Catallaxy Files

polymathic pontification, bleeding heart economic rationalism and liberal secularist contrarianism

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    Saturday, February 01, 2003
    The economist as frustrated musician
    After prolonged exposure to the works of Sonny Boy Williamson and Little Walter I have at last succumbed to temptation. This Saturday morning I bought a 'Hohner' blues 'harp' (i.e. harmonica) in the key of C (ironically made in Germany but then the Krauts have like the Japs always been renowned for their attention to detail and craftsmanship) and a beginners' instruction book for blues harmonica.

    Mind you, I have been told that the harmonica can in fact be a very difficult instrument to play and I have other musical loves of course, such as the jazz saxophone of Charlie Parker, John Coltrane, Lester Young and many others; or the jazz trumpet of Louis Armstrong and Miles Davis. However my life history is peppered with examples of enthusiasms rapidly taken on and then dropped so I figure if I find out I'm crap at the harmonica or get bored with learning to play it properly it won't be such a write off compared with if I had sunk a huge investment into a trumpet or saxophone. If I find I don't drive my neighbours crazy with my harmonica practice a year from now then I might consider trying the trumpet or saxophone.

    In any case I've now joined the ranks of economists who have musicians in them struggling (often times vainly) to get out such as 'Ned Kelly' Quiggin with his guitar and ... er ... 'unique' lyrics or Alan 'Shrugged' Greenspan and his saxophone.

    Thursday, January 30, 2003
    Education, education, education??

    The 2003 first years are starting to enrol at Australia’s universities. I’ve seen quite a few at Melbourne University in the last couple of days, often with their parents in a strange parallel to the TV news footage of parents seeing their five year olds off on their first day at school. Let go, Mum.

    Jenny Macklin has been in print trying to convince us that we need even more people with degrees, and Ross Gittins is telling us that it makes personal financial sense.

    On a pure demand basis, Macklin has a point. More people want to go to university than there are places, this year as every other year. And unemployment for graduates remains low, though many have a rough transition to the workforce.

    Yet there’s no evidence at all that the economy itself needs more graduates, as I argued last year. More graduates will just displace less qualified workers in the labour market. The trouble with Gittins’ article flows from this. It’s certainly true that on average graduates earn more than non-graduates, and often a lot more. But over the last decade or so we’ve been conducting a social experiment, enrolling some rather marginal students in higher education. Are they going to earn enough to make further study worthwhile? If they are just buying some unemployment insurance, perhaps not.

    I’m not saying Gittins is definitely wrong. But there’s enough reason for doubt that we should not be encouraging academically underprepared students to embark on university education. Even if their mothers come with them.

    Short lexicon of beliefs
    I notice that Ron Mead, a reader of right wing dispositions, continues to cast aspersions on my political beliefs on the comments facility of Ken Parish's blog. Well, I recall a very neat idea of Godless Capitalist, a blogger who has since retired - a Purpose Statement as his very first post. This inspired me to compose something similar - a brief, non-rigorous, non-comprehensive but hopefully crisp summation of my current beliefs, some long-held and a minority tentatively held. No doubt they won't please everybody but here it is.

    Immigration - high, generous but definitely regulated. Skilled component should remain prominent but also allow for generous intake of humanitarian as skills tests can't capture everything and lots of people who end up as peasants in shit-hole countries might have ended up as rocket scientists if they were born here.

    Regulatory reform (i.e. deregulation, Hilmer reform process) - please continue, facilitate national market with accompanying gains from trade, eliminates pricing distortions including cross subsidies (should be funded transparently), promotes dynamic efficiency and allocative efficiency, notwithstanding possible short term losses in productive efficiency. Also cost-benefit analyses and sunset clauses for all major government legislation.

    Foreign policy - Isolationism and pacifism is for dreamers but so is military adventurism. Foreign policy should primarily be about deterring possible threats, but not when it's too late, so it may also include nipping future threats in the bud

    Taxes - If we got rid of corporate welfare programmes and 'churn' in the tax system through middle-class welfare we could afford to cut taxes more, Wouldn't that be a good thing for everyone including the current beneficiaries of middle-class welfare? Think of it as a benefit from resolving a prisoner's dilemma.

