Say it loud - I'm elitist and proud

Thursday, May 30, 2002

TIM DUNLOP (below) writes:

Hi David,

If you can tell what point David Eastwood was making that I missed, I'd be happy to offer a reply if I can. I'll try and keep it brief.

Cheers - Tim

Here they are:

David Eastwood Tim's argument is internally incoherent. He presents a damning indictment of his Second Way (Economic Rationalism). He also (quite rightly) mentions that the Third Way seeks to humanise capitalism through an envelope of policy and regulation that constrains the free market. But he ignores this distinction in concluding that failings in naked, free-market economics systematically undermine the Third Way.
Tim Dunlop I don't ignore it at all. I argue that a reliance on `free markets' undermines the 3W's humanising project. David's point here completely sidesteps the issue.

No - your second sentence contradicts your first.

Mark Latham's point in Civilising Global Capital (p.40) is that there's no such thing as a pristine 'free market' in anything (some form of governance always shapes it) and that 'a belief in the primacy of market-based economies does not imply that private markets are always likely to produce optimal outcomes...The differentiated nature of markets makes it difficult to construct a general theory for the countervailing role of government. This again underlines the usefulness of an institutional approach: fashioning a mix of market influences, public interest regulation and public sector delivery as circumstances might demand'. It's wrong to say 'humanising capitalism' can't be done - it's being done all the time.

David Eastwood For example, an attestation that dairy deregulation has failed is what I would term an IBA (Intellectually Blank Assertion) when presented without any evidence as to the impacts on all stakeholders.
Tim Dunlop Far from being an intellectually blank assertion, the evidence about the price of milk is overwhelming, not least by that old fashioned empirical method of going and buying some.

You're right here, as far as you go! Milk industry deregulation may well have been a massive stuff-up, but this only confirms Latham's point that, no matter how 'free' a market may seem, there will always be some form of governance which will affect what form the 'market forces' take. I'm the first to say that you shouldn't go ahead with 'de-regulation' (which is often just 'change in regulation') unless you're clear about what will be 'the impacts on all stakeholders'.
David Eastwood His attestation that free trade policy had little to do with the express economic development of nations like Singapore and Japan, Korea et al ignores the facts. Free trade policy in their customer jurisdictions made these countries success.
Tim Dunlop As Dr Aaron Oakley so ably pointed out on these pages, these countries are not examples of free trading miracle economies but of ones where strong central governments had serious control over resource allocation. It's you, David, who have the facts wrong.

Singapore, Japan and Korea are indeed countries 'where strong central governments had serious control over resource allocation', but what about Hong Kong, China (politically authoritarian, but economically?) and India (which opened up its economy in the 90s)? Hence Laura Tingle's article. Did the prosperity take place because of such resource allocation, or in spite of it?
David Eastwood Tim's analysis ignores the temporal dimension of economic change. If change and globalisation create short-term losers today, (and certainly they do) the theory says this is for the longer term good.
Tim Dunlop It's becoming a cliche to quote Keynes on this, but it remains the best response. When chided by free marketeers that even if `free markets' weren't working now they would work `in the long run', Keynes replied: "In the long run we are all dead." As a side point, dairy deregulation has caused more pollution, not less.

I'm surprised to see you criticising long-term thinking, then talking about pollution: a consistent theme of environmentalists over the last 40-odd years has been 'We can't go on like this indefinitely', while their critics reply 'We can't see the benefit of stopping pollution, it's too long-term to be sure it's worth it, and what about the effect on jobs?' A Third Wayist (dread term!) might, however, suggest a time-scale of when the benefits of a policy change should become apparent - if benefits aren't likely to appear within that time, don't go ahead with the change.
David Eastwood Tim's analysis seems predicated on a dated view of sovereignty. Today's sovereign states are largely geopolitical constructs, as were their predecessors dating back to Stone Age times.
Tim Dunlop Largely? Try entirely. There are no naturally occurring states that I know of. What's your point?

Well, his point follows:
David Eastwood If the Third Way tolerates a managed short term dislocation in a developed market (say, for example killing Australia's uncompetitive textile industry) in return for creating many more jobs elsewhere (productivity is much lower in poor countries), and if in turn that sustains and delivers self-esteem to many more humans in less developed worlds, isn't that a good thing? Does the fact that `they' are not `we' prevent us from acting in their interests?
Tim Dunlop Now who's making assertions? Where your evidence for even half of this? The creation of jobs is one thing economic rationalism in Australia is particularly poor at, though advocates are more likely to blame `outdated' employment laws etc..

Much of the criticism of globalisation has been that evil Western corporations have 'exported poverty' to developing countries by taking advantage of free trade. This seems hardly different from One Nation's rhetoric, which is in turn a reheating of the justification for the White Australia Policy and the tariff wall a century ago - that the Australian working man needed to be protected from the Asian 'coolie'. 'It's not his fault, the poor devil, but he can't stand up for himself the way the white Australian working man can against the profit-hungry capitalist.' I'm sure the vast majority of anti-globalists would be shocked if they realised the racist implications of their attitude.

