Something I picked up recently in San Francisco. OK I don’t own it, but got to play with one waiting in a queue and talking to a developer waiting to get into a function at the conference I was attending. I was impressed. It looks a bit weird, but you ignore it until you want to look at it, at which point you look up and to the right a little and there, apparently a foot or so from your head is a little TV screen.

I liked the way they’d set up the interface which, as we’ve known ever since the Mac is the secret source of a great IT product like this. You talk to it and ask it to look stuff up, show you stuff, take pictures etc. And you can gesture to it by running your finger along the side of the black plastic near the eye-piece. This works like a scroll bar or dial and you can replay your day and generally use it to help you access files.  One of the people in the queue said that it would likely replace a lot of smartphone use. One’s phone would stay in one’s pocket and you could use Google Glass to consult it most of the time, and you would then take out your smartphone when it was particularly apposite. I don’t know if that will happen, but I could see why he thought that.

Anyway, I was impressed. I doubt I want to be a leading edge user, but when they get it (even) better and cheaper, I might well be in for my chop.

…“My problem is not,” [writes Alecia Simmonds], “that our public sphere harbours ill-educated members (like the imbecilic Andrew Bolt who never made it past first-year uni).”

Sorry? Anyone who doesn’t possess a university degree is an imbecile? That would be some 60 per cent of the working population, casually dismissed as moronic. Going to uni might not, in and of itself, make you a member of an elite. But class, ethnicity and geography still play a major role in determining access to higher education. It behoves progressives – particularly those in academia – to remember that there’s plenty of very, very bright people out there who never attended a university but who nonetheless might have something to say…

…Take the passage above. Andrew Bolt an imbecile? It might console those on the Left to think so but the notion’s entirely ludicrous.

In reality, Bolt’s a talented prose writer, adept in the tabloid genre. He’s a powerful speaker (as anyone who has seen him ruthlessly destroy academic critics in public debates would know) and an extraordinarily effective populariser of ideas. Andrew Bolt is conservative and many of his ideas are repellent. But it’s ridiculous to call him stupid on the basis of how many university degrees he does or doesn’t possess.

Now compare Simmonds’ description of Australian academics.

“Academics may also not want to enter public debate. And I can understand why. Firstly, they receive no rewards in terms of career advancement for writing for the public. And secondly, many may not want to engage with a knife-drawn public prone to Goldstein-style Two-Minute Twitter Hate Rituals. Academics are often timorous folk who specialise in showing the complexity of issues, not offering tweet-sized solutions. Social media doesn’t democratise debate. It limits it to the resilient. Snark triumphs over insight, and commentary is reserved for those with voluminous folds of scar-tissue. Sensitive thinkers rarely fit this bill.”

Academics don’t want to engage with public debate because it won’t advance their careers – and also because people might say mean things about them. They’re sensitive, don’t you know!

Does this not perfectly exemplify the problem with the liberal Left? Rather than fighting the Right, liberal academics want to be treated like philosopher kings: protected from snark and richly rewarded any time they deign to comment on public events.

Instead of dismissing polemicists like Bolt, the Left might do better to ask why we lack anyone of a similar calibre…

If I weren’t plagued with ruminations at the moment I might have a few things to add on this subject myself.

One can see the main learning challenges in Australian schools as related to the quality of what is taught, the quality of who is teaching, and the quality of the school as a whole. Three main issues then come to mind:

1. The curriculum is often too influenced by political concerns and of low quality.
2. Teachers are relatively low paid, and have seen their relative wages drop over many decades, leading to the newer cohorts of teachers to be less good as the old ones.
3. Failing schools are kept going rather than replaced, effectively leading to whole neighbourhoods being bereft of good educational opportunities.

On top of this, the sector has governance issues, like a large education bureaucracy both inside schools and outside of them, but since we are here ultimately interested in the transmission of knowledge, let us focus on the problems at the coal-face and talk about the governance issues when they arise.

Now, on point 1, I am optimistic about the role of the National Curriculum that was recently introduced. It will make it visible what the educational problems are in parts of the country, most likely will lead to a set curriculum and thus a set textbook and teaching aids for all subjects, and should hence significantly raise the bottom of the education distribution (though I don’t think it will matter for the top). Whilst one cannot really see this dynamic yet on the ground, in which schools and states are just getting used to the idea of a national curriculum, one can argue that other countries that have a national curriculum have indeed gone the way of raising the floor (NZ in particular). Given the competitive mindset of the Australians and the fact that you now get frequent international comparisons, I do expect the political pressures to accumulate to use the national curriculum to improve what is taught and how it is taught. In short, I think the signs are good in terms of addressing problem number 1.

Point 2 is a very tricky one because of the fact that we have a large stock of teachers who accept the current wages and hence would not change their behaviour if you increased their wages. This means education authorities, school principals, and ministers have a strong incentive not to raise teacher wages except for the new entrants. However, if you would cheat the stock of existing teachers and only increase wages for the new teachers, you quite understandably run into opposition from the union on equity grounds. Similarly, having schools compete for teachers by letting the good schools offer better teachers higher salaries needs active competition and would probably only happen if the private schools expand and become more academically focused (rather than focused on local networks or particular religions). In short, the pressures from within the sector don’t look like leading to higher teacher pay at all, even though it is well-recognised that better teachers are the main thing that leads to improved education.

Whilst the federal government could explicitly raise teacher wages, the current reforms do exactly the opposite: to partially fund the Gonski reforms, the government is discontinuing the current policies of paying some teachers extra, and the policies under which principals can reward good teachers (and many commentators seem not to realise that the main benefit of paying teachers more is that you attract better people into the profession). In exchange for this effective lowering of teacher pay, it seems likely that it is the already overly large education bureaucracies that will get discretion over how to spend more money, and only non-economists could believe that they are going to spend most of the money on improving education by attracting better teachers into the profession by means of higher wages, rather than to predominantly use the money to hire more and better paid bureaucrats. Indeed, even if the local education bureaucracies were far-sighted and truly interested in teaching outcomes, it makes no sense for them to individually increase teacher pay because aspiring teachers do not know where they will work and hence base their entry decision on the average pay in the whole sector, implying that it needs a central push to increase teacher pay across the board. Given that Gonski seems to imply local authorities get discretion, we are talking about a clear missed opportunity in terms of teacher pay.

The third problem is the trickiest of all and has bedeviled most education reforms and flummoxed many economists too.

The essential problem with failing schools is twofold: their initial failure leads to lock-in effects such that they become hopeless in nearly all dimensions (teaching, parents, pupils), whilst there are enormous political transaction costs in actually closing down a school. Let me expand on both.

Schools can fail for many reasons, just as a marriage can go sour for many reasons. Schools might have a particularly bad principal, have particular drug-prone and aggressive students, might suffer from parents who see the dominant culture as something to be actively resisted, have open warfare between clubs of teachers, etc.

Like a failing marriage, once a school starts to fail, the problems tend to get worse and worse. Good teachers will leave a failing school and try their luck elsewhere. Good pupils will leave to go to other schools. Active parents will similarly take their children elsewhere. So over time, a failing school gets stuck with the most demoralised and least skilled teachers, the most disruptive and dumb pupils, the least interested and least active parents, and a run-down building to boot.

Now, economists know exactly what should happen in such a case: you basically want the whole school to be disbanded. You don’t merely want new management, because new management would still inherit the disruptive culture amongst students and parents. Similarly, a small influx of better pupils or parents wouldnt help much either. No, what you want is for all the teachers, parents and pupils to have to find a better school elsewhere, cap in hand. That’s what happens in a market: what is efficient and productive survives, what is not disbands such that the individual elements can become part of successful entities elsewhere.

Why do you want to destroy the old school rather than reform it? Basically because you want to force the disruptive parents and the dispirited teachers to enter a different culture in which they are the small minority: you want the disruptive kid to go to a school where the disruptive behaviour is not merely frowned upon by teachers, but actively discouraged by the peers in the class. You want the dispirited teacher to go to a school where the other teachers are optimistic and things are run well, so that that teacher rediscovers the good parts about teaching. Etc. Effectively, you want teachers, parents, and pupils to get away from cultural lock-in effects (called peer spill-overs in the jargon of this literature).

Now, here is the rub: destroying an existing school comes with huge initial transaction costs. You force individuals to go to schools further away (a big no-no in policy land, particularly when pertaining to Aboriginal kids); you are stuck with a large expensive property unsuited for anything else; and you would have to pay out redundancy packages for the teachers and actively find places for the pupils.

It should be clear that this disruption is politically very unappealing and a nightmare administratively. So the local politicians and education bureaucrats would usually prefer to have the next generation of local children get no decent education than go through the pain of this disruption. This selfishness on the part of politicians and bureaucrats, by the way, is normal since it is the usual tradeoff between visible short-run pain versus uncertain long-term benefit. It is exactly the same when it comes to bankruptcy of large corporations: politicians don’t want to be seen to be responsible for those forms of short-run pain either.

Now, it is in this realm that the Gonski reforms will succeed or fail. The headline promise is that funding will follow students (a voucher system), which in principle means that good schools can outbid bad schools, that new schools can come in, and that bad schools can thus go bankrupt, to be replaced (potentially in the same location some time later) by good schools.

Will this really happen though, and in particular, will local education authorities allow bad schools to disappear and be displaced by (Christian) private schools or more successful public schools, as many commentators seem to hope? I have my doubts: I find it hard to imagine that local politicians and bureaucrats will not actively sabotage or try to undo any existential threat to bad schools. They simply have too much to lose politically not to engage in ‘emergency loans’, ‘visitation committees’, ‘additional resources’, etc.

I find the following quote by the teacher union ominous as to what will really happen with the Gonski reforms: ‘‘What Gonski proposed to do is not pay teachers but instead direct resources into schools to allow students who are disadvantaged, by a whole range of circumstances, to get better outcomes for education’’. My my, that sounds pretty bad, doesn’t it? The unions clearly don’t think the additional resources will go either to improve teacher pay nor to the disbanding of failing schools. They seem to hope it goes into the bottomless sink of administrators ‘helping’ failing schools.

In this respect, the post-Gonski environment will probably offer a lot of scope for fudge and for rewarding failing schools rather than killing them off. For instance, local education authorities can then easily discover a whole set of mental learning difficulties amongst the pupils of a failing school, thus allowing them to send in an army of monitors who will set ‘performance criteria’. Similarly, they can engage in the ‘let us try new management’ trick, thus ensuring not much changes in the medium run. In short, I fear that the potentially positive aspects of the Gonski reforms are easily sabotaged and that we will end up with more education administrators.

My hope is that the National Curriculum will break the political dead-lock over failing schools: that open league tables will start to make it so clear which schools are really bad, that education authorities will bite the bullet and truly let some schools go under, replaced by better ones. But I am not holding my breath on this.

In the short run however, the resources for Gonski seem partially to come from reducing teacher pay (via the axing of bonuses), which is a clear turn for the worse in terms of attracting good new teachers. Australian education just got a little dumber again.

Readers ask, we answer! What happens if you don’t pay Obamacare’s tax penalty?

Gene is a self-employed New Yorker who currently purchases his own health insurance. He also is a strong opponent of Obamacare. And starting next year, Gene plans to drop his health coverage in express protest of the health law’s mandate.

