Category Archives: Politics

Intelligent design and its not-so-intelligent proponents

In another setback for science in the United States, the Kansas School Board has effectively allowed for the teaching of creationism in classrooms. This has followed much debate in the U.S. over the teaching of the so-called ‘theory of intelligent design’ which has been advocated by many Republicans, including the President.

Of course, the Kansas School Board didn’t explicitly incorporate the words ‘creationism’ or ‘intelligent design’ into the curriculum. Instead they use the typical roundabout and cryptic language used by the religious right when promoting such policies. Specifically, according to the Sydney Morning Herald the board “redefined science so that it is no longer limited to the search for natural explanations of phenomena”.

While I agree completely that science needs to be completely open-minded, and not be restrictive in what sort of explanations it considers, any scientific theory, whether it be a natural theory or otherwise, still needs to adhere to basic scientific principles, otherwise it is, by definition, not scientific. In my mind these principles can be summarized by the following pseudo-code algorithm for how a scientific idea develops:

  • 1. Consider a particular phenomenon.
  • 2. Propose a postulate to explain that phenomena.
  • 3. Present evidence to support the postulate.
  • 4. Allow others the opportunity to present evidence to either support or contradict the postulate.
  • 5. If after a reasonable amount of time and evidence the postulate still stands up strong, it may be promoted to the rank of theory.
  • 6. If it is disproven, goto 1.
  • 7. If, after a much longer time, the theory is very strong and essentially unchallenged, it may be promoted to the rank of law.

Most scientific ideas have more or less followed a progression of this nature. The specifics of my list are highly debateable and rather irrelevant, with exception to points (3) and (4), which are absolutely fundamental. My criticism of the ‘theory of intelligent design’ is that, based on these criteria, it is not a scientific theory at all. The reason for this is that it completely sidesteps the all-important points (3) and (4). The argument for intelligent design in every account I have read is something along the lines of “the universe is incredibly complex, therefore it must have been created by a higher power”. Let’s be very clear about one thing. This is not a theory. It’s a postulate (and one which it not logically defensible at that). Most proponents of ID, on the other hand, seem to immediately promote their idea to the status or theory, or in some Bible bashing circles, directly to law. While these people are quite entitled to their views on creationism, and I wouldn’t want to argue against them for fear of completely undermining their sense of purpose in life, it’s farcical to promote ID as a scientific theory. While I don’t believe that creationism should be taught in school at all, if it is it should at least go by the title of “unsubstantiated postulate that immaterial and supernatural phenomena are responsible for human life”, which would be far more scientifically accurate than “intelligent design” which gives the false impression that in some way the idea is in fact intelligent.

The economic and military strength of the United States can be attributed in large part to its scientific dominance throughout the second half of the last century. If science in the U.S. continues to be undermined at the most fundamental level (i.e. in the education of the next generation), this will have very significant consequences on future U.S. power, something which I’m surprised the neo-cons haven’t caught on to yet. Already countless American scientists are becoming disgruntled and are expressing their dismay or writing petitions against the perversion and falsification of science in the United States. I sincerely hope that this trend doesn’t continue (the perversion that is, not the dismay). However I have a suspicion that it will.

Update: According to this article from the Sydney Morning Herald, the creationists are spreading their assault on science to Australian schools as well.

The case for the full sale of Telstra

After many months of doubt, negotiation and bitter feuding, the Australian Senate has finally given the go-ahead for the full sale of Telstra, Australia’s largest telecommunications corporation. While the fate of the sale has now been sealed, I thought I’d throw in my two cents worth and present my arguments as to why privatisation is desirable.

Domestic competitiveness

It is only through a competitive market place that the best interests of consumers will be represented. The long term objective of government policy, whether it be in the telecommunications sector or otherwise, should therefore be to create a competitive telecommunications environment. When an industry is effectively nationalised under a publicly owned monopoly, there is very little room for competitors to enter the market. In the immediate short term, it is very difficult to say whether a privatised Telstra will serve the best interests of consumers. However, in the long term, by effectively opening the telco sector to competition, we can realistically expect more private investment to flow in, and the development of the industry to be expedited.