    Law and order - Tough on crime, tough on the causes of crime. Also legalise drug use and you have more resources to deal with real crimes.

    Death penalty - Not a good idea in general if only because you can't bring wrongly convicted people back to life (at least not yet). However may be justifiably used for crimes of rare occurence like treason and terrorism.

    Welfare - There but for the grace of God/chance/genetics/environment go I. Focus on reducing effective marginal tax rates that dissuade labour market participation but the richer the society, the more generous we can afford to be on this. Plus people are more likely to feel alright about things like free trade and rationalisation of uneconomic industries if there's a secure safety net in place.

    Gay marriage - If the traditional family can't survive two people of the same gender being allowed to tie the knot, then it's not worth preserving.

    Affirmative action: If Group B has been historically pissed on by governments elected by Group A, the current generation of Group B will likely have accrued disadvantages as a result of their forefathers being pissed on. Even if descendants of Group A had nothing to do with all this, Group B could possibly bring a reasonable case before the courts for restitution for past injustices. Let's leave it out of the courts and do something about this now as long as there's a sunset clause to the measures and their proportionality to the problem is properly assessed.

    Labour market deregulation - Yes to freedom of contract including freedom for employees to opt out of award terms and conditions. High minimum wages can worsen unemployment but no need to scare the horses with proposals like abolishing minimum wages, just as long as reliance on raising them as a means of 'helping' the poor is stopped by a a focus on reducing EMTRs (see above).

    Antitrust - yes, but don't overuse it.

    Free speech - Say anything you please as long as it's not akin to shouting fire in a crowded theatre or tortious in any other way. If it is and is worth cracking down on, we don't need to pass any special laws to crack down on it.

    Privatisation: Yes, please. No strict rule but generally regulated private monopoly is preferred to publicly ownership because of market for corporate control, generally reduced political interference with resource allocation and greater transparency of political instruments (social obligations should be funded by clearly transparent levies which can be periodically subject to political accountability).

    Free trade and open economy - no trade barriers period except for quarantine considerations (which is to be subject to cost-benefit analysis) and national security considerations. No foreign investment restrictions period except for national security considerations.

    Native title - Everyone should have their property rights respected by the courts regardless of colour or creed.

    Guns - In a civil society, there is no role for private ownership of guns period except in very special cases e.g. people living on isolated farms. Sporting shooters to have their locked up in shooting clubs after use.

    Abortion - no abridgement of abortion rights period even if late term abortion is a bit morally iffy.

    Drugs - as a generally principle, feel free smoke and sniff your brains out. Soft drugs to be completely legalised. Hard drugs to be available from pharmacy by prescription. People who sell drugs to children to be treated harshly, no littering of syringes! A responsible user is a legal user.

    Euthanasia - If I lost or knew I was soon going to lose 90% of my brains but still had enough sense to want to blow the rest out and some do-gooding wanker forced me to be kept alive as some drooling charity case I'd be mighty pissed off (think of poor Freddy Nietzsche in advanced syphilis stage and how his sister turned him into a Nazi icon). Dr Nietschke should be free to sell his stuff.

    Censorship - none period. As for all you whinging 'think of the children' types, think of looking after your children when you have them or please don't have any.

    Prostitution - Prostitutes have as much right to operate in safe conditions as architects. If that means operating out of their homes, as long as they're good neighbours (i.e. nobody can tell whether visitors are clients or partners, no hogging other people's parking places, no condoms thrown over the fence) so be it.

    Who's afraid of the big, bad lobbyists?
    John Quiggin comes out against the Free Trade Agreement with the US on the basis that it's a trojan horse for US monopolists. Kim Weatherall agrees. Ah, these Cassandras of academia!

    As an opponent of economically irrational copyright term extensions I share his concern that we not be pushed to adopt the US approach to copyright but IP is not the be-all and end-all of public policy and his attitude sounds like one of cutting off your nose to spite your face.

    There are immense benefits to be had from pulling off a well formulated FTA along with the attendant risks of deflecting lobbyists' demands - for one thing it can jumpstart the micro-reform process which has been lagging for a while. It's also a chance to revisit our competition law and adopt a more economically rational approach there. Particularly promising is a chance to hash out a commonly agreed Statement of Regulatory Principles with far-reaching benefits for future legislation. There are risks to be aware of in entering the bargaining process but there are risks in all bargains. If we can't trust our trade ministry to competently negotiate a bilateral agreement what can we trust them to do?

