The decline of liberalism in early 20th century Australia (a post on the third volume of David Kemp’s history of Australian liberalism)

The first volume of David Kemp’s history of Australian liberalism told the surprising story of how, between 1788 and 1860, a penal colony became an early liberal democracy. In the second volume, covering 1861 to 1901, the new national constitution federating the six colonies gave Australian democracy deep legal foundations.

While democracy was strengthened, by 1901 liberalism was weakened. Liberal political movements were divided between protectionist and free trade versions. Both were challenged by utopian socialist ideas and a militant union movement. The unions acquired direct political influence as Labour MPs won seats in parliament (Labor does not drop the ‘u’ until 1912). Kemp’s third volume, A Democratic Nation: Identity, Freedom and Equality in Australia 1901-1925, chronicles further liberal troubles in the first quarter century of federation.

Continue reading “The decline of liberalism in early 20th century Australia (a post on the third volume of David Kemp’s history of Australian liberalism)”

Federation under a liberal-democratic constitution the last victory of 19th century Australian liberalism (a review of the second volume of David Kemp’s history of Australian liberalism)

David Kemp’s The Land of Dreams: How Australians Won Their Freedom, 1788–1860, his first volume of an Australian political history seen from a liberal perspective, told a surprisingly positive story. The British settlers who arrived in 1788 established a penal colony; an inauspicious start for a liberal society. But by the book’s conclusion in 1860 Australia had, for its European residents, transformed itself into a largely free society. The Australian colonies were also early experiments in democracy. Self-described liberals, drawing on intellectual debates in England and elsewhere, played key roles in this transition.

In 1901, when this second volume in Kemp’s five-part series finishes, the liberals had enjoyed a recent triumph. The newly federated Commonwealth of Australia, which began that year, gave Australian democracy deep legal foundations. It was a limited government, with the national parliament restricted to legislating on a specific list of topics. Free trade between the states was guaranteed. Private property could be taken by government only on ‘just terms’. A national established church was a legal impossibility.

But in many other respects things had gone badly wrong. The new Constitution prohibited tariffs and other restrictions on interstate commerce, but protectionism lived on at the national level. The new Constitution included a power for the conciliation and arbitration of industrial disputes, the basis of non-market wage setting. The flow of people into Australia was more restricted, with racist ideas central to migration policy. Sectarian disputes within Australian society, especially between Catholics and Protestants, were entrenched. Class divisions, although less sharp than in Britain, were a serious problem.

Continue reading “Federation under a liberal-democratic constitution the last victory of 19th century Australian liberalism (a review of the second volume of David Kemp’s history of Australian liberalism)”

The WEIRDEST people in the world

If you are reading this review, you are almost certainly from a WEIRD culture – Western, Educated, Industrialised, Rich and Democratic. Your psychology differs significantly from the mindset of traditional societies and, to a lesser extent, wealthy contemporary Asian societies. In ways consistent with this psychology, your society’s social, economic and political institutions are also very unusual in human history.

As a general observation this is not novel. In an early chapter of The Weirdest People in the World, Joseph Henrich acknowledges the cross-cultural psychology work of Harry Triandis and Geert Hofstede. Decades ago their surveys mapped attitudes and beliefs across countries on an individualism (Western) versus collectivism (the rest) scale.

The Weirdest People ‘s contribution is an ambitious bringing together of history, anthropology, evolutionary theory, theology, sociology, economics, political science and a bit of biology to explain how WEIRD psychology developed.

Continue reading “The WEIRDEST people in the world”

The rise of liberalism in colonial Australia (a review of the first volume of David Kemp’s history of Australian liberalism)

(A shorter version of this review, omitting discussion of how the American experience influenced Australian politics to the mid-19th century, is cross-posted at Goodreads.)

This book is the first in David Kemp’s five-volume history of liberalism in Australia. The series, three volumes out to date, will cover 1788 to 2019. This first book takes us from European settlement in 1788 to 1860, when the colonies had achieved a substantial level of democratic self-government. It is principally a political history with special reference to liberalism; it focuses on major players and their involvement in big debates and events, not on the philosophical views of long-forgotten writers and activists.