“I will cancel my insurance the instant I can no longer be denied insurance for preexisting conditions,” Gene wrote in an e-mail Sunday night. “I will not fill out the special IRS form.”

Gene asked that I not use his last name as he’s talking specifically about disobeying a federal mandate…

“I am especially interested to know what happens, if anything, when my 2013 federal tax return does not include the Obamacare form and when I refuse to comply with any request to produce one?” Gene asked in his e-mail. “Am I correct that if I do not provide the form, there is nothing the IRS can do to me? And if they can do something to me, what is it that they can do?”

To answer these questions, I called up Catherine Livingston. Up until January, she was the health-care counsel in the Internal Revenue Services’s Office of Chief Counsel. She now works as a partner at the law firm Jones Day.

The first thing I asked her was what happens if you don’t send in a form that specifies whether you do or don’t have insurance coverage. That, she told me, isn’t actually clear yet.

I’ll skip over the intricacies of US tax accounting and tax law that follow. What’s interesting to me in this post is Gene’s cunning little plan to avoid paying the $95 tax penalty he might incur by dropping his health coverage:

…In 2014, the health law includes a $95 penalty for not carrying health insurance. This penalty is administered by the Internal Revenue Service through the tax return system. In order to collect, the IRS will typically dock that amount from an individual’s tax return.

Gene has, however, already thought this issue through. He plans to adjust his “quarterly estimated payments to ensure I do not have a tax refund, which I understand to be the only source from which the IRS can extract any penalties that I refuse to pay voluntarily.”

This, Livingston said, is actually a strategy that might just work. For that to happen, the tax filer would need to be cognizant of the estimated tax penalty, which the IRS can levy against filers that pay far too few taxes. But keeping that in mind, dodging a refund could mean dodging the mandate fine.

“The needle you would have to thread to execute this is making sure you’ve paid enough taxes to avoid the estimated tax penalty,” Livingston said, “But not so much that you would get a refund.”

Let’s assume that Gene’s objection to Obamacare is so strong that he’s actually prepared to drop his health coverage and make a special effort every quarter to ensure that he doesn’t qualify for a tax refund, thus avoiding the $95 penalty for not carrying health insurance. What is he actually doing?

First, of course, he’s leaving himself dependent on public health care if he should suffer a major illness or injury. Or exposed to bankruptcy if he seeks private treatment of such a major illness or injury. But maybe he considers those acceptable risks. Now let’s consider the effect of this plan on his finances.

Suppose, that while Gene is preparing his tax return he discovers that he’s due a refund of exactly $95. He carries out his cunning little plan and adjusts his return to ‘dodge’ his refund. Has he dodged the $95 tax penalty? Of course not – he’s merely saved the US Internal Revenue Service a bit of paperwork.

But what if Gene’s refund is considerably more than $95 – say $200? Once again, he carries out his cunning little plan and adjusts his return to ‘dodge’ the refund. Now his efforts to dodge the $95 tax penalty have cost him an additional $105. In protest against – to his mind – an unfair tax impost he’s actually paying more tax than he has to. And voluntarily to boot.

There’s a well known phrase to describe this sort of behaviour. Something about ‘Cutting off your nose…’. Gene’s plan is so cunning you could stick a handle on it and call it a hammer.

Timothy’s first and main empirical finding is that “Overall, the average compensation of a top 100 US public university president is A$480,409; that of a UK vice chancellor A$456,867; and that of an Australian vice chancellor A$721,607. ”

Now, that sounds like Australian Vice-Chancellors are ‘only’ paid some 155% of the compensation of equivalent US and UK Vice-Chancellors, doesn’t it? Not 300% by a long way. But this is where one should dig deeper into the data (explained in his Footnote 3).

Timothy’s data on the US is on total compensation, so includes bonuses and pensions and side-benefits. His data on the UK includes salaries and pensions. Yet his data on Australia is just salary.

In Australia, the salaries that you find in the annual reports do not capture all the elements in the total compensation package of the Vice Chancellors. It misses bonuses, superannuation and side-benefits. And these are large chunks of the total compensation package.

To start with bonuses, my recent post on the goings-on at QUT already mentioned that the average bonus for the Vice Chancellor plus Deputy Vice-Chancellors there was A$270,000 in 2011. That reflects an average bonus of around 40-50% for that layer of administrators.

Employer contributions to superannuation are not normally reported in Australian salary scales, but usually lie in the range of 14-17%.

If we add these probable bonuses and superannuation contributions to the stated salaries of all Australian VC’s (40% and 17% compounded), we get an average monetary compensation of A$1,118,000 per Vice Chancellor in Australia. And that does not yet include the chauffeur-driven car, the business-class travel, or other forms of additional compensation, but let’s be generous and pretend those don’t exist.

So if you just look at monetary compensations for the average Vice Chancellors, then the Australian ones get paid around 250% of that of the top 100 American universities and UK counterparts.

But of course we are then comparing the average Australian VC with the average VC of the better universities in America and the UK. This is not the proper comparison because Australian universities are not in the same league as the top 10 American ones where the salaries are of course higher. If you compare with the more appropriate level of American and UK universities (the bottom of the top 100), you find that you are looking at average total compensations of around A$400,000 in the US and the UK. Using that as a comparison gets you the stunning number that an Australian VC gets paid around 300% of equivalent VCs in the UK and the US.

If one then reflects on Timothy’s finding that the VCs at the GO8 and SJT/ATN universities in Australia get paid at least 20% more than the VCs of other universities in Australia, one should realise that one is looking at an approximate total compensation package of around 1.3 million for VCs at the GO8/ATN/SJT universities in Australia, bringing their compensation well above 300% of VCs at equivalent universities in the UK and the US.

Nice jobs if you can get them! And, as Timothy argues, we are clearly not looking at pay-for-performance, but rather at the compensation levels agreed between different layers of the same entity, i.e. between chancelleries and chancellery-appointed Senates!

As I argued in an earlier piece, one possible solution to the massive governance problem at Australian universities is to have a compensation ceiling wherein no-one in the universities administration can earn more than the Prime-Minister of the day. That would restrict Vice Chancellors to compensations considered normal in top universities in the US.

If you are willing to take part in an interview, you should understand that:

• Your participation in the project is entirely voluntary and you are free to withdraw from the study at any time, without penalty and without providing a reason for doing so.
• You will be asked whether you consent to having your answers to the interview questions recorded for transcription purposes.
• Your name and that of your organisation will not be included in any publications from these interviews unless you provide specific permission for us to identify you as a participant in the research.
• Prior to the reporting of the study findings, you can request that any of the information that you provide in the interview be excluded from the analysis.
• If you have any concerns about the study or the interview process, you can contact [our] Manager of Social Responsibility and Ethics.

I’m very concerned that no safeguards have been specified if:

• The interview takes place during a terrorist attack
• The interviewer makes inappropriate comments
• I make inappropriate comments
• Animals may be harmed during the the interview whether at the place of interview or somewhere else in the organisation, or indeed further afield

You may think that this is all lighthearted. I guess it is. But it’s also serious. I actually think that it is important to resist obvious foolishness – the kind of foolishness that one would hope one could explain was foolish to anyone reasonable. Because there is no end to foolishness.  And if one can’t agree on limits at this level of foolishness, what can one agree on? Which reminds me, there was a good Background Briefing on the absurdities that this kind of thing is leading to in animal research.

What was memorable about the Canberra and Melbourne launches were that the hosts had read the book and prepared lengthy speeches on it, which of course was very flattering. Andrew Leigh, who hosted the Canberra launch, already put his verdict on his own website and Adrian Pagan, co-hosting in Melbourne, kindly gave me permission to let you see what he made of it in the pdf attached (Adrian Pagan on frijters book).

Of course, neither of these two eminent economists are uncritical praisers of the book I wrote with Gigi Foster, and both speeches draw attention to elements that raised their interest and doubts. Andrew Leigh, a politician now, notes how often we make the kind of strong statements that he can no longer make! Adrian Pagan likes the importance in our work of economic linkages in the explanation of recessions, but he is not quite yet ready to accept our theory of love without a bit more humming-and-ahing. Yet, both are very supportive and complementing, whilst giving their own unique view on the endeavour. Thank you both. We hope to get similar responses in our tour of the US and Europe later this year!

One thing that’s become obvious as I’ve read through the CIS’s corporatist manifesto is that their TARGET30 campaign is very much a moral crusade with two goals. First, to reduce the burden (of taxation) on future generations. Second, to eradicate the pernicious vice of welfare dependency which deforms the character just as surely as habitual masturbation saps your manly vigour leading to unmanly weakness, blindness and insanity:

Before the state created a right to unemployment benefits, for example, people saved or insured through friendly societies and trade unions to ensure an income if they lost their job. Nowadays, few bother. Before Medicare, families insured themselves so they could buy treatment if they fell ill, and charitable foundations raised money to build and run hospitals. But now that the state provides health care, individuals are less inclined to insure themselves. When government takes over such functions, therefore, the market shrivels, philanthropy dwindles, and self-reliance is replaced by state dependency. (TARGET30—Towards Smaller Government and Future Prosperity by Simon Cowan (with contributions from Robert Carling and Peter Saunders (and Andrew Baker, Jennifer Buckingham, Stephen Kirchner, Peter Kurti, and Jeremy Sammut)))

…Tax-welfare churn leads to economic costs—for example, administration and compliance costs, a higher tax burden, and higher effective marginal tax rates (EMTRs) and non-economic costs including increased welfare dependency, government paternalism and patronage…(TARGET30—Tax-Welfare Churn and the Australian Welfare State by Andrew Baker)

Generally, when someone makes a moral pronouncement like ‘People should be more self reliant.’ the phrase ‘like me’ is crammed in at the end between the last word of the sentence and the full stop. Rarely does such a sentence end with an implied ‘well, not me of course, I’m a special case with a special exemption’ – it’s much harder to cram into that tiny space. But that’s a subject best left for another post.

The inclusion of Peter Saunders in TARGET30′s cabal sorry cadre sorry collective sorry committee sorry group of co-authors, suggests that his ideas provide the main moral impetus of the campaign. Especially given that the CIS is spruiking a new book by Saunders Re-moralising the Welfare State. Since Saunders has frequently argued in the past that the Welfare State has no moral basis or justification – usually quite badly – I think it’s a safe bet that every ‘remoralising’ measure he proposes works towards its destruction.

Andrew Baker’s policy paper on ‘tax-welfare churn’ continues to prosecute the case for cutting back welfare spending with the twin goals of eliminating the economic efficiency that results when governments take money from individuals with the hand of the taxation system then return it with the hand of the welfare system. While it looks like old wine in a new bottle the wine has been fortified by extending the definition of welfare; government welfare now includes welfare in kind as well as money welfare. The two major forms of welfare-in-kind Baker identifies are health care – government subsidised visits to the GP or hospital treatments – and education, both secondary and tertiary:

…the median Australian household [by income] receives more in benefits each week ($103 in welfare payments and $359 in welfare-in-kind) than it pays in total taxes each week ($348). Family Tax Benefits account for more than a third of the cash transfers ($36 per week), and the Age Pension accounts for more than 20% of these receipts ($24 per week). Of the $359 of welfare-in-kind, $166 is in the form of health care benefits such as hospital stays or GP visits, and $147 is for education benefits ($107 on school education and $32 on tertiary education). The remainder comes from child care assistance and other social security and welfare supports. (Baker op cit)

Baker’s inclusion of education in Australian households’ (and by conflation Australian families‘) welfare take is interesting; it extends his attack beyond the institutions of the socialist or social democratic welfare state to the liberal democratic state from which it evolved – or devolved, if you so prefer. He brings public education, as a feature of modern Australian society into the scope of his attack without any regard for its history before the emergence of the welfare state. But that too, is a subject best left for another post.

