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Jobs and Growth are being Undermined by Corporate Behaviour: the Great Tax Hoax

Thursday, December 29th, 2016

The Coalition government in Australia and the policy of the incoming President of the US Donald Trump propose substantial decreases in corporate tax rates and assert this will stimulate growth and jobs.

However, consideration of past decreases in tax rates reveals the recent behaviour of corporations and their executives and boards as an increasing trend to devote retained earnings to share buy backs and dividend distribution. Thus additional revenue flowing from further tax breaks is likely to contribute to further enrichment of the already super rich including many at the helm of large corporations, especially in the financial sector. Few companies are paying the marginal tax rate and many are avoiding tax altogether.

The campaigns by business to downsize government, reduce wage growth, limit union influence and reduce regulation have been self-defeating. The behaviour of the super-rich is the principal driver of the significant increase in inequality over the last 40 or so years, especially the Global Financial Crisis. This has led to a stalling of demand. In Australia, substantial investment has been directed to property, now a vehicle for financial enrichment at the expense of those wishing to find somewhere to live.

It is vitally important to recall that rising prosperity benefiting the population generally does not depend simply on economic growth: unending growth is a concept believed in only by the naive and many economists. The United Nations Development Program Report for 2009, Real Wealth of Nations: Pathways to Human Development points out that improvements around the world in education and health have been due principally to cross border transfer of ideas: there is little if any correlation with economic growth! Growth in incomes is not unimportant but it is not the main reason for improved prosperity.

In other words we can learn a great deal from other countries and other domains: seeking out those lessons is vitally important. Most particularly the notion that for any individual country the growth of population is critical is nonsense. Indeed, countries where the birth rate has slowed are generally more prosperous and a significant influence on that is education of women.

Governments have a fundamentally critical role in both encouraging transfer of ideas, in the provision of education for women and in encouraging responsible and sustainable population policy. Many developed economies lack any coherent population policy.

In Australia weakening of institutions, increasing inequality, primitive approaches to debt, especially for infrastructure development and to deficit budgeting, ongoing downsizing of government along with poor investment in education, health and science and a lack of understanding of innovation and what drives it is putting Australia’s future at risk. Isolation from the ideas emerging in other countries is a major feature of public policy!

Continue to Managerial Firms and Rentiers: How Corporate Behaviour is driving Inequality

A postscript to the associated essay notes the recently published book on Neoliberalism by George Monbiot  and also deals with the behaviour of banks and the involvement of US administration officials in failing to prosecute bank executives for their behaviour which led to the Global Financial Crisis.

Related post:

Government Policy and the Economic Environment at the turn of the Year, December 2016: Health, Education and Corporations

A postscript to the associated essay “Managerial Firms and Rentiers” notes the recently published book on Neoliberalism by George Monbiot  and also deals with the behaviour of banks and the involvement of US administration officials in failing to prosecute bank executives for their behaviour which led to the Global Financial Crisis.

Science and its Influence: Communication and the Proper Responsibility of Governments

Wednesday, December 28th, 2016

Many scientists ascribe the failure of governments to support science and the recommendations of scientific research to the failure of the scientific community generally to communicate the significance of science effectively.

The failures of government to adopt the science agenda is not due solely to poor communication. Governments fail to address the findings of high quality research in many areas including health, education, public transport, urban planning. Governments are mostly persuaded by their own ideological agenda and the lobbying of sectional interest groups and their funders. Politicians gain support for their policies from many in the community who privilege their own preconceived views and experience over analysis of available evidence.

Many western governments approaches to public policy are based in neoclassical economic beliefs which regards private enterprise as significant, small government as highly important, as more efficient than government and high taxes as inimical to personal freedom and business success. They are loath to address issues such as inequality, government funded health and education and see the private sector as having a major role in infrastructure development and in carrying out functions once considered part of government’s remit. Business practice is considered to be very valuable. That is hardly a view based on performance? Thus many of the conclusions from scientific research, if adopted, would undermine the agenda and interests of business groups, an agenda. Others are marginalised or opposed through embracing of fundamentalist beliefs.

