Competitive neutrality: Camels, pinballs, tilted playing fields and five minute arguments …

Cross posted from the Mandarin:

I recently made a submission to the Productivity Commission’s inquiry into competition in finance. I wanted to suggest a very simple idea, that I thought could make a big difference. Moreover it came straight from Downtown Reformsville. It’s a slight gloss on an old idea that’s been so central to Australia’s economic reform that we coined the expression by which it is known globally – ‘competitive neutrality’.

Indeed, I like to think that my proposal ‘completes’ the idea of competitive neutrality, putting it on an ideological level playing field as it were. This makes it serve the interests of efficiency and the public good rather than special interests whether they’re from business or government. Continue reading

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Comment from today’s Banking Day: Plain vanilla a super flavour

Image result for industry funds

It’s funny how not-for-profit is more efficient than for profit where there’s masses of opportunities to rip people off? Who’da thunk? The Industry Funds were dragged into the Royal Commission in line with the well established principle of public administration: Never let a good deed go unpunished.

The current round of hearings at the royal commission into misconduct in the banking, superannuation and financial services industry has been notable on many levels. Thus far, the much anticipated grilling of the industry super funds has been a fizzer for their critics.

Ian Silk, who has been chief executive officer of the largest industry fund, the A$140 billion AusSuper, since 2006, was unruffled in his time in the witness box, in stark contrast to the caning given to NAB’s super fund trustees who preceded him.

Likewise, for David Elia, the CEO of hospitality and tourism industry fund Hostplus, a position he has held since 2003. He said that as of July this year, Hostplus had $34.5 billion funds under management on behalf of just over 1.1 million members, many of them very young, in part-time entry level casual employment.

Elia took the first opportunity he was given to remind the commission how, despite needing to consider the cohort of disengaged youngsters whose money his fund was managing, it has nevertheless thrived, with the Hostplus MySuper product ranked as the best performing fund, net of investment fees and tax over one, three, five, seven, 15 and 20 years.

What was notable?

Unlike their for-profit counterparts, two of the country’s largest and most influential super funds were represented by their chief executives, both of whom could claim long-term outperformance over their tenures.

Neither of them obfuscated or tried to hide behind weasel words. And they couldn’t – and didn’t – trot out the excuse so often used by their banking counterparts that they weren’t in the job at the time, or weren’t told anything, when (insert allegation of poor behaviour or regulatory breach here) occurred.

On the evidence so far, the industry funds’ CEOs have not left themselves open to the same allegations of bad behaviour and putting their members last that have so damaged the rest of the financial services sector.

Their banking CEO counterparts will soon get their respective days in the spotlight.

The excellent, but paywalled original is here.

Posted in Economics and public policy | 15 Comments

Could CPR resuscitate our political system (Corporate Political Responsibility that is)?

Image result for corporate political responsibilityOne of my twenty something friends once told me of a meeting to discuss corporate social responsibility in their Big Law Firm. Along came the heavies of the firm, together with their Champions of Change. These champions of change are men who look out for women – largely by making sure you don’t have to listen to women when you can listen to a Champion of Change. #WTNTL?

In any event, the team leader or perhaps a Champion asked people what they thought corporate social responsibility was all about. This person piped up and said that it might mean that the law firm wouldn’t do legal work for firms that whose business model actively harmed the world. Most obviously tobacco companies but also, it was suggested Adani and other coal miners.

It emerged that this was the wrong answer. It turns out that corporate social responsibility amounts to doing Nice Things while one works. Whistling While You Work doesn’t quite cut the mustard, but doing Something Nice does. You might spend a night out with the homeless, do pro-bono work for a Good Cause or do a lot more recycling (even if – perhaps specially if – it harms the environment like paper recycling does).

Anyway, its intriguing the way in which CSR is often corralled into relatively peripheral channels. In this regard shared value, is a similar more positive approach to a similar theme. But if corporations do want to show some ethical backbone, one thing we might surely expect them to do is to desist from lobbying governments with demands in their own interests that fairly clearly violate the public interest.

Indeed, the great flaw in so much of this ‘ethical’ this and that is the public good problem. A firm can be ‘ethical’ in choosing to make goods that can be made with lower levels of pollutions effectively outsourcing the pollution to other firms – or countries – offsetting or even in some circumstances outweighing the good they do (as could easily happen with offshore production of aluminium using dirtier coal or manufactures with worse labour practices).