For now, let’s just note that if the $147 Baker’s median household receives in education spending is deducted from its welfare benefits it now receives only $305 total benefit – less than it pays in tax.

Baker’s source for his ‘statistical analysis’*

*: those scare quotes are a sop to the sensitivities of statistically literate readers who might, by the end of this post, vehemently object to my application of the phrase ‘statistical analysis’ to whatever the hell it is that Baker has actually produced.

is the ABS publication Government Benefits, Taxes, and Household Income, Australia 2009–10 (ABS Cat. No. 6537). His description of the median household precedes this table of personal incomes and welfare received by quintiles of the population:

The explanatory notes for ABS Cat. No. 6537 include the following explanation of ‘equivalised income’:

Equivalised income

43. Much of the analysis in this study uses equivalised income rather than gross or disposable income since it enables comparison of the relative economic well-being of households of different size and composition. Equivalised household income is calculated by adjusting household income by the application of an equivalence scale. This adjustment reflects the requirement for a larger household to have a higher level of income to achieve the same standard of living as a smaller household. Where income is negative, it is set to zero equivalised income.

44. When household income is adjusted according to an equivalence scale, the equivalised income can be viewed as an indicator of the economic resources available to a standardised household. For a lone person household, it is equal to income received. For a household comprising more than one person, equivalised income is an indicator of the household income that would be required by a lone person household in order to enjoy the same level of economic wellbeing as the household in question. (emphasis added)

45. The equivalence scale has been used to adjust private, disposable and final income for differing household sizes and composition…

To base an argument on the notion of the ‘median household’ – as if it were real and not a statistical abstraction – ought to be error enough for anyone. Not Baker – he compounds that error by ignoring, in his exposition of the ‘median household’s’ finances, the extra layer of abstraction that’s imposed by ‘equivalising’ household incomes in the manner described above. Each equivalised household consists, essentially, of one person. Bearing that in mind, let’s take a look at composition of the social benefits in cash that these single person households receive:

So the single person in each of the equivalised households of the third quintile receives, in addition to his or her private income: $24 a week from the Age pension, $8 a week from the Disability support pension, $6 a week in DVA pension, $36 a week in Family tax benefit, parenting payment of $4 a week and $11 a week in either student allowances or Newstart. If such a person actually existed it might be a scandal to society – it might also be cause to wonder why anyone would go to the trouble to set up so many bogus identities for such petty returns.

There is, of course, a much more reasonable way to interpret these figures. The lowest quintile consists of households ranging from those with no personal income to the highest income for the quintile: the top income of the 20^th percentile (P20). According to table 1 of the ABS Excel file, the highest personal income for P20 is $284. The average weekly values of the various forms of income support received by the lowest quintile reflect the mix of households it includes and the mix of income sources. While this point seems bleeding obvious to me it seems it wasn’t so bleeding obvious to Baker.

It’s also worth taking a closer look at the ABS listing of social transfers in kind (Baker’s ‘welfare in kind’) in more detail:

The low averages for education in the lowest quintile are consistent with the notion that this quintile contains a lot of Aged pensioners, and others, who are already at least School educated. Other than that, the figures for education suggest very little.

The figures for Health Benefits tell an interesting story: households in the lowest quintile of are the biggest users of publicly provided acute care, community health services and pharmaceuticals but the lowest users of the Private Health Insurance Rebate (PHIR). Also, while usage of publicly provided health services decreases as income increases, the opposite is true for the PHIR.

Baker canvasses a number of possible reforms to reduce the problem of ‘tax-welfare churn’ including:

• The creation of a ‘Personal Future Fund’ (PFF) for every Australian to -
  allow people to accumulate funds they could draw upon to fund their own unemployment benefits, health care, education or homeownership. The expenditure savings that PFFs create would be returned to families and individuals by increasing the tax-free threshold to the point where people are earning enough to cover their living costs. This would eliminate the need for government aid, simultaneous churn, and welfare dependency;
• Replacing unemployment benefits with either a PFF or income contingent loans -
  As part of his PFF proposal, Saunders proposed scrapping the Newstart and Youth allowances so individuals could fund their own unemployment benefits for up to six months before moving on to Work for the Dole programs until they find employment.
  A possible alternative to using PFF-style savings accounts is to enhance existing welfare arrangements for the unemployed and students with income contingent loans. Instead of providing the unemployed with an income support payment, they could be given an income contingent loan, which they will be required to repay once they return to the workforce;
• Superannuation reform -
  aimed at addressing lifetime churn—abolishing taxes on superannuation contributions and requiring retirees to convert some of their superannuation into an annuity when they retire. By reforming superannuation to help ensure retirees live off their own superannuation for longer, retirement savings would be increased and the government’s future pension liabilities would be reduced;
• Refundable tax vouchers for education -
  One way to reduce taxpayer expenditure on school education is by using a refundable tax credit, ideally in the form of a voucher.56 Instead of paying taxes and receiving a publicly funded school place, parents of school-aged children could spend their own money on providing for their child’s education at the school of their choice and then receive a reduced tax bill to the same value in return;
• Means testing government subsidies for aged care in accordance with reccommendations of the Productivity Commission and the adoption of another Productivity Commission reccommendation -
  The Productivity Commission also recommended establishing an ‘Australian Age Pensioners Savings Account’ scheme that would allow age pensioners to deposit some or all of the proceeds of the sale of their principal home into the account, while maintaining their eligibility for the pension. These funds could then be used to help cover the costs of their care;

Baker consistently justifies these measures on two grounds – they reduce ‘tax-welfare churn’ and foster self reliance. In some cases, such as the suggestion that unemployment benefits be replaced by a loans scheme, they merely replace one form of churn with another. ‘Tax-welfare churn’ merely reverses direction and becomes ‘welfare-tax churn’; I see no good reason to suppose that the latter will cost any less than the former.

Neither will these reforms make Australians more self- reliant. We can see this from the existing example of superannuation; most Australians rely, in one way or another, on financial corporations to manage their superannuation. Few have the knowledge, skills and resources to manage their own superannuation funds. The same will most likely happen with ‘PFFs’, Pensioners Savings Accounts, annuities and whatever forms of personal insurance might be advocated as replacements for government spending on education, health and welfare. Australians might end up paying the government less in tax but they’ll be paying more to private corporations for various forms of insurance and other benefits.

If the TARGET30 campaign succeeds it will merely replace state dependency and welfare dependency with another form of dependency: dependency on the corporations that will provide the management services for those Personal Future Funds, private health insurers and whoever takes control of public schools once government has been chased out of the field. This realisation of just who the ‘self-reliant’ citizens of Australia would actually be beholden to crystallised for me after I read the following letter – probably a tongue-in-cheek provocation – published in The Age on Tursday, May 2:

Being a Quadraplegic, I have some idea of the daunting costs involved in providing disabled people with a chance of life. But we should be winding the welfare state back, not cranking it up. Disability insurance is a terrific idea, but it should be run by private companies in the same way life insurance is.

When parents decide to have a child, they will insure the newcomer, in the same way they insure their new house or car. Companies will require tests and provide premium discounts for precautionary measures that will reduce tragic births, disabling diseases and accidents. A culture that encourages people to insure themselves and their children against disability will drastically reduce the numbers who have to rely on charity or welfare.

John Dawson, Chelsea

This is the future the TARGET30 campaign offers ordinary Australians – a future where a multitude of insurance premiums replaces tax collection. Where your personal well-being in times of unemployment and your access to medical treatment depends on corporations whose only responsibility is to increase their profits. Corporations whose limited obligations to you are spelt out in an incomprehensible, self-serving contract which you won’t be able to challenge through a court of law – or more likely a dispute mediation corporation – unless you can afford personal litigation insurance. Assuming of course, that your litigation insurance policy covers you for taking legal action as a plaintiff and not merely for the risk of being the defendant in a civil matter.

And there you have the reason that this series carries the overall title ‘The Corporatist Manifesto’.

• Update (May 14, 2013): today, I received some information about ABS Cat. No . 6537 in answer to an e-mail enquiry I sent on Friday. The private income listed for each quintile in Baker’s table is the mean equivalised private income for the quintile not the median value for the quintile. The median equivalised private household income was actually $790 (top income of the 50^th percentile). Score another – easily avoidable – error to Baker.

And indeed some opponents of these projects take the same attitude from the other side of the fence. Everything’s fine as it is! This new thing will be an enormous white elephant, obsolete before it is finished, you can bet on it!

What we don’t usually talk about is Knightian uncertainty – that is, risk you don’t know enough to quantify, or sometimes even recognise.

This was what former US defence secretary Donald Rumsfeld was talking about when he famously spoke of “unknown unknowns“. That Rumsfeld’s comment is frequently ridiculed just shows how alien considerations of uncertainty are in the public discourse*. Almost no-one wants to say, “well, we just don’t know”. There are things you might do if you just don’t know. They rarely get talked about.

But if you’re having a serious conversation about infrastructure, you have to talk about uncertainty. Uncertainty matters a lot for big monolithic infrastructure projects, such as universal broadband networks and high-speed rail lines: the time they take to complete and the technology environments in which they operate mean there’s great uncertainty about their ultimate benefits and ultimate demand. By the time you deliver them, the world may be in the process of passing them by. Demand risk is always a factor in these projects, but here we seem to have substantial demand uncertainty, which is worse.

This may be particularly true over the next few years, because predicting infrastructure demand growth seems a tough job right now. In the broadband business, you have to make a guess about the capability of mobile broadband and about willingness to pay for ultra-high-definition video streaming. In more traditional infrastructure, car and power use are currently and unexpectedly declining, and we don’t know whether these developments are structural or cyclical (and if they’re structural, we don’t know whether they are new trends or one-off adjustments).

My gut feel is that the shape of our transportation and communications networks is less predictable now than at any time in the past 50 years. Maybe I’m wrong. But that’s Knightian uncertainty for you: you can’t really size it up.

A few people are looking at the effects that technology forecasting has on infrastructure projects. From rail transport analyst Christian Wolmar:

One of the reasons for my scepticism about [UK high-speed rail project] HS2 is on the basis that it does not take into account future development of technology. Just look at how technology has changed since 1993 when mobile phones had barely taken root, Google, Facebook and Twitter were but twinkles in their founders’ eye and digital TV was just starting. Will there really be enough people wanting to pile into what are likely to be expensive trains in 20 years time to justify the huge expenditure on this project?

