We had a panel composed of two ABC journalists (Annabel Crabb and someone from ABC radio) and Bruce Baird, former Liberal MP. (At least people have heard of Baird, and he has some sort of public credentials, unlike some of the “formers” who appear on The Drum, formerly faceless staffers who appear to be doing a fair bit of self-promotion).

This was one of the least overtly political panels. It’s not unusual to have an ABC journo. Two is. Maybe it’s hard to round up ex-pollies and staffers this week. Perhaps Paul Howes is keeping a low profile for once.

Another edition this week featured the IPA’s Tim Wilson, some NSW state political writer from somewhere or other, and the ABC Religion and Ethics Editor, Scott Stephens, who like the Editor of the online Drum itself, Jonathan Green, is actually good value. Unlike pretty much everyone else who appears on the show, they’re intelligent people capable of articulating a reasoned position outside the possible range of media/partisan talking points.

Anyway, it was interesting to hear all three panelists today echo the Qantas management line on offshoring and job cuts. Hook, line and sinker. No critical examination. No, whatever business says must be true. Intone “globalisation” a few times, and nod sagely.

That gets us closer to the actual bias in the journosphere – the liberal bourgeoisie reflecting itself back. The mantra “Productivity Commission” can always be recited instead of thought. Sure, they’re socially liberal, but it’s insane to call these folks left wing. They *are* the inner city dwelling latte sippers of legend, well paid, socially ‘tolerant’, and probably fitting best politically into the more milquetoast faction of the now departed Democrats. “Left neo-liberals” perhaps, but that would be a stretch.

And that was without the almost compulsory representative of the IPA to recite neo-liberal nostrums.

It might be a bit much to ask for reflection, thought and searching reflexivity when you have to switch your attention to the next talking point after about 3 or 4 minutes, but there you have it. And let’s not forget that most journos, with some exceptions among specialist writers, are experts in nothing; except perhaps in being journos. So it’s unclear to me why they have anything to say on business strategy, the changing shape of the airlines industry, industrial relations, or the way managements selectively use numbers to show a ‘cost’.

This is why so much self-serving business propaganda, advocacy research and modelling slips straight through to the keeper, I suspect. Oh, look, Access Economics says, ‘x’. Of course, they’re always right, no matter who’s paying the bills, whereas actual public institutions like Treasury must be politically biased. Or something. Didn’t Ken Henry like wombats?

I was prompted to ponder all this by some interesting attempts on a thread at John Quiggin’s to resolve the apparent conundrum between the right-wing-isation of the ABC and the constant attacks by people like Janet Albrechtsen on its purported left wing bias.

There’s actually no real conundrum.

Balance functions as a pincer movement. Albrechtsen and the other enforcers rely on the way the ABC has been trained, Pavlov’s Dog style, to be hyper-sensitive about the *numbers* of alleged lefties. Her latest column really is just a way to bounce more Brendan O’Neill onto a radio show or an online portal or a panel discussion. As so much of what passes for right wing opinion in Australia is demented, or rather cranky, or incapable of making an argument without a non sequitur or a Godwin, the IPA provides a never ending supply of presentable and well media trained spokespeople. It helps to be in Sydney too.

Then, because of the numerical understanding of ‘balance’, we can exclude anyone who might be a tad original, and not take one side of the so-called left/right equation. And if you live in the eternal present, by definition what you say is actually conservative. We also get the look of shock on presenter Steve Cannane’s face when Peter Reith condemned ABC News 24 for broadcasting the deluded and offensive ravings at some fringe anti-gay protest in Canberra. ZOMG! Where is the balance!

And so it goes…

TONY WINDSOR: Well, I think the media have got some degree of responsibility in relation to some of the things that went on, as well, but the – this is the worst political campaign that I’ve ever seen… But I do believe that the media – this is the worst campaign that I’ve seen from the media. I think some of the senior commentators were actually creating news out of nothing. They weren’t giving – and maybe the leaders weren’t prepared to give of their best but the media commentators in some cases were as appalling as the campaign.