    My boss Henry Ergas in an address to the National Press Club last year (note: PDF file) makes the case for an FTA on this basis. I'll let him speak for me:

    A bilateral agreement on principles of sound competition policy and regulation is one of the most promising opportunities to come from a FTA between the US and Australia. This agreement would not only enhance efficiency domestically, but it could also secure the gains of trade liberalisation, most notably by preventing gains from opening markets to investment and trade from being undermined by harmful or unnecessarily restrictive domestic policies.

    In order to pave the way for such an agreement, there must be a careful dialogue on and scrutiny of the respective traditions of competition and regulatory policy-making in Australia and the US. Irreconcilable differences will inevitably exist because of legitimate differences of opinion with respect to policy. However this does not rule out the possibility of some harmonization. The ever growing scope for gains from trade can make harmonization well worth pursuing.

    Stephen Kirchner gives us another reason to learn to love the FTA:

    one of the main potential benefits of a FTA with the US would be to subject cross-border capital flows and the ownership and control of equity capital in Australia to some semblance of the rule of law. This is an area in which Australian policy is dominated by bureaucratic and ministerial discretion and heavily influenced by domestic corporate interests. Australia would be outraged if our outward direct investment were subject to the same arbitrary and capricious treatment that we routinely administer to foreign interests. Since Australia is now a net exporter of direct investment capital, we should welcome the opportunity a FTA presents to subject cross-border investment to the rule of law.

    So temporary AA is politically possible after all
    At least in Malaysia ... the always cluey Steve Sailer (whom I wish would get a blog with proper permalinks) notes a recent news item from my country of birth

    "Malaysia to abolish ethnic quotas at universities" -- "In a landmark policy shift, Malaysia's government has said it will end its 31-year-old use of a quota system that has effectively limited the enrollment of Chinese Malaysians at the country's best universities." Following anti-Chinese riots in 1969, the government instituted quotas for the majority Malays at the expense of the Chinese, who make up 25% of the population.
    Hayekian regulatory reform vs 'deregulation': Management-based, technology-based and performance-based regulation
    The AEI-Brookings Joint Centre for Regulatory Studies have produced an interesting paper on Management-based regulation which is well worth downloading and reading.

    The authors firstly note the traditional dichotomy between 'performance-based' and 'technology-based' regulation in the economic and public policy literature. In summary the former prescribes outcomes and the latter prescribes inputs specified to appropriately reflect the regulator's aims - thus for instance in environmental regulation an example of performance based regulation would simply be to prescribe emission standards to be met whereas the latter would prescribe the technologies to be used.

    Each of these traditional approaches come with their own set of tradeoffs of course - the former is fundamentally a more 'Hayekian' approach, utilising the tacit knowledge of the regulated parties to achieve the regulatory benchmark at presumably lower cost than what might result if the regulator ended up prescribing the 'wrong' technology or process. And in the case of 'technology-based' regulation, even if the 'right' prescription in the current period was made there is still a tendency to lock in that standard and reduce the incentives of the regulated parties to explore the 'technology space' in future periods to adopt prescribed technologies and standards that may be even better at doing their job (unless the regulator also does a good job of tracking best practice over time, which is a big 'if'.

    On the other hand, where performance-based regulation involves setting uniform performance standards for heteregenous parties, there is still likely to be some cost of 'over-inclusiveness' in some cases and 'under-inclusiveness' - some parties may end up bearing disproportionate compliance costs compared to others and society may end up paying a higher price for achievement of the regulatory standard than necessary. Keeping with our example, this is where market-based measures like emissions trading (as opposed to across the board emissions standards) come in - depending on how well the trading scheme is set up, they should lead to non-uniform standards which are commensurate with the opportunity costs of the complying firms, thus reducing the underinclusiveness and over-inclusiveness problems. Market-based regulations are a subset of performance-based regulations and overall performance-based standards should do a better job of arriving at the appropriate tradeoffs of private losses and social gains than technology-based regulation. One exception to this conclusion which may well result in some cases is where government cannot effectively monitor the individual 'outputs' of the firms (the authors cite discharge of pollutant levels into the sea as an example).

