Expert reports should always stand on their own merits, but if you are going to cast a critical eye over them it helps to work out who commissioned them. In the case of yesterday’s NATSEM report “Income and Wealth of Generation X” it is the AMP, whose major business is selling investment products to Australians. Getting younger Australians into investment products is good business for the AMP because they pay fees for longer, and you have to spend less recruiting replacement clients boosting its income and cutting costs simultaneously. So the first thing I did was cast a critical eye over the claim that Gen X is less well off than the Baby Boomers.
This claim seems to rest on the case that they pay more for housing and education than the boomers did, and that they will need to support the boomers in their old age. This is most dramatically illustrated by a graph (p 12) showing that in 1986 the 25 to 39 year olds held 27% of all wealth, while now they only hold 19%. But what if this is a result of choice rather than circumstance? They say that 30 is now the new 20, as younger people hold off adulthood until later in life – a rational result of the expectation that they will live longer and therefore don’t have to grow up as quickly.
As a result Gen Xers live at home longer and are less likely to own a house. Take another look at the graph and the dates which it spans. Every other age group either increased their wealth or kept it steady over that time scale. Given that the percentage of older people in the population has increased; that house prices have boomed in the interim; and that Gen X have yet to buy the house because they are still living at home and the change can probably be explained without assuming they are somehow doing worse than earlier cohorts. This wouldn’t suit the AMP though, would it?
Another agenda also appears to be running here, quite independently of the need to sell investment products, and that is the fixation of some with the idea that university education ought to be completely free or at least substantially cheaper. NATSEM Director Professor Anne Harding ran this line with a new angle, which is reflected in the report. She blamed HECS debts for the decline in fertility amongst educated women – “It’s possible that we may see major declines in fertility amongst university-educated women if they have to struggle with very high HECS debts”. This is interesting, because for quite some time now the more educated a woman, the more likely she is to have fewer children for quite logical reasons which have nothing to do with the cost of living and everything to do with choice.
I doubt whether you will find too many taking up Harding’s line. When you think about it, the only way to eliminate HECS debt is to increase taxes to provide more funding for universities. But then a HECS debt is in effect an hypothecated tax on tertiary educated Australians. If HECS debts lead to lower fertility, then so too must higher taxes. The sound you can hear is a dog chasing its tail.

