Catallaxy Files

polymathic pontification, bleeding heart economic rationalism and liberal secularist contrarianism

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  • Jason Soon
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    Friday, May 17, 2002
    A parody of thinking: Yet another daft review of Blaming Ourselves - and this time not even a pretence of 'objectivity'. The reviewer, Guy Rundle, is one of the people criticised in the book for his ridiculous statements to the effect that globalisation (promoted by the US) has killed more people than Nazism and Stalinism. Alright, let's think of this as Guy's right of reply. Does he acquit himself better this time? Judge for yourself:

    The position of many of us on the "left" – whatever that is – is that the government and corporate sector of the US has used coercive military and economic means to extend its power throughout the world since World War II. Full capitalism has been pushed into vastly different societies, often at the point of a gun; when market forces crowd out other ways of life and draw the whole society into the cash nexus, the event is retrospectively defined as "free choice".

    "Full capitalism", eh? A libertarian's wet dream or Guy Rundle's worst nightmare it may well be, but one thing it ain't is reality. Rundle, you're slightly behind the times. If the US was imposing 'full capitalism' it wouldn't be protecting itself against textile imports from its ally, Pakistan or protecting its steel industry and its farms - he could have at least produced a more sober critique by accusing the US of blatant hypocrisy in its commitments to free trade - but other people have beat him to that. If you want to understand why I think the Australian Left is pathetic, sophomoric, and completely incapable of logically coherent argument or insight you only have to compare The New Republic against anything the Australian Left produces.

    Cash nexus???!!! What the &%%$??? It's a long time since anyone used that phrase. What's the superior alternative, Rundle, barter nexus?

    Until about the 1970s, money flowed from the OECD to the global south in this process. That extended markets into non-market societies, often with disastrous results, but there were gains in healthcare, education, housing and the like

    Oh my! Not much of a consolation I guess but at least something. *Money* flowed in and extended *markets* so that was evil but at least these poor oppressed countries got some healthcare, education and 'the like'. I wonder if the aforementioned 'money' and 'markets' might have had something to do with it? Naah.

    It gets more and more demented from thereon:

    When these send countries bankrupt, the US-dominated International Monetary Fund steps in to privatise and restructure the economy according to austerity measures.

    Records of the needless suffering caused by this process – of hospitals without medicines, children dying of diarrhoea because privatised water has been diverted from villages to the lawns of resort hotels, and countless other lethal acts – match any horrors to be found in The Gulag Archipelago. Enforcement of such global control has led the US to impose its political will in numerous regions regardless of local aspirations, and it is this that has made the US so many enemies of people who are themselves enemies, from Muslim fundamentalists to Marxists.

    Privatised water causes diarrhoea - that's a good one! Someone should go tell Simon Crean to hire Guy Rundle as his chief economist. What's next? Privatised electricity causes cancer, privatised gas causes excessive flatulence - the possibilities are endless.

    And notice how, like a schizo, the various entities in Rundle's stream of consciousness argument gets blurred in his mind - the IMF, the US government, the Hilton Hotel chain, the *United Nations* sanctions against Iraq - they're all the same!! It's the Freemasons behind it all, don't you see? And what a nefarious plot - this entity causes children to die of diarrhoea, etc, etc as a means of 'enforcing global control' *and then* uses this to 'impose its political will' (god knows what it wants to do with such ruined countries).

    Incidentally, I really don't get this seemingly obvious argument that Rundle and his ilk suggest. The US napalmed Vietnam and dropped an atom bomb on Japan - yet the scum who flew planes into buildings on S11 weren't Japanese or Vietnamese. Could it be because some people get on with their lives and live by the adage that 'the best revenge is success' - while others continually blame external influences for their shortcomings?

    Now, onto some specific comments on the content of the book:

    The rest of it is a free personality assessment in the standard manner. Michael Warby, Peter Saunders, Roger Sandall, Miranda Devine and others identify the left as "the intelligentsia", "the intellectuals", "the chattering classes" – inner-urban types, cut off from the common-sense decency of the mainstream and bitter at their loss of cultural power. Of course, such writers are also journalists, academics and think-tank commanders but they have not succumbed to the lure of the latte – they channel the pure and unmediated beliefs of suburban blokes and sheilas, ranged against the decadent "elites".

    Actually none of these authors' preoccupations are solely with identifying the left as "the intelligentsia" and demonising them. Miranda Devine's is on her poignant reaction on returning from New York where she saw the carnage juxtaposed with the heroism and generosity of a people - and opening her inbox to find a trail of emails by people who are obviously so displaced from their fellow humans as to be able to write the sorts of despicable trash that Miranda proceeds to document. For instance:

    "Eat shit and die Bush. You and your corrupt, manipulative family deserve everything you get. I don't want Australia to be like America. In Newtown we managed to get rid of KFC and McDonald's .."

    This two days after S11. She happens to note that this despicable person wrote his email from his workplace - a global telco company whose biggest client is the US. Irony of ironies, but I suppose Rundle regards this as 'elite bashing' (though he's quite happy to bash resort hotel chains himself). We can count, Rundle. Miranda uses the term 'left wing commentators' once, then she quotes a letter writer who uses the term 'left wing wankers' and uses that term again in quotation marks.