    Where does management-based regulation fit into all this? It's not a panacea either - any serious economist knows nothing is, you live in a world of imperfections, continually crying out for Pareto improvements. But the authors do explore the conditions where it's most likely to be effective. As for what it actually involves, let me quote the authors:

    Under management-based regulatory strategies, firms are expected to produce plans that comply with general criteria designed to promote the targeted social goal.
    Regulatory criteria for management planning specify elements that each plan should have, such as the identification of hazards, risk mitigation actions, procedures for monitoring and correcting problems, employee training policies, and measures for evaluating and refining the firm’s management with respect to the stated social objective ...

    In this way, as well as by enlisting the assistance of private, third-party certifiers, management-based regulatory strategies may help mitigate the problems associated with limited governmental enforcement resources. Finally, by giving firms flexibility to create their own regulatory approaches, management-based approaches enable firms to experiment and seek out better, more innovative solutions

    This idea really isn't as radical as it sounds. It's again all about utilising the tacit knowledge of the regulated parties for the achievement of the regulatory goals. The authors provide short discussions of cases where this approach has been implemented along with preliminary assessments of their successs - among these examples are Australia's very own occupational health and safety regime, and the Hazards Analysis and Critical Control Points food safety regime in the US. The latter involves:

    HACCP first requires firms to identify the potential hazards associated with all stages of food processing and to assess the risks of these hazards occurring. Food processors are expected to use a flow chart to aid them in analyzing the risks at every stage of production, including before and after the food enters the plant in question.
    HACCP next requires firms to identify the best methods for addressing food safety hazards. The firm must identify all “critical control points” (CCPs), or points in the
    production process at which hazards can likely be eliminated, minimized, or reduced to an acceptable level. For each CCP, the firm must establish a minimum value at which the point must be controlled in order to eliminate or minimize the hazard. Having developed a methodology for dealing with hazards, the firm is required to ensure that it complies with that methodology. The firm must list the procedures that will be used to verify that each CCP does not exceed its critical limit, and must determine and indicate how frequently each procedure will be performed.

    I've argued in a previous post that by and large the regulatory reform movement which is mistaken for some sort of 'feral neo-liberal' program in Australia has won and has become widely accepted and it's all about greater attention to incentives, transaction costs, the political economy of regulators, cost-benefit analysis, and utilising tacit knowledge and 'Hayekian' discovery processes of regulated parties. It's got little or nothing to do with any simplistic ideologies about self-made men or justifying rapacious corporate greed. There is still much to do in this area but in the end it's all about tweaking the details - the ideologues may have helped us get here, and now it's the turn of the technocrats to finish the job. This discussion about nuts and bolts of 'management-based' regulation is exactly what I mean. Interesting stuff, not as inspiring as a Reagan speech perhaps but probably more important.

    Incidentallly I prefer the term 'regulatory reform' to 'deregulation' because it's technically more accurate and because the word 'deregulation' has a tendency to make literal-minded lefties equate us neo-liberal utilitarian economists with all those people intent on 'abolishing government'.

    Wednesday, January 29, 2003
    Spare us, Andrew
    Go to Andrew Sullivan's website, read his post called 'Ambition' on GWB and tell me it shouldn't share some award with Greg Sheridan's recent comparison of GWB with Churchill (I think there is something in the comparison between GWB and JFK - both spoilt rich kids, JFK's IQ was only 119, but Churchill??)

    Tuesday, January 28, 2003
    New blog
    A regular reader, Vladimir Dorta, emails to tell me he's now set up his own blog, called Val e-diction. Go visit.
    Windshuttle and the Randians
    Keith Windshuttle gets a double billing on the magazine website of the Randian movement, Capitalism Magazine, which has an article by him on the influence of pomo on history and an article in praise of him by an Australian objectivist. Good on him! I reserve my opinion on Windshuttle's work on Aboriginal history but anyone willing to take a blowtorch to the more vulgar forms of pomo should be supported. Randians are not always the most critical thinkers, least of all Peikoff Randians, but I admit to having a soft spot for any group that can come up with a phrase like Abortion rights are pro-life.
    In praise (and rememberance) of the old PP McGuinness
    The normally temperate John Quiggin comes up with this bizarre comment about the decision to award an AO to Paddy McGuinness:

    The person who should really be nailed on all this is John Howard. While he was saying all the right things about his concern for the people of Canberra, McGuinness, with the AO award already in the bag, was giving vent to the government's real feelings on the subject.

