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

How useful is ideology in political analysis?

In his much discussed, though little praised, essay in The Monthly Kevin Rudd attributes the global financial crisis to what he calls ‘neo-liberalism’, aka ‘free-market fundamentalism’, ‘extreme capitalism’, ‘economic liberalism’, ‘economic fundamentalism’, ‘Thatcherism’, and the ‘Washington Consensus’ (the PM’s political thesaurus was getting a good workout).

But how useful are ideologies in anlaysing politics? There are certainly rival explanatory theories. In journalism, as commenter Alan C complains, the focus tends to be on personalities and personal ambitions, downplaying other forces that are not so easily reduced to an easy-to-understand story. Yet if the media overplays personality as a force, it surely cannot be discounted entirely. Particular individuals do make things turn out differently, holding all other factors constant.

On both right and left, we see theories that put interests at the core of politics. Public choice theory on the right models political actors as self-interested; on this account (for example) public school teachers are not defenders of better education, but are instead just an interest group seeking higher salaries and easier working conditions.

On the left, the the substance of and differences between right-wing beliefs are deemed entirely or largely irrelevant, because these groups are seen just as defenders of corporate or other private interests. This is why Naomi Klein, for instance, can blur together neoliberalism, neoconservatism and corporatism. Norman Abjorensen is aware that liberals and conservatives differ, but on his account only on the means to their common end of the ‘protection of property interests’. Ideology is just empty rhetoric designed to make interest politics respectable.
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Victorian government still committed to anti-democratic reforms

The Age‘s headline reads ‘Backdown on activist councillors’, in reference to the anti-democratic bill currently before the Parliament restricting the freedom of councillors to vote on matters they had previously been involved in, limiting rights of financial support for candidates, and denying voters the capacity to choose candidates committed to defending their interests.

The actual amendments have not yet been put to the Parliament, but based on Minister Richard Wynne’s media release the bill is still very unsatisfactory.

Rather than any objection to or submission on a proposal, the bill now proposes to cover only parties to a civil actions or VCAT appeals, or those who lodge objections to a planning permit. But as I argued last week, if a candidate runs on issues relating to the same subject as a civil action, VCAT appeal, or planning objection, the election victory turns the ‘private’ interest into a ‘public’ interest as well.

And there is no word about changing the absurd requirement that councillors keep complex records of who donates to them and then match them against all matters they have to decide on in council meetings.

I’m yet to hear what the Liberals will do on this bill – the Greens are still leading the fight. But I am hoping that the Liberals will come good.

Conflict of interest laws vs democracy

One of the West’s great cultural and political achievements is the idea of an ‘office’, the idea that certain roles should be performed in the interests of persons other than the person who fills that role at a particular time. While tribal cultures see little or nothing wrong with their leaders handing out ‘public’ privileges to their friends, relatives and cronies, in the West this is now seen as a ‘conflict of interest’, if not corrupt.

But in many cases the line between personal and public interest in a matter is far from clear. The Age this morning reports on legislation before the Victorian Parliament that in my view redefines legitimate political interests in the outcome of issues as personal interests. In the future, local councillors may be prevented from voting on the very motions before council they may have been elected to support or oppose.

For example, they will be held to have become an ‘interested party’ if they have lodged an appeal in relation to a council decision, or have made an objection or submission. Say the Council wants to cut down the trees in your street, or redirect its traffic, or let someone build a house that overshadows your garden. You go through the normal processes to protect your interests, by making an objection. This fails.

So you run for election on one of these issues, win a mandate to act on them, and then because of your earlier steps to protect your interests you cannot vote on the matter. Not only are you deprived of your right to vote, but the democratic will of the people who supported you is also frustrated.
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Sub-prime courses and students?

As Rafe and others have pointed out, the US financial meltdown is giving market critics a long-awaited opportunity. Indeed, over the last few years things had grown so desperate for them that they had given up arguing that capitalism didn’t work, and instead resorted Clive Hamilton-style to claiming that it worked too well, causing unhappiness and trashing the planet.

But now the argument is swinging back to markets don’t work. The National Tertiary Education Union is jumping on this bandwagon as the Bradley committee considers the future of Australian higher education, with several submissions (including of course mine) calling for relaxing quantity and price controls.

In this week’s Higher Education Supplement of The Australian, NTEU Policy and Research coordinator Paul Kneist says:

Opening up the higher education sector to competition to give potential students greater choice no doubt echoes the calls for financial deregulation in the ’80s.

Specialised private providers with lower costs will enter the market. Student choice will increase and the cost of a higher education qualification may fall. Universities will be forced to respond if they are to remain competitive.

However, will increased competition and lower prices result in lower entry standards and a lowering of the quality of education being delivered? Will there be a proliferation of sub-prime qualifications?

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Should universities self-accredit?

It’s a pity the terms of reference for the Senate’s academic freedom inquiry were confused and implicitly threatening interference in academic affairs, because this has brought out the reflexive defensiveness of academics, rather than encouraging them to reflect critically on university practices.