    I have also read and admired the piece by my friend Michael Warby. Far from demonising the Left, his article, titled "The Enlightenment battles of September 11' is an interesting application of the idea of distinguishing between a 'sceptical Enlightenment' and a 'radical Enlightenment' (an idea most skillfully developed throughout the writings of Hayek). One implication of his piece is that the crack lines between these two strands of the Enlightenment are replicated within the Left itself which, for all intents and purposes, shares a common heritage with liberalism. Thus far from demonising the Left, Michael's piece distinguishes carefully between the various Left reactions to S11 (for instance compare Michael Walzer and Noam Chomsky) using this conceptual framework.

    I could go on and on but the point is that Rundle's intellectually feeble and incoherent excuse for a review does it no justice, much as the gleeful proponents of blowback did the US no justice. In the end, it seems that Rundle's main problem with the book is that he would have written a different one:

    Do they think people haven't noticed that those making the most noise about the "intellectual elites" and the "commentariat" are all professional opinion-producers, often on six-figure salaries? Unwilling to do the hard work of foreign policy analysis, they turn to pro-forma cultural analysis and even social psychology, with ex-New Leftist Douglas Kirsner's psychoanalysis of the anti-globalisation movement greatly extending our knowledge of Douglas Kirsner

    I suppose Rundle could have written about 1984 "Unwilling to do the hard work of suggesting how the ideal society should be organised, Orwell turns to literary embellishment which overly focuses on the undesirable cultural implications of the totalitarian mentality."

    The whole point of the book being reviewed by Rundle is that, quite aside from the foreign policy implications of S11, there are many affinities between the intellectual foundations and cultural legacy underlying the 'blowback' theorists, and 'anti-globalisation' and 'anti-war' activists and that this is worthy of examination. Rundle could have written a better review about whether the book does this adequately but the bulk of his criticism seems to be that the book doesn't share his premises that the issue is solely about foreign policy i.e. Rundle's complaint is that if he could have gotten off his arse and done so he would have written a different book on a totally different topic.

    The book does not even pretend to be a book solely about foreign policy. Have a look at its blurb.

    For that matter, why is an analysis of the implications for the political culture in the West following the reactions to S11 any less important or interesting or demanding than a book about foreign policy? Indeed, isn't this a lot like what Rundle's Pomo colleagues in cultural studies and media studies do all the time? Oh, I forgot, they do it but end up with the 'right' and acceptable conclusions.
    Gentiles for Israel: Ken Layne responds to Josh Marshall's claim that there is necessarily a correlation between being Jewish and supporting Israel:

    ... guess what? I'm not Jewish -- yet I couldn't be more disgusted by the tidal wave of anti-Jew/anti-Israel crap this year.

    In fact, I'm a white-trash Kentucky/Louisiana kid who never even knew what a Jew was outside of Moses in the "Ten Commandments" until I moved to California as a youngster. Hell, Catholics were weird enough for me, back in New Orleans. (Yeah, I knew some priests, but they were just nice old drunks.)

    Layne's plain but elegant polemic goes on to document his changing views and ends with many memorable phrases. It's worth the full read:

    Those who blow themselves up to kill as many civilians as possible aren't just terrorists. At that point, they're Devils. They're Devils like the Devils who flew planes into the WTC and Pentagon.

    I don't need to be a Jew to be outraged and repulsed by this kind of primitive bullshit. Americans aren't a race; they're a Nation. I couldn't tell you my full family tree even if you offered me delicious money. Got some English and French and Irish and American Indian and African slave in there and God knows what else. Who cares ...

    The only thing I believe in is Liberty and basic human decency. I don't believe in Jeebus and I don't mind if you do. And I'm not gonna kill you if you want to worship Allah, Yahweh, Buddha or Boba Fett. But I will defend those who believe in Liberty. It's the only goddamned thing that matters. Whether it's East Timor or the Czech Republic or Mexico or Mars, I'll side with Liberty. I could give a fuck if that means Jewish.

    Anybody who thinks it's cute to blow up children and call it politics doesn't deserve to play the game. That goes for Tim McVeigh, ETA, the IRA and the PLO.

    Thursday, May 16, 2002
    Quote of the day: I'm an economist and the Federal Budget was just announced. Why haven't I written anything about it? One word ... Boring ... nothing much is going to change with this Budget or the next few and the fact that the nation takes such an obsessive interest in it (compare how the equivalent in the US is received) suggests not much is going to change for a very long time. I shall be accordingly superficial and merely offer a quote from Frederic Bastiat which couldn't be more apt in light of recent developments:

    The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.

    The left-wing fascist is alive and well: The logically incoherent, fledgling left-wing fascist Jack Robertson takes issue with my critique of Melanie Philips’ article in the Tory Paternalist rag Spectator on the most ludicrous grounds, namely that I was attacking her cliched contention that liberalism presupposes a moral framework.

    Jackie boy, almost anything to do with social issues presupposes a moral framework. Liberalism, libertarianism, conservatism, hell even fascism of the ‘Community and Nation’ variety whether of the Left (like the sort Jack favours) or the Right presupposes a moral framework, even though it’s a highly perverted one. If this is all Philips meant to say then there would be no point commenting on her article other than to say that it was pointless. But that was not my contention – indeed my contention was twofold.

    Firstly, in my comments on Philips’ remarks on sexual licence, I was pointing out that Philips was conflating libertarianism with what people who are ideologically liberal may have said about personal ethics.

