The Case for Universal Basic Services

How do we solve the coming decimation of jobs through automation? The solution of a Universal Basic Income has united both Silicon Valley libertarians and social democrats, offering a guaranteed income to every citizen. But the practical and political issues with the UBI mean it will only serve as a temporary salve for the underlying problems. Instead, progressives must argue for Universal Basic Services, drawing on the history of publicly provided health and education services to build a state fit for the 21st century.

 

Automation will put between three and five million jobs at risk in Australia by 2030. Some new jobs will be created, but the rise in baseline unemployment since the Second World War will continue, putting millions out of work. This structural change will require adjustment to welfare systems, or risk severing the social contract and plunging the reserve army of labour into wretched poverty.

 

The idea of a Universal Basic Income (UBI) has been around for some time, championed by Hayek and Friedman on the right, as well as Martin Luther King on the left. The idea is that every citizen would receive a basic stipend paid by the government. This would be paid for through the elimination of existing targeted welfare systems and tax increases on the rich to counteract their portion of the UBI. But because this idea has come separately from the left and right, there are two competing views of how the program should be implemented.

 

The social democratic version of a UBI would provide each citizen with enough money to fulfill their basic needs. Each person could then spend this income on the market, and this consumption would circulate through the economy, providing customers for businesses and allowing each person to allocate their money to maximise their own utility. Systems like the NDIS would remain in place to ensure that those with exceptional needs have those met. The social democratic UBI would keep everyone from absolute poverty and desperation. By ensuring that people’s basic needs are met, it would also allow more risk taking by entrepreneurs and artists.

 

But the social democratic vision of a UBI is not the only version of this policy.  The conservative vision of a UBI is as a trojan horse to dismantle the welfare state. Milton Friedman didn’t advocate what he called a negative income tax in order to eliminate poverty, but to serve his ideology of small government. Under a conservative vision, the basic income level could not be sufficient to live on, but would be kept as low as possible (like the dole) in order to ensure recipients are desperate for work. All other welfare programs would be abolished, meaning that the desperation for work would extend to the retired and injured. The UBI would also serve as a cudgel for cutting other government programs – for instance replacing universal healthcare with an increase in the UBI to allow for citizens to buy their own health insurance.

 

In a two party democracy like ours, these competing visions of a UBI would clash, providing conservative governments with justification for slashing public welfare and services whenever they are in power. For all the good intentions of a social democratic UBI, it cannot fail but be corrupted by the libertarian right. In a policy contest between social democrats who want to maintain welfare at a low but livable level and conservatives who want to push it as low as possible, the social democrats cannot win. The collapse in the level of unemployment and student benefits in Australia demonstrates this well.

 

Even discounting the political problems, there are practical issues with a UBI as well. The amount of funding necessary is substantial – if the current welfare spend was diverted entirely to UBI, it would provide each person with a little more than $6000 per annum, thus requiring spending to be quadrupled in order to reach the poverty line. Core to the idea of the social democratic UBI is to fund it with tax increases on the rich, but a $500B per year tax increase would be tough for even the most radical in the Labour Party to support.  It is more likely that the UBI is set to a much lower level, ensuring that it does not meet people’s living needs and functions like a conservative UBI in practice.

 

By relying on the market as a mediator, the UBI also introduces a slew of other problems. Much like first home buyers grants only serve to pump up the prices of homes, there is a real risk that a UBI will just end up in the pockets of landlords who can set higher rents at the bottom end of the market. The profit seeking motives of market intermediaries like this mean that a cash grant has to be higher than what would be required for the government to fund the services directly.

 

So why not provide Universal Basic Services instead? The state could provide basic housing, food, transport and communications in addition to existing healthcare and education services. The public sector already has recent experience in providing services in all these areas, from social housing to public transport and pre-privatisation telecommunications networks. The healthcare example demonstrates the cost savings which are possible through public services rather than those run for-profit – the UK’s NHS costs less than half that of the private US system. This would allow the services to be set at a genuine living standard while keeping tax increases to palatable levels. All the benefits of a social democratic UBI, but at a much more affordable cost.

 

Providing a non-market alternative in these basic areas would also have other benefits. The poor would no longer be anxious about whether they could afford the necessities, as these would be guaranteed. The public provision of these services would have unexpected benefits, like eliminating food deserts and homelessness. It would also help to combat alienation, allowing creatives to meet their basic needs without pandering to the whims of a fickle market. It may prompt a rethinking of the central role which markets play in our society.

