Magna Carta and ‘vox pop’ democracy

Intriguingly there are two substantial permanent monuments to Magna Carta at Runnymede. Both are American. This one was erected by the US Bar Association in 1957.

I was recently asked to participate in a panel discussion on Magna Carta and our democracy by the Australian Archives. The discussion will be replayed on Big Ideas on Radio National this coming Monday 20th July (now here), but you can watch the proceedings here if you’re especially keen. In the meantime, mostly over the fold below here’s a blog post I did in preparation for the event. It’s on the NAA website here. I have also drafted an additional one with some specific suggestions above and beyond a People’s Chamber, which I’ll post in the not to distant future.

It was an enjoyable process (though I was half inside a cupboard so lavishly spaced are the hotels of leafy London.) The panel was dominated by lawyers, the most eloquent of which I thought was Gillian Triggs, but over the course of the discussion, it dawned on me how much they were gravitating towards solutions that would be imposed by lawyers – all very well paid for their time I hasten to add, though that’s not the main point which is that they are an elite – indeed an elite elite. I think we need to do better than that. You can hear two different approaches to doing a bit better than that. More participatory approaches – championed by Pia Waugh particularly, and more deliberative ones championed by me.

(Apropos of nothing much, Magna Carta had standards in it – weights and measures for wine and other things – just as Hammurabi’s code did. You just can’t keep those emergent public goods from emerging and then attaching themselves to governments to improve their situation.)

If we compare our own system of government to King John’s government – either before or after Magna Carta – there is no comparison. We have a robust democracy rather than a tyranny at the very beginning of a centuries long process by which the West came to impose the rule of law on its rulers. In contrast to the barons of thirteenth century England, if we’re unhappy with our government, we vote them out.

Yet all is not well in our democracy. Continue reading

Syriza: the latest disaster for the left

I don’t have much time to offer anything very considered but want to just say how bemused I am at the carryings on of Syriza. The whole sorry business has been horrible to watch with creditors showing no interest in their own self-interest let alone a little enlightenment in their self-interest. But the Syriza Government? I was and remain a huge fan of how coherent and compelling Varoufakis was in articulating his case – of Syriza’s arrival as some kind of circuit breaker that might rescue Europe from itself as it rescued Greece from Europe.

But to negotiate properly, to negotiate as a broke borrower, you have to be able to show how you’re going to make your loan the creditor’s problem – not just your own. That requires a Plan A – in which the creditors and the borrower negotiate some mutually satisfactory settlement and this needs to be done with a Plan B clearly in view in which the creditors lose their shirts – and the borrower recovers.

I’ve always been kind of surprised at Syriza’s commitment to the Euro. Not that it wouldn’t be saying that it would strongly prefer an outcome in which the Euro remains its sole currency, but that that is all contingent on satisfactory negotiation. And to negotiate credibly in that situation one needs a clear Plan B. Perhaps it might make sense to conceal the plan for a while. But here we are at the end game and there’s no Plan B.

The referendum is a bizarre plebiscite on . . . well no-one really knows what it’s about. The Greek people get to vote on whether they will agree to the Troika’s terms. Those terms are not current. They’ve been withdrawn. Now they’ll probably be back on the table if they Greek’s vote ‘Yes’. But if they vote that way – presumably Syriza’s days are numbered – if it doesn’t resign immediately. And if they vote “No”. Well it’s completely unclear what that means other than that the Greek populace are where they were when they elected Syriza which is to say that they don’t want to pay their government’s debts. Well so what? The German populace want them to pay those debts. So where does that get us?

If BHP Billiton owes NAB a billion dollars, it’s not a very compelling result if a plebiscite of its shareholders say they’d rather not repay the loan. So we have Plan A which is that the Europeans offer Greece a deal that they won’t offer them, and Plan A with a tantrum, which is to say that the Greeks come back to the negotiating table saying “you know how we said we really don’t want to repay the loans. Well we really really don’t want to repay the loans. What do you say now?”