    Whatever my or any other liberals’ thought on sexual ethics, they cannot be conflated with implications that can be derived from classical liberal philosophy because liberalism is primarily a political philosophy about the legitimate role of the State and its limitations. This is not to deny that most liberals including myself couldn’t give a root about consenting adults rooting each other but this is irrelevant to the main point that Philips was being quite unjustified in hurling charges of promoting sexual licence or moral licence at liberals just because they generally advocate policies of laissez faire in the bedroom as well as in the market. This is because such advocacy of laissez faire has nothing to do with approving of the morality of the behaviour in question.

    I do not have to be personally in favour of drug use to be against drug prohibition – it is sufficient to point out the failures and perverse results of drug prohibition, and make the argument that a world with prohibition is not better than a world without, whether for users or anyone else. Insofar as liberalism has anything to say about morality or personal ethics it is usually quite little limited not because liberals don’t care about morality or are personally morally neutral but because that is not the purpose of liberal political philosophy as such. Thus my recommendation that if Philips really found her life so meaningless she should consider taking up a religion or joining a New Age cult or whatever rather than to point out how limited in usefullness for other purposes a particular political philosophy is.

    Secondly I was taking issue with her general comments that the Islamic fundamentalist critique of Western society was valid. In part her comments were flawed because they were partly based on her premises about the liberal political philosophy, which I have already pointed out, are quite wrong premises, wrong in a very logically elementary way. In addition, one of the major components of my short critique was the way in which she quite tried to play down the moral importance of invidividual choice by contrasting it against the ‘sacred’, whatever that is. In fact the notion of individual choice is itself quite an important one and an important part of the moral heritage of the West (e.g. Protestanism) and the point there is really quite simple – people are not being moral if they are forced to do what an authority deems moral. Choice is a precondition for a moral act. To taken an outlandish example but one easy enough for Jack to understand, if you are only donating to charity because you have a gun at your head, then you aren’t motivated by charity when you made that donation.

    I should hasten to add that none of this is meant to be an argument against laws that force people not to do immoral things like rape or kill or even force people to do things that they might have done if they were more moral (e.g. pay taxes to fund some minimal welfare safety net) – however as a liberal I support such laws not because they promote a particular traditional morality as such or because I approve of the State legislating morality but because they can be supported on other consequentialist grounds (e.g. the Hobbesian problem, market failure). I have to make this very clear because Jack Robertson has a tendency not to understand the arguments he attacks since he suggests that my argument is:

    Arguable (although practically what truly matters to a liberal society about an individual's 'behaviour' is the behaviour itself, not the motivation for it).

    i.e. he thinks that my argument about the precondition for morality was meant to imply that I supported laws based solely on the motivation behind an individual’s behaviour when as is clear from above no such construal can be legitimately drawn or even suggested.

    Incidentally Jack’s comments on JS Mill are actually wrong. Jack says

    she's demanding that your jackboot libertarian mates stop arguing that such personal 'choices' (and films like 'Baise-Moi') have some connection to, and even draw intellectual 'authority' from, the writings of those like J. S. bloody Mill.

    I’m simply unaware of any libertarians being against the ban on Baise Moi on the basis that it is a good personal choice to watch Baise Moi – the point is government is stopping anyone from making that choice. JS Mill was clearly against censorship – freedom of speech and expression were his concerns, he favoured a ‘free marketplace’ of ideas and was willing to tolerate people making bad choices and people having bad taste. What possible objection can Jack have to all this?

    However Jack Robertson’s grasp of such concepts is somewhat dodgy because in an earlier post on Baise Moi he writes:

    why public objection to Baise-Moi and certain other works of 'art' (such as this one) are sneeringly dismissed as 'ultra-conservative calls for censorship' so many of the very same thinkers who warmly embrace public objection to this one, say, as 'important debate' about the need for 'cultural protocols and sensitivity'?

    Well Jackie boy, maybe because some of these objections have been nothing more than a blatant call for censorship. For the benefit of your limited ability to grasp insights, liberals are not against film reviews or book reviews. If someone wants to write in and say that Baise Moi is a crap film, that’s their business. But it actually has been censored, Jackie boy, yes. And you sound rather blasé about that - you seem to think that censorship by the government is one legitimate way of 'registering an objection'.
    Paddy Goes to Market?

    As promised, here is my thoughts on Paddy’s article on the privatisation of Telstra.

    Like Jason, I have to declare my interests. Firstly, I am employed by Telstra. But I probably have more to lose than gain by commenting on this issue. Secondly, all views are obviously my own personal views and in no way are to be taken as any sort of official company statement - yadda yadda - you get the idea.

    So, assuming this isn't some huge prank by Paddy, lets get things under way.

    Before revealing his plan for Telstra, Paddy wants to make sure that we all feel the same way about Telstra. He reminds us that the partly privatised Telstra is a greedy monpolistic firm which has changed little since the days it was the wholly government owned Telecom. Paddy has it partly right. The firm is greedy and monopilistic - but greed (self-interest) is the motivation of most companies who have private owners. The firms dominance in many sectors of telecoms is partly a historical legacy of the days when it was a government monopoly, and partly the result of its competitive tactics and strategy since deregulation.

    But I would dispute pretty strongly the claim the company hasn't changed since the telecom days. Deregulation has allowed other firms to enter many markets that were once the exclusive domain of Telstra. The ACCC has kept a fairly close eye on Telstra and has recently been granted even greater powers. (discussed by Jason below). Then there has been the massive restructuring within Telstra. The unions are still strong in some parts of the company, but I would argue their overall influence has weakened. Lastly, where Telecom was probably somewhat nationalistic in its interests, Telstra is showing a strong interest in further expanding its Asian operations - ironically because, according to media reports, it feels that it is too constrained in its Australian operations.

