G’Day. There’s been a lot said in Webdiary lately about democracy and what the hell it is, or could be, from conservative, Green, Liberal and Labor left perspectives. Today, long suffering ALP member Guido Tresoldidiscusses what Carmen’s run for the ALP presidency might mean for democracy and the derision of the commentariat at Labor’s experiment in direct elections and Philip Gomes and Matthew Barnes respond toDaniel Moye’s piece on conservatism Why conservatives fear John Howard.
To begin, Webdiarist John Boase and many others sent me a great piece by journalist Greg Palast on the United States blackouts. Greg co-wrote Democracy and Regulation, a guide to electricity deregulation. Here’s an extract from POWER OUTAGE TRACED TO DIM BULB IN WHITE HOUSE – THE TALE OF THE BRITS WHO SWIPED 800 JOBS FROM NEW YORK, CARTED OFF $90 MILLION, THEN TONIGHT, TURNED OFF OUR LIGHTS:
In 1990, one devious little bunch of operators out of Texas, Houston Natural Gas, operating under the alias “Enron,” talked an over-the-edge free-market fanatic, Britain’s Prime Minister Margaret Thatcher, into licensing the first completely deregulated power plant in the hemisphere.
And so began an economic disease called “regulatory reform” that spread faster than SARS. Notably, Enron rewarded Thatcher’s Energy Minister, one Lord Wakeham, with a bushel of dollar bills for ‘consulting’ services and a seat on Enron’s board of directors. The English experiment proved the viability of Enron’s new industrial formula: that the enthusiasm of politicians for deregulation was in direct proportion to the payola provided by power companies.
The power elite first moved on England because they knew Americans wouldn’t swallow the deregulation snake oil easily. The USA had gotten used to cheap power available at the flick of switch. This was the legacy of Franklin Roosevelt who, in 1933, caged the man he thought to be the last of the power pirates, Samuel Insull… To frustrate Insull and his ilk, FDR gave us the Federal Power Commission and the Public Utilities Holding Company Act which told electricity companies where to stand and salute. Detailed regulations limited charges to real expenditures plus a government-set profit. The laws banned “power markets” and required companies to keep the lights on under threat of arrest – no blackout blackmail to hike rates.
Of particular significance as I write here in the dark, regulators told utilities exactly how much they had to spend to insure the system stayed in repair and the lights stayed on. Bureaucrats crawled along the wire and, like me, crawled through the account books, to make sure the power execs spent customers’ money on parts and labor. If they didn’t, we’d whack’m over the head with our thick rule books. Did we get in the way of these businessmen’s entrepreneurial spirit? Damn right we did.
Most important, FDR banned political contributions from utility companies – no ‘soft’ money, no ‘hard’ money, no money PERIOD.
But then came George the First. In 1992, just prior to his departure from the White House, President Bush Senior gave the power industry one long deep-through-the-teeth kiss good-bye: federal deregulation of electricity. It was a legacy he wanted to leave for his son, the gratitude of power companies which ponied up $16 million for the Republican campaign of 2000, seven times the sum they gave Democrats.
But Poppy Bush’s gift of deregulating of wholesale prices set by the feds only got the power pirates halfway to the plunder of Joe Ratepayer. For the big payday they needed deregulation at the state level. There were only two states, California and Texas, big enough and Republican enough to put the electricity market con into operation.
California fell first. The power companies spent $39 million to defeat a 1998 referendum pushed by Ralph Nadar which would have blocked the de-reg scam. Another $37 million was spent on lobbying and lubricating the campaign coffers of legislators to write a lie into law: in the deregulation act’s preamble, the Legislature promised that deregulation would reduce electricity bills by 20%. In fact, when San Diegans in the first California city to go “lawless” looked at their bills, the 20% savings became a 300% jump in surcharges.
Enron circled California and licked its lips. As the number one life-time contributor to the George W. Bush campaign, it was confident about the future. With just a half dozen other companies it controlled at times 100% of the available power capacity needed to keep the Golden State lit. Their motto, “your money or your lights.” Enron and its comrades played the system like a broken ATM machine, yanking out the bills. For example, in the shamelessly fixed “auctions” for electricity held by the state, Enron bid, in one instance, to supply 500 megawatts of electricity over a 15 megawatt line. That’s like pouring a gallon of gasoline into a thimble – the lines would burn up if they attempted it. Faced with blackout because of Enron’s destructive bid, the state was willing to pay anything to keep the lights on.