And the thing is that this seems of a piece with the left in so many instances – utterly lacking in the courage of what they claim are their convictions.

The generative commons of generalised social capital

Paul Krugman has an interesting blog post on the extent to which there might be contagion from one area of social capital (or lack thereof) to another. He’s responding to the claim CEOs made to him that they only started arcing up their pay demands when they saw sportspeople doing it. And we can all understand the micro-foundations for rises in superstar sportspeople – local sub-urban live audiences morphing into TV audiences at the city, national or global level.

One of the things that’s gradually been happening over the same period is a kind of leeching away of general social solidarity. The most striking aspect of this is a stat I heard on Radio National’s All in the Mind. Asked of the importance of “being very well off financially”

The latest data from 2013 for entering university students here in the US, 82% say that that is an important life goal. And back in the late ’60s and early ’70s only about 45% said that was an important life goal.

Continue reading

Politics in the Courtroom: Political Ideology and Jury Decision Making

by Shamena Anwar, Patrick Bayer, Randi Hjalmarsson. Publication is available here.

This paper uses data from the Gothenburg District Court in Sweden and a research design that exploits the random assignment of politically appointed jurors (termed naemndemaen) to make three contributions to the literature on jury decision-making: (i) an assessment of whether systematic biases exist in the Swedish naemndemaen system, (ii) causal evidence on the impact of juror political party on verdicts, and (iii) an empirical examination of the role of peer effects in jury decision-making. The results reveal a number of systematic biases: convictions for young defendants and those with distinctly Arabic sounding names increase substantially when they are randomly assigned jurors from the far-right (nationalist) Swedish Democrat party, while convictions in cases with a female victim increase markedly when they are assigned jurors from the far-left (feminist) Vaenster party. The results also indicate the presence of peer effects, with jurors from both the far-left and far-right parties drawing the votes of their more centrist peers towards their positions. Peer effects take the form of both sway effects, where jurors influence the opinions of their closest peers in a way that can impact trial outcomes, and dissent aversion, where jurors switch non-pivotal votes so that the decision is unanimous.

Overton Window – Overton Juggernaut: Part Two

Negus

Well folks, when I put “Overton Window – Overton Juggernaut” into Google and looked for an image, this came up naturally enough. If the cap fits . . .

Continued from Part One yesterday.

Over the last few years, there been a sense in which we didn’t like cutting cash rates to bring them too close to zero. Thus amidst fiscal contraction – initially quite strong as the one off aspects of the fiscal stimulus ceased – though tailing off in severity, and then mining investment boom came off, the RBA showed it’s penchant for very gradual easing (never cutting rates by more than 0.25% and then usually stopping for some time before the next rate cut). For the last few years, we’ve witnessed a situation where the government has been committed to gradual fiscal contraction – however successful it’s been at getting it through the parliament – and the Official Family have forecast slack in the economy to remain for a considerable time. In its February 2012 Statement on Monetary Policy the RBA suggested this:

Employment growth is expected to remain fairly subdued in the first half of this year . . . and the unemployment rate is expected to increase modestly. Employment growth is expected to begin to strengthen later in the year [with] the unemployment rate . . . expected to decline modestly over the later part of the forecast period.

By May 2012 output was forecast to average a sub-par 3% through 2012 and then grow to a sub-par 3–3½% in calendar 2013 which would be consistent with unemployment either remaining high or drifting higher. By Feb 2013 this was the RBA story:

Employment growth has remained subdued in recent months, with the unemployment rate drifting gradually higher. . . . Employment is expected to grow only modestly in the near term, broadly in line with the outlook implied by a range of leading indicators. Employment growth is then expected to pick up gradually, but to remain below the pace of population growth over most of the forecast horizon. Accordingly, unemployment is expected to drift gradually higher. Continue reading