    According to Paddy:

    "Complete privatisation of Telstra would do nothing to improve this.[Telstr'as monopoly and greed] As the Thatcher government in Britain found, privatising a statutory monopoly without dealing directly with the source of its power cures nothing and guarantees no improvement in performance."

    Again, he is partly right. Turning a public monopoly into a private monopoly isn't going to necessarily make things cheaper or reduce the firms market power. But this ignores the fact that not all of Telstra's market power comes from historical legacy. The Telstra brand name has a lot to do with it I suspect. Just look at the huge numbers of Internet users who choose Big Pond as their dial-up ISP despite the availability of a multitude of competitors. Ditto to the GSM mobile network - where despite other providers offering competitive plans and mobile portability, Telstra still has the bulk of the market.

    Paddy also seems to be ignoring what I would have thought was the bleeding obvious. Following any privatisation of Telstra, both the ACA and ACCC will doubtlessly have more power to enforce their will ( and that of the government) onto Telstra.

    After a brief history lesson, Paddy comments:

    "Of course, such was the rapidity of the growth in demand for telecommunications that Optus, and a myriad other retailers of capacity, flourished - or, in the case of One.Tel, for example, did not, as a result of mismanagement. But the problem for all of these was that they all had to access the terrestrial network, and Telstra continued to abuse its power through interchange charges."

    Even if we accept that this has been the situation in the past, this doesn't mean it will be the way of the future, especially not with the rate of technological change in telecoms. Voice over IP is starting to look like it might finally got off the ground, which may reduce PSTN voice traffic. On the broadband front, Telstra's cable and ADSL networks could face significant competition from both wireless broadband and broadband via the electricity grid - assuming the government doesn't kill these competitors with the sort of regulation that has made digital tv and data-casting a farce.

    In short - terrestrial networks might not matter so much in the future and Telstra's advantage in this area will be less significant I suspect.

    After such a build-up one might expect some radical proposal. Instead Paddy throws his weight behind what is a fairly commonplace suggestion:

    "the best path to reform was to split the commercial-retail aspects of Telstra from the common carrier network and establish them as separate entities. The latter would sell capacity equally to all the other retailers, including Telstra. …Who would own the common carrier is the main, but really irrelevant, issue. … So, to reform Telstra, the Government must first legislate to split the retail arm from the common carrier arm and establish it as a separate corporation. … the ideal result initially would be to leave the Government as sole owner of the network, and Telstra fully privatised and independent. Then the ownership of the network could be dealt with separately."

    I think this idea has been floating around for quite a while now. It is an idea which has both positives and negatives. On the face of it, this kind of separation makes sense as it means that Telstra Retail won’t have any advantages over other firms offering retail telecoms.

    On the other hand, breaking up a vertically integrated firm might actually raise the end to end costs of supplying a particular good or service. It is quite legitimate in this context to ask if the prices paid following the break up of Telstra would be significantly cheaper, if any economies from vertical integration are lost. It may well be that the outcome is improved by breaking Telstra up – but it can’t just be assumed.

    But what I really have to take issue with is Paddy’s lack of concern about who owns and what happens to the ‘common carrier’ network provider. (what is effectively IS&W under Telstra’s current structure). IS&W is an enormous division. It would probably still rank as one of Australia’s largest firms even if split off from Retail. What paddy’s proposal would actually be doing is leaving the government with a 100% government owned monopoly over the wireline network. A 100% government owned monopoly with the temptation for the government to interfere in the setting of prices and which, according to Paddy' own logic, would be at greater risk from union influence and ‘management featherbedding’ (Paddy’s assertions not mine).

    I think there is something in that for all of us.

    Wednesday, May 15, 2002
    Over-regulated Telstra: Former Labor Minister and now IPA Senior Fellow Gary Johns (jeez - he must have lost lots of friends in that move!) presents an alternative perspective to PP McGuinness's shallow outburst on Telstra, the former statutory telco monopoly. Johns also ends up calling for privatisation - I never thought I'd see the day that a former Labor minister would be to the Right of the iconic PP McG and more economically rational than PP McG, but there you go:

    Competition in the sector is fierce, there are over 40 carriers in the market and some have been unable to survive the competition. The real debate about the sale of Telstra is what is best for Telstra as a telecommunications company. Not Telstra as a government entity, or a milch cow for the revenues, or as an asset to be realised, or as the saviour of rural Australia, or as the third favourite demon of the regulators after big oil and big banks. No, just Telstra, Australia's biggest company. The company being frigged about by every Tom, Dick or Harry who wants a bit of payback against anything big and bountiful. Governments have to stop mimicking current affairs programs, playing the role of 'protecting the little Aussie bleeder'. Australians are extraordinarily well protected in the telecommunications market. But its time to let Telstra perform without the hobbles.

    The regulation of the telecommunications sector is extraordinarily far-reaching. There is a clear universal service obligation to ensure that standard telephone services and payphones are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business. There is continued access to untimed local calls. There is the customer service guarantee. There are special benefits for rural and regional customers of carriage service providers. There is a price-cap regime. There is a regulatory structure designed to stimulate competition.
    Paddy Goes Socialist?