And the state did. According to Dr. Anjali Sheffrin, economist with the California state Independent System Operator which directed power movements, between May and November 2000, three power giants physically or “economically” withheld power from the state and concocted enough false bids to cost the California customers over $6.2 billion in excess charges.
It took until December 20, 2000, with the lights going out on the Golden Gate, for President Bill Clinton, once a deregulation booster, to find his lost Democratic soul and impose price caps in California and ban Enron from the market.
But the light-bulb buccaneers didn’t have to wait long to put their hooks back into the treasure chest. Within seventy-two hours of moving into the White House, while he was still sweeping out the inaugural champagne bottles, George Bush the Second reversed Clinton’s executive order and put the power pirates back in business in California. Enron, Reliant (aka Houston Industries), TXU (aka Texas Utilities) and the others who had economically snipped California’s wires knew they could count on Dubya, who as governor of the Lone Star state cut them the richest deregulation deal in America.
Meanwhile, the deregulation bug made it to New York where Republican Governor George Pataki and his industry-picked utility commissioners ripped the lid off electric bills and relieved my old friends at Niagara Mohawk of the expensive obligation to properly fund the maintenance of the grid system.
And the Pataki-Bush Axis of Weasels permitted something that must have former New York governor Roosevelt spinning in his wheelchair in Heaven: They allowed a foreign company, the notoriously incompetent National Grid of England, to buy up NiMo, get rid of 800 workers and pocket most of their wages – producing a bonus for NiMo stockholders approaching $90 million.
Is tonight’s black-out a surprise? Heck, no, not to us in the field who’ve watched Bush’s buddies flick the switches across the globe. In Brazil, Houston Industries seized ownership of Rio de Janeiro’s electric company. The Texans (aided by their French partners) fired workers, raised prices, cut maintenance expenditures and, CLICK! the juice went out so often the locals now call it, “Rio Dark.”
So too the free-market cowboys of Niagara Mohawk raised prices, slashed staff, cut maintenance and CLICK! – New York joins Brazil in the Dark Ages.
Californians have found the solution to the deregulation disaster: re-call the only governor in the nation with the cojones to stand up to the electricity price fixers. And unlike Arnold Schwarzenegger, Gov. Gray Davis stood alone against the bad guys without using a body double. Davis called Reliant Corp of Houston a pack of “pirates” – and now he’ll walk the plank for daring to stand up to the Texas marauders.
So where’s the President? Just before he landed on the deck of the Abe Lincoln, the White House was so concerned about our brave troops facing the foe that they used the cover of war for a new push in Congress for yet more electricity deregulation. This has a certain logic: there’s no sense defeating Iraq if a hostile regime remains in California.
Sitting in the dark, as my laptop battery runs low, I don’t know if the truth about deregulation will ever see the light – until we change the dim bulb in the White House.
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Anne Magarey
I was interested to read Rekindling Liberalism: a beginning. Have you come across what is known as neo-republicanism? It has nothing to do with the US party, or any party for that matter, but as proposed by Philip Pettit of the ANU is a very interesting, modern rethink of previous republics. Liberalism has a focus on freedom as non-interference; republicanism focuses on freedom as non-domination, which takes freedom one step further. It stresses a strong involvement of the people in politics, and the public good (something which liberalism says is not possible due to its focus on individualism). Pettit’s book is called Republicanism: a theory of freedom and government and is well worth reading.
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Guido Tresoldi in Melbourne
I would like to discuss how Carmen Lawrence’s decision to run for ALP president can provide a good starting point in discussing a question you asked some time ago: “What is at the heart of democracy that makes it so sustainable, valuable and worth fighting for?”