 

Those who wish to seek their riches and luxuries on the market would still be able to, but those with other priorities would be freed from the drudgery required to make rent. Without this Sword of Damocles hanging over the worker’s head, they will be able to push harder for wage rises, whose stagnancy has been decried by even the Reserve Bank. In a society where basic needs are guaranteed one can forsee some in the  creative class eschewing the market entirely, enriching the lives of all. Entrepreneurs would not need to set aside funds for their own survival, helping startup businesses become established and providing a boost to innovation.

 

Universal Basic Services may reduce the incentives for people to undertake menial labour. Some would see this as a negative. But in a world of increasing automation, the demand for low skilled workers will contine to fall. UBS would make it easier for workers to retrain and build their skills in the new fields demanded by the market, helping fit them to the skilled work available. Critics will decry the program as enabling bludgers to watch TV all day, but is this any less valuable to society than them working as telemarketers instead? In an automated world with less demand for low skilled labour, we need to reconsider the nature of unemployment. I believe that the vast majority of people want to do socially useful work, and if this is community volunteering or their own creative projects rather than the alienating wage labour they are forced into at present then all the better for them and us.

 

Politically, there is no right wing case for the state to provide these services. So there would be no squabbling and compromise between the left and right over the level of service provided. History shows that once implemented, universal public services are very hard for any conservative government to repeal. By their universal nature, voters experience these services and understand their value – the whole population cannot be decried as ‘welfare queens’. Consider how the Labor Party was able to fight the last election solely on saving Medicare from privatisation, even though the Liberal Party had no such policy.

 

There is strong support for increased public spending funded by taxation on those who can afford to pay. Without action in advance of the job losses caused by automation, we risk severing the social contract and leaving swathes of the population in abject poverty. Universal Basic Services are a radical idea, but one whose time has come.

Beneath the Corporate Mask

Companies deploy elegant public relations masks in order to appear a positive influence on our society and lives. BP claims to deliver services that “help drive the transition to a low carbon future“. Northrop Grumman are “committed to maintaining the highest of ethical standards, embracing diversity and inclusion, protecting the environment, and striving to be an ideal corporate citizen in the community and in the world.” But beneath the hollow sheen of advertisements and corporate branding is an ugly demonstration of what is really important to the corporations who run our lives.

 

The infamous vampire squid – Goldman Sachs – released a report to investors on gene therapy developments a few days ago. In it, their analysts raised concerns with the profit potential of such companies, asking “is curing patients a sustainable business model?” Treatments like gene therapy do not offer the recurring revenues of the pharmaceuticals currently used, and “could represent a challenge for genome medicine developers looking for sustained cash flow.”

 

Those investors who can afford the fees of Goldman Sachs don’t want platitudes about corporate responsibility. The lives of those who might be saved with new innovations have no importance when there are profits to be made. These ghouls can extract more money from a patient who needs to take a pill every day for the rest of their lives than from one who can be fixed with a single treatment. The patient’s entire future earnings are available to pilfer, rather than just the savings they may have accrued to date.

 

This rigid focus on money and profits regardless of the consequences is not merely confined to corporate investors but has spread throughout our society. While public relations departments might paint a different picture, those who wield corporate power continue this rigid focus on economics. Petrochemical giant BP’s submission to drill for oil in the Great Australian Bight was recently unearthed, in which their real vision of the world was laid bare.

 

BP claimed that in the event of an oil spill, “in most instances, the increased activity associated with cleanup operations will be a welcome boost to local economies” with no social impacts. This displays the very same worldview as the Goldman Sachs report – that the only consideration is monetary. The massive environmental degradation which would result from any oil spill is of no importance, except that the locals might be benefit from temporary jobs cleaning the slick from their once pristine beaches.

 

Within the ideology embedded in our society, life is simply a game where each player’s score is measured in dollars. Profit isn’t just the most important thing. It is the only thing.

Book Nook – An Incredible Race of People: A Passionate History of Australia by Bob Katter

Bob Katter Jr is a riddle wrapped in an enigma topped with a cowboy hat. A man renowned for the social conservatism which led him to claim there were no gay people in his electorate, and yet who also criticises the Rudd/Gillard industrial relations reforms as not going nearly far enough in favour of workers. A man who lists as paragons ‘Red Ted’ Theodore and Ben Chifley but who served in the cabinet of Joh Bjelke-Petersen. The best way to understand a man is to listen to what he has to say, so I’m reading An Incredible Race of People to see if this enigma can be unravelled.