[I've edited out a bit of his answer where he discussed the two party leaders - the full transcript is here.]

Perhaps unsurprisingly, no one on the panel really reacted to this observation, one with which I’m sure many of us would agree.

It was interesting to see Janet Albrechtsen’s usual brand of bile and snark almost completely marginalised.

Anyway, it’s probably a good time to reflect on the media’s performance in the campaign – Media Watch’s analysis last night is also a good discussion starter.

It is disappointing if this is now the politics of Rudd’s prime ministership. Despite Rudd’s tendency to conflate issues as moral challenges, he appears to view every political decision through one prism: inflict no pain and it’s all gain for him. … Here, in a nutshell, is Rudd’s political nirvana. He can continue a prime ministership based on rhetorical flourishes and symbolism without inflicting any pain on voters.

Much of Albrechtsen’s analysis is inflected with the spleen one would expect (and the illusion that to introduce WorkChoices is to do good), but I suspect she has something of a point. I’ve been critical myself of Rudd’s ‘big tent’ strategy – the accumulation of political capital for its own sake. As I’ve also commented, the Labor Party, in the face of Abbott’s leadership, is likely to downplay climate change as an issue. In an election year, the theme will move to an accentuation of the argument that Abbott and his frontbench waxworks represent a return to Howardism; but a nastier, more brutish version. And don’t be misled, they’ve hardly even begun to fight on this front. In many respects, the smart political move is to let Abbott prepare his own noose, as his negatives are already very much defined in the public mind.

But any election theme that Abbott represents the past requires painting Rudd as representing a brighter future. I’m not so certain Labor can just run on its record – a la the first term Hawke government, which got a nasty surprise in the 1984 election.

The issue of health might be a straw in the wind, indicating which way it may blow. Health still plays as one of the biggest issues in Queensland at state level, and I’d be surprised if that’s not the case in other states. Whether or not a commonwealth takeover would lead to a more efficient system I’ll leave to the policy wonks to ponder. But there’s no doubt that health, and “the administration of things” generally, is a potential minefield for governments. It’s one area, and some talk back programmes in Queensland more or less specialise in this, where human stories of woe can be endlessly sheeted home to political causes.

Richard Farmer has been arguing for a long time that health is an issue on which the government is vulnerable, and rightly decrying the useless performance of Peter Dutton as shadow minister. But Abbott seems to have finally taken his advice, and raised the temperature of the health debate – seeking to hold Rudd to his promise of a federal takeover if hospitals aren’t fixed. It’s absolutely no coincidence that the Prime Minister’s first public appearance after returning from Copenhagen was the opening of a cancer care facility, duly popping up on the news.

But there’s a seeming gap between “the buck stops here” and a review that reported ages ago, an apparently interminable round of consultations, and a fractured COAG process. Rudd might be doing the bureaucratic tango, and erecting his big tent, but the politics of health reform are problematic, insofar as the opposition can actually begin to politicise this question.

I don’t expect that Tony Abbott and the Coalition will go close to winning the 2011 election, but I do think that there’s some truth in the argument that the government’s dropped the political ball to some degree. In that context, it was interesting to look at the numbers in the latest Essential Research poll on the government’s performance, compared to expectations. It’s not impacting on primaries or the two party preferred, but there’s at least an indication here of some vulnerability.

In short, the Rudd government will need to articulate a positive vision for its second term. It won’t be too hard to argue that the GFC delayed the reform agenda, but it might be difficult to excite people with reviews and administrative caution. I’ve no doubt that the political hardheads in Labor know that, and it will be fascinating to see whether Rudd adopts a somewhat less apolitical political persona, and whether there are some big surprises in store on the policy front. His style, so far, has worked to preserve a big poll lead, but it may need to change to harden part of that lead into a smaller election winning majority.