    Where does one start with this appaling piece. Jason suggests either Paddy has turned socialist or he doesn't know what he is talking about. I would suggest that Paddy is just displaying the typical conservative trait of only being comitted to small government and market freedom when it suits... and he doesn't know fully what he is talking about.

    My full comments will come tomorrow when I have the time for a more thoughtful discussion.
    From the burqa into the chastity belt: Melanie Philips has an abysmal piece in The Spectator which proposes to defend liberty against Muslim fundamentalists by ... restricting liberty. That's right. Have a read yourself:

    As someone who deplores this warping of liberal values, I find that Muslims are often allies. Their critique offers a salutary contrast to Western indifference and inertia. Muslims rightly condemn the collapse of Western moral authority, the failure of nerve that has created our epidemics of crime, drug abuse, family breakdown and promiscuity. They are right to be horrified at the wholesale destruction of the sacred, and the worship instead of consumer choice. They are right to point to the meaninglessness and vacuity of secular society, its arrogance and the paralysis of its institutions.

    Sounds like a cave in to me. You can keep your allies to yourself, lady. Interesting how putting the word 'consumer' next to the word 'choice' seems to put 'choice' in a bad light. Why not just say 'choice'? Whether your life is meaningless or vacuous or whatever is up to you - it's your choice. It's not a matter of worshipping it, it's a matter of abiding by whatever results from your choices and discovering yourself in the process - and being moral in the process. I know it's cliched to say this but it's worth saying - there can be no such thing as forced morality. Genuinely moral behaviour can only come about through choice to adopt said moral behaviour.

    Similar non-sequiturs are littered through out this piece:

    Take the drug use for which the Netherlands has become so famous and which was so enthusiastically promoted by Fortuyn. The Dutch blame immigrants for the epidemic of drugs and crime. But it is not immigrants that are the cause of the problem; it is rather the indigenous Dutch libertarians, whose misguided permissive approach has resulted in a spiral of social mayhem.

    This is not a liberal policy. Harm to individuals and society was never part of the liberal agenda. Similarly, sexual licence has left behind a gathering trail of damage and misery in sundered families, broken hearts, and the shredding of trust and security.

    She is talking about Fortuyn here but funnily I don't recall him complaining about Muslims causing drug use. And when did he see drug use per se as a problem if he was pro legalisation? Maybe I'm wrong - if anything Fortuyn thought he was defending such things as one's lifestyle choices about whether to smoke pot against the incursions of fundamentalism. Sure he was worried about crime, but that's a different issue altogether. And drug use doesn't cause crime - drug prohibition does.

    I am also baffled by Philips' concern with sexual licence. Does she mean rape and molestation? Presumably not, as liberals support laws against those kinds of things. Does she mean 'sex acts which lead to broken hearts?' This seems to be closer to what she means. And what does she propose we poor liberals do about these admittedly endemic problems? Reintroduce punishments for adultery and such like? Or is she accusing liberals of promoting sexual licence? Presumably some liberal do - but not in their capacity as liberals as liberalism isn't a philosophy of personal ethics per se - it is a political philosophy about the limitations of the State. Philips must be thinking of some sort of philosophy that prescribes almost every detail of your life - perhaps she's looking for a religion rather than a political philosophy?
    Has Paddy McGuinness become a socialist?: I ask this question about the famous or infamous (depending on your viewpoint) right of centre Australian polemicist and editor of liberal/conservative brains trust journal Quadrant because the alternative is that he doesn't know what he's talking about. In a recent SMH column he essentially runs with Labor's argument that Telstra should be split up with the local network being owned by the government. (Disclosure: it is well known in the industry that the consulting firm I work for acts for Telstra - but I am writing this in my personal capacity and there is certainly no rational reason for me to suck up to my employers via writing things on my blog!) Now, it's not the fact that he adopts this position per se that's the problem but how he frames his argument:

    As Allan Fels of the Australian Competition and Consumer Commission is aware, the greedy monopolistic instincts of the former statutory monopoly have changed little with its part- privatisation. Telstra uses its market power - in particular, its control over the common carrier network of terrestrial communications - to shoulder potential rivals out of the way

    Complete privatisation of Telstra would do nothing to improve this. As the Thatcher government in Britain found, privatising a statutory monopoly without dealing directly with the source of its power cures nothing and guarantees no improvement in performance

    The critique of Thatcher's muddled privatisation policies is well taken - except it doesn't apply here! Contrary to Mr McGuinness's claims no one is talking about privatising Telstra with no competitive safeguards because not only is Telstra subject to an access regime (which is designed precisely to ensure that Telstra can't shoulder competitors out of the way by denying them access to Telstra's networks or charging them 'unreasonable' access prices which would render competition unviable) and an anti-competitive conduct regime, it is subject to these regulations in an industry specific regime separate from the generic Part IIIA of the Trade Practices Act which has far more appeal rights and is, in essence, subject to more checks on regulatory discretion. Does this make a difference? You bet it does. For one thing the legislature specifically drafted the Part 11C regulatory regime for the telecommunications market based on the presumption that because of a combination of industry characteristics, it needed more hands-on regulation to push it into competitiveness. And recently, as my boss Henry Ergas points out appeal rights against regulatory decisions under the telco regime have been further stripped back, most likely with adverse results in the long term:

    As the Productivity Commission has noted, the telecommunications regime provides little real guidance on the crucial issue of how access prices are to be set. Even less constraint is placed on how, and how quickly, regulators evaluate undertakings. Already, the manner in which the ACCC exercises its wide discretion in considering undertakings is not subject to full review; in now closing off appeals against arbitrations, the government has granted the regulator a right to err without check or balance.