Overton Window – Overton Juggernaut: Part One

Overton Window diagram.svgThe Overton Window is a quite well known expression describing the demarcation between political/policy discussion that is and is not acceptable in mainstream discussion. Sometimes what removes your idea from the window is that, whatever policy merit it might have, it would arouse the politically powerful and so ensure that it could only be implemented by democratic politicians with a death wish. This ‘rational’ interpretation of what’s in and outside the window is the one illustrated in most of the illustrations from which I took the one above. But a lot of the demarcation is much more arbitrary than that. It’s often just about what’s getting talked about. <MixedMetaphorAlert>So I have at least one policy horse in the race that’s outside the Overton Window for the classical reason that half a trillion dollars of market capitalisation of banking oligarchs would be seriously inconvenienced by it.</MixedMetaphorAlert> But other policy proposals of mine aren’t like that. They’re typically moderate, low or very low risk with high to very high potential payoffs.

So why aren’t they talked about? Well no reason really. They’re not talked about because they’re not talked about. Well they’re talked about by me. And when I give a presentation on them, people often respond as if they’re positively elevated to hear them. They complement me on how ‘lateral’ they are. Just hearing such ‘out of the box’ thinking makes them feel more innovative. They sometimes say I really should come and give a talk to their whole management group or some subset of it. They sometimes, though much more rarely, make that happen. And then they get back to their in-tray.

When I was working for the Business Council of Australia I once tried to sell independent fiscal policy to Australian Democrat Treasury spokesperson Andrew Murray. After my presentation he was very complimentary and asked if I couldn’t perhaps get anyone really important to publicly endorse the idea. It’s a reasonable question from him, as a person with limited expertise and resources at his command he needed to protect himself against crank proposals or proposals that earned him the ire of the powerful. I suggested he ask Ross Garnaut what he thought of the idea, but in the end Senator Murray just got back to his in-tray. And somehow most of the gatekeepers to the Overton Window don’t see it as their role to widen it in helpful ways.

They all get greater kudos for entertaining more mainstream thoughts, like “how soon should we balance the budget?”, “do we need more workplace flexibility?” or “will the RBA cut cash rates at it’s next meeting?” or that perennial “what’s the outlook for the Hawks next week the economy and how does [insert important person/institution] think it will go?”. Another fave is “how can we get back to the glory days of productivity growth?” (so long as it’s a well understood answer – like “more micro-economic reform” – which will be just like what we already know from the glory days of reform).

Those ‘out of the box’ the ideas I’ve sketched out often arise from a little reframing of an issue. So they’re not answers to well known questions – which very often come in the form of “should we spend more or less money on” or “should we tax this or that activity more?” complete with a quick cross to the interest groups who can be relied upon to slip into the trenches lobbing soundbites back and forth across the terrain of interests and ideologies. Continue reading

Professionalism as tyranny: a liberationist fantasy

‘People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public’ - Adam Smith

Adam Smith put it memorably above. I’ll be forever grateful for my time at the Australian Centre for Social Innovation because it has shown me the generality of that statement. Whether Smith intended it or not, it applies not just to businesspeople of the same trade, but to professions. And it applies not just to the professions whose anti-competitive practices are familiar to us all – lawyers and medical specialists for instance. The behaviour of these high status professions is consistent with the entire sentence from Smith which ends “or some contrivance to drive up prices”.

Some of the lower status professions also try to use their political power to drive up their own wages and, leaving aside the vexed question of the political and economic means by which their campaigns might be waged, I have a lot of sympathy for their desire to be paid and treated better than they are.  I’m talking of teachers and nurses most particularly, but I could be tempted to add academics and various others. However, often in an almost thoroughly well-intentioned way these professions exercise a kind of tyranny in the way they work. They see things in a particular way and, because they are either in charge of or an integral part of the functioning of some important social institution, it gets built around their world view. This is the meaning of the marvellous French expression déformation professionnelle

As I recounted in my speech launching the Centre’s family mentoring programme in Mt Druitt:

These are the words of Mystic (pronounced Mystique). She’s 21 now but was in out of home care since she was 3.

It happened so quickly. Once I turned 18, they sort of kicked me on my arse. They said ‘here’s $750, see you later, thank you’. And I’m just like ‘what the hell?’. A book and $750. That’s for being in care all your life.