International competitiveness

While Telstra’s reach is primarily within Australia, it is a very large corporation with much potential for extending its reach into overseas markets. Foreign governments are typically very hostile to competition from foreign publicly held companies, since there is a perception, whether it be true or not, that such companies are anti-competitive by nature. There are many examples, mostly notably in the defence sector, where this limits companies from engaging in overseas market. By fully privatising Telstra we can ensure its future viability as a player in the global telecommunications industry.

The elimination of conflict of interest

The most fundamental role of government in a market economy is as regulator. This is an inherent conflict of interest when the government is simultaneously the regulator of an industry and the primary stakeholder in a monopoly over that industry. This is likely to distort government decision making in favour of maximizing its profits by maintaining that monopoly, which conflicts with its requirement to ensure a competitive market place.

Efficiency and good management

Without getting caught up in the arguments as to why or why not this should be the case, it’s an empirical fact that privately held companies tend to be better managed, more profitable and more growth-centric than government owned ones. When a company is in a situation where it cannot rely on the government to bail it out of problems and protect it from competition, it will inherently operate more efficiently and competitively.

The new police state?

In the last few days there have been some very troubling developments, both here in Australia and in the U.S., regarding the infringement of personal liberty and the degradation of democratic principles.

In the U.S., since the beginning of the war in Afghanistan, there has been much controversy surrounding the detention of terrorist suspects at Guantanamo Bay, Cuba, who are being held indefinitely and without charge. Now it appears that the ability of the state to arbitrarily detain people is being extended not just to foreign suspects captured on foreign soil, but also to U.S. citizens captured on U.S. soil. According to this article from the Washington Post, a federal appeals court has ruled that the President has the authority to indefinitely detain U.S. citizens captured on U.S. soil, without charge.

At home, according to this article from the ABC, a U.S. peace activist has been arrested and faces deportation. No charges have been laid against him and no reason has been given for his deportation.

Both of these developments, especially the former since it deals with a country’s own citizens, are very troubling. One of the fundamental tenets of democracy is the existence of a transparent judicial system in which people may not be punished for a crime unless proven guilty, have the right to know what they are accused of, and have the right to defend themselves against accusations. Throughout recent history, the breakdown of these fundamental rights has typically preceded transitions to totalitarianism. While I sincerely hope that this is not the case now, these developments give much credence to the many critics who claim that current anti-terrorism laws are being used as a pretext for expanded state control over the individual.

The case for industrial relations reform

Recently, here in Australia, there has been an enormous amount of controversy surrounding the government’s proposed reforms of the industrial relations system. While details of the proposed changes are still scarce (or at least I’m not particularly up-to-date with them), I will present a broad case for the need for industrial relations reform and labour market deregulation, and attempt to dispel some of the myths perpetuated by its opponents. I will speak generally, without specific reference to the changes being proposed. However, much of what I say is directly applicable to the proposed reforms.

The motivation for labour market deregulation

  • Improved competitiveness
    In today’s world it is not possible to consider Australia, or any other country for that matter, in isolation from all others. When determining any sort of economic policies one needs to consider them in the context of the world economy, not just in terms of any single country. This said, there is no denying that many other countries, particularly developing ones, are becoming increasingly competitive. For this reason, if Australia is to remain competitive internationally, the artifical inflation of labour costs (i.e. labour market regulation) needs to be systematically eliminated.
  • Create jobs
    Whether we like it or not, it’s a simple fact of life that employers, whether they be governmental or in the private sector, have finite financial resources at their disposal with which to employ people. It is clear that if labour costs are higher then employers will be able to employ fewer people. In my opinion, so long as there are people in society who are unable to find work, the priority of labour market policy ought to be to create full employment, not to artificially boost the incomes and entitlements of those who have jobs at the expense of those who do not. Moving towards a deregulated labour market model is more conducive to this goal than the regulated and protectionist model advocated by social democrats and the union movement, which prices people out of jobs.
  • Improved productivity
    Government imposed regulations and, in particular, collective bargaining decouple employee income and benefits from productivity, thereby undermining incentive. Both have the effect of placing all working class citizens in the one basket, labelled ‘workers’. In practice, some workers work harder than others, some are more productive than others, some are willing to work longer than others and so on. For this reason, adopting a system which encourages individually negotiated workplace contracts over regulated collectively bargained contracts is desireable.
  • Respect for personal liberty
    In addition to the economic motives, labour market deregulation is desireable simply from the point of view that it advances personal freedom. In a free society every individual should be entrusted to make all personal decisions for themselves. Nobody other than the individual is better qualified to decide what terms of employment are favourable. Labour market regulations, on the other hand, shift this decision making responsibility from the individual to the government, undermining individual discretion.