An op-ed in this morning’s Age by University of Sydney academic Ben Saul is a case in point. While he correctly, in my view, argues that students with views contrary to those of academics are rarely treated unprofessionally, his argument on existing mechanisms for controlling bias or prejudice among academics will not reassure sceptics.

For research, he argues that peer review ‘maintains rigorous academic standards’. But peer review is a far from failsafe mechanism. The editors and others who send manuscripts out for peer review may not know the best people to contact, or may not be able to persuade them to act as referees. So expertise may be lacking. Partly because it is anonymous, academics (and others) put very varying levels of effort into it. I’ve come across plenty of refereed publications with multiple factual errors, particularly when I was working on ‘economic rationalism’. Unfortunately, very few academic students of economic rationalism knew very much about economics. With authors and referees as ignorant as each other, errors went undetected.

But at least peer review for research is better than what happens with course materials. Saul tells us that:
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Are the politics of climate change easier or harder than the politics of economic reform?

On the Sunday programme yesterday (about 6 minutes in), Laurie Oakes asked Ross Garnaut whether it was politically possible to implement the radical reforms needed to reduce carbon emissions.

In his reply Garnaut drew an analogy with trade liberalisation – a reform in which he played a distinguished part during the Hawke government. Public opinion has been consistently protectionist, Garnaut noted, yet politicians successfully implemented Australia’s transition from a highly protected to a largely open economy. They did so without major electoral consequences.

Garnaut argues that, politically speaking, we are starting well ahead of where we were with trade reform, since large majorities accept the need for change. Garnaut acknowledges the difficulties in moving from this generalised support for action to specific measures, but thinks it can be done.

The two issue starting points are, contrary to what Garnaut suggests, quite similar. The basic goal of the economic reform process – essentially to restore Australia’s economic prosperity – was a point of near-consensus, just as the need to do something about climate change is now. It was the means of getting there that generated controversy. Protection was a means, not an end, and we should not compare opinion on that with views on the goal of slowing or stopping climate change. In each reform case, we have a popular aim, but no easy way of getting there.
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Self-interest and the Budget

A small postcript to my post on self-interest and public opinion. All three polls on the Budget – Galaxy yesterday, and ACNielsen and Newspoll today, find very similar proportions of people saying the Budget will make them worse off (33%/30%/32%) or make no difference/uncommitted (44%/39%/39%).

However, ACNielsen finds 61% of people declaring themselves satisfied with the Budget and 57% saying it was ‘fair’. At least some voters who don’t think they will get anything from the Budget or perhaps even think they will be worse off are nevertheless not unhappy with it.

Self-interest and public opinion

Being a longtime political junkie and occasionally involved in campaigns I suggest that, putting the ideologues aside, the driving force in voting behaviour is perceived self-interest.

commenter Graham today

I’m not so sure. Though there is a complex relationship between opinion on issues and voting behaviour, a self-interest hypothesis at best seriously under-explains opinion on numerous issues, and in some cases people hold opinions that seem contrary to their self-interest.

Self-interest under-explains opinion because there are many issues in which the voter (or poll respondent) has no personal material stake. People are passionate about the ‘sorry’ issue though, as the ‘practical reconciliation’ critics point out, it in itself will make no material difference to anyone. The republicans don’t argue that doing away with monarchy will make us richer, but that it will somehow make us feel more independent. The gay civil union/marriage issue cannot materially affect more than 2-3% of the population, and probably much less, yet most people seem to have a view on it. The government’s Tampa exercise was very popular, though most Australians live many hours flying time from where the boats come in, and most will probably never meet a refugee. The Iraq war is unpopular, even though few Australians know any soldier serving there and the cost has had no impact on daily life back home.
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What is a ‘conflict of interest’?

Twice in recent months I have become involved in blogosphere debates about claimed conflicts of interest. First I disputed James Farrell’s argument that ABC TV news needed to disclose the fact that finance presenter Alan Kohler also operates a financial advice newsletter, which in turn is partly financed by a firm that had links with companies that Kohler reported on for the ABC. Then this week I questioned Andrew Leigh’s suggestion that Westpac CEO Gail Kelly had a conflict of interest when she was reported suggesting that the RBA would not increase interest rates again this year. According to Andrew L:

nowhere does the journalist mention the key commercial conflict: people who expect a rate rise will be less likely to buy a Westpac variable rate mortgage.

The basic problem behind the concept ‘conflict of interest’ is that the different roles people play can have different interests attached to them. There is said to be a ‘conflict of interest’ where a personal interest might be put ahead of the interests of those relying on the person’s words or actions.

The ‘interests’ in conflict often have different definitions. The personal interest seems almost always, as it was in the two blog cases, to be related to financial or material gain, for the individual, or those associated with the individual. Other personal interests don’t seem to classed as potential conflicts, even if they could be seen to be bad for other reasons. If someone offers commentary on interest rates because they like getting their name mentioned in the media, that isn’t going to be seen as a conflict of interest, despite that person’s interest in publicity.

The interests with which the personal financial interest is conflicting are far more varied. Read the rest of this entry »