And here’s where I stick my neck out. The next big technology, one with such huge implications that it is impossible to being to predict them, is driverless cars … Perhaps they will start by being driven only on motorways but even that would have enormous consequences. It would combine many of the advantages of train travel with the flexibility of car use. Think trucks, too. The economics of transport would change as radically as they did when the railways were first developed. The time frame may be a decade or two, but the consequences will be much more far reaching than, say, the much talked-about electric cars. The driverless car – or rather motor vehicle – is the innovation that we ought all to be taking into account in our future thinking.

From University of Minnesota mathematician and network capacity expert Andrew Odlyzko:

How many times have you seen predictions and promises that better communications, such as faster Internet access, will stimulate telecommuting and decrease road congestion?
Such predictions are almost certainly wrong. At least they have been consistently wrong for about two centuries. Many, often very knowledgeable, observers, thought that transportation and communication were substitutes for each other. But the uniform experience to this age has been that they are complements, and grow in parallel. Yes, you may work from home, but chances are that you will make more trips to meet clients, or for family and other reasons, and in the end will travel more than before (barring major upsets, such as astronomical rise in price of fuels).

So what can we conclude? Most of all, that the future is hard to predict, so we have to prepare for the unexpected. Second, though, we should keep in mind that among the most common unexpected phenomena is the resilience of old technologies, services, and business methods, and their propensity to adopt some of the innovations that we work on.

If we conclude that big monolithic infrastructure projects need to factor in uncertainty, what do we do?

The simplest course is to raise our estimation of the risks. But how much? Bent Flyvbjerg recommends a technique called “reference class forecasting“, which predicts the outcome of a planned action based on actual outcomes in a “reference class”. But what’s the right reference class, and how useful are past projects, when the environment is changing fast?

Another option is to try to break down the project into smaller units, which we can tackle one by one. That only goes so far with high-speed rail, where we essentially have just three big legs (Melbourne to Canberra, Canberra to Sydney and Sydney to Brisbane). It does make a lot of sense for a fibre-to-the-premises broadband network, since such a network is by its nature mostly local in nature. It’s why we should be improving our existing broadband networks suburb by suburb, as suggested by Joshus Gans in a paper for CEDA back in 2007.

We should also, of course, adjust our thinking about such monolithic infrastructure – “megaprojects”, as Flyvbjerg has dubbed them. If the most recent study of the Melbourne-Sydney-Brisbane high-speed rail system says the environmental benefits mostly emerge from around 2057, for instance, we should probably avoid making very much of those benefits.

But first, we need to talk about big infrastructure as if uncertainty mattered. The unknown unknowns are real, and we need to acknowledge them.

* Note: You don’t need to agree with Rumsfeld about the conduct of US defence policy in order to think he was, on this occasion, talking sensibly about risk. As John Quiggin has noted in his own defence of Rumsfeld’s comments, the bloke could have usefully thought more and earlier about the repercussions of Knightian uncertainty for US attempts to reshape the Middle East through a war in Iraq.

By: Philipp Ager (Universitat Pompeu Fabra)

URL: http://d.repec.org/n?u=RePEc:hes:wpaper:0038&r=his

Wealthy elites may end up retarding economic development for their own interests. This paper examines how the historical planter elite of the Southern US affected economic development at the county level between 1840 and 1960. To capture the planter elite’s potential to exercise de facto power, I construct a new dataset on the personal wealth of the richest Southern planters before the American Civil War. I find that counties with a relatively wealthier planter elite before the Civil War performed significantly worse in the post-war decades and even after World War II. I argue that this is the likely consequence of the planter elite’s lack of support for mass schooling. My results suggest that when during Reconstruction the US government abolished slavery and enfranchised the freedmen, the planter elite used their de facto power to maintain their influence over the political system and preserve a plantation economy based on low-skilled labor. In fact, I find that the planter elite was better able to sustain land prices and the production of plantation crops during Reconstruction in counties where they had more de facto power.

Since March this year the Centre for Independent Studies has been promoting its new manifesto ‘TARGET30 – towards smaller government and future prosperity‘. TARGET30′s stated goal is to get Australia’s total government spending below 30% of GDP by 2023, reversing the steady growth in the size of government (federal, state and local) that has happened in the past 40 years (in other words since 1973, the year of the first Whitlam government budget):

TARGET30 will consist of a series of research reports and companion activities, including public events, commencing with this introductory report, proposing concrete plans and policy suggestions for reducing the size of government in Australia from approximately 35% of GDP today to 30% or less over the next 10 years.

It’s been a long time since I last looked over a policy proposal from the CIS; it’s reassuring to find that the CIS have maintained the intellectual rigor I expect from them while I’ve been ignoring them. For example in the introduction to the TARGET30 manifesto Simon Cowan, its lead author, tells readers:

TARGET30 acknowledges that governments have a crucial role to play in modern societies. There are always some things that need doing which individual citizens, voluntary organisations, and private companies are unable or unwilling to do, therefore requiring state intervention.

So the legitimate function of government, for TARGET30′s purposes is to do those needful things that other members of a modern society are unwilling or unable to do. However this declaration is quickly qualified in the next paragraph:

However, over the last hundred or so years, government intervention has expanded far beyond this limited scope to include responsibilities that citizens could (and arguably should) be discharging themselves. Nowadays, anytime there is a problem, we invariably and immediately turn to the government rather than explore solutions on our own first. We have come to expect that governments will do anything we are unable or unwilling to do ourselves.

Calling this a qualification is a kindness that Cowan doesn’t deserve; it verges on self-contradiction. Particularly when it comes to the needful things that we are unable to do for ourselves and can’t get done through the private sector. If it’s a need we share with others – if, in other words, it might be considered a public good rather than a private good – it might well be legitimate business for government and Cowan has contradicted himself in a mere four sentences.

So what are these responsibilities of government that citizens could (and arguably should) be discharging themselves? We find some indication in Appendix B ‘The impact of the size of government on society’ in a section on the ‘Entitlement Mentality’:

Before the state created a right to unemployment benefits, for example, people saved or insured through friendly societies and trade unions to ensure an income if they lost their job. Nowadays, few bother. Before Medicare, families insured themselves so they could buy treatment if they fell ill, and charitable foundations raised money to build and run hospitals. But now that the state provides health care, individuals are less inclined to insure themselves. When government takes over such functions, therefore, the market shrivels, philanthropy dwindles, and self-reliance is replaced by state dependency.

Given Cowan’s disapproval of the growth of government over the last hundred or so years, I think we can date the end of this golden age of self-reliance at around 1913. It started, of course, on January 1, 1901 (or so I shall assume for now; it’s quite conceivable that a later paper in the TARGET30 series will propose rolling back Federation as a good way to reduce total government expenditure in Australia). That’s even further back than John Howard’s beloved white picket fence age of the 1950s.

I doubt that the lost age of self-reliance – whenever it was – was as golden as Cowan depicts it. Before the state began to provide unemployment benefits, for example, people who could afford to saved or insured their income through friendly societies. Those who couldn’t, didn’t. Before Medicare, families insured themselves to pay for medical treatment because there was no other alternative and the level of health care children received depended very much on how much their parents were able, or willing, to pay for health insurance.

Cowan’s description of the way things were before we all developed an entitlement  mentality thanks to nanny state coddling by big government owes much to romantic imagination and little to historical fact. So does the section of Appendix B which follows it,  where big government is charged with ‘crowding out of charities [and] weakening family connections’. Cowan’s account of how the size of government affects society is pure myth-making.

None of  these lapses amount to faults in the manifesto. Far from it; the purpose of a manifesto is to inspire your existing supporters and allies and turn passive supporters into active ones. TARGET30 will succeed if it convinces the right people to share CIS Executive Director Greg Lindsay’s conviction, proudly declared in the foreword, that the CIS ‘has the best ideas’. Reasoned argument be blowed – it’s inspiring myth as brings in the punters.

But a good bogey helps too; an oppressor, or oppressor class, whose shackles must be thrown off.  Expropriators to expropriate. Personifications of state dependency. And here they are – public servants and welfare recipients:

Recent data from the 2010 election shows that approximately 13.5% of all voters were employed in the public service… Of course, people employed by the state are not the only group in society with a strong interest in increasing taxes and government spending. Approximately 35% of all voters rely on government welfare payments for income…

This means between 4 and 5 of every 10 voters rely on the government for virtually all of their income (there may be some overlap between these two groups)…

Potentially, this dependence poses a formidable opposition for any politician trying to cut back on the growth in state spending.

Since the publication of the TARGET30 manifesto, the first two of the promised TARGET30 research papers have appeared on-line; one on tax/welfare ‘churn’  – a topic very familiar to afficionados of the research papers Peter Saunders produced for the CIS back in the day – and one on Medicare. I’ll get down to writing about those later.

Postscript: if you’re a little bemused by my choice of ‘The Corporatist Manifesto’ as the title for this series of posts be of good cheer. That’s explained in Part II, coming to a web-site near you very soon.

(Part II)

Australia needs intellectuals, says Nick Cater. In his new book The Lucky Culture he writes:

A nation is entitled to look to its intellectuals to articulate its common purpose, to pull together loose strands and write a narrative that says where it has come from and where it is going. Only they have the skills of abstraction and gift of eloquence to capture shared emotions, to explain the past, frame the present and embrace its destiny.

Cater argues that Australia’s intellectuals have failed to deliver. On the one hand is a new Knowledge Class that disparages ordinary people’s moral emotions and sense of common purpose. And on the other is a cowardly rump of conservative thinkers who have failed to champion the nation’s culture and defend it against attack.

"If a charge of intellectual cowardice were to be brought against conservative thinkers, the National Museum would be Exhibit One", writes Cater. A initiative of the Howard government, the museum came under the control of the became "an assault on the very idea of nationhood."

In Cater’s account the conservatives’ defence of nationhood was half-hearted. They failed to challenge Knowledge Class doctrines like diversity, historical injustice and compassion – "ideas that subvert the democratic principles of an ordered society."

Ideas are what’s at stake here. As Cater writes: "this is not a culture war, if we interpret warfare as a means to attain power. It is a dispute about the opinions that should be listened to, and those, if any, that should be considered beyond the pale."

It’s not hard to see why this war of ideas matters. Those who shape the climate of opinion set the agenda and frame debates over policy. If newspapers and television talk shows programs are full of talk about climate change and same sex marriage, this is because these are the issues intellectuals want to talk about.

According to Cater, the struggle over ideas is also a struggle for respectability. "The new class values cultural wealth over financial wealth," he says, "and accords status to those who observe its mores and obey its morality." But the war isn’t over. Cater says that: "much of the intelligentsia’s orthodox wisdom is challenged robustly in the public square."

The National Museum is one example of the weakness of Australia’s conservative intellectuals. Instead of using their "skills of abstraction and gift of eloquence" to argue for a museum that would articulate our common purpose and capture our shared emotions, conservative thinkers capitulated to the Knowledge Class’ norms of respectability.

What Cater doesn’t explain is why conservative thinkers keep losing ground to the Knowledge Class. The popular explanation in conservative circles is the narrative of victimhood. Conservatives say that the new class controls the schools, the universities, the ABC and most of the country’s intellectually serious newspapers and magazines. When conservatives apply for jobs in these organisations they are discriminated against. And if they are inadvertently hired, they are harassed and bullied. In the end, most give up.

