbols. The government has it's ear to the ground very closely ... And the drought has put people's mind to the environment as never before.

My own guess would be that the government would like to divvy up the alleged $30 billion thus- $10 billion on the rivers, $10 billion on a tax cut, and $10 billion on defense- HMAS Showboat might be on the cards.

Economists are people that sit around and think economic thoughts all day. Politicians are people that sit around and think politics all day. So if you want to understand what's on their mind, think politics. The economic havering that's going on does suggest that something's up".

This is right. Politics rules economics. And something is up. Water is being taken seriously. Scott's remarks succinctly spell it out more accuratelythan my one line comment in Big shift in public policythat water has become a core issue in public policy; or my long attempt to argue that water has been piggy-backed into the policy centre on the back of the full privatisation of Telstra in Testra, River Murray and the Media. I would concur with Scott that the current drought keeps the politician's focused on water----it is the life-support for the economy and society.

Now Scott's porkbarrelling argument counters my cut and paste use of Margo Kingston's judgements in her webdiary piece, Election Watch, to say that Howard will use his newly-forming nation-building heritage thing on water to cut the green ground from under Labor Party's feet.

Labor is not travelling well here these days on this terrain. In his Address to the Tasmanian ALP Conference (26 October 2002), Simon Crean, the Leader of the Opposition, said in passing:

" We're also committed to a national water policy. To tackle salinity, to tackle landclearing, better drought preparedness. Our commitment when we were in government through both Federal and State levels for the Regional Forest Agreement. Getting the balance right between protecting our forests but also protecting our jobs. Its the Labor way. Its the correct way. And also our commitment to protecting the Great Barrier Reef. The point I'm making to you delegates is this. The difference between Labor and the Greens is that we have to act and we want to deliver. We are the alternative government. What we put forward has to be capable of delivering not just sounding good rhetorically. Thats the difference between us and them. We have to develop, continue to develop our environmental credentials through Labor values. We will promote our green agenda, but we won't promote the Green agenda. Its got to be a Labor agenda that's green, not someone's agenda".

There is little by way of policy content here. Scott, no doubt would be pleased as it gives the Howard Government the policy edge. I notice that there is nothing about a commitment to saving the River Murray. I'm not happy Simon.

As for the porkbarrelling line run by Scott? Well, SA is the downstream state with little power in the federation. It is going to need all the porkbarrelling that it's state and federal politicians can get, if it is to ensure that the other basin states come to the party to save the River Murray. They are not particularly interested in helping out at the moment. Politics is not always about buying off the punters with greenwash, which is what the Bracks Government is doing in Victoria with the Otway Ranges Bracks pledge to save forests.

Comment on the State of South Australia

Greg Kelton, the state political reporter, writing in the The Advertiser on Saturday refers to a second report published by the Economic Development Board on the regeneration of the SA economy. This one (the name of the Report is not mentioned by Kelton) is another pathfinder report. (There is no link to the Kelton article, "Now we must get down to business-or else,' on p. 8 of The Advertiser). According to Kelton, the Report says that in a global marketplace ruled by competition, SA needs to build a new export strategy to regenerate the SA economy.

What the report says confirms the concerns I raised in my post last Thursday about the lack of intellectual grunt power around the use of 'sustainability'. It is all about sustainable economic growth not ecologically sustainable development.

The export case put by the Economic Development Board says that SA cannot rely on the local market alone for economic growth. It has to export.

"Increasing the range and value of exports, together with the number of companies exporting product from the state, will have significant benefits to the broader community. If SA is to compete and prosper in the global economy, the importance of developing and implementing a focused, targeted export strategy, which is wholehearted embraced by both the private and public sectors, cannot be over-emphasised."

The Board basically says that the Government should not be the initiator and provider of funds, since SA companies need to lead the way. The wine industry did it. It is a guide to what needs to be done. Industry should provide leadership and commitment from the outset.

This is almost an economic truism and it recycles the economic wisdom of the 1980s: the expansion of trade and investment will increase wealth, and more people will share in the fruits of the booming economy. SA basically missed out on the expansion of global trade and investment in the 1990s that expanded the economic cake. It was too isolationist and insular and it is in danger of becoming an economic backwater. SA is now on the wrong side of the growing regional inequality in Australia. So SA needs to plug in, get connected, implement more microeconomic reforms and play catch up in embracing change. There is no alternative. It is that simple.

The fool begs to differ. The impressive growth of the wine industry in the 1990s was based on running down what economists call natural capital----especially the overuse of groundwater in the aquifers of the Barossa and Angas Bremer (Langhorn Creek) regions. That is why they've built private pipelines to the River Murray. That present path is unsustainable and doing nothing is not an option. There appears to be nothing in the report about economic growth avoiding the running down our natural capital. That conception of sustainablity---eg., reforming the agricultural practices that damage the environment----is still missing from the Economic Development Board's thinking, even though it would acknowledge that regional environmental problems are getting worse. (See comments on sustainable agriculture by Russ Grayson in Time for the cities to stop bailing out farmers).

As John HiIl, the SA Environment Minister, keeps telling us, there is a pressing need to protect the commons (the River Murray) because too much pressure has been placed on its ecosystems.

John Hill is right. Let me speak plainly. The consequences of unsustainable agricultural practices is that large tracts of SA are now ecological basket cases. The damage has gone too far and they will, in all probability, be sacrificed. They are ecological triage cases. 'They' refers to Eyre Peninsula, the Spencer Gulf, large tracts of the upper south east and the Mallee. The prospects of recovery in these areas are not good and their restoration will be expensive. SA does not have the money to rehabilitate these landscapes and the Commonwealth will get more bang for its buck by spending the money elsewhere.

So it is not simply the case that the Rann Government should be just a good economic manager that ensures strong and sustained economic growth to increase the incomes of its population. We in South Australia have to be a lot smarter than repeating the old script of the 1980s and 1990s. Or saying that economic growth has costs and it is what we have to live with.

In a comment article, "D-day for a state in the shadows", in the Saturday Advertiser (on p.34), Greg Kelton says that the areas that both the SA Government and the Economic Development Board will address are population, growing exports, higher education, government efficiency and leadership. Reports on this aeras will lead up to the major strategic plan in March. There is nothing here about ecological sustainability. And the export report shows that ESD is unlikely to be included in the consideration of the other areas. So ESD drops away into the background.

Kelton quotes the SA Premier, Mike Rann, as saying that..."we don't have any option but to embrace change and to be a Labor Government which is going for growth. We canot afford to preside over continuing decline." Kelton adds that Rann wanted the Board to give his government tough challenges about embracing an economic strategy with vigor and purpose. Rann then adds, " Our guarantee is we don't have any option but to back this board."

This looks like a government that will go for economic growth at the expense of the environment. The Economic Development Board is doing the thinking for the Rann Government.