At least corporate political responsibility would not suffer from this public good problem. Unless and until the Western economies transition into the kinds of gangsterism we see in Russia and in the mind of Donald Trump, if one firm desisted in lobbying for its own benefit at the expense of the public interest, other firms in the same industry might lobby for their interest, but if they were successful in influencing policy they’d also benefit the Good Firm that was desisting from such practices.

Do I expect any of this to happen? Not soon. But then Ben Neville drew my attention to this article, calling for environmental CPR. It’s a pity it’s limited it to environmentalist objectives, especially since CSR often extends well beyond environmental responsibility and the article wasn’t even shoehorned into an environmental journal. It wasn’t even delivered at a conference at which the theme was Pirates of the Caribbean The Environment.

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It’s on again on 6th Sept: making the world a tad better with our guest Christos Tsiolkas

If only I’d been alive to get to one of these events.

Nelson Mandela

Last year’s second dinner was perhaps only matched by Lincoln’s Second Inaugural.

Nicholas Gruen

Lying Nick Gruen is a total lightweight. TOTALLY FAKE ECONOMIST. Begged me to let him clean the ashtrays on The Apprentice. Small hands. Todd Sampson only thing to come out of his TV show. Sad!

Donald Trump

As you may recall, last year I had so much fun at my birthday, I decided to make it an annual event. To disguise the naked egotism of it we (which is to say “I”) decided to raise money for a Good Cause. For me that’s refugees. We ran a kind of trial just two months after my birthday last year and it was a blast.

Now, many months after not getting my act together for my birthday, we’re going again. So you’re invited to a fantastic party in Melbourne with a whole lot of fantastically interesting people I know. (Seriously, there’ll be some fascinating people there I promise!)

It will mostly be dinner and meeting and talking to friends and interesting people you’ve not met before, but Christos Tsiolkas is coming and has agreed to speak to us. We’re inviting you to pay your way with $49.99 as was the case last year) I contemplated raising the price to $50 but then the credit card margin (which you get to pay) also went up by a cent. And effective marginal tax rates of 100% are not something that is tolerated in my profession! So Book Now for 7.00 pm on Thursday Sept 6th at Tazios on this link.

I’m also hoping you can donate and will match every dollar of yours over $100 up to a total liability of $5,000 for me. (Last year Ross Gittins decided to play hard-ball and try to bankrupt me with a thousand dollar donation which took $900 out of my pocket right there! Bring it on I say! We can always auction off the Troppo garage of imaginary cars, – starting, obviously enough, with Rooter.)

And there’s a special deal for those from out of town. They can make a donation as Ross did from interstate or overseas. Just email me on ngruen at gmail and I’ll send you details. And please pass this around.

Posted in Blegs, Competitions, Personal | 2 Comments

Authoritarianism: GUEST POST by John Burnheim

Image result for authoritarianismArguing with an American ex-Australian now resident in Canada, I contested his view that, of the three countries, America is the least and Australia the most, authoritarian. In part it was a verbal difference. I was taking “authoritarian” in the established pejorative meaning: Valuing authority for its own sake often used to describe totalitarian regimes or certain personalities or cultures.

I was pretty sure that he was following an American usage that is descriptive of the degree of governmental activity in regulating daily life. But the pejorative content of authoritarian is not so easily shrugged off, especially in America where there is a widespread belief that government is at best a necessary evil. What follows is my attempt to sort out some of the issues. In any event below is the text of an email I wrote him:

I did find the distinction you mention between structure and culture very useful. I think of a social structure as a bus that is supposed to run its route by a timetable. Anybody can use it, if they accept it’s operating conditions. On the whole it is in the interests of the citizens if the bus does what it is supposed to do.

Even though it must involve quite a lot of use of authority, it is not authoritarian until running the system becomes an in in itself, imposed whether people like it or no by an authority that claims to act in a superior interest. In any majoritarian democracy, it is inevitable that some people feel that some authoritative decisions are authoritarian, but that may be a matter of a tolerable defect in a wider context.