Myths about industrial relations and labour market policy:

  • Mandatory entitlements create prosperity
    There seems to be a widespread misconception in society that by legislating employee entitlements and benefits the living standards and working conditions of the working class will be improved. This couldn’t be further from the truth. In practise, mandatory entitlements serve only one goal, to artificially inflate the cost of labour. By inflating the cost of labour people are priced out of jobs, resulting in increased unemployment. Prosperity cannot be legislated or regulated into existence. Rather, it is economic growth which creates prosperity for the working class. There is only one way to advance living standards, and that is to embrace pro-economic growth policies.
  • Legislated job security creates job security
    Job security is a benefit like any other, and, like any benefit, it carries a cost to the employer. For this reason job security is best left open for negotiation. There are plenty of people in society who would be more than happy to accept a job without guaranteed security, if the alternative is no job whatsoever. What about people who presently have jobs with guaranteed security? Would these people stand to loose such security under a deregulated system? The answer is no. If peoples’ jobs are economically viable with guaranteed security now, so they will be tomorrow, and there is no reason why an employer would be unwilling to negotiate the same terms into an employment contract tomorrow. So what’s the difference then? The difference is that some jobs which presently don’t exist because they are economically unviable to employers, would become viable. Legislated job security, like other mandatory entitlements, prices people out of jobs, inhibits peoples’ ability to freely negotiate, and creates unemployement.
  • Unfair dismissal laws prevent unfair dismissmal
    As I see it, there are two types of dismissal: dismissals which are made in the interest of the employer (e.g. for financial reasons); and, dismissals which are not in the interests of the employer, but which are made anyway for personal reasons (e.g. racial, sexual or religious discrimination, or personal disagreements). Allow me to address both of these types of dismissal individually.

    The former type of dismissal is not, in my opinion, unfair dismissal. Instead, while certainly unfortunate, it is a perfectly legitimate act. It is of fundamental importance that employers be able to act in their own financial interests. If their ability to do this is limited, so too is growth, which, in the long term, costs more jobs. Alternately, the employers might just take their business somewhere else, which, again, costs more jobs.

    In the case of the later type of dismissal, which I refer to as unfair dismissal, it is highly dubious that any sort of government regulation or legislation can be effective. If an employer is genuinely discriminatory, rather than hire and fire someone, they simply wouldn’t hire them in the first place. In the case of an employer firing an employee on personal grounds, even if such acts are prohibited there is simply no way of stopping a determined employer from finding some other pretext by which to fire the employee, or make their life so miserable that they’ll leave on their own accord. Truly unfair dismissal is something which is near impossible to legislate against, serves to discourage legitimate dismissal and exposes employers to spurious unfair dismissal claims.

  • Minimum award wages protect the battlers in society
    Minimum award wages are simply another form of legislated benefit and achieve the same result, to price people out of jobs. While it is clear that there is a subsistence level below which people cannot survive financially, it needs to be kept in mind that whenever the minimum award wage is increased, there will necessarily be people who loose their jobs as a result. For this reason, award wages ought to be kept as close to the subsistence level as possible.

Having stated my views on these issues, I will suggest policy goals which, in my opinion, will reduce unemployment and boost productivity.