 

This is Bob’s history of Bob’s Australia, and he deploys a narrow but deep gaze upon the elements and characters which have crafted his vision of Australia. The informality of his writing style fits the oafish hick persona which Bob is happy to play up to the media, but the depth and range of references demonstrate a far wider range of scholarship than would be expected, and certainly more than that presented by Tony Abbott, by way of comparison. Nonetheless, this is a tale full of tough blokey men from the Queensland outback who weren’t afraid to ruffle the feathers of those ivory tower dwelling city-slickers.

 

Katter eschews the classical first fleet narrative and heads straight to Cloncurry’s founding and Queensland’s development in the late 1800s. Curiously for a man who served 26 years in parliaments for the National Party before splitting away, the story of early life in Australia is seen almost entirely through the lense of unions and the Labor Party fight for worker conditions. Bob lays down the depth of deprivation for regular workers in early 1900s Queensland, as large corporations like CSR applied their monopsony power to place workers in what he deems “almost like a master-servant relationship”. Against this corporate tyranny, ‘Red Ted’ Theodore and the AWU rose up to struggle for workers rights. We can begin to see the genesis of Bob’s political vision as he cheers on the actions of the Labor government to establish binding wage arbitration, redistribute land from big corporations to ordinary workers, establish a series of government owned abbotoirs and abolish the upper house of parliament.

 

Bob wants government to be an active participant in society, rather than a bystander and facilitator. Whether this is through direct public intervention like the Theodore government or through subsidy of private corporations as in the Bjelke-Petersen government is not important. He has no faith in the market sorting itself out. But along with this, he also has no care or conception for conflicts of interest or abuse of power. Aggressive and flagrant ethical violations are continually justified as the required actions of these great men of history. As Bob puts it, “the propriety of their methods was of little concern to a Bjelke-Petersen or a Theodore, men who had a nation to build.”

 

This talk of aggressive government intervention might bring to mind Fred Paterson and the communist presence in North Queensland at this time, but Bob is keen to draw a line between his heroes and the hard-left. Katter decries the “anti-win mentality of the left” who were “more interested in class warfare than development and prosperity.” In practice, this appears to be primarily a matter of mentality rather than policy for Bob, who happily cheers on Theodore’s vision of “an owner-operator society where men sold their labour through collectively owned means of production” and union direct action against scabbing as “a rallying point of victory and success by the Australian people”.

 

The Australian people’s fight in New Guinea is the subject of a fairly routine retelling, which tells us more around its edges and absences than in the bog-standard story. He dedicates a fifth of the book to this fight in World War Two, but mentions WW1 only in passing through the fight against conscription, and completely ignores any wars since. Again, this is Bob’s history of Bob’s Australia, an idiosyncratic tale. His nationalism comes through in his condemnation of the leaders who were subservient to Britain and whose actions which were more concerned with the protection of the motherland than Australia. But in the consideration given to Japanese anti-colonialist objectives he demonstrates a wider perspective than would be expected, especially from a book titled An Incredible Race Of People.

 

The core of Bob’s philosophy is best distilled through his lionisation of the Bjelke-Petersen government and what he calls Developmentalism. The environment exists to be exploited by man, and government’s job is to facilitate that. His heroes here shift to men like Les Theiss, Laurence Harnett and Essington Lewis (who was also raised as an exemplar by Andrew Leigh, subject of my last Book Nook), those who rose from working class origins to build companies associated with production and retained that connection with their workers. Government should be actively involved in building these companies, with tariffs, contracts and subsidy all considered.

 

These blokes are seen as underdogs fighting against the evils of foreign corporations, and are encouraged by government in order to ensure these industries are Australian owned. But with such a focus on development over other considerations, Katter is quite willing to let graft and insider trading slide as long as it is in the service of this ideology. The same Russell Hinze who resigned from parliament after damning reports of corruption to Bob “represented what Australian politicians should be.”