But on the ABC’s Q&A, Cater acknowledged that "the people running the show" include those at the Australian as well as those at the ABC. Conservative intellectuals do have forums where they can make their case. The obvious question is why they have been so unsuccessful at winning over other intellectuals.

One possibility is that conservatives don’t think intellectual debate is worth bothering with. Rather than talking endlessly about ideas, conservatives prefer to get things done. But this isn’t Cater’s view. Cater clearly values liberals education and intellectual argument. Paraphrasing John Henry Newman, he writes:

… universities must aspire to be more than escalators of social improvement; they have a duty to enlarge and develop young minds, teaching their charges to discriminate between truth and falsehood and to value things according to their real worth. A degree should be so much more than a mere qualification; it should certify that the bearer has acquired the faculty of judgment, clear-sightedness, sagacity and wisdom, and has the cerebral capacity for philosophical reach, intellectual acumen and reflection.

You might think that a person who has learned to "discriminate between truth and falsehood" and "value things according to their real worth", is a person whose opinion might carry some weight in public debate. You might think that a person who has acquired "sagacity and wisdom" is a person worth involving in public affairs.

There are parts of The Lucky Culture where Cater seems to suggest exactly that. It’s not that educated people should be running the country, but that the rest of us ought to pay attention to their views. So why does he think the Knowledge Class has too much influence?

According to Cater, the Knowledge Class have the pretensions an educated elite but not the intelligence, knowledge or judgment.

By extending higher education to more and more students, universities have become degree factories. Cater argues that many students drawn into the expanded system lack the mental horsepower to benefit from a traditional university education. The "notion that some people are more intelligent than others passes the common sense test" he says. In an effort to extend the benefits of higher education to more and more young people, universities are dumbing down their teaching and assessment. It’s the only way the weaker students will get through.

Universities have lost their higher purpose, he says. "Two generations of students, and now a third, have been deprived of the enjoyment of intellectual discovery; they follow ever narrower fields of study with fragile and subversive intellectual foundations, antithetical to the journey of a curious mind."

Not only do most of those in the Knowledge Class lack the education and cognitive ability they need to function effectively as intellectuals, Cater argues that they have misunderstood the role they should play. For a start, the Knowledge Class misunderstands culture:

National culture, in so far as it is recognised at all by contemporary intellectuals, is commonly assumed to have little or no bearing on a country’s destiny. It is regarded merely as an instrument of power; a weapon that can be used by oppressors at home and abroad to influence the national mood. A culture imposed from the top, however, is not culture at all; it is ideology and the lesson of the twentieth century is that ideology is short-lived, since it rubs against the grain of human nature.

Unlike the old Whigs who outlawed child labour and abolished slavery, the Knowledge Class is impatient and uninterested in building consensus. They refuse to engage in a conversation with ordinary people. When the views of the Knowledge Class and people in the street clash, the Knowledge Class try to ignore or suppress dissenting opinions. According to Cater, their favourite way of doing this is through shaming.

Cater acknowledges that intellectuals can lead reform. But he thinks they should do so by engaging the rest of the community in conversation and pursuing change patiently. The national culture is where Australian values like egalitarianism are grounded. Values are not grounded in reason but in shared emotion. The correct view on values cannot be discovered through reason of empirical research. Intellectuals have no superior insight into right and wrong. Cater argues that intellectuals should respect the culture and build on shared emotions and identity.

If conservative thinkers are losing the debate, perhaps it’s because they’re not engaging in it. Rather than argue with their opponents they spend most of their time stirring up populist resentment against anyone with intellectual pretensions. People who quote Plato, Machiavelli or Nietzsche are wankers. And suggesting that a liberal education might help people think more deeply or carefully about public issues is an elitist attack on ordinary working people, their commonsense and intelligence.

Much of Cater’s book is devoted to mocking the Knowledge Class, their lifestyles and pretensions. Surprisingly little of it is devoted to explaining why they are wrong. As he says himself in chapter 4: "Belittlement is a tactic best left in the schoolyard, but it has become an acceptable manoeuvre in modern debate, where discrediting an opponent is quicker, and less exhausting, than intellectual rebuttal."

If Cater really cares about intellectual debate he could encourage conservatives to join the conversation instead of belittling and stereotyping their opponents. It mightn’t sell as many books but it would be a lot more constructive.

Abstract:

Although a huge literature spanning several disciplines documents an
association between poverty and child abuse, researchers have not
found persuasive evidence that economic downturns increase abuse,
despite their impacts on family income. In this paper, we address
this seeming contradiction. Using county-level child abuse data
spanning 1996 to 2009 from the California Department of Justice, we
estimate the extent to which a county’s reported abuse rate diverges
from its trend when its economic conditions diverge from trend,
controlling for statewide annual shocks. The results of this
analysis indicate that overall measures of economic conditions are
not strongly related to rates of abuse. However, focusing on overall
measures of economic conditions masks strong opposing effects of
economic conditions facing males and females: male layoffs increase
rates of abuse whereas female layoffs reduce rates of abuse. These
results are consistent with a theoretical framework that builds on
family-time-use models and emphasizes differential risks of abuse
associated with a child’s time spent with different caregivers.

http://papers.nber.org/papers/W18994?utm_campaign=ntw&utm_medium=email&utm_source=ntw

The mythical – or legendary if you so prefer – figure of the dole bludger has haunted our political folklore since the Whitlam years of the 1970s. In, I think, 1973 the Whitlam government outraged the editors of the major Australian newspapers by doubling the dole and not long afterwards, the public opinion informed by those papers was equally outraged.

The Melbourne Herald did some especially sterling work to raise public awareness of the insidious problem of dole bludging. For a while it ran a regular feature of inside stories about dole-bludgers thwarted from a source within the CES.

One choice example featured a bloke who went to CES to claim the dole saying he was a lion tamer. As there was a circus in town, the CES worker rang them up and asked if they would be prepared to take him on. Suddenly the would-be dole-bludger discovered a revived interest in factory work. With the benefit of hindsight I’d say that the so-called CES insider was no further from the Herald’s newsroom than the sub-editors desk.

Thanks to a lot of newspaper op-edding and talk-back radio shock-jocking the idea that much of Australia’s unemployment – definitely too much, and probably most of it – was voluntary became conventional wisdom in the community at large. Everyone knew of someone who was living the easy life at the taxpayer’s expense. If you were unemployed it wasn’t because of a lack of jobs – for many it was a lifestyle choice.

For many, unemployment remained a lifestyle choice even after Reserve Bank and Federal governments accepted an official unemployment rate of 5% of the Australian workforce rate as ‘full employment’. At least so says the myth.

In reality policy makers have accepted the 5% rate as the natural unemployment rate and stopped worrying about how much of it was frictional – people temporarily out of work while they were changing jobs – and how much was structural that is, caused by economic conditions and the government’s economic management.

When you’re stuck with an official unemployment rate of 5% and op-edders and shock-jocks are telling the public that it’s mostly dole-bludging, why bother to correct them? In pragmatic political terms, they’re on your side. Ratings hungry TV current affairs producers might even prove a source of electorally attractive policy proposals such as ‘Work for the Dole’.

‘Work for the Dole’ is usually described as a Howard government initiative but my memory still insists that it was a Sixty Minutes initiative – that the Liberals included the proposal in their 1996 election platform after Sixty Minutes broadcast a report on ‘workfare’ in the USA. After the show’s mailbag segment showed a lot of viewer support for the idea it went into the Liberals’ policy platform and the rest, as they say is history. Getting tough on the unemployed was the new true blue.

If my memory is correct – something I shall have to check one day – ‘Work for the Dole’ is a good example of the media tail wagging the political dog. But that’s a subject for another day; what I’ll be looking at in this post is the Howard Government’s later efforts to promote the dole bludger myth from 2002 to its demise in 2007.

In April 2002, 4 months after winning the November 2001 election the Howard government launched the ‘Support the System that Supports You’ (SSSY) campaign. A media release from the office of Amanda Vanstone, then Minister for Family and Community Services described the campaign as an ‘educational campaign’ to ensure that Centrelink’s clients were complying with their obligation to keep Centrelink informed on changes in their personal circumstances that might affect their benefit. The campaign was ‘backed’ by a national multi-media advertising campaign.

As the campaign was expected to result in more Centrelink clients reporting changed circumstances and more calls from decent working Aussie battlers ringing to dob-in their dole bludging neighbours Centrelink received more funding to cope with the extra workload in processing these ‘tip-offs’. (Australian National Audit Office, Audit Report No 7, 2008-09 Centrelink’s Tip-off System (ANAO)):

The campaign was expected to result in an increased number of tip offs and contacts from customers advising of changed circumstances. Consequently, Centrelink received funding for the expected increased workload, while policy departments were funded to undertake the campaign.

‘Educating’ Centrelink clients wasn’t the only purpose of the advertising campaign – there was another explicit message for the rest of the community:

Unfortunately, there is also a small number of people who deliberately cheat the system. The message to them is crystal clear – you will get caught, you will have to pay the money back and you may get prosecuted. The hotline number in the advertisements will give the public the chance to dob-in people who are ripping off the system. (Vanstone media release [emphasis added])

Implicitly, through the situations portrayed in the advertisements, the campaign depicted Newstart recipients and other Centrelink clients – particularly the young – as fraudsters ripping off the system.

Implicitly, through the situations portrayed in the advertisements, the campaign depicted Newstart recipients and other Centrelink clients – particularly the young – as fraudsters ripping off the system. In 2005 the campaign became the ‘Keeping the System Fair’ campaign but both the overt and implied messages remained unchanged.
If, like me, you’d like to know where the idea for this campaign originated and why the Howard government went ahead with it you’ll have to wait another 19 years to find out. Under the 30 year rule the relevant cabinet papers won’t be available until 2032.

In the meantime we might as well assume that the impulse that moved the Coalition to run the SSSY campaign was as mysterious and complex as that which moves a dog to lick its own genitals. Otherwise we might be drawn to the conspiracy theoretical view that it was a cynical exercise in manipulating public attitudes to the unemployed for long-term political advantage. Time – 19 years of it – will tell.

The SSSY campaign was discontinued in June 2008 due to its declining effectiveness. There is a bit of irony in the campaign’s demise. To keep parliament’s support for the campaign, Centrelink had to provide data that showed it to be effective. I suspect that after the change of government in 2007 when members of the ALP Federal Cabinet looked over the data through a new set of ideological blinkers they saw a different picture than the one the Coalition saw through theirs.

Most importantly, they would have seen – because they were told so by the ANAO – that neither Centrelink nor the major policy department (DEEWR) involved in running the campaign had any idea whether the campaign was effective or not:

1.26 The actual number of tip offs and savings realised as a result of the campaign cannot be clearly established due to a discrepancy between results calculated by Centrelink and results calculated by DEEWR.
2.30 During the ANAO’s call centre visits some operators were observed not asking the informant… [whether the tip off was due to the SSSY campaign] …For activities such as the SSSY campaign, which rely on recording responses, it is important that responses are recordedconsistently to enable the effectiveness of the campaign to be accurately measured and assessed. (ANAO)

Nonetheless from 2004 to 2009 Centrelink spruiked the effectiveness of its tip-off system to government with a boilerplate section which included this interesting claim:

Investigations of tip-off information continue to build community confidence in the integrity of the … system.