    This doctrine of regulatory infallibility sets a precedent that is deeply troubling. Regulators are more powerful today than at any time in Australia's history. Infrastructure assets worth over $100 billion are now subject to regulatory decision-making. Many decisions regulators take are sensible and welfare-enhancing. But some are not, and those should be reviewable.

    The regulators themselves should be the first to recognise this. What do they have to fear from merits review? And if they do protect themselves from it, what do they gain? A quieter life in the short term, perhaps - but only at the cost of cheapening the regulatory coin over the longer term.

    Furthermore, contrary to Mr McGuinness's claim, it was the ACCC, the same ACCC run by the Allan Fels cited that approved recent access charges by Telstra. Now, Telstra generally complains the ACCC doesn't allow it to set the access charges it wants and the ACCC generally thinks access charges are too high - and they usually meet in the middle. The point is that in regulating the access regime, the ACCC, as big business knows, is not inclined to give Telstra an easy time.

    McGuinness also argues:

    Union influence was the reason why the last Labor government made such a mess of telecommunications policy. The telecom unions were opposed to any introduction of competition into the industry and against all technological innovations which threatened the terrestrial common carrier network. From the start, an irrational and self-interested campaign was mounted against all technological innovation, especially the establishment of the satellite system. And then, when a degree of competition was introduced belatedly through the establishment of Optus, it was saddled with satellites in the hope that it would be crippled with an initial burden.

    Of course, such was the rapidity of the growth in demand for telecommunications that Optus, and a myriad other retailers of capacity, flourished - or, in the case of One.Tel, for example, did not, as a result of mismanagement

    He has his characterisation of Optus precisely the wrong way. Recall that Keating favoured introducing full deregulation while it was the wishy washy Kim Beazley whose views were translated into policy in the end whoi scuttled Keating's more radical reforms and introduced the duopoly policy which stayed for many years before full deregulation in 1997 and amounted to an unprecedented mollycoddling of the second player. Basically during this period of asymmetric regulation between the two carriers it was Optus which was the infant industry, so to speak, which the State tried to build up as a countervailing force to Telstra.

    It seems the real problem McGuinness has with Telstra is that it was once a statutory monopoly. Well, it ain't a statutory monopoly anymore. It receives no more subsidies than its competitors. It competes in one of the most deregulated telco markets in the world but at the same time is subject to an industry specific access and anti-competitive conduct regime - it gets less rather than more favourable treatment compared to comparable 'bottleneck' facility owners in electricity or gas. Economic efficiency is not about 'high' prices or 'low' prices but efficient prices and efficient prices (or access charges in this case) are not necessarily what populists want them to be. An efficient access charge has to take account of the fact that charges set too low dampen incentives for investment in new networks or other forms of telco infrastructure and encourage 'cheap riding' on existing infrastructure. If you want cheap access then get ready for a telco sector that is based solely on resale competition and no infrastructure innovation. Is this necessarily an argument against structural separation as McGuinness proposes? No, but such a proposal should be based on sounder premises than those critiqued here.

    Monday, May 13, 2002
    You can't please everyone: Bahrain has banned Al Jazeera TV under the suspicion that it is a 'pro-Zionist' front:

    According to a news bulletin on the Qatar-based channel, Mr al-Hamr [Bahrain's Information Minister] said the ban was being imposed because the station was biased towards Israel and against Bahrain ...

    Mr al-Hamr is said to have accused the station of being infiltrated by Zionists.

    "We believe (Al Jazeera) is suspect and represents the Zionist side in the region. We will not deal with this channel because we object to its coverage of current affairs. It is a channel penetrated by Zionists," he was quoted as saying.
    Sharon *is* a man of peace ... given the alternative: Bruce Hill is shocked by the recent turn of events in the Mid-East and so am I:

    Rejecting the possibility of a Palestinian State is foolishness made flesh. If Sharon says it's going to be neccessary, then I'd say there's a fighting chance he's correct. I never thought I would hear myself say anything this insane, but Sharon needs to be supported because he's a mo.....I mean, he's a mod...oh god, please don't make me say this...a moderate. Gaack! Augh!

    What's going on? Well the opportunistic scoundrel Netanyahu who stuffed up his country so badly the last time he was in power is obviously hungry to get back his Prime Ministership and is doing everything possible to achieve this, even if it means outflanking Sharon (!) on the Right as this report shows:

    Ariel Sharon suffered a scalding defeat last night at the hands of his right-wing Likud party and his rival Benjamin Netanyahu after they voted to reject Palestinian statehood.

    The decision, by the party's central committee, which has about 2,500 members, was the culmination of a noisy and acrimonious meeting at which Mr Sharon, the Israeli Prime Minister, failed to persuade his party colleagues to postpone the vote, arguing that it was against Israel's interests.

    The resolution undermines Mr Sharon's diplomatic position, and runs counter to that of Washington, Israel's chief ally and the the main sponsor of the wrecked Oslo peace efforts.
    Drivel detector to Education Minister, Pomo gets slam-dunked: Interesting news from France, a land that seems disproportionately populated by both the genuine species of intellectual and the drivel-meisters. Luc Ferry, a philosophy professor and critic of Pomo darlings such as Foucault and Derrida has been appointed as the new French Education Minister under Jacques Chirac. Chirac may, as various accounts, suggest, be an unprincipled and cynical old technocrat but he definitely has the right instincts in this case:

    Mr. Ferry is best known for his criticism of several French thinkers who have exercised considerable influence on scholarship in the United States. The University of Chicago Press has published a number of Mr. Ferry's books in translation -- including, earlier this month, Man Made God: The Meaning of Life...