 

In Katter’s telling, Australia’s decline started with the ascent of Gough Whitlam. But this was not for the issues you might expect a conservative to take with the great reformer – Bob sees Whitlam as starting the rise of the ‘educrat’, politicians who were university educated bureaucrats rather than the traditional working class with “dirt under their fingernails”. The great issue which Katter takes with the Whitlam government is the unilateral slashing of tariffs. The protectionism implicit in these tariffs is core to the developmentalist philosophy which Katter espouses. So rather than my view of Whitlam as the last great social democrat, Katter considers Gough as the first neoliberal (which he terms Marketism, but is better known by the common term).

 

Since Whitlam, Bob traces the gradual growth of neoliberalism and free trade, demonstrating how these policies have hurt primary producers and the rural areas. He sees Keating and Costello as ideologues responsible for aggressive free trade policies and the National Party abandoning the party’s values in favour of this market-centred ideology. The willingness of these politicians to drop our trade barriers without corresponding reductions in subsidy from our partners comes in for particular opprobrium. Bob’s country focus delivers a perspective on these policies which city-slickers in the service industries like myself often fail to consider. In outback North Queensland where 25% of the population are employed in mining and agriculture is clearly the 2nd biggest employer, the impacts on these industries are critical to the survival and success of regional communities.

 

However, this focus also flows through into a complete ignorance of environmental issues. Although Bob is happy to stop importation of foreign foods to prevent the spread of disease, he sees these concerns only through the realm of production and development. He deems the World Heritage declaration of the Daintree Rainforest “an economic iron curtain”, blaming it for the suicide of former timber mill workers. When he puts forth his vision for the future, he suggests that rather than reducing irrigator water allocations to ensure flow through the Murray-Darling Basin, he would rather reduce the size of the Alexandrina and Menindee Lakes.

 

This future vision lays the environmental devastation which Katter supports clear. He sees massive geoengineering schemes, from a seawater canal between the Spencer Gulf and Lake Eyre to massive damming in Queensland and WA to create the conditions for massive sugar cane fields. Bob sees an Australia with a rapidly increasing immigration program, in order to build a country of 55 million people by 2037. He wants to be one of the great men he depicts, building Australia through massive infrastructure schemes.

 

But Bob’s history is also notable in what he chooses not to include. There are hardly any woman in his story, nor any mention of the vast change in womens’ status in Australian society. Social issues in general are scarce, as he focuses entirely on these great men of business and politics. This fits entirely with his political focus, but allows some of his more loathsome personal opinions to avoid scrutiny.

 

Fundamentally, Bob Katter’s vision of the world is rooted in the past. He is best seen as a pure conservative, looking to take us back to the days of his childhood in the 1950s, a world of big men with big egos building the nation on the sheep’s back. But unlike those who wear the trappings of social conservatism in order to camouflage an aggressive dedication to markets, the past Bob wants to return to includes strong unions, worker protections, government investment and acceptance of immigrants. With his prediliction for development regardless of the consequences, he certainly shouldn’t be allowed anywhere near the levers of power. But nonetheless, city folks should pay heed to the opinions of those like Bob who understand the impact of policy on regional areas. The National Party could stand to be closer to Katter’s prescriptions rather than those of Barnaby Joyce.

 

An Incredible Race of People: A Passionate History of Australia by Bob Katter was published by Murdoch Books in 2012. My copy was purchased 2nd hand at a Lifeline Bookfair.

Book Nook: Battlers & Billionaires by Andrew Leigh

Once a professor of economics, Andrew Leigh is now the MP for Fenner and one of the leading intellectual lights of the Labor Party. Having reached the shadow cabinet without the backroom benefits of factional alignment, he brings a vision beyond simple pugilistic politics to parliament. Andrew is also a prolific author, so I picked up his Battlers & Billionaires to see what insights could be gleamed from the unaligned man.

 

It is clear that Leigh genuinely cares about rising inequality in Australian society. He focuses this book tightly on it, providing a brief history of its colonial expansion, post-war contraction and recent explosion peppered with graphs and anecdotes. The conversational style he employs gives Battlers & Billionaires an easy-reading style which is sorely lacking in many books on the dismal science. The style may be new, but the story is instantly familiar to anyone who has read Piketty’s wildly popular Capital in the 21st Century, albeit localised to Australian conditions.