It’s a claim which is demonstrably, and laughably, specious. Centrelink’s own figures (in its annual reports) show that investigating tip-offs from the public makes only a minor contribution to Centrelink’s savings from compliance reviews and fraud investigation (see the table below). In addition of the relatively few members of the public provide tip-offs to Centrelink it’s unlikely that those who do have of confidence in the system – quite the reverse. Unless they’re acting in the confident belief that anonymously dobbing someone in to Centrelink is a good way to cause them a bit of vexation with no comeback.

Tip off Investigations and Results by Financial Year
Year TotalCompliance Reviews (TCR)
Tip-offs Investigated (TOI)* Rate Reductions from
Tip-offs
No % TCR No % TOI*
2004 4 121 196 72 473 1.8% 17 570 24%
2005 3 808 302 55 331 1.5% 10 022 18%
2006 4 010 773 59 781 1.5% 11 492 19%
2007 4 276 281 52 597 1.2% 11 063 21%
2008 4 431 309 60 257 1.4% 17 311 29%

* According to the ANAO’s 2008 audit of Centrelink’s tip-off system, Centrelink received a total of 101 595 tip-offs in 2007-08; of those only 60257 (59%) were actually investigated – either through compliance review or fraud investigation. If the total number of tip-offs received had been reported as well as the number investigated it’s likely that the percentages would look even more underwhelming.

Compliance reviews are administrative checks by Centrelink that its clients are providing up-to-date information about their personal circumstances and adjusting payments – up or down but usually down – to reflect any changes. They are not fraud investigations; Centrelink assumes that in most cases non-compliance is the result of an oversight rather than a deliberate attempt to rip off the system.
As an indication of the financial value of compliance reviews and pursuing tip-offs, in 2003-04, 709,923 Centrelink clients had their payments reduced after compliance reviews. The resulting saving to Centrelink was $104m. Payment reductions from tip-offs account for a mere 2% of that amount. Over the whole year, investigating tip-offs saved Centrelink roughly the same amount as other compliance review measures saved in each single fortnight.
Centrelink’s annual reports show just how few people deliberately cheat the system and how little they cost the taxpayer as a proportion of Centrelink’s total spending:

Year Total Centrelink Payments (TCP) Investigations (Inv) Prosecutions Debts/Savings Notes
No % Inv Amount % TCP
2004 $60.1bn – 3 055 $36.6m 0.06%
2005 $63.1bn – 3 511 $41.2m 0.07%
2006 $64.7bn – 2 885 $34.3m 0.05%
2007 $66.2bn 42 000 3 400 8.1% $127m 0.19% (1)
2008 $69.9bn 35 885 2 658 7.4% $140.2m 0.20%
2009 $143.7bn 26 084 3 388 13% $113.4m 0.08% (2)
2010 $83.8bn 22 693 3 461 15.3% $103.3m 0.12%
Table Notes
(1) From 2007 onward Centrelink changed from reporting only customer debts resulting to reporting consolidated debts and claimed savings.
(2) Total Payments for the 2008-2009 includes the one-off payment of $1500 to all pensioners as part of Labor’s GFC stimulus package.

Centrelink’s reported figures on compliance reviews don’t support any inferences on the rate of dole-bludging. All they show is that Centrelink’s ‘non-compliant’ clients are in the minority. The figures on fraud investigations and prosecutions are much more revealing.

First, they suggest very strongly that the number of people who deliberately cheat the welfare system is not merely a small proportion of Centrelink clients it’s a positively a miniscule percentage of the total number of Centrelink clients. They also suggests that there aren’t too many more of them out there who could be caught and prosecuted if Centrelink did more investigations; at most you can expect Centrelink’s fraud investigations to produce between ~2700 and ~3500 prosecutions each year. This will save somewhere between $100m and $150m off welfare spending – consistently less than 1% of the total welfare budget.

That’s a lot of – uncosted – bureaucratic effort for very little result. As noted above the ANAO found that it’s impossible to say whether the ‘Support the System that Supports You’ campaign delivered value for money by saving more off the welfare budget than it cost to run the advertising and provide the administrative support.

Maybe the real rorters of the welfare system back then were the government and officials who spent public money on a divisive ‘educational campaign’ which produced no demonstrable savings.

I took particular aim at the claim by consumer group Choice that regulators should investigate whether Coles is engaged in predatory pricing. Said Choice: “It is difficult to see why any retailer would sustain such losses if it were not seeking to eliminate or damage its competitors”. Said me: Shouldn’t a consumer group know a little about how retailers operate?

My view was that Coles’ decision looked more like an implementation of the basic retail strategy known as “low-high” – price the basics like milk and bread cheaply, advertise the heck out of those basics, get people into the store, and then rely on them buying items which have more margin in them: frozen blueberries, dishwashing powder, ready-to-cook kebabs, flea collars, Tom Cruise DVDs, broccolini.

In July 2011, the ACCC rejected Choice’s predatory pricing claims and said the milk price cuts were good for consumers.

It looks to me like time for the ACCC (and me) to declare victory. Two years on, milk is still cheap, not just at Coles but at Woolworths and Aldi and IGA. Coles’ strategy is widely viewed within the industry as a success for the company, but there’s still plenty of competition to sell milk to you and me. And of course low-income people have cheap access to food basics. This hasn’t been the Choice organisation’s worst call, but it might make the top ten.

Choice’s dodgy claims about milk are just one example of a broader belief in what we’ll call the kill-them-all business plan, which seems common among consumer advocates. This is the idea that companies or industries can drive all of their competitors out of business, take over and charge what they like. The problem is that this rarely happen in real life, except in a small list of very special circumstances. Predatory pricing is generally very tough to pull off.

There are ways in which companies can control markets, but they are more common in  service industries and they generally fit one of several well-known profiles:

• The market is a natural monopoly. This is an issue in all sorts of infrastructure markets. Think of parking at Australian airports, or electricity transmission.
• The market started with a giant government player. That was the case for the Victorian electricity industry and for national fixed-line telecommunications before the 1990s. One market (Victorian electricity) was redesigned fairly well under former state treasurer Alan Stockdale; the other (telecommunications) is still a regulatory mess, with a new monopoly player being put in place.
• The market is subject to lock-in, often because people use the product to interact. Think Microsoft Office, which evolved into people’s default choice because they had to share files with other people. This is one case of a product market where competitors really are pushed out over time. For what it’s worth – and it might not be worth that much – consumers get a benefit (interoperability) as well as higher costs. These markets don’t stay monopolies forever – hello Google Drive! – but they can last a long time.

Feel free to nominate more special cases in the comments.

But in general, companies struggle to control goods markets. When you see someone claiming they can, it seems to me best to take a deep breath and then ask: how, exactly? If the answer is “they’ll slowly drive all their competitors out of business”, you might want to be sceptical.

It’s always been hard to pin down who ‘the elites’ are why we are supposed reject them as un-Australian. A new book review by Tony Abbott offers some clues. It also hints at why attacks on ‘the elites’ are likely to backfire for conservatives.

In the Spectator Australia, Abbott reviews Nick Cater’s The Lucky Culture and the Rise of an Australian Ruling Class. He writes:

As Cater sees it, there’s a powerful new commentariat, dominant in the media, academia and public administration, that is every bit as condescending as the aristocracy he left behind in Britain. In contemporary Australia, the worst snobbery is not directed towards people of lower status, he says, but towards people of different opinions. He thinks that this ‘my opinion must be better than yours’ conceit is putting at risk the egalitarianism that’s at the heart of Australians’ sense of self.

What distinguishes this group from every other influential sector of society is its unshakeable conviction in its moral superiority. Everyone who disputes its thinking is not just wrong, but inferior. Critics of the politically correct consensus are not just bad thinkers but verge on being bad people, as those who are cautious about gay marriage are starting to discover.

Comparing the new commentariat to the British aristocracy makes it sound as if this is a problem of status. Like a bunch of obnoxious Old Etonians, the elites are snobs who consider their manners and way of life to be superior to those of ordinary people. But what made the snobbery of Britain’s upper class oppressive rather than ridiculous was that it was the snobbery of a ruling class. Without power, the snobbery of our elites would be no more threatening than the snobbery of a bunch of undergraduate hipsters.

As Abbott makes clear, Australia’s "politically correct critics don’t constitute an Australian ruling class at all." The elites chatter and provide commentary. But they have no power and they do not rule. They are not an Australian aristocracy.

This isn’t a battle over status, it’s a battle over moral authority. The elites seek to discipline those in power, not those beneath them in the socio-economic pecking order.

As conservatives see it, the elites are preaching a doctrine of original sin that undermines the nation’s confidence in itself. As Abbott writes: "Cater correctly identifies the cultural self-doubt verging on self-loathing that permeates much of our media and higher education."

Conservatives see talk of stolen generations and the dispossession of Australia’s first peoples as conjuring up a sense of collective guilt. Since our nation was founded in sin, we can never be proud of who we are. Instead, we must admit our unworthiness and repent.

So ‘the elites’ do not take the place of the aristocracy, they take the place of the clergy. Just as moralising preachers were attacked as do-gooders and wowsers, the elite are attacked as self-righteous kill joys. By constantly harping on about our sins against the environment, Indigenous Australians and the disadvantaged they try to manipulate us into seeking atonement through submission and obedience.

In his 1964 book The Lucky Country, Donald Horne observed that "there has long been opposition to religion and ‘bible bangers’ amongst Australians." For "many Australians religion becomes important only when it stops them from doing something they want to do." But at the same time, many Australians had a strong "urge to restrict the activities of other people."

When conservatives attack ‘the elites’ for their self-righteousness and moralising, they tap into Australians’ long standing opposition to anyone who insists desire and individual conscience should be disciplined by moral authority. As Horne put it: "the concept of evil is un-Australian: one must look for the good in people." No one should tell Australians what they should want.

This approach makes sense for libertarians who want to overturn the idea of moral authority and create a society based on enlightened self interest and self-actualisation. But philosophically, conservatism is founded on the belief that human nature contains evil as well as good. Conservatives believe that there are desires that should never be satisfied. That is why they have traditionally supported the idea of moral authority and the elitism that goes with it.

By attacking the moral authority of progressive ‘elites,’ conservatives may end up weakening the idea of moral authority and undermining their own cause. Their libertarian allies will be happy to see them do it.

In any event I came to the US for most of 1967 but lived in North Carolina where they were having something rather different – a summer of lynching. Well, I exaggerate. But they weren’t having a Summer of Love.

In any event during that year I went to what I’ve always remembered as  Central Park where there was a ‘be-in’. I was ten and recognised that the people there were strange – long knotted, knitted, nitted hair – that kind of thing – but what struck me was how nice everyone was. (I suspect if I’d seen the same crowd today I would have thought they smiled too much.)  But everyone was very very lovey dovey.

In any event, I now read this in Wikipedia.

The Human Be-In was an event in San Francisco‘s Golden Gate Park on January 14, 1967.^[1] It was a prelude to San Francisco’s Summer of Love, which made the Haight-Ashbury district a symbol of American counterculture and introduced the word “psychedelic” tosuburbia.