Order 39 of the Coalition Provisional Administration in Iraq has reached cult status. I first became aware of its name courtesy of this post to the OLO email forum when Tristan Ewins provided a link to an article by Naomi Klein of No Logo fame. I vaguely remember hearing a radio report about the proclamation. It included quotes from members of the Iraqi Governing Council supporting the proclamation. That satisfied me.
However, a google search yesterday evening turned up 100s of sites referencing this order with alarm, using almost identical wording because virtually all of them draw upon the Klein article. Yet Klein’s reasoning is dubious and many of her facts wrong.
So what is Order 39? It’s complicated, but essentially it provides for some level of foreign ownership of Iraqi assets and businesses. You can see an analysis of it by Pillsbury Winthrop, a large international US law firm here, while Mena Associates in association with Krauss Amereller Henkenborg has provided this guide.
Major points to note are that while the order allows foreign ownership up to 100% of Iraqi businesses, it bans foreign ownership of “natural resources” and types of “initial processing”; limits foreign ownership of real property to 40 year leasehold; prevents foreign investors from starting to retail without lodging a bond of $100,000 US; forbids discrimination against foreign companies; and allows foreign companies to remit dividends and interest home. As a result, on a continuum between investing in Australia and investing in Cuba it lies much closer to the Cuban end of the axis. What is Klein’s beef?
Her major argument is that the enactment is illegal because she says it is not allowed by the Iraqi constitution. She also claims that it breaches the 1907 Hague Convention. This bout of legalism had me wrinkling my nose. Normally Klein isn’t so pharisaical. So I checked out the constitution. Well, it’s not a real constitution, it’s an “Interim Constitution” and has never been ratified by a popular vote. I guess that’s not necessary in a dictatorship. But if a breach of the constitution by the US or any other body, such as say the UN, makes their actions illegal then we have some problems.
For example, while the constitution makes appropriate noises about freedom of speech, association and religion, it lays out a form of government where to be a member of the executive you have to be a member of the Ba’athist Party (Article 38) This is no doubt part of its object of “Establishing the socialist system on scientific and revolutionary foundations..” and “Realizing the economic Arab unity” (Article 12). The President and the Vice-Presidents also “enjoy full immunity” (Article 40), a right which, while ambiguously worded, Hussein appears to have pushed to the limit. In other words, any occupation which does not enshrine Ba’ath Party rule with a dictatorial President would be illegal under this constitution. So, a logical extension of Klein’s argument is that the coalition ought to go home and re-instate if not the previous regime, one just like it.
In her zeal to get at the US I am sure she overlooked this logic, just as she appears to have overlooked another fundamental fact – the Iraqi Interim Constitution doesn’t actually ban foreign ownership at all! The only mention of foreign ownership is in Article 18 which says “Immobile ownership is prohibited for non-Iraqi, except otherwise mentioned by a law”. “Immobile ownership” appears to be what we call “real property” i.e. “real estate”, and this is the only restriction on foreign ownership in the constitution. Not only is this restriction only limited to immobile property, meaning owning businesses etc. is O.K., but it allows for laws to be passed modifying the constitutional position. Order 39 doesn’t allow foreigners to own immobile property either – it merely gives them the opportunity to enter into a 40 year lease – is therefore well within the letter of these provisions.
Klein appears to be trying hard to imply that the US is actually selling off public assets and pocketing the proceeds but Order 39 cannot possibly be read in that way. It allows foreigners to buy all sorts of businesses, including state owned ones, but doesn’t on its own effect one single sale. In Clause 1 of Section 6 it forbids foreign ownership of natural resources – putting a fairly definitive spike into the arguments of the “No blood for oil” crowd. In this regard the clause is more restrictive than the interim constitution Article 13, which invests ownership of the “National resources and basic means of production” in the people yet doesn’t define what these assets are, and again, doesn’t forbid their sale.
So much for the constitutional problems. In the light of this the Hague convention doesn’t appear to be a problem either. Without going into the details of it, the relevant part of the convention is essentially an agreement that the victor will not pillage the defeated. This was a pretty radical notion at the turn of 19th Century when all of the major European countries had empires. It up-ended the whole economic basis of war which was to increase the wealth of one nation by expropriating the property of another. While there is a US plan to recoup some of the cost of the invasion from a tax on oil revenues, Order 39 does not address that issue, and even if it did, Article 49 of the Hague convention allows an occupying army to levy taxes to pay for the costs of occupation and administration.
Why have so many off-beam notions been given such credibility? Because so many people want to believe the worst of the coalition invasion of Iraq that they are prepared to grasp hold of any justification that looks half-way decent. It is difficult to argue against the occupation on human rights grounds, so they are forced to retreat to legalistic arguments. With the UN effectively endorsing the occupation much of this has been cut out from under them as well, so now we see a retreat into the truly ridiculous, amplified by the words of intellectual fringe dwellers like Klein and the power of the world wide net to propagate uninformed opinion.
My support for the coalition occupation of Iraq is pragmatic. Once the US had massed a couple of hundred thousand troops on Iraq’s borders to go back would have been worse for world peace than to go forward. That is still my position, which is made a little more urgent by the fact that domestic politics in the US limits the length of time that troops can be committed. Klein and others can prattle on about legalisms, but without coercive force, law is nothing. Whether or not we agree that it was legal, coalition action in Iraq proves that the West can bring coercive force to bear effectively. Undermine the coalition efforts and you essentially destroy that proof, making the world a much more dangerous place, one less inclined to abide by the dictates of the rule of law, much less those of interim constitutions.

John Howard says Australians are not a warlike people. I don’t think Australians are especially warlike, but we have a history of governments sending off Australian boys to fight wars for our imperial masters. Sudan , South Africa, World War One, Malaysia, Vietnam, etc – Australia has a bad habit of going to fight in far off places for reasons that have little or nothing to do with genuine national security and a lot to do with currying favour with the global hegemon.
Once this was because the Australian ruling class saw Britain as home, and sending off a few colonials to fight other less tractiable colonials seemed all in order. As for World War One, in which Australia suffered extraordinary casualties as Britain used Australian soldiers as shock troops, it was mainly a war between the declining hegemon, Britain, and one of the rising challengers, Germany (when the other challenger, the US, came in on Britain’s side, it was all over). When WWI did not clearly decide the issue, another round of war was necessary. This time Australia was actually threatened, and John Curtin took action to dedicate our forces to defending Australia from the Japanese. He also shifted our primary defence relationship to the US. Unfortunately, the Liberals – party of Australia’s natural ruling class – now back in power, reverted to their old ways and sent off Australian troops to support both the Brits as they backed out of Asia and the incoming Americans.
So yes, John, we are not a very bellicose bunch here in Oz, but we are cursed with leaders who far too readily send our young men scurrying off into danger overseas for no good reason.