    He has debated the legacy of Martin Heidegger, argued against the philosophical underpinnings of the radical ecology movement, and written for mass-circulation journals such as Le Point and L'Express...

    Mr. Ferry is sometimes identified as one of the "New Philosophers" -- a group of young thinkers who, in the late 1970s, challenged the hold of Marxism and other radical currents on the French intelligentsia. In 1986, in a collaboration with Alain Renaut, Mr. Ferry published an influential critique of Michel Foucault, Jacques Derrida, Pierre Bourdieu, and Jacques Lacan, treating them as manifestations of what the book's title called "68 thought."

    Ferry is of course, not without his detractors, because of his advocacy of the idea that we may still have a lot to learn from the clearer thinkers that preceded the likes of Deridda and Foucault:

    Against such radical criticism, Mr. Ferry and other thinkers argued that the Western philosophical tradition, far from being exhausted, remains essential to the task of developing a notion of human rights adequate for modern society. (Nor, implicitly, had there been some great leap forward, hurtling mankind into "postmodernism.") While a certain apocalyptic tone and high-flying literary quality often accompanied "68 thought," Mr. Ferry's philosophical writings have tended to be rather more dry.

    That has not kept them from being controversial. In May '68 and Its Afterlives, published this month by the University of Chicago Press, Kristin Ross, a professor of comparative literature at New York University, treats Mr. Ferry's work as a triumph of advertising over analysis. His work, she argues, reflects "the transposition of the marketing concept of 'generation' and other journalistic techniques into the field of philosophy, such that the new generation emerges fully formed to render the previous one obsolete."...

    Many scholars assume Mr. Ferry to be a neoconservative, if they have heard of him at all.

    Note the typical obscurantist language in Professor Ross's dismissal that one comes to expect from the Postmodernists. And how debauched philosophy has become that a critic of radical ecology (an anti-humanist ideology) and Heidegger (a Nazi sympathiser whose own philosophy was very compatible with the woolier mystical forms of Nazi anti-modernism) is regarded as a 'neo-conservative.'

    For filters sake!

    When it comes to Internet censorship, you can rely on the Australian regulators to force the Internet industry to give users something they don't want. In this case, it's cost price filtering software.

    On the same day that 'Baise Moi' was being banned by the OFLC, the ABA announced that Internet Providers would be obliged to offer cost-price internet filtering software to their users.

    " 'The IIA has worked to ensure that the codes continue to address community concerns about illegal and offensive Internet content while not imposing unreasonable burdens on the Internet industry,' he [head of the ABA, Professor Flint] said in a statement.

    Professor Flint said many Internet users, particularly families with children, consider Internet filter software useful in helping restrict access to illegal and offensive material."

    At first I amazed that there wasn't a huge outcry from the majority of the industry about having prices dictated to them. (as opposed to Telstra who is well used to the ACCC telling it what price it may charge) Surely even those who didn't have an ideological opposition to such direct intervention would rebel at the thought of lost profits.

    But then there was this article, where it was revealed that the usually compliant Big Pond seemed somewhat unconcerned.

    " The new code has been met with a cool response from Australia's largest Internet provider, Telstra BigPond, which charges customer $59 to download the software. A BigPond spokesman said customers were offered filtering software automatically when they completed registration forms online.

    The spokesman said despite offering a free trial of one of the most recognised filters, the majority of BigPond's 1.2 million customers had opted not to download.

    'Most people aren't interested in it, that is our experience,' he said."

    It's not necessarily going to cost ISP's much in lost profits because most consumers don't give a shit about content filters.

    Which leads one to ask why bother with mandating cost-price filters when few consumers want them. In particular, why is Peter Coroneos , head of the Internet Industry Association, promoting the changes arguing that:

    " the ABA code would bring those rogue providers who did not offer the software into line.

    'But those that were charging for the programs should do it on a cost-recovery basis rather than for profit,' he said.

    'That is because cost shouldn't become an issue for families that wanted to take advantage of a filter.' "

    I'm sorry, but if you want a special service, such as filtering, why on earth shouldn’t you have to pay for it? Why do the small number of households who want filters have some special right to cost-price filter software? I'm still struggling to see what the IIA gains from this policy other than looking good in front of the government, and perhaps also putting increased pressure on the smaller players in the industry. I'm amazed it has any small ISPs as members at all given the contempt with which the IIA leadership seems to treat them.

    Regulating Competition.

    By sheer good fortune I happened to catch John Clarke and Brian Dawe doing their weekly "interview" on Thursday night. Sometimes the routines and gags used by this pair are a bit worn and recycled, but on Thursday they had a fantastic skewering of Alan Fels & the ACCC (Australia's anti-trust body).

    With John Clarke taking on the role of Professor Fels, the complete "interview" is available on the ABC web site for your enjoyment. The following dialogue takes place in the context of a discussion abt the ACCC launching legal action against QANTAS following the decision by QANTAS to cut price and put on more flights to certain destinations following the entry of Virgin Blue into the market.

    BRYAN DAWE: So Qantas put extra flights on that route?