“What about the Love Rug?” he demanded. “Can’t you lift your gaze?” (via)

Emboldened by Ms Albrechtsen’s words I will admit to a level of respect for the man. His beliefs really are genuine and well-considered. He, for the moment at least, seems rather incapable of bullshitting the electorate about what he thinks. On a certain level I find that more understandable and easy to empathise with than I do politicians with no discernible policy ideas or passions at all.

But invoking the bad boy fantasy in support of Abbott’s chances is more apt than Ms Albrechtsen seems to understand. Sure the fantasy of catching and taming the bad boy might be common, but almost everyone understands it as fantasy. We all know that in real life it plays out as an action-packed summer, ending in heartbreak and/or difficult life lessons (and maybe even a love child).

Of course, most of us also cast our votes for reasons other than analogies with teenage fantasy. But that’s all a little serious for a Friday afternoon. So instead, listen to Sabian Wilde do a Gregorian chant about the Mad Monk.

But really, Devine’s column isn’t there to express a view shared by real people, but rather to disagree with a particular group. The column is aimed at cyclists, and those who are prepared to get angry on their behalf. Anyone who — like Devine — uses Twitter will have seen the outrage cranking up as soon as the column was posted. Along with the expressions of anger come links to the online version of the column, where metrics are collected and advertising hosted. In a fragmented media marketplace augmented by real-time social media, networked irritation drives traffic. Devine’s columns look more and more like linkbaiting, pure and simple.

I’ve rarely seen a better analysis of just why exactly all this ranting and raving is the lifeblood of a declining media than Wilson’s. But it does beg the question – what is it, precisely, about our culture that fosters the desire to be indignant? One wouldn’t want to credit the “trollumnist” with too much originality. The ground has to be prepared.

Albrechtsen tied herself in a series of knots trying to find the “gotcha” moment in Rudd’s ideological discourse. In point of fact, it’s quite possible to reconcile fiscal conservatism with being a social democrat, but the Hayek worshippers seem stuck in an age when there was supposedly a slippery slope between any view that markets are social institutions and socialism itself.

Here, it’s perhaps interesting that Gordon Brown chose to invoke Adam Smith on several occasions, a thinker to whom the authors of Hayekian dribble pay only occasional and meaningless obeisance:

Now, let me put markets in context. They can create unrivalled widening of choices and chances, harnessing self-interest to produce results transcending self-interest. When they work, they will fulfil the promise of Adam Smith that individual gain leads to collective gain, that even when people are pursuing private interests and private wishes they can nevertheless deliver public good.

But as we are discovering to our considerable cost, the problem is that, without transparent rules to guide them, free markets can reduce all relationships to transactions, all motivations to self-interest; as Jonathan Sacks has said, they can reduce all sense of value to consumer choice, all sense of worth to a price tag. So, unbridled and untrammelled, they can become the enemy of the good society.

And we can now see also that markets cannot self-regulate, but they can self-destruct and, again, if untrammelled and unbridled, they can become not just the enemy of the good society; they can become the enemy of the good economy. Markets are in the public interest but they are not synonymous with it.

Gordon Brown, a former university lecturer with a History PhD from Edinburgh, perhaps has a better claim to public intellectual status than Kevin Rudd. His whole speech is worth a read, and the full text is here (as is Rudd’s).

So why was Brown conjuring up the spirit of Adam Smith (aside from the Scottish angle)?

In 1960, Maurice Merleau-Ponty referred to Marxism as a body of thought that no longer had life, but felt that liberated Marx himself to speak more clearly. That’s a sentiment echoed by many – and Marx as a philosopher enjoyed something of a revival after the demise of Soviet Marxism in 1991. Something similar might be happening to Adam Smith. The body of practices, and the free market ideology underpinning and supporting them, which invoked Smith as a founder, are now in rapid decay. We can now read Smith for what he says, rather than for what ideologues have made him say, and that gives his insights much more contemporary force.