There is a great scene from Annie Hall where Woody Allen Allen is standing in a cinema queue and becomes engaged in an argument about what Marshall McLuhan meant. He abruptly walks the other party over to a movie poster and pulls out the flesh and blood McLuhan who backs him up 100%. Allen turns to the camera and says “Boy, if life were only like this!”
To literature students this scene is even funnier because it commits what is called the “intentional fallacy”. This is the idea that because an author wrote a work they necessarily have a better idea of what it means than the reader. Books, essays and articles are artifacts, and while the author will have insights that are unavailable to the outside observer, he or she does not have a monopoly on what the work means. To take this to the extreme, as postmodernists do, is to accord the critique equal weighting with the book as a work of art, and the critic equal weighting with the author.
ABC Radio’s Earthbeat programme did an “Annie Hall” this week when it interviewed Raymond Dominick, Professor Emeritus of History at Ohio State University. Professor Dominick is the author of The Environmental Movement in Germany: Prophets and Pioneers, 1871-1971, which was extensively “cited” by Liberal Senator George Brandis in his claims that the Australian Greens are closely related to the Nazi movement. Doing a McLuhan Dominick says “I was a little distressed to see that the point I thought I had made was misconstrued, in fact I think it was twisted almost into its opposite.”
However, no doubt keenly aware of the intentional fallacy himself, Dominick then takes on the role of reader to prove his point: “On Page 111 there’s a section of the book entitled Connections Between Nazis and Conservationists. ‘The allegation has arisen from diverse quarters that environmental protection at least in some of its manifestations, is intrinsically Nazi.’ And I go on a little further down to say ‘These allegations reflect a superficial understanding of the history and world view of environmentalist and today’s Greens.’”
The real question therefore is (a) whether this is a fallacy that Brandis perpetrated by intention, or (b) whether he has some more fundamental problems with reality. George has been dubbed “George Washington” by Crikey! on the basis of a statement made at a Brisbane Liberal Party branch meeting that he had never in his life told a lie. Taking this claim at face value, I’m going for (b).

“The change of government provides a new opportunity for us to reassess a whole range of Autralian foreign policies and attitudes…the general direction of my thinking is towards a more independent Australian stance in international affairs, an Australia which will be less militarily-oriented and not open to suggestions of racism; an Australia which will enjoy a growing standing as a distinctive, tolerant, co-operative and well-regarded nation not only in the Asian and Pacific region, but in the world at large.”
Gough Whitlam said these words on election in 1972. Much of his work has been undone, so much so that the next labor prime minister could just about use the same speech.

There’s a comforting Labor myth (comforting if you’re a Labor supporter anyway) that the only reason John Howard is Prime Minister is because he has “dog whistled” the xenophobic vote using the refugee and national security issues. Like all good myths, it has a basis in fact, but it is not ultimately true.
Howard is in control because voters just don’t trust Labor. A good example of why they don’t trust Labor happened yesterday. When Access Economics announced their estimate that the federal budget surplus for this financial year would be $6.9 B – considerably higher than the government’s estimate – Mark Latham, Labor’s Shadow Treasurer said, “now is the time to be talking about tax cuts because under this government, year by year you have tax increases” (as quoted in AFR).
Almost immediately he was contradicted by Anthony Albanese, Shadow Minister for Employment Services and Training who according to the AFR said ‘that it was not the time to cut the federal government’s tax take, particularly “to be contemplating reducing the top marginal tax rate or raising the threshold at which it kicks in”. He also is quoted as saying “Australia is one of the few countries in the world without a wealth tax”.
In our analysis of the last federal election we found that voters saw Howard as looking back while Beazley looked forward, but they were confident that Howard could deliver the past while they weren’t sure that Beazley could deliver the future. So, even though they were attracted to Beazley’s promises they weren’t prepared to move across for them – they were sticking with certainty. There was also a huge question mark over Labor when it came to taxes and finances.
The reason refugees is such a difficult issue for Labor is not so much because of what Labor says, but because it can’t make up its mind what it really believes. There are some vocal members on the right who are indistinguishable from the government while there are vocal members on the left (including newly elected federal president, Carmen Lawrence) who are indistinguishable from the Greens. Both positions have electoral advantages, but not if, as a party, you appear to hold them simultaneously.
Those on the left, like Albanese, create a similar problem with respect to taxes and finances. There are only two areas where Howard is seen to be clearly superior to the ALP, and that is in foreign affairs/defence and the economy. Not only do these internal ALP battles in these areas increase the perception of Howard’s superiority, but they draw attention to Labor’s weakness and more importantly, “untrustworthiness” in these areas.
As a consequence, when Labor does talk about issues where it is more highly regarded than the Government and where it can win votes – issues like health and education – voters want to believe them, but they aren’t prepared to trust them. By this public display of division Labor ends up negating its positives as well.
It is all very well for frontbencher Wayne Swan to say this morning that this is a sign of healthy debate in the party, but the public won’t accept this argument. Not that parties need to keep all the debate behind closed doors, but you can’t have two shadow frontbenchers slugging it out. A backbencher taking an opposing view can actually enhance your vote by providing some institutionalized empathy with those voters who disagree with you on this issue but will probably vote for you on wider issues. But if you are going to allow frontbenchers to conduct this sort of policy debate in public in this way, then get used to opposition.