Peter’s policy recommendations:

  • Eliminate all minimum award wages and unemployment support, replacing it with negative income tax for people with incomes below the subsistence level
    By completely eliminating all minimum award wages, nobody who is willing and able to work will be unable to find work. Why, if I could employ someone for one cent per hour, I would single handedly take a big bite out of the country’s unemployment level (my house could use a paint). To counteract the problem of there being many workers left below the subsistence level, and as an alternative to unemployment support, negative income tax could be employed to boost the effective income of such people back up to the equivalent of the minimum award wage. This would cost the state no more than having these people sitting on the dole and claiming the same benefits. However, productivity would be massively boosted.
  • Eliminate all forms of mandatory workers’ entitlements, including job security
    All terms of employment contracts ought to be left open for negotiation. This will encourage a more competitive and productive labour market and not price people out of jobs.
  • Enshrine in law the right of employees to negotiate individual employment contracts
    Freedom of association is a fundamental human right. For this reason closed-shops should be outlated. Under such a system individual workplace contracts would become more common, resulting in an increase in performance based pay, which is more conducive to high productivity.

The case for a national sales tax

In recent months there has been much talk in the United States of the possibility of introducing a National Sales Tax (NST) to replace the existing income based tax system (stories on Fox News, CNN Money). The proposal has been steadily gathering support in Congress and has the backing of Federal Reserve Chairman, Alan Greenspan (stories on Chicago Tribune, Fox News).

The proposal for an National Sales Tax would replace all forms of taxation, including income tax, capital gains tax, corporate taxes, and other duties and levies with a single sales tax, or Goods and Services Tax (GST) for the Australians amongst us.

As a long-time advocate of a completely consumption based tax system here in Australia, I’ll present my own take on this issue and why I think it would be an extremely beneficial policy. The main points in favour of a NST, in my opinion, are as follows:

  • Increased investment and employment
    The present income based tax system has the following effects:

    • Investment is strongly discouraged through Capital Gains Tax (in fact investment is doubly taxed: first in the form of income tax and then again on the capital gains earned on the investment).
    • Employment and promotion are discouraged through Income Tax.
    • Entrepreneurship is discouraged through Income Tax and Corporate Tax.
    • Consumption is encouraged, since it is, on average, taxed at a much lower rate than income.

    A consumption based taxation system would have the converse effect. Namely, people would be encouraged to seek employment, to seek promotion while in employment, and to invest their money rather than spend it. This would have several consequences:

    • Employment levels would increase. As a result of the elimination of disincentive to work we could reasonably expect unemployment levels to decrease. This would be further exacerbated by the fact that with increased investment and a decreased tax burden, companies would have more capital available with with to take on employees.
    • Interest rates would be lower. With a higher percentage of peoples’ disposable income going into savings, banks would have a greatly increased capacity to lend money, resulting in lower effective interest rates. An important point is that these decreases in interest rates would not have an inflationary effect, since they come about as a direct result of people’s consumption abstinence.
    • Economic growth would increase. As a result of massively increased investment and decreased growth disincentive, economic productivity (i.e. GDP) would increase.
  • Elimination of bureaucracy and complexity
    The present tax system necessitates a massive bureaucracy to support its processing and collection. In the United States this costs almost $11b annually. Under a simplified consumption based tax system this bureaucracy and its associated maintenance costs would be slashed, representing a significant saving to the tax-payer.

    In addition to bureaucratic simplification, a NST would represent an enormous simplification to the individual. I’m sure anyone who has filled in a tax return, whether it be here in Australia, the US, or anywhere else, would concur on that note.

