Archive for the 'Economics' Category
Monday, October 27th, 2014
Like thousands of Australians I have been almost consumed by frustration over the political situation in Australia over the last several decades. To anyone reading these pages that will come as no surprise. The last 25 or so years have for the most part been exceptionally difficult as politically and economically the country seemed to retreat to the past, to embrace more than most other countries an economic model which on examination lacks any real justification in history or people’s behaviour, a subject I have already traversed in the context of education policy.
Australia has achieved some astounding things in its relatively short history.
And it has been through some horrendous experiences, though almost as nothing compared to what has fallen on the citizens of many countries. And continues!
But more than that, the embrace of a policy – neoclassical or market economics – which focuses so much on the short run, on a belief in the merits of competition and financial rewards and more, indeed an ultimate gain in individual gratification through financial success, has led to further marginalisation of the less advantaged and ongoing limitation in the expectations for many. That is seen in policies for education and housing which entrench advantage, in limited investment in infrastructure of all kinds and in continued reliance on resource exploitation and primary production, a “dig it up and ship it out” mentality which allows that commercial enterprises, especially those owned by overseas interests, need not necessarily devote resources to research and development in this country because the answers can be got from overseas, sometimes from their branches. In particular little attention has been paid to economic diversification whilst the contribution of some areas of the economy, especially mining, are vastly exaggerated by their supporters. The Australia Institute has released reports showing, for instance, that solar energy contributes more to the economy than coal mining.
To some, such things as concern for the disadvantaged, for universal access to education and universal health care, to decent housing for everyone and to functioning and attractive physical and natural environments, to a system of justice which recognises and protects the dignity and justifiable right to reasonable privacy for all, a society in which creativity and inquiry are valued and not least a society in which diversity, cultural, racial, gender, age and more including sexual orientation, seem justifiable only in an economic frame. That these things, along with workplaces which respect and appropriately reward the unique contribution of everyone, do actually contribute very substantially indeed to economic success is evident beyond any doubt to anyone who considers that evidence. Seemingly, that is not sufficient to those who allow that personal experience and entrenched belief should trump everything. So political propaganda and patronage of fear can play havoc and divert attention from the imperatives of the future in favour of the emergencies of the present. Something that the wonderful Barry Jones said decades ago.
Ignoring the substantial contributions that Australians have made to science and the arts are just part of the mix, a view that innovation is something that business does but government doesn’t. That is wrong! As Mariana Mazzucato points out in her book The Entrepreneurial State (Anthem, 2014), very many extremely significant commercial developments developed from basic “blue sky” research by government funded agencies, not from business. Business takes on the results of the basic research and brings the product to market. To do that requires business to be prepared to take risks, including the risk of failure, an essential element of innovation. The claim for certainty heard often from business is antithetical innovation and ignores the real world.
The response? The Australian government’s spending on R&D as a proportion of GDP is now the lowest it has been since 1978 and the third lowest of any OECD country. For several decades there has been a drive for CSIRO to be more commercially oriented and substantial numbers of staff have been lost from the organisation. In 2007 the Productivity Commission reported concerns about the focus and called for the tax breaks for business investment should not be targeted only at commercial benefit. Then science minister Julie Bishop dismissed the concerns.
In October 2014 the Abbott government announced $500 millions for programs entirely directed at certain areas of the commercial economy and Industry Minister Macfarlane acknowledged that there were concerns about reductions in funding but blamed the budgetary situation! At the same time most other countries are investing heavily in science. The 2013 budget contained very substantial cuts to research in universities and proposed increasing charges for students attending universities. These were part of proposed university deregulation which large universities, some policy groups like the Grattan Institute and the Business Council supported. That is despite clear evidence that in Australia the return to the community was far greater than that to the individual.
Of course we do well in sport: well we don’t actually achieve internationally in sport as we do in the arts and in science, for our size. Recall the number of leading actors, dance companies, orchestras – the Australian Chamber Orchestra recognised as the best small orchestra in the world – authors and musicians. Films don’t miss out because they are no good but because of the scene being swamped by huge promotional spends by overseas companies.
The fact that business can thrive quite satisfactorily and at the same time be regulated to protect the legitimate interests of the citizenry is not a deeply held view. Too often, especially in respect of financial institutions (which incidentally have done best from the measures put in place to confront the Global Financial Crisis), an attempt by government to regulate is howled down. For the governments led by John Howard and Tony Abbott almost any regulation is seen as a burden. Indeed the Abbott government seems intent on abandoning any role in regulation and even the notion of Australia as a nation except in respect of defence and foreign policy and a few other things such as “being open for business”, whatever that means. Providing we determine who comes to this country and allowed to stay!