The ultimate course of public policy is determined by politics and alliance formation, by narratives which address the beliefs of those in power.  Logic and rationality are not central. Therefore support for a stronger role by scientific bodies and by allies is needed. The strong promotion of the achievements and significant public benefits deriving from science must continue at the same time. Above all advancement of any enterprise from small informal group to major corporation and government is significantly influenced by cohesive leadership with a clearly articulated and defensible policy. In many countries that is lacking.

For their part, government ministers need to recognise that they have a greater responsibility than mere satisfaction of their own narrow political agenda. Where governments ignore the considered findings of science the future of the community is at risk. For instance, it is not possible to claim a secure and prosperous future and at the same time continue with burning of fossil fuels unless one dismisses the majority conclusions of scientists engaged in the relevant science and the many other scientists.

There are too many examples of past errors today in respect of climate change, public health, education, infrastructure development and economics. The notion that small government and economic growth will solve everything has to be discarded.

A stronger role for science is essential and governments have to ensure that role is addressed. In the absence of perceived economic gain, usually over the short-term, the private sector will not.

The level of funding for scientific research is related both to government policy and to the involvement of the private sector. In the United States and a number of other countries in Europe and Asia, industry supports laboratories conducting applied and often basic research and maintains close ties with universities and government agencies.

In Australia, at both Commonwealth and State level, governments have reduced their involvement in scientific research substantially. Where State governments funded research in areas such as agriculture, mining, fisheries, nature conservation and many other areas, they now fund very little. At the Commonwealth level CSIRO has been through numerous reviews and its funding reduced significantly; as well layers of corporate activities have been added and goals related to industry given much more attention.

Numerous programs on radio, tv and many publications focus on science. Those opposing the proposition that human agency was the main contributor to carbon emissions and climate change for instance simply didn’t listen, watch or read such material. Even a cursory glance through readers’ responses to articles and programs about subjects ranging from health to education and the arts is sufficient to show that many people consider their own already held views to be a better guide to ‘truth’ than the views of ‘experts’.

There are some who consider the views of experts to be no longer relevant and even that universities are not either. Many such people regard the benefits of education to flow principally to the individual and therefore appropriately charged to the individual rather than the citizenry through government taxes. Similar views pervade the policies of many governments concerning health and social welfare.

Read more at The problem is that scientists are poor communicators. Really?

A related background document addresses some issues relevant to the main theme of this essay as they concern government policy, especially in Australia.

I nearly forgot: one of the main reasons for the disregard of science is that so much of the discussion, especially within academe, is simply an argument amongst the advocates for different branches of science in order to gain more funding or more graduate students or just more. Just like everywhere else.

And the other important point is that many charged with leadership of the scientific enterprise are not sufficiently aware of the characteristics of the most successful scientific enterprises and the features of leadership there. Why was the Cassini-Huygens mission to Saturn and its moons successful? And the Rosetta and Philae mission to the comet 67P. The discovery of Higgs Boson? Gravity waves?

What are the successful scientific laboratories – in terms of Nobel Prizes – and what goes on there?

Australia’s CSIRO continues to make very important contributions in many fields, despite ongoing reorganisations of doubtful utility and ongoing reductions in funding. Why is that?

Last, what has corporatisation and “monetisation” – the requirement that CSIRO devote its research to areas of significant economic development – contributed to success?

What are the key features of science leadership? Some other essays on this site deal with some of these issues. Robyn Williams on the Science Show has on several occasions dealt with these very issues.

The role of government seems often to be overlooked. This is a point taken up by Professor Robert Hill, Executive Dean, Faculty of Sciences at the University of Adelaide on the ABC RN Science Show for 3 December 2016. He says this, “Until Australian politicians understand and properly promote the exceptional quality of our best scientists and the obvious relevance of careers in science, we will continue to underachieve as a nation. University science faculties should also take their share of the responsibility for failing to demonstrate the wide variety of career choices available to graduates.”