    The presumption here being that Paddy's AO is to be judged against his current,no, not just current but latest output so that the decision allegedly signifies that John Howard implicitly approved of the recent piece by Paddy on the Canberra bushfires. Let's remember that the AO is as much for achievement over one's lifetime as recent output.

    Uncritical praise does no one any good, least of all the subject of praise so let me say that I do agree that Paddy's output of late has not necessarily been of sterling quality but that placed in the context of his past work his AO was well-deserved.

    I was probably not even in Australia for most of the period when he was writing in The Australian and the Financial Review (I migrated here in 1990) but I do recall getting an anthology of his collected pieces from his time at The Australian which was arguably when he produced some of his best output (I think this was in the 80s to early 90s). Unfortunately I don't have it with me here so I can't cite chapter and verse but I can speak from memory.

    Firstly in his articles from that era he did capture the zeitegeist of the move towards micro-reform at a time when this was not yet fully fashionable even among the Canberra Press Gallery which was later to become besotted with the besuited Keating and his 'beautiful set of numbers'. He produced an extraordinary amount of quite well written and argued pieces on enterprise bargaining, infrastructure and other regulatory reforms (including a piece which I believe argued that Keating was a better pro-market reformer than Thatcher which I still remember) - all now more or less accepted and conventional wisdom ideas today (with differences really relating to differences over how much to tinker at the edges) but still close to heresy when he was writing. The same can, I imagine, be said of his earlier work at the Financial Review. For instance, he wrote up and promoted Milton Friedman's trip to Australia.

    This was also probably a period when Paddy was a principled and mostly thoughtful libertarian, producing very socially progressive pieces on euthanasia, a very forceful piece in favour of the legalisation of heroin (this idea is still heresy of course but probably even more so back then), abortion rights and gay rights. None of these were causes which were as fashionable as they are now and I imagine would not have necessarily enhanced his popularity among the relatively more conservative, blue rinse readers of The Australian.

    It is also worth pointing out that though many of the more prominent writers on Quadrant are not necessarily everyone's cup of tea, he has clearly preserved its independent spirit, publishing articles by people whom he would not necessarily agree with, and publishing some genuinely free thinking and thought provoking writers as well such as Paul Monk, Russell Blackford and Roger Sandall.

    Having said that, it it true that I find his articles of late have been aimed at annoying the Left for the sake of it, even leading in some cases to a clouding of what I thought used to be clear views of his on issues like, say, heroin legalisation. There are probably many reasons for this but I wonder whether one isn't best encapsulated by a famous saying of Nietzsche's

    "At times one remains faithful to a cause only because its opponents do not cease to be insipid."

    When I read some of the avowedly leftie and hate-filled pseudonymous mediocrities on Quiggin's comments facility move in for the kill, character-assassinating Paddy and other right wing commentators, I am inclined to agree and can understand the crankiness of Paddy's more recent work.

    Monday, January 27, 2003
    Last year my friend Rafe Champion attended the Popper Centenary Conference in Vienna where he got to present a paper. He has recently obtained permission to and has commenced posting many of the papers presented at the conference on the Forum of his website - they are available here (the site will be continually updated as new papers come in). Some of the papers already available include 'Karl Popper and the reconstitution of the rationalist left' by Steve Fuller; 'Popper's conception of the rationality principle' by Boudewijn de Bruin; "Darwinism is the Application of Situational Logic to the State of Ignorance" by David Miller; and Rafe's own paper "Popper and the Austrian school of economics'. Some quite intense discussion has also developed on the forum site itself. Have a look around.

    Links updated!
    Apologies to all those who have been linking to me for months without any reciprocation. I have finally gotten around to updating my links, getting rid of dead links and updating URLs of those blogs that have recently moved. Initially I started adding them in the alphabetical order I arranged the older links in but gave up halfway and have just decided to add them to the end of the older list randomly.

