Archive for the 'Conflict of interest & self-interest' Category

The corruption of campaign finance laws

As the SMH reported this morning, the NSW government has announced plans for the nation’s most draconian campaign finance laws, including:

• Political donations from individuals, registered political parties and other entities will be capped at $5,000 to registered political parties or groups and $2,000 to candidates or elected members annually;
• A candidate’s campaign expenditure will be capped at $100,000 per electorate during a regulated period;
• Expenditure by political parties will be capped at $100,000 per electorate and this is in addition to candidate’s expenditure cap
• Third parties may not receive more than $2,000 from each donor in a financial year;
• Third parties may not spend more than $1.05 million in a regulated period or $20,000 per electorate

And indeed if you were running the nation’s most unpopular government six months before an election why wouldn’t you back a plan to limit how much money people can spend throwing you out? Read the rest of this entry »

Does full-fare public transport deter international students?

International students have long campaigned for public transport fare concessions. I have argued before that this is based on a mistaken understanding of why Australian students receive cheaper fares, but I will concede that there is potentially an interesting debate here about the status of long-term but legally temporary residents in Australia. A massive increase in their numbers – principally international students and section 457 visa holders – during the Howard years creates issues we’ve never really had to think about before (I might post on this some other time).

While I can sympathise but not agree with the international students, I have no sympathy at all with the arguments made by my colleagues in the higher education sector.

An op-ed by La Trobe academic Anthony Jarvis in The Age uses the ‘financial burden’ of overseas study as a rationale for extending transport concessions. But surely the very high fees charged by universities are a far more significant burden. For example a La Trobe business course would cost an international student more than $18,000 a year, an 80% mark-up on what La Trobe gets for a domestic student. Read the rest of this entry »

Is Christine Wallace’s review of the new Gillard biography an ‘absolute stink-to-high-heaven conflict of interest’?

In the latest issue of the Monthly, Christine Wallace reviews Jacqueline Kent’s new biography of Julia Gillard.

Wallace has her own Gillard biography coming out next year, a fact she discloses in the Monthly review. This is the usual let-the-readers-decide solution to apparent conflicts of interest.

Kent doesn’t accept that disclosure is enough, and Kent’s publisher doesn’t buy the disclosure defence either:

While [Monthly editor Ben] Naparstek said Wallace had clearly identified herself as the author of a rival biography, Mr Ball [the Penguin publisher] said that was “like a mugger declaring his profession when you first meet”.

“It doesn’t explain away the absolute stink-to-high-heaven conflict of interest in getting one biographer to review another. What kind of intellectual contortion must he have gone through to come up with that?”

Read the rest of this entry »

The partisan self-interest behind political donations regulation

In my Australian op-ed for my new CIS paper on political expenditure laws I begin by paraphrasing a famous Adam Smith comment on cartels:

ADAM Smith, the great 18th-century economist and philosopher, famously observed that people of the same trade rarely get together without the conversation ending in some conspiracy against the public. When the Senate meets again after the winter recess, members of the same trade — party politics — will decide on how to regulate their political competition.

I’m referring of course to the bill to ban all foreign-sourced and anonymous above $50 political donations to NGOs, plus lower the expenditure and donations disclosure thresholds from $10,900 every 12 months to $1,000 every 6 months.

Proposals to regulate political donations are almost invariably accompanied by high-minded concerns about protecting the political process from improper influence through donations. But one of the great ironies is that while attempts to show improper influence by donors almost always fail, there is one clear prima facie case of the parties being corrupted by donations considerations: the disclosure law itself. Read the rest of this entry »

Economic liberalism and the opportunities for political favours

Today John Quiggin published a post on ‘probity and economic liberalism’, arguments from which have also been appearing in the thread to this post of mine.

In response to the argument that economic liberalism reduces the scope for wrong-doing, Quiggin offers evidence which I think is in itself pretty much irrelevant: that various governments that introduced some liberal policies also had scandals. But as social scientists often point out, correlation is not causation. All governments eventually have scandals of some sort, and by Quiggin’s standard every ideology stands condemned.

The Latham argument I agreed with was that to the extent government either withdraws from activities or sets neutral rules of the game the scope for political favours is reduced. Because classical/neo-liberalism provides no ideological justification for industry policy and advocates cutting taxes over most forms of government spending it seems to me that it must, to the extent it is successful, have a prophylactic effect on political favours.
Read the rest of this entry »

What constitutes successful working of a policy integrity system?

I’m one of the few people who thinks that regulation of political donations already goes too far, at least for NGOs. But I think there is some common ground that nobody – whether donors or not – should get special treatment that would not be given to other persons or organisations with the same relevant characteristics.