And who benefits from the fact that I wear an unsubsidised shirt made in Fiji rather than a subsidised one made in Australia? The Fijians working at the shirt factory do, as they otherwise wouldn't have received my money. Australian shirtmakers lose - but why should I pay more for a comparable product, other than because it's made by 'fellow Australians'? (Or - speaking of 'geopolitical constructs' - 'fellow New South Welsh', or even 'fellow residents of Ashfield Municipality'.) There may indeed be reasons - I'd just like to know what they are.
David Eastwood Viewed collectively, nations and their societies are at very different levels in Maslows hierarchy. Tim's view of economics and communities is based squarely on a parochial frame of reference within a society seeking self-actualisation. What about those societies for whom the basic needs have not yet been met. Could we be morally obliged to further their fundamental needs over our luxuries? Our broadly Judaeo-Christian faiths speak of the common man, not of arbitrarily defined nationalities
Tim Dunlop This is waffle. How do you get this out of my article? Again, pots and kettles should watch who they accuse of `assertion'. But to take up the point briefly, why does David think that some societies are without necessities while others bathe in luxury (and more insanely, why does he seem to imply that I approve of it?)

Of course you don't. But your arguments, if applied, lead to such a conclusion. This is what we find difficult to understand: 'protecting Australian jobs' means losing them in Fiji.
Tim Dunlop You might want to look at your basics of market allocation (the worth of which, remember, I am sceptical of) and consider why we have millions affected by diseases like TB and AIDS while the market is busy withholding drugs from poor countries thusly affected, while at the same time allocating such marvels as Viagara and fat-burning pills in more affluent markets. In market terms this might be legitimate `allocation', but if David doesn't think it is, then he should be agreeing with my analysis, not arguing with it. Don't ask me rhetorical question about morality - ask `free markets'.

Few economists will claim markets are 'moral' - at best they're 'morally neutral'. Why these glaring inconsistencies in what the market produces? It's Maslow's hierarchy again: people in rich countries, by and large, don't have to worry about basic necessities any more, so they can concentrate on having a better sex life and being thinner - but also on paying people to come up with those solutions for TB and AIDS. 'The free market' doesn't withhold these solutions from poor countries - patent laws do. That's right - market regulation is keeping these drugs expensive! A completely unregulated market in drugs would allow cheap, 'pirated' copies of these drugs to be distributed, though they might be of doubtful quality, and lack of patent protection would be a disincentive to pharmaceutical companies to invest in further research. How do you strike a balance? This is the kind of situation Latham is talking about when he calls for 'fashioning a mix of market influences, public interest regulation and public sector delivery as circumstances might demand'.

Since you think 'a reliance on "free markets" undermines the 3W's humanising project', you would probably rule them out and call for a government-funded research body to take future research out of the hands of big business - but how do you convince American or Australian taxpayers to pay for this, when the benefit will mostly go to other countries? The more honest taxpayers would tell you: 'Yes, I'm more interested in having a better sex life and being thinner than in helping people in Africa or Asia with TB or AIDS. Sorry, but it's the truth. It's my money and I'll do what I like with it. Who are you to tell me what to do?'

I'd be as appalled by this as you would be. But what can be done? Don't laugh, but David Eastwood did mention 'Our broadly Judaeo-Christian faiths [which] speak of the common man, not of arbitrarily defined nationalities.' I've often felt that much of the anti-globalist, anti-capitalist agitation is really religious in nature - but since religion is now deeply unfashionable (they're all irrational, wowsers, sexists, hypocrites and child-molesters) people don't have a language with which to attack the immorality of rampant selfishness, so they attack 'the capitalist system' instead.

Well, there it is!

Wednesday, May 29, 2002

A SPECTATOR article attacking Ireland - as they say in Private Eye: 'Just fancy that.'

'The most common sight here is of shell-suited and tube-topped teenage mothers pushing fatherless prams'. Sounds like Leominster, Herefordshire, England, June 2001. No wonder Theodore Dalrymple left for Australia.

TIM DUNLOP, as is his wont, uses a lot of words to fail to answer David Eastwood's criticisms of his attack on the 'Third Way'. The funniest bit (unintentionally) was when he disavowed any sentimentality about the past, going so far as to quote that Republican Party Reptile, P.J. O'Rourke: "If you think that, in the past, there was some golden age of pleasure and plenty to which you would, if you were able, transport yourself, let me say one single word: 'Dentistry'."

True indeed - but has Tim read any of P.J.'s other work, like Eat the Rich: a Treatise on Economics? And despite his denial of any nostalgia, he spends the last 1400-or-so words of his original 13000 word screed on his real point: that, having lived the life a 'Third Way pin-up boy' (which just sounds like the life of a globetrotting academic to me) he has 'inevitably' cut himself and his family off from any chance of being part of a community. But if he doesn't believe there was once a time in which community was stronger than it is now, what is he complaining about?

As to whether there's anything to be nostalgic about: Donald Horne wrote in the Sydney Morning Herald on 20 May (no link available) that his memory of growing up in both Sydney and rural NSW in the 20s, 30s and 40s was that 'good neighbours' kept to themselves.

No doubt Tim will come up with a long winded rebuttal to Dr David Dollar - too late, I hope, for that name to be an April Fool's Day joke - who tells us that the number of the world's poor is down by 350 million.

Dr Dollar says "it is easy to quibble about specific numbers but no amount of quibbling can get around the fact that there has been massive poverty reduction in China and India".