    JOHN CLARKE: Yes, they did.

    BRYAN DAWE: Professor Fels, isn't that competition?

    JOHN CLARKE: Yes, it is.

    BRYAN DAWE: And did they not lower their prices?

    JOHN CLARKE: Yes, they did.

    Do you work in the airline industry?

    How do you know --

    BRYAN DAWE: No, look, I don't Professor Fels but it's logical isn't it that they would lower their prices.

    Isn't that benefit of competition?

    Isn't that what this is about?

    JOHN CLARKE: Our job is to make sure that the market works successfully as an unregulated market.

    BRYAN DAWE: Yes, but you're regulating it --

    JOHN CLARKE: But that is the best way to ensure that that vital competitive behaviour is actually taking place.

    BRYAN DAWE: Isn't it the competitive forces that produce the best result?

    JOHN CLARKE: It is and we would only step in when they didn't work.

    BRYAN DAWE: Well if the competitive forces don't produce the result, why don't we have a regulated system?

    JOHN CLARKE: We do, I'm the regulator.

    That is my job, Brian.

    We're the ACCC that's what I'm trying to explain."

    Touche! I think this sums up nicely the dilemma of trying to regulate competition.

    Sunday, May 12, 2002
    The anti-American Left in Australia and other idiot savant intellectuals: Ah! The joys of taking on pseudo-intellectuals like the much overrated feminist 'thinker' Anne Summers ( a bit unfair ain't it? The US gets Andrew Sullivan, we get Alan Jones; the US gets Camille Paglia who for all her faults and weird notions is a genuinely provocative and original thinker, we get Anne Summers).

    In the Saturday edition of the SMH, Summers gets stuck into a recently released book from the excellent independent publishers Duffy&Snellgrove called Blaming ourselves: September 11 and the agony of the left which is an anthology of essays on anti-American leftist reactions to September 11 in Australia. (So that I am later accused of not disclosing this let me disclose - I am friends with two of the contributors to this anthology and am acquainted with or have met 7 of the contributors.)

    To be fair most of her comments are not unreasonable but they are punctuated by some patches of idiocy. For instance she writes:

    from the start, the responses to these attacks differed from how the world has reacted to other, recent acts of terrorism. Were British High Commission offices plied with flowers after IRA bombings? Were condolence books opened for those assassinated at the Indian Parliament? No. The attacks on America were seen as special - the invincible had suddenly become victim, and that was a scary thing to contemplate.

    Umm, could it perhaps be a relevant consideration that more people died at the same instant during the S11 attack than during the equally reprehensible bombings in the UK and India? Or is this simply too commonsensical to be regarded as a good reason for the outpouring of grief? I don't know about you but the sheer number of people slaughtered seems to be a more sensible reason for the response than the fact that 'the invincible had suddenly become victim and that was a scary thing to contemplate'. The ordinary person in the street when considering death does not, I think, get in the dumps because of a contemplation of its geopolitical implications.

    Summers also writes:

    Once the war in Afghanistan began, however, most people around the world resumed their former view of America. Europeans especially, but many elsewhere, including Australia, went back to attacking its arrogance and hypocrisy. Why, they said, should we join the war on terror when America won't commit to the Kyoto Protocol, or maintain support for the Anti-Ballistic Missile Treaty?

    Once again the intellectual misses the obvious explanation. Let's put it this way, Ms Summers - the ordinary person in the street with a modicum of common sense thinks: "Not supporting the US and getting the Sydney Harbour Bridge blown up by similar nutsos if they're allowed to get away with it versus wearing summer clothing during winter if we don't go ahead with Kyoto. Hmm, which scenario is worse? Getting blown up versus wearing summer clothing in winter ... let me think about this"

    But this remark coming from a feminist I find particularly surprising:

    Many of its contributions have as their ambition ''to provide a permanent memorial to the intemperance of the intellectual Left" in the weeks following the attack on America. This book, the editors claim, ''will ensure that these people will never be able to step away from the agonised, and agonising statements they made, that struggled to balance the supposed crimes of capitalism against those of terrorism, and that were so conspicuously devoid of perspective, proportion, and compassion". In other words, this book is motivated by revenge, not scholarship - and it shows.

    So according to Ms Summers, feminist extraordinaire, there can be no such thing as morally driven scholarship or even intelligent polemic. Simone de Beauvoir, George Orwell, Betty Friedan, Germaine Greer, please take note of this. Particularly Germaine Greer as it's a long time coming since she said anything worth saying ...

    Ms Summers is of course, entitled to her opinion that:

    there are several very good essays that take as their task wider issues than Left-bashing. The American academic Muqtedar Khan writes movingly about how to bridge the gap between Muslim values, and Islamic practices, and democratic values. Leanne Piggott, a Middle East studies expert from the University of Sydney, probes the sources of Islamic hatred of the West - and the probable terrible consequences for ordinary people in the Islamic world of the war against terror

    However, having read Piggot's essay I do not see any substantial differences between her conclusions and those drawn by other contributors who are presumably disfavoured by Summers because of their known ideological affiliations.

    On a concluding note she correctly observes that:

    The great irony is that, despite everything, it is America that is still the most open of countries, that still welcomes migrants and refugees and whose possibilities are still a powerful magnet for those who want a better life. It is, writes the Canadian Michael Ignatieff, ''the only country whose citizenship is an act of faith, the only country whose promises to itself continue to command the faith of people like me, who are not its citizens".




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