And since we’d left Sydney on the Oriana in late December 1966 and headed to Vancouver, then San Francisco and finally LA – or that’s what I think we did –  I reckon that was the ‘be-in’ that I’ve always assumed was in Central Park. Golden Gate Park is a marvellous mega park, very much in the tradition of Central Park.

And so there you have it folks.  Like Forest Gump at an early age appearing in the wings of history, in the prelude to the Summer of Love. And so of course your Troppo correspondent was there, not yet reporting for Troppo, but nevertheless making it possible for all Troppodillians to enjoy a first hand view of history.

I like trains. For a while when I was a kid, I spent Saturdays clambering around Adelaide’s Mile End Railway Museum and most of my pocket money buying items for an elaborate train set. Which may explain how I found myself today reading KPMG’s Phase 2 report in the federal government’s High Speed Rail Study, looking at a high-speed rail line from Melbourne to Sydney and on to Brisbane.

Sadly, the Phase 2 report essentially restates, with arithmetic, everything that most analysts keep concluding about a Melbourne-Sydney-Brisbane High Speed Rail (MSB HSR) project. It would be, like my old train set, a bit of a money pit. It would be very expensive ($114 billion in 2012 dollars), would never earn back its capital costs, would take decades to build, and would not be very green. It would doubtless be a buzz to see shiny locomotives surging through the countryside, but its economics don’t stack up.

It’s useful to have this point repeated. There’s a stream of public commentary that says, essentially, that anyone who opposes high-speed rail is just lacking in vision, because, well, to quote a cringeworthy lead paragraph from The Age’s transport reporter, “High speed rail would be the best“. The low point of this vein of commentary was probably Gordon Weiss’s evidence-free paean to HSR in the Global Mail last year, memorable mostly for a bizarre string of approving references to totalitarian governments: ”Benito Mussolini not only made trains run on time, he made them run fast … Unfortunately, Mussolini’s equally manic support for Hitler interrupted HSR technology … the Central Committee changed [China's rail system] with Mussolini-like bravura.”

When that’s the quality of policy debate, a little realism about costs and benefits should be welcome.

Predictably, HSR boosters are arguing the toss. Their first objection is that the $114 billion estimate is way too high. Hey, another study says we could do the job for a mere $70 billion!

This is an unlikely criticism to anyone who understands the recent trends in major developed-country infrastructure projects. The clear trend is for projects to come in way over their original cost estimates.

Why’s that? We don’t know for sure, but the University of Minnesota’s David Levinson has compiled a list of 39 hypotheses.

[Update 11 May 2013: The paragraph above is wrong. Commenter derrida derider correctly notes that Levinson lists reasons why infrastructure projects are expensive, especially in comparison to Chinese equivalents, but not reasons why they come in over budget. The better source for the nature of budget overruns is Danish economic geographer Bent Flyvbjerg, author of Megaprojects and Risk: An Anatomy of Ambition:

"[The Aalborg study] and other studies of cost development in major transport infrastructure projects reveal the same overall pattern: cost overruns above 40 per cent are common, especially for rail projects, and overruns above 80 per cent are not uncommon … Cost overrun today is the same order of magnitude as it was ten, thirty or seventy years ago.”

The core point remains: $114 billion is not on its face ridiculous.]

The most likely sources of additional and unbudgeted costs (not that I would see them all as important) include:

• Commitment to tunnelling for road and rail rather than tearing up big chunks of cities, My first guess is that this is the biggest single factor in high costs.
• High build standards generally (safety, social, environmental, architectural).
• The one-off nature of the projects. (China, building 20,000 kilometres of HSR lines, will get some economies of scale, as has Europe to a lesser extent. Australia won’t.)
• High labour costs.
• High land costs.
• Process costs to get the power to acquire and use land. (The Chinese government can happily tell 1.3 million people to move when it wants to build a dam; Canberra rightly cannot.)
• Insufficient commitment to detailed benefit/cost analysis, which in turn leads to a get-it-done-at-any-cost mentality.
• Lack of competition among construction services providers.
• Poor government oversight.
• Political pressure to add extra features (tunnels to protect creeks and forests, extra stops at smallish towns etc)
• Updated 11 May 2013: Intentional underestimation of costs by the promoters in order to get the projects signed off is probably very important. As Flyvbjerg puts it: “Strong incentives and weak disincentives may have taught project promoters what there is to learn, namely that cost underestimation and overrun pay off.”

I would add that the Sydney-Brisbane HSR line faces particularly unfriendly natural terrain, compared to most of China and anywhere else.

By far the best public analysis of the high-speed rail issue appears to be Alan Davies’ work at The Urbanist, and he does not appear very surprised by KMPG’s estimate.

So I think it’s hard to argue those numbers are on their face ridiculous.

Just as troubling is the tendency to ignore the report’s conclusions on the MSB HSR’s environmental impacts. “I’d think HSR would have considerable … environmental benefits which don’t seem to be mentioned in the report” suggested one Troppo commenter. Actually, the environmental benefits are in chapter three of the report, which has a sub-section titled “System-wide environmental impacts during operation”, and in Appendix 5G, which goes through the modelling of those impacts. The problem for HSR boosters is the environmental story that the report tells.

The report claims, for instance, that an MSB HSR will cause a net increase in emissions. Why?

Partly because building a new rail system uses a heap of cement and steel, which are high-emission materials.

And partly because when you build new pieces onto an existing traffic network, you encourage activity on other parts of the network.

But mostly because right now there’s a lot of unmet demand for flights out of Sydney Airport. When we build our rail line, we won’t get less traffic through Sydney Airport; we’ll just get new traffic replacing old.

This is a variant of the point often made by critics of new freeways: they don’t reduce congestion, because they pull new users onto the roads. (Note by the way that we do get benefits in these situations; those benefits just don’t include reduced congestion.) Because this point is so often made by anti-freeway, pro-rail types, I suspect it will be a little hard for HSR fans to deny.

Yes, when it’s up and running the MSB HSR should create less greenhouse gas emissions than air and road travel (though this depends on the trains being pretty full). But it ends up producing a lot of net new transport activity, which means emissions go up rather than down. The report estimates “a net increase in overall transport emissions of 32 million tonnes of CO2–e over the evaluation period up to 2085″.

You can construct a scenario where HSR reduces emissions. That’s the scenario where Sydney gets a second airport, so that HSR is no longer filling unmet Sydney airport demand. But of course an extra Sydney airport makes the economic case for HSR weaker. And even in this scenario, HSR remains an extraordinarily expensive way to reduce CO₂ emissions.

High-speed rail has rarely been economically compelling anywhere. But like many forms of infrastructure, it has most appeal when you are starting with a relatively clean slate and high population densities, like Japan after World War II. In Australia, with its built-up cities and long inter-city distances, HSR makes less sense.

For Australia, high-speed rail looks a little like a very expensive hobby. We have far better ways to spend $100 billion.

One of the hallmarks of a real university is that you don’t get called a professor for being a high level administrator: you have to have been a serious scholar with some degree of national and international recognition before you get the highest academic title a university has to offer. Whilst it is thus quite normal in many universities that high-level administrators are not academics because the job requires different skills, serious universities will only hand out academic titles based on academic merit, not administrative merit. After all, professors are supposed to embody and profess the quality of the academics in their university! So the reputation and quality of these publicly funded universities stands or falls with how easy or difficult it is to get an academic title. I will let you judge the case of QUT.

Let us start at the top of the university, made up of the Vice Chancellor and 6 Deputy Vice Chancellors. All 7 of them are professors. The 2 people just below the VC on the QUT management website, the ‘Senior’ Deputy Vice Chancellors are Professor Carol Dickenson and Professor Peter Little. Let us look at their achievements and those of the others using two standards every other academic has been judged by in recent years in Australia: whether they have published in good journals and conferences, and whether their peers have cited their work. For publications we can turn to the rankings used by the journal lists of the Excellence in Research for Australia (ERA) exercise, wherein publication outlets have been ranked from high (A* and A) to low (B and C). For citations, there are various possible sources, but let us take the very generous and easily accessible Google Scholars information, a resource frequently used and recommend in Australian grant applications.

A complication is that one cannot find the CV of any of these DVCs online, which is unusual because normally academics are not afraid to let you know their achievements. Yet, QUT helpfully has a reprint facility and Google Scholar finds almost every paper from the last 50 years. Also, the QUT website does tell you whether they have a PhD and where it is from, so there is enough information to trace people’s academic careers from these sources. To be sure the results are not biased, the DVCs were individually approached to see if publications and citations were overlooked in this search (none responded with information on additional papers or citations).

Professor Peter Little has a PhD (from Bond university). He has one publication in 2001 registered at QUT (co-authored with two others) in a journal that is not on the ERA 2010 journal list. He has another paper from 1998, also in an un-ranked journal, with a total of 31 Google Scholar Search cites (including self-cites) up to 31.

Professor Carol Dickenson has 17 cites generated by two papers, one of which is a report from a ministry and the other in a B-journal on the ERA journals lists.

What about the next four DVCs in line then: Professors Scott Sheppard, Suzi Vaughan, Arun Sharma, and Tom Cochrane?

Professor Scott Sheppard doesn’t have a PhD, has no publications to be found anywhere and has been a diplomat most of his life.

Professor Suzi Vaughan comes from an art background. In terms of publications,  she has two book chapters,  an un-ranked journal paper, two conferences (see here), and 14 citations on Google Scholar. On top of this is a 2003 ‘art work’.

Professor Arun Sharma  is still producing as an academic, with an A*, 6 A’s and 2 B’s to his name in the 00’s alone, as well as some serious conferences. He has 40 citations from his QUT-registered publications.

Finally, Professor Tom Cochrane. He does not have a PhD. He has one B and one C publication on the QUT repository . His main publication is called ‘making a difference: implementing the eprints mandate at QUT’ and has been cited 21 times, bringing his estimated total number of Google Scholar cites to 44.

Let us for comparison look at the publications and citations of senior professor-administrators in other regional universities in Queensland: the University of the Sunshine Coast and the Southern Cross University.

The Vice-Chancellor of the University of the Sunshine Coast has hundreds of citations and dozens of articles, praised on his own promotional website.  The Deputy Vice-Chancellor, the Pro Vice-Chancellor International, and the Pro Vice-Chancellor Research, all seem to be solid academics with hundreds of publications combined. Indeed, they are still publishing and are encouraging some of the lower managers, who primarily have worked in government, to write papers too. The one person on the management team who is clearly not an academic is also not called a professor.

At the Southern Cross University, meanwhile, the VC, the Deputy VC, and the Pro-VC look very solid academics too. Together they have about 500 publications (papers, book chapters, etc.) and thousands of Google cites.

Let us now take a different comparison and look at what is normal within QUT, the school of management in the faculty of Business. Let’s look at the lecturers first for they are at the bottom of the academic hierarchy. One of the lecturers there had 5 publications, including an A on the ERA 2010 list. And at the senior lecturer level, the standards are higher: this senior lecturer for instance has an A and an A* and a whole list of further publications. Another senior lecturer has several C’s, B’s and an A* too, on top of 165 Google citations, which is more cites than all 6 DVCs combined.