  • Less tax evasion
    A NST would eliminate tax evasion, which is rife under the present system. People often argue against sales taxes on the basis that they harm the poor and favour the rich. I would argue that in fact quite the opposite is true. It in an undeniable fact that the bulk of the income tax burden falls on the shoulders of the middle-class, not the extremely rich. In fact, the very wealthy typically have the means by which to avoid income tax altogether through a variety of mechanisms which are not accessible to the working class. Under a consumption based tax system this could, to a large extend, be mitigated, and everyone would pay tax as a proportion of how much they consume.
  • Ideological reasons
    From an ideological point of view, I’m sure I’m not alone in being critical of how materialistic society has become. For this reason I believe a NST is a better alternative to the present system since it would encourage people away from living materialistic lifestyles, towards ones which place more emphasis on the importance of saving, investment and long-term financial planning.

Perhaps the most common criticism of consumption based tax systems is that they represent an increased burden on the poor. There are two rebuttals to this criticism:

  • Under the NST proposal a rebate on tax paid would be offered to those below the designated poverty threshold.
  • Unemployment levels would be reduced, resulting in many people at the lower end of the poverty scale being drawn out of poverty and into employment.
  • The effects of the NST would be partially offset by an increase in disposable income.

In summary, a National Sales Tax would be pro-growth, pro-employment and pro-investment, which is in stark contrast to the present system which seems to discourage all the things we should be encouraging and discouraging all the things we shouldn’t.


The case for voluntary unionism

Today the government put the controversial “Higher Education Support Amendment (Abolition of Compulsory Up-front Student Union Fees) Bill 2005” before Federal Parliament, which would ban compulsory student unionism (CSU) throughout Australia. Over recent months this proposal has been subject to countless protests by activist student groups and much bad-press. Consequently, as a staunch supporter of voluntary student unionism (VSU), I’ll present the supporting case from my personal perspective.

From my point of view, there are four main supporting arguments in favour of VSU:

  • Freedom of association
    One of the fundamental tenets of Democracy is freedom of association. When a student is forced to belong to an organisation which they do not want to belong to, this is a fundamental violation of our personal freedoms. This criticism applies to any sort of forced affiliation, but particularly to student unions since they are not all-inclusive and not representative of the majority (refer to my next point).
  • Student unions are not representative
    Student unions is Australia typically pursue blatant political agendas, usually including socialism, feminism, environmentalism, drug-law reform and countless other leftist ideologies, typically in extreme form. While people are certainly more than entitled to any or all of these points of view, the fact is that they do not represent a majority perspective. I should clarify that I am not suggesting that student unions instead start pursuing right-wing political agendas. Rather, they should pursue strictly apolitical agendas and focus on providing services which are available and useful to all. So long as student unions promote any ideology over any other, they are not, and cannot be the all-inclusive, representative bodies they should. However, student unions are so universally plagued by the problem of partisanship, and the political affiliations so firmly entrenched, that most students, myself included, have no faith whatsoever they will change on their own accord.
  • Students should not have to pay for services they do not use
    At the University of Queensland, where I study, I pay approximately $300 per year in Student Union fees, and I should reasonably be able to expect something in return. Unfortunately, rather than using their massive budget to provide services of benefit to everyone, the money is funnelled into countless causes which are of no benefit to the vast majority of students. Following are a few examples of ways in which Student Union money is spent ‘representing’ students at UQ:

    • The Women’s Collective, a small group of activist feminists, receive approximately $150,000 per year in support from the Student Union. This money is spent on activities such as sending members to surf and meditation camps on the New South Wales North Coast. Needless to say, ‘services’ like this are an extravagance and of no benefit to the average student.
    • The Queer Collective, a group open to gays and lesbians on campus, receives similar levels of funding and spends it in similar ways.
    • The Food and Wine Appreciation Society, a small group of people who regularly eat-out at some of Brisbane’s most expensive and elite restaurants, at the expense of the University of Queensland Student Union.
    • The High Society, my personal favourite, is a group of marijuana smokers whose stated goal is to promote drug-law reform, but in fact organize for drug dealers from all across Brisbane to gather once a week on-campus to sell to UQ students. One of their trading sessions was recently stormed by the police, however they still meet regularly and still actively deal drugs to students on campus. Needless to say, this ‘essential service’ is subsidised by the Student Union.