To disclose my biases, I have known David Kemp for decades, including working for and with him, and share his interest in and concern for the Australian liberal tradition, with its ups and downs over 200 or so years in Australia. Some years ago I read a manuscript that turned into the first two volumes of this series.

In 1788, when British settlers arrived in the place that became Sydney, there was not yet such a thing as liberalism. The period covered by this first volume is the early decades of both Australia (that name is post-1788 too, but for convenience I’ll use it for the colonies collectively) and liberalism.

Although 1788 was before liberalism, many of the institutions and ideas that were later joined under the label ‘liberal’ were forming. Liberalism came in part from the creative linking between and expansion of existing ideas, institutions and issues.

the-land-of-dreams-hardback20200207-4-qw1svi

Continue reading “The rise of liberalism in colonial Australia (a review of the first volume of David Kemp’s history of Australian liberalism)”

The still sad story of my local ex-milk bar

Of all the hundreds of blog posts I have written since 2003, the one that sparked the most interest was this one from ten years ago, about the closure of the milk bar at the corner of Barkly and Canning Streets in Carlton. The post made it into one of Andrew Leigh’s books, and for years afterwards I was contacted by locals wanting to know more. Milk bars were part of growing up in Australia for anyone now middle aged or older, and I think the post resonated because it tapped into childhood nostalgia.

In 2009, I put the milk bar’s demise down to the redevelopment opportunities of a prime piece of Carlton real estate. The same people who in the 1970s would indulge themselves spending 20 cents on a bag of sweets at the milk bar were now willing to pay over a million dollars to live in the inner city. But that turned out to be an optimistic thought.

Instead the old milk bar has, apart from the occasional squatter, now been vacant for a decade. Today, it is boarded up and covered in graffiti.  I expect there is some story that explains ten years of inactivity, and why someone would forgo rent on the milk bar or the large amount a developer would pay for the land. But if we can’t have our milk bar back, a new house or apartments would be better than the current eyesore.

Barkly and Canning street corner ex-milk bar, 22 December 2019

Milk bar December 2019

Barkly and Canning street corner milk bar on its last day, 20 December 2009

milkbar resave

The symbiosis of capitalism and democracy

(This review is cross-posted at Goodreads.)

Theorists of the left and the right argue that there are tensions if not contradictions between democracy and capitalism. Left-wing theorists argue that business has undemocratic power, buying influence through political donations and altering policy by threatening to invest elsewhere. Right-wing theorists argue that democratic majorities vote for taxes and regulations that weaken incentives and undermine the efficiency of capitalist enterprises.

Judged by the normative standards of these theorists, these critiques have something to them. But judged by some other standard, such as elected governments maintaining capitalist economic systems with widespread high living standards over long periods of time, the ‘advanced capitalist democracies’ discussed in Democracy and prosperity: reinventing capitalism through a turbulent century, look very successful compared to other political and economic combinations.

democracy and prosperity

 

One contention of the book’s authors, Torben Iversen and David Soskice, is that a symbiotic relationship between democracy and capitalism contributes to the success of these countries. Although business and rich people may, at least initially, resist the increased taxes that democracies impose for social policy programs, often in the long run these programs contribute to economic success.

For example, education is electorally popular and provides business with the highly-skilled workforces they need. Government unemployment, health, and retirement programs reduce workers’ uncertainty about their future welfare, reducing short-termist behaviour and industrial conflict. Workers are less dependent on their employers.

In turn, key constituencies in advanced capitalist democracies depend on a successful economy for their own jobs and the tax revenues that support social programs. They support political parties that competently deliver economic growth, limiting the political potential of parties that would damage the capitalist economy. The rejection of Jeremy Corbyn’s Labour in Britain is an example. Continue reading “The symbiosis of capitalism and democracy”

History gone wrong: liberal democracy’s failure to flourish in Central Europe and Russia

(This is cross-posted at Goodreads.)