In this context, I’d gesture again to the fact that “free markets” are not identical with capitalism. A recent student of Smith, the Italian-American economist and historical sociologist Giovanni Arrighi, argues:

One of the major problems on the left, but also on the right, is to think that there is only one kind of capitalism that reproduces itself historically; whereas capitalism has transformed itself substantively—particularly on a global basis—in unexpected ways. For several centuries capitalism relied on slavery, and seemed so embedded in slavery from all points of view that it could not survive without it; whereas slavery was abolished, and capitalism not only survived but prospered more than ever, now developing on the basis of colonialism and imperialism. At this point it seemed that colonialism and imperialism were essential to capitalism’s operation—but again, after the Second World War, capitalism managed to discard them, and to survive and prosper. World-historically, capitalism has been continually transforming itself, and this is one of its main characteristics; it would be very short-sighted to try to pin down what capitalism is without looking at these crucial transformations.

Writing in the New York Review of Books, the Nobel prize winning economist Amyarta Sen makes a complementary point:

What are the special characteristics that make a system indubitably capitalist—old or new? If the present capitalist economic system is to be reformed, what would make the end result a new capitalism, rather than something else? It seems to be generally assumed that relying on markets for economic transactions is a necessary condition for an economy to be identified as capitalist. In a similar way, dependence on the profit motive and on individual rewards based on private ownership are seen as archetypal features of capitalism. However, if these are necessary requirements, are the economic systems we currently have, for example, in Europe and America, genuinely capitalist?

All affluent countries in the world—those in Europe, as well as the US, Canada, Japan, Singapore, South Korea, Australia, and others—have, for quite some time now, depended partly on transactions and other payments that occur largely outside markets. These include unemployment benefits, public pensions, other features of social security, and the provision of education, health care, and a variety of other services distributed through nonmarket arrangements. The economic entitlements connected with such services are not based on private ownership and property rights.

Also, the market economy has depended for its own working not only on maximizing profits but also on many other activities, such as maintaining public security and supplying public services—some of which have taken people well beyond an economy driven only by profit. The creditable performance of the so-called capitalist system, when things moved forward, drew on a combination of institutions—publicly funded education, medical care, and mass transportation are just a few of many—that went much beyond relying only on a profit-maximizing market economy and on personal entitlements confined to private ownership.

Sen goes on to discuss Smith:

Indeed, early advocates of the use of markets, including Smith, did not take the pure market mechanism to be a freestanding performer of excellence, nor did they take the profit motive to be all that is needed.

Even though people seek trade because of self-interest (nothing more than self-interest is needed, as Smith famously put it, in explaining why bakers, brewers, butchers, and consumers seek trade), nevertheless an economy can operate effectively only on the basis of trust among different parties.

There’s a clear echo there in Brown and Rudd’s rhetoric.

Sen also observes:

It is also worth mentioning in this context, especially since the “welfare state” emerged long after Smith’s own time, that in his various writings, his overwhelming concern—and worry—about the fate of the poor and the disadvantaged are strikingly prominent. The most immediate failure of the market mechanism lies in the things that the market leaves undone. Smith’s economic analysis went well beyond leaving everything to the invisible hand of the market mechanism. He was not only a defender of the role of the state in providing public services, such as education, and in poverty relief (along with demanding greater freedom for the indigents who received support than the Poor Laws of his day provided), he was also deeply concerned about the inequality and poverty that might survive in an otherwise successful market economy.

It’s probably time – along with Arrighi and Sen – to reread Adam Smith as well as Keynes. And it is time to recognise that Hayek was much more of an ideologue than a serious thinker, providing a range of justifications for a particular form of capitalism – now dubbed neo-liberalism – rather than making any real contribution either to public welfare or to economic policy. Geoffrey Barker:

Keynes was, moreover, hostile to the general equilibrium assumption of the laissez-faire advocates. As early as 1926 he wrote: “It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest.” Perhaps most significantly, he did not he see economic planning as an encroachment on “freedom.” In 1944, two years before his death, Keynes wrote to Friedrich Hayek about his book The Road to Serfdom, which argued against economic planning. While acknowledging that he agreed with most of the book, Keynes took Hayek to task over his attack on planning.