However, differences arise on this issue because I, like Mark Latham, see the central problem as inappropriate levels of political discretion. If discretion exists, we can hardly blame constituents for trying to take advantage, or politicians hoping to win support from offering advantage. We cannot be surprised when people follow the incentives a system creates. To the extent that constituents attempt to win special favours by donations this is a symptom of a deficient system rather than the cause of a deficient system.

This is why I think that Joo-Cheong Tham, writing in The Age this morning, is mistaken in arguing that the fact that John Grant did not get special treatment does not make a significant difference to how we should assess the case. When Treasury can repeatedly raise a particular case (indeed, cases) with a company seeking financial guarantees from the Commonwealth and get nowhere it suggests that the policy integrity system is working. Read the rest of this entry »

The easiest way to avoid conflicts of interest

Amidst the hyperbole and counter-hyperbole of Ute-gate, some words of sense (yes, really) from Mark Latham:

Neoliberalism is not without its shortcomings as an economic philosophy, but one thing its favour is the avoidance of conflicts of interest. As it does not support interventionist industry programs and government hand-outs to the corporate sector, MPs cannot be compromised in their dealings with businesspeople.

-AFR opinion page, 22 June 2009

More weak conflict of interest claims

Andrew Leigh was one of 21 economist signatories to an apparently Nick Gruen-iniatiated open letter (open op-ed?) defending government debt as an appropriate policy response to the GFC. In broad terms, it supports the orthodox pro-debt view being advanced by the government and most though not all commentators.

But when he blogged on the subject, two commenters used conflict of interest arguments in a way they are regularly used in public debate – to cast doubt on the person making the argument rather than directly tackle the argument itself. One alluded to Andrew’s recent but now completed secondment to Treasury to suggest that he was ‘conflicted’. Another suggested that Nick may be ‘less than disinterested’ because he had received consulting fees from the government.

Perhaps the open letter/open ed genre invites this kind of claim. Presumably the point of having 21 economist signatories/authors is to use their general professional standing to give the conclusions more weight than the argument as stated can provide, and so their professional standing is a legitimate target.

But as with many conflict of interest claims, this attack is an appeal to readers’ cynicism rather than providing any substantive reason to doubt the conclusions reached. If the argument is so flimsy it needs past government employment to explain why it is appearing, how come 19 other economists put their names to it? Isn’t it more likely that these 21 economists are among the many economists who support this general line of reasoning, and the precise signatories depend on social and professional networks rather than past financial interests?
Read the rest of this entry »

No bribes needed to support the budget

Like last year, Australian voters have shown that they don’t need to be bribed to approve of budgets.

The Nielsen poll, like other polls, found between one in four and one in five voters thought that they would personally be better off as a result of the budget (there are a lot of pensioners). But heading on to three times than number thought that it was fair (56%) or said that they were satisfied with it (58%).

The Newspoll reported in The Australian found that twice as many voters thought that it would be good for the economy (45%) as thought it would be good for them personally (22%).

Whatever its merits as an economic document, the Budget was well handled politically by the government. The manipulation of expectations I noted last week in higher education was successful across portfolios. The Essential Research before-and-after question shows that good reactions exceeded forecast good reactions, and actual negative reactions were lower than anticipated negative reactions.

The only problems for the government are a narrow majority (56%) against lifting the retirement age in the Neilsen poll, and in the Newspoll only 30% of respondents believing that the budget will be back in surplus in six years. Not even Labor voters (49%) believe the government on this one.

Commentators and ‘conflict of interest’

The idea that decision-makers have conflicts of interest is well established in law and the governance of private organisations. Those who have a direct or indirect (say, through a relative) financial interest in a decision usually have to excuse themselves from the decision-making process or at least declare their interest.

Though formal rules are less common than for decision-makers, the idea of a conflict of interest has spread into public debate and commentary. Two recent examples of a potential ‘conflict of interest’:

In a recent episode of The Gruen Transfer, an ABC TV panel show that discusses advertising, regular panel member Todd Sampson expressed strong views against an ad from a child abuse charity. Last Monday, the Fairfax press ran a story reporting that Sampson’s agency had done work for that child abuse charity, until they had a falling out in 2003. The reported claim was that this was a conflict of interest that Sampson should have disclosed.

Today, The Age ran a story about the departure of Monthly editor Sally Warhaft, reportedly over excessive meddling by editorial board chair Robert Manne. The report contains these paragraphs, emphasis added:

Monthly contributors contacted by The Age, most of whom declined to be identified, expressed shock at Dr Warhaft’s departure and praised her abilities as an editor.

“I’m deeply disappointed by what has transpired,” said regular contributor Gideon Haigh. “It does change my attitude to the magazine. Sally was a very good editor, as good an editor as I’ve worked with in 25 years as a journalist.”

What isn’t mentioned in the report is that Haigh is was Warhaft’s partner. Read the rest of this entry »