The Light that Faileds first sentence says ‘the future was better yesterday’. And so it was. Thirty years ago there were high hopes for the future of liberal democracy, especially in Central Europe, which had just peacefully ended communist rule. But that is yesterday’s future, replaced now with Central European governments dismantling liberal democracy, authoritarian regimes in Russia and China causing trouble around the world, and many established liberal democracies suffering from serious political dysfunction.

In trying to explain what is going on, The Light that Failed: A Reckoning, reads to me more like a pre-20th century political classic than contemporary political analysis (one of its authors, Stephen Holmes, has previously written excellent books on the history of liberalism and its critics; I have ordered the English-language books of his Bulgarian co-author Ivan Krastev). The Light that Failed has evidence and examples, but not the relentless facts and data of recent journalistic or academic accounts. Instead, its contribution is the categories it uses to understand events and its psychological insight.

light that failed

The book’s central concept is imitation. Individuals and societies are always copying each other, but this process can be experienced in very different ways. In Central Europe, the first post-communist political leaders and many of their people wanted to imitate the West: democracy, individual freedom, a market economy. And a triumphalist West wanted its model to be imitated; including in countries where the political elites and many of their people were not asking for advice. Continue reading “History gone wrong: liberal democracy’s failure to flourish in Central Europe and Russia”

Handouts to support thrift?

The Australian this morning runs a left-field editorial opposing the cut to the discount for paying student contributions upfront.

Completely ignoring the only compelling rationale for the discount, reducing the cost of the HELP scheme, the editorial drifts off into various social policy objectives: encouraging students to use some of their part-time earnings to reduce their debts, and encouraging the ‘responsible behaviour’ of families who assist their students by reducing their debt.

But why is increasing public debt to decrease private debt a good thing?

And if increasing public debt to decrease private debt is a good thing, why restrict it to families with university students?

No wonder we are sinking in a sea of debt when even the most economically rational newspaper resists sensible plans to reduce government spending.

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The editorial also incorrectly states that the change will reduce revenue flows to universities. Instead, universities will get slightly more revenue directly from students and slightly less directly from government. We’ll have to wait for the forward estimates next week to see what the government thinks, but after factoring in some behaviour change I’d estimate a $70-80 million shift.

The longer-term effects of upfront discount rates

Rajat asks about deferral trends over time. The figure below is the percent of total student liabilities deferred 1989-2009.


Source: Higher Education Report 2009.

As you can see, the trend is consistent with discount rate having an effect. When it increased in 1993 from 15% to 25%, more people paid up-front and the deferral rate dropped. When the discount decreased from 25% to 20% in 2005, the deferral rate increased, ie fewer people considered it worth paying upfront.

The data is also consistent with the effect building over time. Continue reading “The longer-term effects of upfront discount rates”

Should the upfront student contribution discount be halved?

According to media reports this morning, the government is planning to cut the discount on student contributions paid up-front from 20% to 10%.

According to The Age’s version of things, ‘the government will justify the cut on the grounds that the benefit goes mostly to wealthy families.’

But contrary to common impressions, the discount was not intended as a benefit to anyone other than taxpayers. Because it is very expensive to lend money at zero real interest, students paying up-front can save the goverment money. In a couple of scenarios I did last year, for male arts and law graduates earning median incomes in professional or managerial jobs, it was slightly cheaper for the federal government to pay the discount than to pay the interest subsidy on the HELP debt.

However, the economics of the discount depend on how long students would otherwise take to repay. For quick repayers (or people who would pay upfront anyway), the government would be better off not giving the discount. If students are going to repay slowly, the discount looks like a better deal for taxpayers. Another factor is that up-front payment removes the risk of non-repayment.

Whether or not halving the discount makes financial sense for the government depends on the behavioural response. Continue reading “Should the upfront student contribution discount be halved?”