Culture is the behaviour of the bus driver and the passengers, regulated either by explicitly accepted rules or by reasonable expectations. There are always reasons for most rules that are generally accepted as beneficial. Often the reason is simply that people don’t like to have to change their habits. Even those who would prefer a different rule at least know where they stand. That is social authority. Continue reading

Posted in Cultural Critique, Democracy, Philosophy, Political theory, Politics - international | 25 Comments

The first page test: Hannah Arendt edition

There’s an amazing amount of dreck about – masquerading as the latest thinking. It’s not that there isn’t a lot to think about, so it’s easy to think you should read this or that. How to choose? One of my filters is the first page test, or even the first paragraph test. Does the first paragraph have arresting ideas in it. Ideally does it intimate a whole bunch of ideas in ways that make you think the author might have been pondering them for some time, bringing them into some compelling relation to each other.

Because there are books that start well and you then end up wading through dreck, you can also apply the random paragraph or page test. This also helps because you can get an idea in the bookstore and read the first chapter on your ebook sample.

Why am I telling you this. Because over the fold I have the first page of an essay by Hannah Arendt called “The Crisis in Education”. Imagine if every first page had what it has? Note, during the afternoon, I ran into another cracker of an opening, and so you’ll find it below Arndt for your delectation.

(Disclaimer and declaration of conformity with Troppo’s ethics policy: I’ve rushed into print. I’ve not got beyond the paragraphs quoted below. Perhaps she goes on to develop the thesis that our education system is in crisis because of alien abduction. Perhaps she thinks it will all be fixed by a giant monocle mounted on a pedestal. If that is the case then my ‘front page test’ is thus refuted. But if that doesn’t happen, it’s pretty much plain sailing as far as I can see.)

Continue reading

Posted in Cultural Critique, Philosophy, Political theory | 9 Comments

The people’s voice: as rage and as healing

There’s a spectre haunting Europe … and the rest of the Western world. We have elaborate ‘diversity’ programs in good upper-middle-class places to prevent discrimination against all manner of minorities (and majorities like women). It’s a fine thing. But there’s a diversity challenge a little closer to home which is tearing the world apart. There’s a war on the less well educated.

They’re falling out of the economy in droves, being driven into marginal employment or out of the labour force. This is a vexing problem to solve economically if the electorate values rising incomes which it does. Because, as a rule, the less well educated are less productive.

Still, the less well educated are marginalised from polite society. Polite society even runs special newspapers for them. They’re called tabloids and they’re full of resentment and hate. And yes, a big reason they are the way they are is that the less well educated buy them. They’re also marginalised, except in stereotyped form, from TV.

Then there are our institutions of governance. While less than 50 per cent of our population are university educated, over 90 per cent of our parliamentarians are. Something very similar would be going on down the chain of public and private governance down to local councils and private firms.

And I’m pretty confident that a lot of this is internalised even by those not well educated. The last working-class Prime Minister we’ve had in Australia was Ben Chifley who was turfed out of office by a silver-tongued barrister in 1949. Barrie Unsworth in NSW going down badly in his first election as NSW Premier despite seeming – at least to me to be doing quite a good job. But he sounded working class – because he was. I wonder if that was it?

The world is made by and for the upper middle class, those who’ve been to the right schools and gone to unis (preferably the right unis), to get on. The ancient Greeks had a political/legal principle of relevance here which is entirely absent from our political language. In addition to ‘παρρησία’ or ‘parrhesia‘ which is often translated as ‘freedom of speech’ but which also carries a connotation of the duty to speak the truth boldly for the community’s wellbeing even at your own cost (a la Socrates), they also had the concept of ‘ισηγορια’ or ‘isegoria‘ meaning equality of speech.1

In Australia Pauline Hanson’s One Nation represents the political system’s concession to isegoria – toxified as a protest party within a hostile political culture. My own support for a greater role for selection by lot in our democracy is to build more isegoria into our political system in a way that, I think there’s good evidence, can help us get to a much better politics and policy.

In any event, the big, most toxified political events illustrating these problems are, of course, Brexit and Trump – concrete political acts of transformative significance standing before illustrating the power of isegoria as rage. Continue reading

Posted in Cultural Critique, Democracy, Philosophy, Political theory, Sortition and citizens’ juries | 23 Comments