“You agree that a line has to be drawn somewhere, and that the logical extreme is not possible,” he wrote. “But you give us no guidance whatever as to where to draw it… [A]s soon as you admit that the extreme is not possible, and that a line has to be drawn, you are, on your own argument, done for, since you are trying to persuade us that so soon as one moves an inch in the planned direction you are necessarily launched on the slippery path which will lead you in due course over the precipice.”

Keynes’s logic, of course, is impeccable; his judgement is mature and balanced. The question is not whether or not Keynes is “back” but whether today’s politicians can put together packages for economic and financial recovery with similar logic and balance.

My contention throughout the global financial crisis has been that blinkered ideological thinking has been worse than useless in explaining it or proscribing remedies, and that indeed the pressure of events has exposed yawning chasms in the coherence of ideology, and what we might call its fit with reality.

That’s never been more evident than in a truly absurd column today from Alan Wood, which argues that Hayek has a lesson for Rudd in the story of the bank deposit guarantee.

But the important point that shouldn’t be missed is that what we are seeing here is what happens when governments intervene in markets. Australia is not the only country grappling with difficult policy implementation issues and second-best decision-making seems inevitable.

The Prime Minister’s least favourite economist, von Hayek, who Rudd seems to regard as “extreme capitalism” personified, made a powerful point many years ago. He said economies and societies based on socialist planning interventions would fail because no planner could incorporate into a planning model the myriad decisions made by individuals in the daily functioning of a market economy. For this reason von Hayek and other economists of the so-called Austrian school concluded that free markets were superior to governments when it comes to co-ordinating economic decisions.

The evidence in favour of this view is compelling, the present financial crisis notwithstanding.

The only logical conclusion one could draw from this potage of non sequiturs is that the government should have done nothing in the face of the global financial crisis, and allowed the wisdom of markets to sort things through appropriately. This is manifestly absurd (as is the analogy between state action in this context and “socialist planning”), and without apparently seeing that absurdity, Wood goes on to contradict himself in the next paragraph:

To say this is not to suggest that Australia could have avoided intervening in deposit markets once others did so. The near meltdown of the international financial system has made intervention imperative, and fortunately it appears to be working to stabilise global credit markets, although it will obviously take time.

Spectacularly going begging here is how the situation arose in the first place, given that the normal role of markets was – by Wood’s logic – bubbling along happily free of any noticeable state intervention once the prudential and regulatory rules of the game had been set. So “free markets” are always “superior”, except when they’re not, and that’s an inexplicable blip, to be explained away so that normality can resume.

Risible.

But it’s how ideology works when confronted with events that call it into question. It’s a grave error to see ideology as a coherent explanatory frame. It’s not – it’s an assemblage of desires, predilections, dispositions and modes of thought which have a purpose in justifying and underpinning particular forms of political action.

It’s also nonsense to suggest that Hayek originated some “law of unintended consequences”. Max Weber, anyone? Hayek was in fact working with one side of a debate which had raged among German philosophers of social science for some decades from the late ninenteenth century about (among other things) the appropriate level of analysis for understanding the wellsprings of social action, and its consequences for purpose and meaning in history. The Methodenstreit isn’t just some arcane dispute in social epistemology preserved in sociological folklore, but well known as a key moment in the history of economic thought among the Austrian economists and others who disciples of Hayek ought to be familiar with.

In fact, anyone who has learnt its lessons should pause and take at least a few deep breaths before weaving together a political grand narrative and contingent historical events whose causation is multiple.

Sorry! This article really got my scholarly ire going….

Ps: Peter Martin explains why the “fine tuning” of the bank deposit guarantee isn’t the cause of all known woes apparently ascribed to it.