 

ICOM Australia Award 2016

Wednesday, July 27th, 2016

I thought it would be appropriate to place on the site the details of the ICOM Australia Individual Award “recognising sustained international achievement over a long period” which I received at the dinner at the Auckland War Memorial Museum for the Museums Australasia Conference in Auckland New Zealand 17 May this year, 2016.

Details have been published in the the ICOM Australia newsletter, Museums Australia Magazine 24(4), Winter 2016 (“ICOM Australia’s International Awards 2016” by Nancy Ladas) and Museum Matters for July 2016 published by Museums Australia New South Wales.

It was a great honour to receive the Award, presented by Dr Robin Hirst, Museum Victoria and past Chair of ICOM Australia

I was especially pleased that following the award to me, the National Museum of Australia was presented with the ICOM Australia Institutional Award for the exhibitions, Indigenous Australia: Enduring Civilisation, shown at the British Museum in 2015 and Encounters: Revealing Stories of Aboriginal and Torres Strait Islander Objects from the British Museum, shown at the NMA in Canberra over the Summer of 2015-2016. That award was accepted by Museum Director Mathew Trinca and colleagues.

The link is to the citation and my response.

My response draws on the ideas already presented on this website, not least in the paper presented to the conference for the late Stephen Weil.

The Myth of School Choice and the Distortion of Education Policy

Sunday, April 24th, 2016

 

At the Global Education and Skills Forum in Dubai in March Education Director for the OECD Andreas Schleicher criticised the Australian education system for falling behind global standards. He pointed to the very significant drop in the results of students at the top of the PISA test rankings in the past year. He said “[Australia] more or less defines teachers by the number of hours that [they] teach in front of students. That is part of the problem. We treat teachers as interchangeable widgets on the frontline – they are just there to implement prefabricated knowledge.” Schleicher said many countries were struggling to keep the best teachers in the profession because of curriculums that restrict creativity.

The OECD through its PISA program which explores literacy in 15 year olds in writing, math and science every three years has been criticised very heavily in some countries as driving the education agenda. Countries determine their own policies but unfortunately the ideology which underlies PISA – standardised testing, along with performance pay and independent schooling – has been adopted too vigorously by some countries. The important findings about effective school education policies and practices brought out in the comprehensive reports of PISA and Education at a Glance are ignored or even deliberately misinterpreted.

___________

In Australia parents are moving their kids in ever larger numbers to schools they perceive to be better based mainly on scores in standardised tests – NAPLAN – published on the MySchool website. What is happening is a drift of students from advantaged backgrounds away from public schools, which generally have large numbers of students from disadvantaged backgrounds, to independent schools. As a result learning gaps between children from different backgrounds are widening. Parents are responding to test scores and to other factors. That should have been anticipated by those deciding to privilege standardised testing and support extra funding for independent schools.

The Myth of School Choice: Government support for Independent Schools and Standardised Tests traverses the recent report from the Grattan Institute which illuminates important outcomes of the Howard Government’s support of independent schools and the reactions of parents to that. The focus on NAPLAN has problems drawn out in a report by Chris Bonner and Bernie Shepherd for the Centre for Policy Development and a study by David Zyngier of Monash University. That independent schools do not contribute to better educational achievement when socioeconomic background is taken into account is shown by a sophisticated report by researchers from the University of Queensland and colleagues. As it has been by many previous analyses!

Study after study has shown no significant educational gain by the much better resourced independent schools. The extra funds would have been better spent supporting those children with greatest needs, those from disadvantaged backgrounds having trouble with the learning program.

The Turnbull Coalition Government, like the Abbott Government before it, has refused to fund the last two years of the National Plan for School Improvement framed in response to the Gonski Panel’s recommendations: it maintains there are insufficient funds. However, there is substantial evidence to the effect that funds are available by addressing the substantial tax expenditures – tax concessions – introduced in recent years; Australia is a relatively low tax country and a major contribution to debt is private debt funding purchase of houses and apartments.