All of these issues are ones traversed energetically in the increasing conversations in social media and more serious places. But governments in the last 25 years have not necessarily listened to those views which do not suit their philosophies. Though one would have to say that the Rudd and Gillard governments were characterised by substantially greater intelligence than some others. A contested view of course. But think education reform and the response to the Global Financial Crisis. And the substantial raft of legislation passed despite it being a minority government: being supported by intelligent and committed independents made a difference which Abbott refused to admit, branding the government illegitimate but not labelling the coalition government of David Cameron in the UK with that epithet.
Go back further and think of the reforms of the Hawke and Keating Governments, not just economically. The Whitlam government whose achievements have been so acknowledged in the last weeks of October following the death of Gough Whitlam aged 98, achievements of vast long-term economic importance, achievements denied at the time. The Fraser government which enacted some of the Whitlam initiatives, embraced humanitarian approaches to asylum seekers and immigrants which have so enriched this country in the context of multiculturalism initiated during the Whitlam years, difficult though that was. And advanced Indigenous interests.
Now we face critical issues at almost every turn. As I have already written, these essays under the subject of “In Australia” address some of those issues and eventually will suggest some approaches for the future. But the views and suggestions are just more amongst the many views and suggestions of others, the thoughts and opinions of the many Australians whose commitment and intelligence will be evident to anyone reading, listening to or watching the more serious publications, radio and television programs. Most of the last two and some of the first are to be found on the platforms of the ABC and SBS, media branded as inefficient at best and biased at worst by those of the right. Despite being trusted by over 80 per cent of the population on every survey! Despite their attention to the very values which so many cherish and which on occasion have been embraced politically.
The next two essays address a very difficult subject: is the Abbott government competent to lead the country.
Thursday, October 9th, 2014
Universities, Academe and Managerialism
Universities contribute substantially to the community through research and teaching and to economic gains as well as to the individuals who graduate. University reforms in developed countries over the last thirty or so years has brought managerialism and corporatisation without matching gains in quality of undergraduate teaching, now often assigned to graduate students. Market economics has reduced the overall spread of courses offered and commercial sponsorship and partnerships have sometimes severely compromised independence.
The contribution of universities to significant innovation through multilateral relationships with government and business, enhanced by geographic location and funding from philanthropic organisations and alumni attracting high quality staff is not always understood, not least in Australia.
As in all other areas of public policy there is much nonsense written about alleged threats that are not really the major issue: those are ignored. In a well argued opinion, one-time journalism student and now business commentator Rob Burgess wrote in early October 2014, in Business Spectator, “The brainwashing of students, I would suggest, is far less dangerous than the mis-selling educational products to young Australians. It keeps them out of other kinds of work-based learning for three years, lumbers them with a HECS debt and releases them into a jobs market that doesn’t want them.”
Burgess was responding to a report that “university lecturers were ‘indoctrinating’ journalism students to hate some media and gravitate toward some others”. As Burgess points out, “Young journalists often argue with their jaded bosses over idealistic views of society, but each, with time, finds their own map of reality.”
One of the theoretical requirements for the operation of a free market is perfect information. Students making a choice about which university to attend or which course to enrol in, like everyone else, lacks such perfect information. Indeed Nobel Prizes are awarded for studies into this asymmetry. So large numbers of students enrol in journalism courses for which there are few jobs and few enrol in actuarial studies where there are many jobs.
This all has relevance to recent proposed reforms.
Australia’s Universities: recent proposals for reform
The first Abbott/Hockey budget proposed major changes for Australia’s universities. Whilst there has been very substantial opposition, the larger universities have promoted the changes. (So has the Business Council of Australia.) Prominent commentators have accused Minister Pyne and the larger universities’ Vice Chancellors of not understanding the actual situation or the recent history of the microeconomic reforms proposed.
Deregulation of higher education fees is proposed with interest on the debt incurred through HECS funding of the fees being adjusted to the government bond rate and private providers allowed to offer courses. Significant cuts will be made to funding including to the Research Grants scheme. The argument is that the outcome will be enhancement of diversity and choice and lead to the older established universities being able to increase their revenue and attract the best students.
The assertions are considered on analysis to be wrong by comparison with the experience in the US and the recent history in Australia.
Senator Elizabeth Warren (Dem, MA) was interviewed recently on the website Salon.com. Several paragraphs refer to the college and university situation in the U.S. They make chilling reading:
Three of four kids in college are in public universities. A generation ago three of four dollars of the cost came from government: it is now one in four and the family or student has to make up the rest. “The state universities are the backbones of access to higher education for the middle class ..”
One in 10 kids in college is in a for-profit university: “those universities are sucking down 25 per cent of federal loan dollars and they are responsible for 50 percent of all student loan defaults. So the federal government is subsidizing a for-profit industry that is ripping off young people. Those young people are graduating-many of them are never graduating-and of those that are graduating, many of them have certificates that won’t get them jobs, that don’t produce the benefits of a state college education.”