I think Mark Latham is the biggest gun in the Labor armory, but he’s wrong about taxes. Labor should spend all the surplus, whatever it is, and not give it back in tax cuts (and especially not to the wealthy); in fact, Labor should increase taxes – or just get the rich to pay their share.
Labor governments have to spend money. Yes, there are savings to be made out of being more efficient, but eventually you have to inject new funding to make improvements. The individual tax payer will not spend their tax cuts on things like national health, education, environmental and social welfare infrastructure, and so government has to do it.
Labor governments have to be social engineers in order to fix big structural problems and lay the groundwork for the future. In other terminology, this is called investment. On the presumption that it is better not to borrow too much, this means taxes.
The electorate know that our basic social and environmental conditions are coming apart. Our hitherto world class health and education systems are in disarray, a permanent underclass of lost unemployed is growing up, and our environment is in crisis. It will take some money to start to fix these things.
So, think ahead, Mark, and take the money and spend it.

There are a lot of parallels betwen Iraq and Vietnam. A deeply conservative, single-mindedly pro-US prime minister sends Australian troops into an internationally unpopular war started on the basis of lies. Then it was to defeat international communism, supposedly on the verge of destroyng the west, this time it is international terrorism. Growing dissent within the US itself is ignored by the Australian government. The war drags on, without a viable government in the war-torn country, and threatens to spread to nearby countries.
There are abut 800 Australian military personnel in Iraq; the first major contingent of Australian troops to Vietnam numbered 800 – eventually there were 8,000.
Of course that time the British resisted US pressure and stayed out of it, but at the time Britain had a Labour prime minister.

I lost it just a little in an interview on Hobart radio earlier this week. Tim Cox was interviewing me about Pauline Hanson and he started talking about separation of powers. “Well, we know you are different up there…”
“Yes…?” I thought. “Where is this leading?” The tips of my ears and the back of my neck burned a little bit redder and I wondered if he was going to try the same question on me that was tried on Joh Bjelke-Petersen in 1988.
“You do have a unicameral system…”
“Mmmm, and a representative system in the lower house that is just a little more decisive than your Hare-Clarke one,” again inaudibly at the back of my mind. Where was this leading?
“And you have had the ‘Moonlight State’.” Suddenly all was clear. Pauline was allegedly convicted because hick politicians had leaned on corrupt judges and policemen to get a prosecution. I let him have it. Everyone has corrupt police, but there has never been a serious suggestion of a taint around our judiciary.
Yesterday’s debate in Parliament suggests that Tim is not alone in thinking that the Queensland system is corrupt. Apparently Her Majesty’s Loyal Opposition thinks so as well, else why would they be calling for the matter to be referred to the CMC? What is going on? The attached press release may provide some of the answers. The Opposition appears to be playing to a particular constituency. Read the press release and make up your own mind as to whether this is a good strategy.

(more…)

It is one of those inevitable laws of nature that in this age of white hot competition for work, it’s the mediocre who have established themselves as the deciders of who gets what. Mostly this is because the people in middle and upper management got their jobs when it was easy, and they slotted themselves in at the centre of things to protect themselves as, later, the cuts were made.
Take my profession, lecturing in universities. There are very few jobs around now because people are hanging on like grim death to what they have. The average age of university academic staff is now over 50. Many of the jobs advertised are actually already taken by people who will keep them, no matter how incompetent they are, on the ‘better the devil you know’ principle adopted by the selection panel.
In the old days one of the senior staff – say the dean or professor – would select new staff from the relatively few applicants. They could choose someone who went to their old university, or the son of their old mate, or whatever. Then they introduced this peer selection process on the grounds that existing staff should have some say in the selection of people who were afterall going to work with them.
Sounds reasonable, eh? Trouble is, there is this well known phenomenon – existing staff will not select someone they think is more competent than they are. Because it would rock the boat.
Even good academics get burnt out, and there are few enough of them to start with. So there is in place a system that directly mitigates against competency and promotes mediocrity.
I have had bitter personal experience of this. I can tell you it is nasty feeling to look across at a bunch of acadmics interviewing you for a position, all the paperwork you have to provide now being shuffled in their dry fingers. You know you could outperform each one of them, given the chance, and you know they will never give you that chance.
The same situation applies in other professions, and it is increasingly taking on a generational character. Like the real estate boom and superannuation, the baby-boomers are eating it all, leaving the mess for the kids to clean up. I see trouble ahead.