The response by the Turnbull Government to the States’ refusal to consider operating their own income tax systems has left unresolved the funding of schools (and hospitals) through agreements between the former government and the states, with the Prime Minister maintaining that the states have no grounds on which to ask the Commonwealth to raise taxes and claiming the previous agreements were made in “barely credible circumstances”. The Myth of School Choice: the Economics of Independent Schools and Australian Government Policy shows just how wrong this is and how billions of taxpayer funds have been wasted. A report by Lyndsay Connors and Jim McMorrow and detailed analysis by Trevor Cobbold illuminate the situation.

Proposals to have the Commonwealth fund independent schools and the States fund public schools were strongly criticised and are not supported by the Government’s own Green Paper on the Future of the Federation. In Victoria a review by former Premier Steve Bracks recommends policies reinforcing the Gonski reforms.

Despite adoption of policies in the US and UK based mainly on neoclassical economics which privilege private sector participation in generating public goods like education, favour competition and choice and deploy financial incentives to drive change, there are examples in those countries, as in Australia, of exciting outcomes from schools which do address the main features of effective learning in schools.

The Myth of School Choice: Genuine improvement happens when everyone collaborates for the benefit of the children summarises an important review by education historian Diane Ravitch of two very interesting books on schools in the United States.  It isn’t simply quality teachers or the administrative independence of school principals and it certainly isn’t standardised testing which make the difference! Kristina Rizga, author of Mission High: One School, How Experts Tried to Fail It, and the Students and Teachers Who Made It Triumph, about a high school in San Francisco with an enrolment of students from a wide cultural diversity, many from disadvantaged backgrounds, points out, “too many politicians, powerful bureaucrats, management and business experts, economists, and philanthropists are making decisions about the best solutions for schools. In short, the people in charge don’t know nearly as much about schooling as the students and teachers they are trying to “fix.””

Despite everything, at Mission High in San Francisco great gains were made by students through the intense enthusiasm of their teachers.

Rizga says, “What matters in quality education – critical thinking, intrinsic motivation, resilience, self-management, resourcefulness, and relationship skills – exist in realms that can’t be easily measured by statistical measures and computer algorithms, but can be detected by teachers using human judgment. America’s business-inspired obsession with prioritizing “metrics” in a complex world that deals with the development of individual minds has become the primary cause of mediocrity in American schools.

Diane Ravitch points out “grand ideas cannot be imposed on people without their assent. Money and power are not sufficient to improve schools. Genuine improvement happens when students, teachers, principals, parents, and the local community collaborate for the benefit of the children.”

And education does not by itself fix poverty.

Not listening Not hearing

Friday, March 11th, 2016

 

How many times must a man look up
Before he can see the sky?
Yes, ’n’ how many ears must one man have
Before he can hear people cry?
Yes, ’n’ how many deaths will it take till he knows
That too many people have died?
The answer, my friend, is blowin’ in the wind
The answer is blowin’ in the wind

      “Blowin’ In The Wind”, Bob Dylan

“That Aboriginal people were dispossessed of their land without benefit of treaty, agreement or compensation is generally known. But .. little known is the amount of brutality and bloodshed involved in enforcing .. [it]… people were deprived of their land and if they showed resistance they were summarily dealt with. The loss of land meant the destruction of the Aboriginal economy which everywhere was based upon hunting and foraging. And the land use adopted by the settlers drastically reduced the population of animals to be hunted and plants to be foraged. And the loss of the land threatened the Aboriginal culture which all over Australia was based upon land and relationship to the land. These were the most dramatic effects of European colonisation supplemented by the decimating effects of introduced disease to which the Aboriginal people had no resistance. These matters are understood to a very imperfect degree by non-Aboriginal society.

“But the facts of later policies and their effects are even less well known to the general population. Having reduced the original inhabitants to a condition, in many places, of abject dependency the colonial governments decided upon a policy of protection which had two main thrusts: Aboriginal people were swept up into reserves and missions where they were supervised as to every detail of their lives and there was a deliberate policy of undermining and destroying their spiritual and cultural beliefs.”