Actually it makes you feel like an outsider. It makes you feel non existent on this earth. Like you are an alien. It does. It affects when you go to school too. You’re so used to being called ‘client’ and stuff that you start looking at yourself different to everyone else.

That ladies and gentlemen of the Tropposphere is, to purloin and marvellous expression of William Easterly’s the “cartel of good intentions”, or do-good professionalism as tyranny. Why is this tendency so strong and what could be done about it. Both good questions, but this post is dedicated to a fantasy of how it could be – to a bit of rhetoric. The sentiment might be said to be utopian I guess, but it’s not devoid of seriousness, or even practical import of some kind. Recall that, not only are the professions full of people who have taken them up for real love of the texture of the work, the intrinsic reward for doing it well and for the good they do, but professions are all built implicitly and often explicitly on noble ethical commitments – like the doctor’s to do no harm, the lawyers to uphold the rule of law ahead of the rule of men and the generalised duties of care of the many caring professions.

In any event, when I read Albert Camus’ magnificent lecture accepting the Nobel Prize for Literature for the first time, inside my brain the speech morphed into one in which Camus used the word ‘professional’ wherever he had used the word ‘artist’ and mutatis mutandis for all the associated derivatives of both words. This is what I read: Continue reading

Some stimulating debate on the sensitive subject of gender differences in specific cognitive abilities

On a difficult subject, let’s throw the conversation over to some people who know nothing about it, but who have flawless makeup on and vigorously assert mutually inconsistent propositions. If you think the first 90% of the video is exemplary, wait, there’s more – when the panelist asks whether it might not be time to talk about her again – and return to the subject of how ‘hot’ she is – and then tops it all off with a truly masterful summary of her position.

The original article that sparked the celebrities’ analysis is here.

Neoclassical economics: what is it good for?

Michael Leunig says the tough economic times will plant seeds of change and happiness.I sent the passage below to my friend Alex Coram noting “I like this post from Brad Delong – though you may not”. Alex, you see, has a deeper understanding than me of these things. I was right – he wasn’t that impressed – but for reasons that I also agreed with and might have offered if I were not a thirsty man in a desert.

I think that modern neoclassical economics is in fine shape, as long as it is understood as the ideological and substantive legitimating doctrine of the political theory of possessive individualism. As long as we have relatively self-interested liberal individuals who have relatively strong beliefs that things are theirs, the competitive market in equilibrium is an absolutely wonderful mechanism for achieving truly extraordinary degree of societal coordination and productivity. We need to understand that. We need to value that. And that is what neoclassical economics does, and does well.

Of course, there are all the caveats to Arrow-Debreu-Mackenzie:

  1. The market must be in equilibrium.
  2. The market must be competitive.
  3. The goods traded must be excludable.
  4. The goods traded must be non-rival.
  5. The quality of goods traded and of effort delivered must be known, or at least bonded, for adverse selection and moral hazard are poison.
  6. Externalities must be corrected by successful Pigovian taxes or successful Coaseian carving of property rights at the joints.
  7. People must be able to accurately calculate their own interests.
  8. People must not be sadistic–the market does not work well if participating agents are either the envious or the spiteful.
  9. The distribution of wealth must correspond to the societal consensus of need and desert.
  10. The structure of debt and credit must be sound, or if it is not sound we need a central bank or a social-credit agency to make it sound and so make Say’s Law true in practice even though we have no reason to believe Say’s Law is true in theory.

An adequate undergraduate economics major will spend due time not just on the excellences of the competitive market equilibrium, but on these 10 modes of market failure, and in so doing become, effectively, a history and moral philosophy major as well.

A first-rate undergraduate economic major will also spend due time on government failure and bureaucratic failure, and thus reach the very economic conclusion that there are substantial trade-offs, and we must pick our poison among inadequate and imperfect alternatives, even in institution design.

In any event Alex disagreed in terms that I completely agree with as below: Continue reading