That’s a pretty big question. One of the most important aspects of democracy is participation; the ability to participate into a process that has direct impacts on the type of society that we live in. On my part, joining a major political party was part of that process. I believe that joining the ALP and providing input into its policies is an integral part of my rights in a democracy. (See Carmen’s ldeas to save our withering democracy)
Of course anyone with the slightest knowledge of Australian politics would know that the ALP (or the Liberal Party for that matter) is not exactly the best model for democracy. As Chris Schacht wrote recently about the ALP, detailed policy adopted at party conferences bears little relationship to what is presented at election time. This had led to increasing cynicism, alienation of members, and declining active membership.
This has prompted calls for more democracy in the party, and one measure to try an increase the participation of members was the introduction of the direct election of the president of the ALP. Being president of the ALP is not a position of great power in the scheme of things, so it is somewhat disconcerting to hear the commentary around the possibility of Lawrence being elected. The Australian had this in one of its editorials:“Electing Carmen Lawrence as president, for example, might please party members who opposed Australia’s involvement in the war against Iraq and dislike the American alliance. But it would risk a split between the moderate politicians and the party machine – with catastrophic electoral consequences.”
The Age, which usually publishes articles supporting more democracy in politics, wrote in an editorial that Carmen Lawrence would create problems, not solutions, as the ALP national president: “Dr Lawrence has cast herself as a heroine of the hand-wringing left, a walking, talking embodiment of the Labor Party’s ‘conscience’. Such a person as national president is the last thing needed by Mr Crean, Labor’s broader electoral base or the political system at large.”
On the ABC’s Insiders program even the the idea of giving the rank and file the chance of electing the president was derided as a ‘bit of madness’ that ‘must had been seen to be a good idea at the time’.
What all this has to do with a broader issue of democracy? Quite a lot. I wish Carmen well, but in the end my argument does not focus on her, but rather how her candidacy has exposed an extraordinary disdain for party membership amongst political commentators. After each defeat by the ALP we read and hear in these same media outlets the fact that the ALP needs rejuvenation and new blood. But when we get a small token of direct democracy that does not fit in with the dominant paradigms we get this reactionary backlash.
Have we arrived at such a stage in Australia that the election of a party president is seen as ‘stupid idea’? Instead of seeing this as a positive step (albeit a small one) towards allowing those who have bothered join a party to elect their president, this is seen as an unnecessary risk. It really demeans the idea of participation and demeans the intelligence of party membership.
This lack of participation, which translates to apathy, is what feeds and keeps the Howard’s government alive. The ethanol lies, the attack on the ABC, not to mention keeping children in detention are things that do not register amongst a disengaged electorate which expects politicians to mislead parliament.
You asked me what I think is crucial for democracy? Many things are, but one is a greater degree of participation and debate in the parties that are supposed to reflect the opinions and sentiment of the people. And a degree of respect for that process
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Philip Gomes in Redfern, Sydney
Perhaps Daniel Moye would like to try political compass for a different understanding of the left right nexus. He might surprise himself.
Like all suburban conservatives Daniel espouses an essentially passive view of his conservatism relaxed and comfortable. Or should I say; fortified and assured. His words: “Having read this outline, I was fortified in my belief that a ‘conservative’ I am. Having found out this answer and the reassurance I sought, a larger question begged itself. How do we own the ideas, ideals and institutions we label ourselves with?” (Owning your beliefs)
Unfortunately he has asked the wrong question. The question Daniel should have asked himself is, ‘How do I unshackle myself from the bonds of a hide bound ideology?’ In the face of a changing world many from the so-called left have done just that.
They have freed themselves from the apologist view of support of regimes of tyranny on the left for example and look to condemn all regimes that practise tyranny and oppression, a humanist position. They are embracing new ideas of co-operation across a wide rainbow of viewpoints, as evidenced by the slow rise of the Greens and similar movements (see When black is white, it’s easy being Green) State ownership is not necessarily embraced, and an emphasis of the powerful ideas of triple bottom line economics and fair trade is another example of this. The left can no longer be viewed as irrationally exuberant. They are fighting new battles with an enlightened responsibility.
I do not own these ideas, nor do I own our institutions – they are a public commons to be debated in and argued over. Ideas and institutions are not copyrighted but are open source. Free to be downloaded into the public consciousness. And as such we should have the chance to write a few new lines of code.