What is normal at GO8 universities? Well, senior professors at GO8s typically have thousands of citations and dozens, if not hundreds, of articles that are in the ERA rankings. In economics at GO8 universities, it would be hard to even get tenure as a lecturer without at least a couple of A/A* publications. Professors with less than 500 Google citations are rare. I don’t know any professor at a Go8 without a PhD.

What are the criteria at QUT for being a professor? Well, the official QUT criteria for professors is that they demonstrate “leadership and authority in research and scholarship”. Judging by some of the DVCs this apparently does not include the need for either a PhD, journal publications, or citations. Who judges, you might ask? In the end, at QUT it is all up to the Vice Chancellor whose word on this is final according to its criteria.

Do these DVC professors then accept a lower wage as compensation for getting an academic title with their levels of academic output? Not quite: they get huge salaries of around 500,000 dollars each (see pages 44 and 45 for their salaries) and average ‘bonuses’ of 271,000 in 2011!.

I have not looked at all the Deans and other ‘lesser managers’ at QUT, but from a quick glance at ‘Creative Industries’, the situation seems the same as higher up. You might want to browse their list of emeritus professors who are supposed to be top scientists.

I think it is up to the reader to judge whether QUT takes academic titles seriously or not. Personally, I am amazed at the ease with which administrators there get professor titles. I want to see QUT adopt far higher standards and find myself wondering, whenever I meet a QUT professor, whether they are a real one or not.

Disclaimer: the views expressed above are solely those of the author and do not necessarily reflect those of his employer (UQ). Previous writings on related topics are here, here, here, here, and here.

The Chinese emperors hit upon this truth when they started to surround themselves with eunuchs, despised by the rest of Chinese society and thus fiercely loyal to their protector, the Emperor. The roman emperors, similarly, made a habit of surrounding themselves with freed slaved who were despised by other Romans, as well as by a dedicated palace guard (the Praetorians) who were the only militia allowed in the vicinity of Rome.

The European colonialists too used this basic ‘dirty dozen’ technique when it came to keeping a large population in check with minimal own presence, particularly in Africa, by elevating some small despised group (ethnic or religious minorities) as the preferred club from whom the senior administrators came. This small favoured group would get personal benefits (riches and influence) but in return they would do whatever the colonizers wanted.

To see the relevance of this for university cuts in the Land of Beyond, you first need to step back a level and imagine yourself to be the Vice Chancellor of a second-rate university that brings in, say, a billion ‘Beyond’ dollars a year out of which some 300 million is money you dont really need to generate that 1 billion. It is ‘potential profit’ if you like.

Now, your first thought will of course be to give as much of this money to yourself as you can. That is not so easy though: in Beyond, universities are non-profit organisations nominally run by senates and full of academics who like to monitor and criticise you. You would never get away with giving yourself multi-million dollar salaries and huge offices if academics are really watching your every step.

So in order to get more of the profit, you need to subdue two groups, the academics and the senate. You subdue the academics by keeping them busy with ‘compliance’ and having a lot of systems in place to punish them if they become pesky. You thus include in your rules that anything that harms the reputation of the university is a sacking offence. You put yourself at the top of the committees that decide on professorial promotions and academic bonuses so that you are their direct boss. You appoint hundreds of administrators to monitor the media, teaching, and student-related activities of the academics with the purpose of keeping them quiet and punishing them when they get out of line.
You subdue the senate by overloading them with information (for which you need again more administrators) and by keeping them happy with luxuries and gifts. Over time, you attempt to get control of the mechanism via which new members get to be in these senates.

Now, the essential problem you face in this as a VC is how to ensure that the people helping you with your take-over plans are somewhat loyal to you rather than to something as silly as the goals of the university or academia or even to the needs of Beyond. It is loyalty to yourself that you need in order to eventually be able to get away with giving yourself huge amounts of money.

You remember your history lessons and realise that what you need is a set of eunuchs: people despised by the academics in your organisation who will thus have the same incentive as you have to subdue the academics and grab as much of the university resources as possible.

What are the equivalent of eunuchs in universities? Why, non-academics of course! Better still, non-academics whom you give academic titles for they will be even more despised! Hence you pick the most efficient bullies you can find, call them all professor and put them in charge of the divisions that subdue the academics and that send mountains of information to the university senate to ensure they will just go along with whatever you happen to ask of them at the end of some sumptuous occasion.

Due to your brilliance and foresight, the trick works like a charm and you find yourself earning well over a million, with several huge offices, and in a position to bargain for even more kick-backs from outsiders who want to use parts of the university for their own end (property developers and the like).

Now imagine yourself in the layer yet higher: you are now an ambitious paymaster in the Capital of Beyond, someone who nurtures a reputation for being able to get things done even if they might not really be in Beyond’s best interests. You too have a control problem for you want all kinds of things from universities. You would like the universities to keep the population happy by churning out cheap degrees to domestics. You also want universities to sell visas to smart oversees students by means of high fees for almost no education (cross-subsidising those domestics). Basically, you want universities to abide by whatever fancy drifts into the head of your current minister.

The control problem you have as a ‘wheeling and dealing’ senior civil servant in Beyond is again those pesky academics: they are self-righteous, not all that interested in your opinion or even your money, and wouldn’t easily go along with these plans. They might well flatly refuse to sell visas to foreigners because they would baulk at short-changing the education given to those foreigners. Indeed, they would probably laugh in your face if you suggested that universities should fall in line with, say, your wish to have a campus in the middle of nowhere just because it is a marginal constituency.

Just imagine what confident academics would do if you told them to cut their budget by 900 million! Why, they might do something as bold and brash as to honestly tell their students that there are no funds to properly educate them. Imagine the political fallout of such honesty by a bunch of self-righteous academics who won’t simply do your bidding! No no, it is quite clear to you that the last people you want leading universities are academics. You want leaders who know what you really mean when you talk about ‘university accountability’, ‘stakeholder management’, ‘strategic visions’ and ‘preparing for the future’.

So the senior Beyond bureaucrat too finds herself in the situation of needing eunuchs in charge of universities. You don’t mind if they get some private benefits out of the arrangement as long as they do your bidding and not rock the boat politically.

Now think a step higher again and consider why Beyond might have fixers at the top of the ministries …..

So, who did this study that concluded that Australia would need 50 years and 114 billion dollars to build a high-speed rail line that would make travel slightly longer and more expensive than just going by air?

The report was compiled by a gravy-train made up by AECOM and its sub-consultants (Grimshaw, KPMG, SKM, ACIL Tasman, Booz & Co and Hyder), all highly-paid private consultancies. There was no noticeable involvement of the public sector at all.

What is wrong with that? Everything. Private consultancies get paid for their answers, not their honesty. Just take AECOM’s strategic vision: “Our purpose is to create, enhance and sustain the world’s built, natural and social environments”. Lovely. Its a bit cheeky of course to have entirely contradictory elements (build and natural) in your mission statement as if they are not contradictory at all, but what do you expect from consultants? Honesty?

KPMG Australia then, what about their reputation for honesty? Its stated values are of course beautiful, full of words like ‘respect’, ‘honest’, ‘community’, ‘integrity’.  But what about its history in this kind of area? Well, its 2010 report into the mining tax was a great example of being paid-for-an-answer. It was selective, made false comparisons, and uninformative. My conclusion at the time was that “The report, and in particular the summary, is indeed not an objective appraisal but a piece of propaganda that was bought for a reason.”

So, it is a bunch of paid consultants that now tell us that it would take 50 years to build a high-speed rail line (whilst the Chinese took 4 years to build a longer one between Beijing and Shanghai). And how serious are its pronouncements? Well, if you use their own disclaimer, not very much for they say in their own disclaimer “The Study Team has not verified information provided by the Information Providers (unless specifically noted otherwise) and it assumes no responsibility nor makes any representations with respect to the adequacy, accuracy or completeness of such information. ”

So, it was given a set of assumptions and information by others and takes no responsibility for checking those, meaning that its conclusions could have been pre-cooked by those ‘information providers’, including the controlling ministry. How handy! How convenient to have such non-inquisitive consultants! So much for integrity!

It is basically ridiculous to have national debates on the basis of the words of hired guns. The Australian civil service should have something like its own independent budget office with the ability to calculate the effects of major infrastructural projects, as well as major tax plans.

We now in fact have a parliamentary budget office and I hope it grows into a substantial independent body that can get us out of these consultancy-lead shadow debates.

In the year Margaret Thatcher became PM, government revenue was around 34% of GDP. When the conservatives finally left office at the end of the 1990s, it was a bit higher at 36% and today it is… again, about 36%. Government spending at the peak of the recession of the early 80s was 47% of GDP and  …. so it was again in 2009 at the peak of the current recession.

Real GDP growth per person from the first quarter in 1970 to the first in 1980 was around 25%. From the first quarter in 1980 to 1990 it was around 32% (and the next decade 26%). Not so different from Germany.

In terms of major events that politicians can truly influence that came up in her time, the first one that comes to mind is the housing bubble that the UK government allowed to build up and that burst at the end of the 1980s, leaving households in negative equity and devastating the country as much as any Winter ever did. The second one that comes to mind is the Single European Act of 1986, proposed by Lord Cockfield (British) and helped through parliament by Thatcher’s massive conservative majority, giving European laws reached by qualified majority precedence over those of the UK. This greatly expanded the powers of the EU and diminished those of Britain. It was one of the biggest reductions in UK’s parliamentary powers in its history. No wonder Thatcher tried to disown it later when ex-post rationalizing her reign to fit her image, essentially by pretending to have been too stupid to see what she was pushing through parliament. A weird defense from an ‘Iron Lady’!

And if you believe her favourite minister’s autobiography (John Major, who went on himself to be PM for 7 years), then Thatcher was pushed by her cabinet to declare war on the Argentineans, changed her mind frequently on important issues, and had gone control-freak to the point of paranoia by the time of her demise.

So the overall legacy of Margaret Thatcher has been to make no basic difference to the spending or revenue of the state, to have bankrupted many small house owners by having too low interest rates for too long, and to have signed over a lot of powers to Europe. So she neither destroyed the public sector, nor was she truly frugal, nor was she immovable, nor did she protect British powers.

Summing up her time, she resided over an average economic period, made serious mistakes, and essentially went with the flow of her party and the times. A normal reign. What was truly unusual about her was her style: people were and are passionately for her or against her.

So the reality simply does not measure up to either the picture that her enemies paint nor that of her supporters. The consumers of Thatcherism are the consumers of exaggerations.

But what about her facing down of the unions, I hear you ask? The halving of union membership, the demise of Arthur Scargill and the return to mass private share ownership? Was that not a real change in the destiny of the UK?

I am glad you ask about that one. Yes, the unions lost a lot of influence during Thatcher’s time. But what filled the void of these public sector and manufacturing-based unions? The small entrepreneurs she so admired and that were part of her own family history? Fat chance! In effect, what replaced the manufacturing unions were the financial unions: with the demise of the role and power of industry came the rise of London as a financial capital, fueled by foreign money and foreign workers, making manufacturing uncompetitive and greatly increasing the power and influence of the financial executives.

So yes, sandwiches at number 10 by hairy smelly men with strong regional accents were no more after Thatcher. They have been replaced by well-coifed corporate men smelling of roses, with impeccable French and German English accents, coming for caviar on toast. To paraphrase the Italians: everything had to change so that nothing would change!