      The Royal Commission into Aboriginal Deaths in Custody 1991

 

“Ten years old. Think about that. Someone’s daughter. A child who came into the world with the joy of all newborns. A child who first smiled, who spoke her first words, who said “mum” and “dad”. A child who laughed her first laugh, who took her first step, who held the hands of her parents as babies do, tiny hands tightly gripping a finger. All of this potential, all of this love, all she could have brought to the world: all of it gone.

“I can’t speak to the specifics of this girl’s life or death, but I can say she was born into the sadness that too often is our world. She was born into the intergenerational trauma of so many black families. This was her inheritance. …

“Look to your children this day and think about that. Then ask: how we can possibly look away?

“I have spent these last weeks travelling Australia speaking to people about how we – Indigenous people – live with the weight of our history.

“We are connected directly to the darkness of our past. We are born out of the legacy of dispossession and suffering and injustice. The crippling malaise that sits at the heart of so many black communities and lives in this country is seeded in that still unresolved grievance that underpins the Australian settlement: Terra Nullius.

“Our land was deemed empty we as a people were denied the fundamental rights that pertain to all humanity. Those things that are self evident – equality and dignity.

“The high court may have ruled in favour of native title, but the original sin of dispossession and the subsequent despair and poverty casts a dark, menacing and long shadow.

“Our lives are shaped by the great forces of history as surely as the lives of peoples of other lands: those who live with the legacy of war in Afghanistan or Syria or Iraq, those hidden behind secrecy and propaganda in North Korea or those emerging from a fractious troubled century of humiliation to grasp the China dream.”

          Stan Grant, “A 10-year-old girl has taken her own life. How can we possibly look away?” The Guardian 9 March 2016

 

“One in three deaths across the country among Aboriginal and Torres Strait Islander people aged 15 to 35 is a suicide and the rates of suicide for First Australians is twice that of other Australians”, Minister for Indigenous Affairs, Senator the Hon Nigel Scullion.

“The suicide rate among Indigenous people in Australia is twice that for non-Indigenous people. In some areas, such as the Kimberley region in northern WA and far-north Queensland, the suicide rate is six or seven times that.

“One in four Indigenous suicides occurs in WA. Between 2004-2005 and 2012-2013, hospitalisation rates for self-harm among Indigenous people increased 48%. Hospitalisation rates for non-Indigenous people remained steady.”

     Carla Wahlquist, “Critical response team to tackle ‘ongoing tragedy’ of Indigenous suicide”, The Guardian 18 January 2016

“A Select Committee on Aborigines reported in 1837 to the House of Commons that the state of Australian Aborigines was “barbarous” and “so entirely destitute … of the rudest forms of civil polity, that their claims, whether as sovereigns or proprietors of the soil, have been utterly disregarded” … The theory that the indigenous inhabitants of a “settled” colony had no proprietary interest in the land thus depended on a discriminatory denigration of indigenous inhabitants, their social organization and customs…

“As the Governments of the Australian Colonies and, latterly, the Governments of the Commonwealth, States and Territories have alienated or appropriated to their own purposes most of the land in this country during the last 200 years, the Australian Aboriginal peoples have been substantially dispossessed of their traditional lands. They were dispossessed by the Crown’s exercise of its sovereign powers to grant land to whom it chose and to appropriate to itself the beneficial ownership of parcels of land for the Crown’s purposes. Aboriginal rights and interests were not stripped away by operation of the common law on first settlement by British colonists, but by the exercise of a sovereign authority over land exercised recurrently by Governments. To treat the dispossession of the Australian Aborigines as the working out of the Crown’s acquisition of ownership of all land on first settlement is contrary to history. Aborigines were dispossessed of their land parcel by parcel, to make way for expanding colonial settlement. Their dispossession underwrote the development of the nation.”

       High Court of Australia, Chief Justice Mason presiding, Mabo  v Queensland (No 2) CLR 1 (3 June 1992):           Opinion of Justice Brennan