Many conservatives have objected to attempts to elicit a ‘philosophy’ of conservatism on the ground that conservatism is not a creed but a disposition, and that the conservative differs from radicals and intellectuals precisely because he is willing to change his mind and abandon any particular doctrine or any particular goal for the sake of conserving the vital interests of his society.
In Daniel’s Conservative definition, I would not hesitate to use the word cynical, and would say the opposite is true. The problem for old style conservatives like Daniel is that the current group of so-called conservatives (neo-cons) exhibit many of the attributes in his dictionary definition in spades, indeed they are reactionary and dogmatic in the extreme and lack a moral and ethical compass.
The hallmark of modern conservatism is its sociopathic nature – devoid of compassion, drilling all aspects of society and culture down to that of a commodity – including the ownership of ideas and institutions.
They have shown a singular disrespect for many of our institutions and have on more than one occasion shown an ability to abandon a particular doctrine to conserving the vital interests of the Party. Human rights, for example. Cute.
The ethical and moral compass of old-style conservatism has been challenged by this new variant. I suggest this explains the confusion felt by many of its adherents, because they are essentially unthinking in their practice of conservatism and the new boys on the block have forced them to choose i.e. you are either with us or against us. This is the cart to which he is hitched.
Daniel ultimately represents the silent majority of middle class Australian thought whose cosy little world has gone unchallenged until now. Their passivity and disposition has given rise to the neo-con view that is now being met by those who see another world possible.
I would suggest that the left is brimming with ideas and ideals filled with humanity and universality; something conservatives have shown little regard for of late. The left have embraced intellectual flexibility and uncertainty – the watchwords of our future. It’s new ideas and institutions are there to be accessed by all, not just those with the deepest pockets, the sharpest spin-doctors or the biggest media whores.
PS: Perhaps Daniel could also look to this little item in order to reassess his belief and relief at being a conservative, it’s quite amusing: Study of Bush’s psyche touches a nerve
Matthew Barnes in London
Disclosure: In every federal election up till now I’ve voted Liberal. In the next one I’ll probably vote informal because I can no longer keep on giving the Howard government my support when they are not committed to income tax relief or small government. Or I might vote Labor though and use my vote as a stick, because if both sides of politics are going to deliver big government I might as well have one more committed to subsidising university education. I live in the UK and am in the investment banking industry. I was born and raised in Penrith and commuted daily from Penrith during my five years at the University of NSW, where I did a combined degree in Commerce and Law. I consider myself one of these aspirational voters that Mr Howard pretends to champion.
Daniel Moye wrote in Why Conservatives fear John Howard:
For many conservative Australians, including myself, it is difficult to encapsulate our objections to the Howard Government. I supported the downsizing of government and the further deregulation of the Australian economy and I acknowledge excellent management of that economy, so it is not as if the Howard Government has overwhelmingly got it wrong.
I’ve got to take great exception to your passage above as far as it relates to the contention that (1) government has shrunk under John Howard’s stewardship (2) excellent management of the economy.
Government has shrunk under John Howard’s stewardship: Federal government revenues as a percentage of GDP have actually increased and are increasing. The reason for this is pretty simple: the Howard government is not interested in income tax relief and has taken the revenue benefit of wages bracket creep. In 1995/96 federal govt revenues amounted to $121.7 billion, or 25% of GDP. In 2001/02 federal government revenues (once the GST revenues are included, as of course they must be given that the GST is a federal tax ) amounted to $189 billion or 26.4% of GDP
The share of income tax as a percentage of GDP is now higher than in 1995/96 notwithstanding that the GST was supposed to lower the tax burden.
Internationally, Australians face a prohibitive income tax regime. The top marginal rate of 48.5% cuts in at just $62,000 a year, at just 1.35 times male average weekly earnings. In the USA the top rate of 35% cuts in at over $US 300,000. In the UK the top tax rate of 41% cuts in at about 1.7 times AWE.
The last 7 plus years have witnessed strong economic growth of the magnitude of 3.5% per annum. This is high by industrialised standards. Nevertheless, there has been little tax relief and the Australian people have been delivered a pathetic return from a so-called economically conservative government.
Examples of the rapacious tax appetite of the Howard govt can be seen in their obsession with stealth taxes such as the Ansett tax, sugar tax etc. The sugar tax represented basic industry assistance. Similarly, given the resources of government, the assistance provided to former Ansett employees should have been paid from existing revenues.