Labor promised last year to eschew political appointments, and introduce a selection panel at arms length from the Communications Minister. The final appointment would still be ministerial, but any appointment not recommended by the panel would have to be justified and the justification tabled in parliament. The procedure is outlined here. Ex pollies and senior political advisors are banned from appointment.

There are now two vacancies on the boards of both ABC and SBS, and the panel has been announced (note that it hasn’t been appointed by Communications Minister Stephen Conroy but by PMC Secretary Terry Moran). By the way, you’re reading about this first on LP – it hasn’t been picked up in the media yet. The panel is:

Mr Ric Smith AO PSM has been appointed to chair the Nomination Panel for a period of three years. Mr Smith was Secretary of the Department of Defence from 2002 to 2006 and had previously served as Australia’s Ambassador to Indonesia and to the People’s Republic of China.

Professor Allan Fels AO has been appointed as a member for a period of three years. Professor Fels is currently Dean of the Australia and New Zealand School of Government. He was Chairman of the Australian Competition and Consumer Commission from 1995 until 30 June 2003.

Ms Leneen Forde AC has been appointed as a member for a period of two years. Ms Forde has been Chancellor of Griffith University since 2000 and was Governor of Queensland from 1992 to 1997.

Mr David Gonski AC has been appointed as a member for a period of two years. Mr Gonski has been Chancellor of the University of New South Wales since 2005 and is chairman and director of a number of major companies. He was Chairman of the Australia Council from 2002 to 2005.

Stephen Conroy has also announced that the position of staff elected Director will be restored to the ABC Board.

Concurrently with this process, there’s also a discussion paper on the future of the two public broadcasters – available here. When I have a little more time, I’ll take a look at it and write something. In the meantime, it’s very good to see a merit based process for board appointments put in place.

The bottom line is this. The more the PM and the Treasurer bash the banks, the more they hurts Australian borrowers. Bank-bashing may feel good at the time but the subsequent pain will outweigh – heavily – the momentary pleasure. Anyone who understands the economy should understand that.

Anyone who understands economics? That apparently doesn’t include the Reserve Bank’s Deputy Governor Ric Battelino, who made these remarks to the House of Representatives Standing Committee on Economics yesterday, reinforcing a “detailed case” from Assistant Governor Phil Lowe:

When we look at bank profitability, we find that Australian banks are around the top of the international range. On the surface, this could indicate a lesser degree of competition than elsewhere. But when we look a bit deeper it seems that an important reason for the high profitability of Australian banks is their unusually low bad debt experience.

That’s directly opposed to Planet’s arguments, any disagreement with which she denounced as “hypocrisy” and “ignorance”. Let’s dwell on the first of those nouns. Stephen Mayne revealed on Tuesday that Albrechtsen’s husband John O’Sullivan works in the banking sector, and that their family wealth was enhanced by remuneration including Commonwealth Bank shares worth $5.1 million. O’Sullivan received them as a senior CommBank exec. Does Janet disclose any of this? And this is the mob who have been crusading all week for the public “right to know”?

Of much more interest is the new kid on the polling block, Essential Research (which btw has Labor 58-42 on the 2PP). The online poll has been mixing it up a bit with different questions. You can read all the results here, but I wanted to focus on the question on interest rates and the banks.

82% of respondents would support a law to compel the commercial banks to pass on any drop in rates by the Reserve. That should embolden the government, and send a wake up call to the banks. Incidentally, we know – contra Planet Janet – that not all the banks’ funds are sourced domestically, but on the other hand they’re making hay while the sun shines by increasing their margins in a less competitive market. Planet might remember that even Howard and Costello weren’t averse to a bit of bank bashing, but perhaps her memory is as selective as her grasp of how markets work is flimsy.

The other interesting thing to note about the big banks is that they’re very successfully reinforcing the case that interest rates are quite removed from direct government control. If Labor were cynics, they’d be hoping that the banks don’t pass on the full rate cut.