    I thought I'd also give another plug to the blog of my friend Stephen Kirchner. Stephen currently is conducting a short exchange with Professor Quiggin on the unemployment issue. Unfortunately Stephen doesn't use conventional blogging software so there are no permalinks, and he tells me the script on the page just orders things by date, and after that, it starts to jump around which means that you might ocassionally need to scroll down to find his latest post.

    Incidentally Ken Parish has moved back to Blogspot and he's now re-categorised his blogger links. He has me under the 'Centre-ish' blogs which will probably only reinforce the perception of my Libertarian friends that I am 'softening'.
    Lee Kuan Yew and racial stereotyping among Asians
    Gene Expression links to this interesting article on the racial views of Singapore's neo-Confucian patriarch Lee Kuan Yew.

    The career and metamorphosis of Lee Kuan Yew has always fascinated me. When he was a prominent anti-colonialist he hung around Fabian Socialist types, almost got arrested by the colonial authorities in Singapore on his return from study in the UK on suspicion of being a Communist instigator and was regarded as 'more English than the English' - he then preferred to be known as Harry Lee, a name by which I believe his political admirer Lady Thatcher who says he "was never wrong" calls him to this day.

    There is in fact much to admire about the man - he steered his country through independence with remarkable skill and relying less then than he does now on political repression still managed to preserve a climate of stability, harmony and consensus in what would have been expected to be turbulent times. His role in creating good institutions for the swift economic development of Singapore would have also assured him a great place in history - he grasped the lessons of outward oriented economic policies long before others did, insofar as his administration indulged in economic dirgiste it was mostly either in creating institutions to cut red tape and reduce transaction costs for business (e.g. 'one stop shops' for business compliance and investment approvals) or to ease the pressures of rationalisation away from outmoded industries; and he even pioneered reforms to the welfare state which today might be regarded as 'third way' and are in fact now being picked up by the likes of Mark Latham (e.g. compulsory savings for education and other human capital investments).

    If only his list of policy initiatives could have stopped there and he could have retired early and gracefully, leaving a new generation to liberalise Singapore in the social sphere and fully democratise it. Alas, the hidden hand of Mr Lee has yet to release its grip on Singaporean polity.

    But on to the article - it deals with Lee Kuan Yew's views on racial differences, apparently formed from a novel interpretation of Toynbee, some Lamarckian evolutionism and his own personal experiences. I don't think Lee should be too ridiculed for his Lamarckianism when other intelligent minds can fall for the even more ridiculous notion of Intelligent Design. What I would comment on is the fact that Lee's views are in fact not atypical in Asian societies. I know this, having lived in one such society for 15 years. Also I share a lot of the same background as Lee Kuan Yew (like him I am of Hakka Chinese descent on my father's side and I have Baba Chinese relatives [1]). The next time an Asian leader accuses Australia of being 'racist' I suggest we roll back our heads in laughter.

    The fact is that the politically incorrect generalisations which Asians have about each other and the politically incorrect phrases they use about each other is enough to make a HREOC commissar's head explode.

    Some examples: (1) generalisations made by one Asian ethnic group about another ('Chinese are studious and good at maths'; 'Indians have the gift of the gab and make good lawyers' 'Malays have better interpersonal intelligence');
    (2) generalisations made by one group of diaspora Chinese about another (I have heard Malaysian Chinese say about the Hong Kong Chinese that 'they would sell their grandmothers for a dollar');
    (3)generalisations made by one Chinese dialect group about another (Hakkas, my dialect group, tend to be perceived by other Chinese as standoffish[2], clannish, frugal, determined, and almost dour people);
    (4) English-educated Chinese in Malaysia almost unconsciously and without malice like to refer to Chinese who were educated in parochial Chinese schools as 'Chinamen'.

    Finally who can forget the delicious irony of the fact that the prominent Malay nationalist and Malaysian Prime Minister Dr Mahathir once wrote a book called 'The Malay Dilemma' where he argued that his people needed affirmative action because they were, by reason of genetics and culture, less intelligent and diligent than the Chinese and Indians? (the book is discussed in the article on Lee Kuan Yew that I've linked to).