    In the meantime, facilities like the refectories, which are used at some stage by the vast majority of students, are not subsidised and run at a large profit. In light of this, arguments in favour of CSU, which argue that it facilitates essential student services are not credible.

  • When membership is compulsory, student unions are run inefficiently
    In the absence of competitive forces, student unions have no incentive to run themselves efficiently. As an example, my purchases at the Union-owned refectories are approximately 20% more expensive than if I walk 10 minutes down the street to the nearest supermarket. The same applies to other Union-owned enterprises. Not only is the Union uncompetitive, but it actively seeks to stifle competition. In fact, the Union has regulations in place which forbid non-Union-owned enterprises from operating on Union premises, if they are in direct competition with a Union-owned enterprise.

In summary, the argument in favour of VSU is not one which ruthlessly opposes the existence of student services or student representation, as much of the media, and certainly the CSU supporters, have been making out. In fact, the argument for VSU is that it is in the interests of openness, transparency, competitiveness and personal liberty, to allow every individual the right to choose for themselves what is best for themselves.

5 minutes of political fun

If you’ve got five minutes to spare, try the World’s Smallest Political Quiz, made by the well known Libertarian organization, the Advocates for Self-Government. The quiz asks 10 multiple choice questions and gives you a graphical representation of how they rate your political persuasion, on a scale of Conservative, Statist, Liberal and Libertarian. Needless to say, as with all such quizzes, especially political ones, the results should be taken with a salt mine. Nonetheless, it’s a good way to get people interested in political issues and get the conversations rolling.

Here’s my result:
Political quiz result

The future of the US economy

This post was inspired by, and refers to, an article I read by CNN on the US Congress’ recent passing of a bill to increase the federal borrowing limit by $800 billion.

As one of his first actions since re-election this month, President Bush has increased the federal borrowing limit from $7.38 trillion to $8.18 trillion. The cap places a legal limit on much debt the government can amass, and, as a result of Bush’s ongoing record deficits, which are rapidly approaching the half trillion dollar mark, the existing cap has been reached. This raises some very serious concerns for both the US economy and the world economy as a whole.

Ordinarily, running a significant deficit on a temporary basis would not raise too much concern. In fact, many economists argue that during periods of economic stagnation, which has recently been the case, this is a favourable approach, sometimes referred to as the Keynesian approach (after the famous economist John Maynard Keynes). This line of thought argues that increased government spending and tax reduction (i.e. deficits) act to stimulate the cycle of spending and consumption, thereby creating jobs and lifting productivity. In other words, large scale spending can serve to kick start a stagnant economy. However, the present situation is a very different one. The massive spending engaged in by Bush does not represent one-off spending. Instead, it comes about as a result of fundamental structural changes which imply that the magnitude of deficits will be on-going, and, in fact, probably increase further. Increased military spending complimented by on-going military commitments in Iraq and Afghanistan, the problem of an ageing population, record high oil prices, and the intention to make permanent, income tax cuts offered by Bush in his first term, all contribute to this expectation.

By my calculations, if deficits continue to be of the same magnitude as they are now, then in about 2 years time Congress will have to increase the borrowing limit again to avoid defaulting on its debt (which would have absolutely catastrophic consequences). Clearly we have a situation that is not sustainable. At $8.18 trillion, the federal borrowing limit represents about 70% of the GDP of the Unites States. If the government continues to adopt the band-aid solution of simply increasing borrowing limits whenever they hit the limit then eventually paying off the interest on the debt will become untenable and large scale spending cuts and/or tax increases will be necessary. The approach presently adopted is akin to a credit card user hitting his credit limit, and then rather than paying off the credit, increasing the credit limit further to go on another shopping spree. It may work fine for while, but eventually, and inevitably, the level of debt becomes unsustainable. Clearly we all hope the US economy will not reach such a stage. However, unfortunately this is a very real concern and one which would have very serious implications. From the Australian perspective, things would be very bleak indeed, since Australia’s economy is both highly dependent upon foreign direct investment, which comes, to a large extent, from the US, and foreign export markets, of which the US is one of our largest.