Part of the problem is that far too many conservative Australians just accept that we have an economically conservative government committed to smaller government when in fact we do not.
There is something seriously wrong with the way the average PAYE tax payer is treated in Australia. It is no wonder that we now have an investment housing boom in which people pay price multiples for homes which bear no relationship whatsoever to gross or net wages. Those who are dictating the prices are the baby boomers with little or no remaining mortgage who use their existing collateral to buy new houses, usually for speculative purposes. The price takers are the first home buyers who make up just 13% of new home purchases and who can look forward to a punitive mortgage eating up 50% to 60% of take home pay, or they can rent. The baby boomers also get a lovely tax benefit funded by the average Howard “battler”. Interest expense is fully tax deductible whilst the future capital gain is taxed at just 24.25%.
There is absolutely no reason why Howard couldn’t immediately limit the interest deduction to the revenue earned from the property, as is the rule in the UK. It is also unfair that an economically useless speculative activity gets taxed at a concessional 24% while the tax on labour is 48.5%. What a tragic misallocation or resources!
The Howard government was supposed to be about incentivising people and enabling people to make a decent go of things. That’s what I believed in 1996 as a then 22 year old. However, when you look at their record its a record of lost opportunity and laziness. I can go on and on about this. Margo, I really hope you use your column to reconsider your assumption about Howard’s record on small government and incentivisation.
Mr Howard is a brilliant politician. He polarises people and he knows that his policies have been a big winner for those fortunate enough to be at the stage of life to be in property. He’s made a lot of people very wealthy. However, his economic policies have been a disaster for those starting out in their adult life.
If that wasn’t bad enough the young also now have the joy of enjoying relatively little state subsidy for their university education, with the cost about 3 times what I paid. You may think higher university charges are OK on user pays grounds – and I guess it would be if the income tax burden was more reasonable. However, it would seem to be only fair that people receive a heavily subsidised university education when the tax burden remains so punitive.
Excellent management of the economy
Leaving aside the necessary budget fiscal tightening of 1996/97 which really helped us in the Asian economic crisis of 1997, the economic management of the economy has been average, not “excellent”.
There were many very favourable global factors that made it relatively benign for most western economies in the second half of the 1990s. The oil price was very low and the cost of capital in the form of interest rates declined all over the world. Howard, like Blair in the UK, inherited an internationally competitive economy in which all the necessary structural and trade reforms had been largely completed. In the Australian context the very weak dollar also boosted exports.
I contend that all the Howard government had to do was just to avoid exploding the economy.
If Howard had vision he would have used the opportunity to give people real income tax relief and incentivise families. Automatic indexation of income tax scales, as happens in the UK, would have been easy to implement and would have put a natural strain on the appetite of government spending as revenue growth would have been less.
Howard’s ill-conceived CGT changes of 2000 have made the housing boom worse, and now cause a situation where interest rates are unnecessarily high by global standards.
The federal government has also lost an important degree of revenue control through the decision to pass on all GST revenues to the states.
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Jonathan Pagan in Sydney
I’d put a fairly large stake on Howard brazening it out destroying our democracy piece by piece, day by day. The scariest thing is that most of my generation (I’m 22) don’t care. They’ve never known anything else, so they expect politicians to lie and deceive on a daily basis.
I guess I was lucky. My grandfather was involved in the Liberal Party in the 50s, 60s and 70s, and Liberal and Labor leaders were and are regular guests and great friends. They are in our family photos, and still come over for lunch. These were and are all men and women of high integrity (whatever other personal faults they may have), who were diametrically opposed on ideas concerning how the country should be run; but once away from Parliament, were good friends who respected each other and each others views greatly.
My grandmother thinks the common bar in the Old Parliament House contributed to the civility and decency of that era of politics. No doubt the sacking of Gough contributed to the bitter schism that now exists. Now they do not know each others husband’s, wives and children. The sheer size of new Parliament House lets the current crop of self-serving toadies think they are the only important thing in the place, and cripple the sort of cross-party friendships, honour and decency that once pervaded Australian parliaments. There’s probably something in that. God know’s she’s right most of the time.