    Notwithstanding all this racial stereotyping, I'd argue that Asians in multicultural Asian societies like Malaysia and Singapore have generally gotten along well - not necessarily in a 'melting pot' way but with surprisingly little actual violence when you contrast it with the hysteria in which racial stereotyping is regarded in the West. The reason being that lots of people do think there is truth to some of these stereotypes, accept them and then go about their business peacefully. It is unhelpful applying the Western experience of racial stereotyping to Asian societies. While in the West, for a myriad of reasons, one of which is possibly guilt over slavery and guilt over the colonisation of indigenous peoples, there has tended to be a link between racial stereotyping and racial hatred (e.g. anti-black racism in the US), there isn't necessarily such a link elsewhere.[3] While obviously such stereotyping isn't helpful to promoting greater integration in the sense of intermarriage and social ties it isn't necessarily contradictory to peaceful coexistence either, while attempts at externally imposed inculcation away from such stereotyping will probably be less authentic in its results than internal evolution of norms over time.

    What about past events like the periodic anti-Chinese pogroms in Indonesia and the racial riots of 1969 in Malaysia? I'd argue that they are, as the term I use implies, basically pogroms and are the blight of all 'middleman minorities' like the Chinese and the Jews. They arose because 'folk economics' that is, the intuitive economic thinking of people tends towards the 'labour theory of value' and in hard economic times people grow resentful towards whatever ethnic minority tends to disproportionately occupy the role of merchants and traders who are perceived as making money 'merely' through arbitrage. Plus, a lot of these riots were at least partly instigated by certain people for political reasons.

    After all, there is no great reason to hate people who are perceived as being different - they are different, that's all. And as for generalisations about certain groups being better at X and others at Y - well, there isn't any perfect global measure of superority anyway - so what does it all mean? Insofar as some of these differences have a basis in reality they are most probably legacies of culture and will disappear over time with greater interaction and mixing of cultures between people - i.e. catallaxy promotes social harmony.

    [1] Baba Chinese are the descendants of early Chinese settlers in Malaysia who intermarried with Malay women.

    [2] One reason for the perceived Hakka standoffishness is they probably were standoffish. Hakka literally means 'guest people' i.e. they were not originally from Southern China where they mostly settled. Many Hakkas have a pride in their culture which arises from the fact that they migrated from the North i.e. the 'cradle of Chinese civilisation' and therefore perceive themselves to be culturally superior to the 'Southern yokels' they settled amongst. The North-South divide in China is no different from the North-South divide in the US.

    [3] I would argue for instance that in the US it was the heritage of slavery that caused anti-black slavery. Many slaveholding peoples and descendants of slaveholdoing peoples in the US were also devout Christians and saw themselves as 'good Christian gentleman (and women)'. In particular, Christianity is supposed to prescribe a universalistic moral code. This perception is of course at odds with the slaveholding aspect. This creates what psychologists call 'cognitive dissonance'. There were 2 ways of resolving this cognitive dissonance - either by condemning slaveholding and the institutions on which it was built (i.e. condemning their society and culture) or by arguing that blacks 'weren't really human'. Not surprisingly, they took the path of least resistance. A good control for this hypothesis is to look at slavery in Arab Muslim societies. Technically Islam doesn't really proscribe slavery - it is alright to enslave infidels for instance. Thus one didn't need to regard one's slaves as subhuman to resolve any cognitive dissonance - I'd infer from this much milder anti-black racism in Arab countries with a legacy of slaveholding. An even better control are the Ancient Greeks who did not believe in any universalistic moral codes and similarly did not regard their slaves as sub-human.
    Stalking John Quiggin Part 2: Messy Compromises or Compromised Messes?
    As part of my ongoing "bite the hand that fed me" course in web blogging I hereby launch a second round of attacks on Professor Quiggin's defence of the EU/UN status-quo and critique of US hegemonic pretensions.
    Starting with Pr Q's critique of US meddling in the Middle East.
    "the US is thoroughly ill-suited to the role of hegemon in which [Jack Strocchi] wants to cast it. The US record in the Middle East proves this. The problem states in the region, Saudi Arabia, Iraq and Iran ... are current or former US clients, and the problems we have now can be traced directly to past US policy."
    The problem with US policy in the ME is not excessive intervention, but insufficient or half-hearted intervention. No doubt the real "axis of evil" consists of blowbacking US client states. And there is plenty of room for criticising the US role in propping up Israel's occupation of the West bank. But it is misleading to call SH's Iraq or the Taliban clients of the US. Both states dealt with the US and were subsequently ostracised by the US. The US's non-client states (Libya, Syria, Iraq) are worse than the clients. And the clients might well have been worse with out the US patronage. This reminds me of the sixties criticisms of the policy of institutionalising mental patients, made on the presumption that releasing them into the community would work out just fine. Instead it has led to a long spate of suicide by cops. We have had a foretaste of that with 911 and Afghanistan.
    Pr Q believes that muddling through with the UN will do the trick.
    "The alternative to US hegemony is a series of messy compromises."
    The US has been building or sponsoring nation building for generations. The record is mixed, but there are some hopeful signs. There have been:

    • successes - Germany, Japan, Taiwan, Korea, Mexico

    • failures - Haiti, Somalia

    • in betweens - El Salvador, Cambodia, Bosnia

    The White House, after an initial hiccup, has affirmed an intention to follow through on Iraqi nation building.
    In any case, the US could hardly do a worse job than "nation demolisher" SH, who has managed to get Iraq into a situation where it is only pumping half its oil capacity, has had all its major infrastructure in disrepair and lost 2 million people in wars, revolts and emigration.
    On the subject of relative nation building competencies let us examine the evidence for those masters of messy compromises - the EU/UN "axis of weasel".
    The record is not promising. Ignore the Balkans effort, for shame (and we know which crazed hyperpower eventually had to step and sort out that mess).
    The EU lost Russia. The Slavic states, right on its doorstep, required desperate help during the nineties, but the EU, the obvious patron, did little. Now, after the nation building has been done, they accept Slavs. Thanks for nothing "Old Europe".
    Even Turkey, a nation that needs building if ever there was one, a swing Muslim state and long an ally and associate of Germany still gets the cold shoulder from France (no prizes for guessing which bumbling hegemonic power seeks Turkeys assimilation to the EU).
    Speaking of the Devil, which famous nation building imperialist regime sat out, if not actively sponsored the most bloody massacre in post-modern times?
    These are the guys who are going to play key roles in managing the "messy compromises" in Iraq et al.
    For am example of UN style nation building one need go no further than its aid to the Palestinian Authority and Hamas. With due allowance for the sins of the Israelis in depriving the Palestinians of a state and harassing them in their partitioned jurisdiction, the performance of UNRWA has been less than impressive. In fact it has helped to enable a mess.
    "UNRWA and the Arab League hold Palestinian refugees in limbo. UNRWA operates 27 refugee camps in the West Bank and Gaza, and another 32 camps in neighboring Jordan, Lebanon and Syria. It counts nearly four million Palestinians as refugees, including those whose grandparents never saw Palestine. ...In 2001 alone, UNRWA spent $310 million on the camps. It is these camps that have been at the center of violence between Israeli forces and Palestinian gunmen."
    There are no perfect options in our messy world, but some options are just a plain mess.

    Sunday, January 26, 2003
    Links updated!
    Apologies to all those who have been linking to me for months without any reciprocation. I have finally gotten around to updating my links, getting rid of dead links and updating URLs of those blogs that have recently moved. Initially I started adding them in the alphabetical order I arranged the older links in but gave up halfway and have just decided to add them to the end of the older list randomly.

    I thought I'd also give another plug to the blog of my friend Stephen Kirchner. Stephen currently is conducting a short exchange with Professor Quiggin on the unemployment issue. Unfortunately Stephen doesn't use conventional blogging software so there are no permalinks, and he tells me the script on the page just orders things by date, and after that, it starts to jump around which means that you might ocassionally need to scroll down to find his latest post.

    Incidentally Ken Parish has moved back to Blogspot and he's now re-categorised his blogger links. He has me under the 'Centre-ish' blogs which will probably only reinforce the perception of my Libertarian friends that I am 'softening'.
    Dining with the warblogger jacobins
    A bunch of us Sydney bloggers got together at the Blackbird Cafe at Darling Harbour for some food and drinks to commemorate Tex's visit here from Canberra. Unfortunately Tex threatened to throw anyone who took his picture to the sharks. However he was quite happy to get behind the camera and shoot us. Click here to see the pseudonymous Zem, myself, new co-blogger Jack Strocchi and Paul Wright (who is on hiatus from his blog) together.




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