It is far from certain that the changes will pass the Senate. They most certainly should not! The Labor Opposition is running a major campaign against them.
Monday, July 7th, 2014
A new series of articles commences with a polemic about the value of thinking outside the domain in which our own organisation is situated and how that can contribute to greater understanding than another seminar from people we already know.
Australia faces perhaps more challenges than at any time in its history. Many commentators and experts point to failure to confront climate change and the carbon emissions contributing to that, to the decline in attention to many aspects of humanity including immigration and asylum-seekers, to the continuing challenge for ‘White Australia’ of Indigenous peoples gaining genuine standing in their own country, to the continuing less than independent stance in foreign policy despite the evidence that simply forming an alliance with the nation currently most powerful carries severe dangers, to the risk averse nature of the political systems in investing in communications and transport infrastructure and much else.
Economically, inequality in Australia, increasingly an issue gaining serious attention not least because of the publication of Capital in the 21st Century by French economist Thomas Piketty, has been brought to the fore in discussions about the first Commonwealth government budget of Treasurer Joe Hockey. Amongst the many features of very great importance characterising the government of Prime Minister Tony Abbott is the failure to appoint a Minister for Science and the abrogation of agreements with the states entered into by the Rudd and Gillard governments in respect of health and education. Education policies have already featured on this site.
The consistent assertions by Abbott government ministers of a budget emergency and a debt crisis requiring a budget featuring significant reductions in government outlays in many areas, the resulting pain to be “shared” across the board, have been comprehensively denied by many economists and commentators supported by numerous detailed studies.
It is intended that these issues will form the background to the essays in this section, In Australia.
Sunday, November 17th, 2013
Museums, Gardens and their Future with Government
A short essay on departures of senior executives from New South Wales museums and botanic gardens in 2013 and what they say about government policies is added to the essays about effective museums. Earlier it had been posted on my blog, commenced in October 2013. The essay questions whether governments and boards appointed by governments to manage and oversight museums and similar enterprises actually show themselves capable of effectively fulfilling their obligations. In the study of effective museums the first distinction, the most important one, of effective organisations was that they are independent of, or at least maintain a distinct arms length from, government.
Governments are often obsessed with centralised control, which usually ends up achieving very little, and boards appointed by them seldom comprise persons with genuine understanding of the organisation and its principal aims. Newly appointed members are seldom properly briefed at the time of their appointment; the chair is often not appointed because they possess the most important characteristic of an effective chair, the ability to bring people together to envision a shared purpose and ensure meaningful participation of the members of the board, but because they are a friend of the Minister or have achieved prominence in business or some other field. The fact is that often people rise to positions of prominence for reasons related mainly to who they know and where they went to school. For all these reasons boards of cultural organisations very often fail to achieve effective governance and in particular may not even make appropriate appointments to the most important position, that of executive director.
If the truth of the assertions of the above paragraph seems doubtful, consider the fact that the vast majority of the people in the UK in the professions of the law and finance are from a few “public” schools. A review of the composition of boards of Australian cultural institutions would show that even if the members are scientists or artists they seldom have any experience of leadership or governance. However, their expertise would be valuable were the majority of the decisions made by the board related to considered judgements about the principal purposes and business of the organisation. Instead they often concern financial matters and issues of an administrative nature.
New Essays on Other Issues
In October 2013, a new blog site was commenced. It will contain articles on subjects other than museums, leadership, organisational development and similar subjects with which this site has been concerned for the last 11 years and education, essays on which have been posted in the last two years.
The first essays deal with climate change; other articles which appear on this main website have been cross posted on the blog site.
A full list of articles on the blog is posted on its own page.
Articles on other sites
Articles published on other online sites are listed on the Publications page of this website. They cover education, economics and climate change.
Thursday, November 14th, 2013
The approach to education reform intended by the new Government, as enunciated especially by Education Minister Pyne, is based on serious misunderstandings of the nature of education and the latest contribution to knowledge about it. “People need to understand that the government has changed in Canberra, that we’re not simply administering the previous government’s policies or views”.
Five areas of concern arise from the statements by Minister Pyne about school education. They are first, the proposition that ‘the present model is not broken’, then the influence of standardised testing, the nature of school leadership, the nature of effective learning and teaching and the nature of the disciplines which form the curriculum, especially history, and the ways they are taught.
Actor and comedian Tim Minchin said much more interesting things about education at the University of Western Australia. Like, “life is best filled by learning as much as you can about as much as you can, taking pride in whatever you’re doing, having compassion, sharing ideas, running(!), being enthusiastic”.
Much of this education reform is just the unwinding of intelligence and creativity!
Read more at The Education of Christopher Pyne.