 

Leigh points at the globalised labour market, declining union membership and lowering of top tax rates as drivers, all of which are reasonably argued. However, in his assertion of insufficient education as a key driver of inequality, Andrew demonstrates an uncritical approach to economic theory which pervades this work. Consider how Leigh puts forth Goldin & Katz’s theory of the race between education and technology:

 

One of the most intriguing explanations of what drives inequality was put forth recently by the Harvard academic super-couple Claudia Goldin and Larry Katz. They suggest that we should think of inequality as a ‘race’ between technology and education. In eras when technological advances outpace schooling attainment, the gap between rich and poor widens. But in times when the quantity and quality of education increases, so too does inequality.

In the past generation, US educational attainment has stagnated while technology has continued to advance. Technology is winning the race, and US inequality is skyrocketing.

 

How does Thomas Piketty consider the same theory?

 

The most widely accepted theory is that of a race between education and technology. To be blunt, this theory does not explain everything. In particular, it does not offer a satisfactory explanation of the rise of the supermanager or of wage inequality in the United States after 1980. The theory does, however, suggest interesting and important clues for explaining certain historical evolutions.

In order to understand the dynamics of wage inequality, we must introduce other factors, such as the institutions and rules that govern the operation of the labor market in each society. To an even greater extent than other markets, the labor market is not a mathematical abstraction whose workings are entirely determined by natural and immutable mechanisms and implacable technological forces; it is a social construct based on specific rules and compromises.

 

This is the difference between one author who questions everything in order to rebuild from the empirical data and another who cannot see past the ideology embedded in orthodox economics. Perhaps comparing Leigh’s book with one which was published a year afterwards is unfair, but Piketty has rightly established himself at the heart of any modern discussion of inequality.

 

Andrew’s uncritical approach colours the remainder of the book and the prescriptions he draws. Any actions which swim against the orthodoxy are dismissed out of hand, as Leigh suggests that “capping CEO salaries might sound tempting until you recall reports from the 1980s and 1990s that bemoaned the low quality of Australian managers” and “few people would argue for reinstating the 60 per cent top income tax rate that prevailed a generation ago, which surely deterred some entrepreneurs”.

 

Without confronting the ideological backing for economic shibboleths like these, Leigh has little ammunition left with which to deal with the problem. Any conservative would be proud of the way he derails the book for a chapter bemoaning the decline of traditional families, trying to argue that unstable families are a cause of poverty rather than a consequence. He completely fails to grasp the purpose of private schools, suggesting that unintentionally “by privileging the children of ‘old boys’ and ‘old girls’, such schools are reducing the amount of social mobility in Australia”. That is of course the entire point of private schools – to segregate the rich from the poor and entrench existing class hierarchies.

 

So after demonstrating both the importance of and public support for reducing inequality, we finally reach his solutions. Andrew asserts that in order to reduce inequality, we need to:

  1. Maintain the policy of open markets and encouraging innovation which have delivered economic growth over the past decades.
  2. Improve our education system, particularly for those from poor backgrounds. There should be incentives for the best teachers to work in the most disadvantaged schools.
  3. Encourage relationship stability with light-touch programs that encourage more ‘concerted cultivation’ in the most disadvantaged households.
  4. Recognising the role of trade unions, perhaps with laws that give them the chance to pursuade new employees to sign up.
  5. Make sure that welfare spending continues to be targeted at those most in need. Ensure that everything is means-tested.
  6. Maintain a progressive income tax system.
  7. Evaluate social policies more accurately with randomised trials.
  8. Keep egalitarianism at the heart of our national story.

Despite his thorough history of inequality and genuine passion for reducing it, Andrew has become so boxed-in by orthodoxy that he can’t offer any meaningful solutions. The underlying assertion is that as long as we don’t actively make things worse, inequality will fix itself. Never mind that expanding means-testing will only serve to stigmatise recipients, if structural change or even raising taxes on the rich have been ruled out by ideology then these limited measures become the only option. Leigh exemplifies the problems inherent in the modern Labor Party’s vision, which is so wedded to neoliberal economics that no matter what concerns they may have with the outcomes, the policy prescription cannot be changed.

 

I can’t entirely condemn Andrew Leigh. On a fundamental ethical level he gives a damn about inequality and its growth in this country. This book may even convince those on the centre-right to care about it. Given the paucity of public intellectuals willing to commit to policy discussions rather than backroom gossip, his intent to spark a discussion with this book is laudable. But without a willingness to confront one’s own ideology, intent can only go so far.

 

Battlers & Billionaires by Andrew Leigh was published by Redback in 2013. My copy was loaned from Queanbeyan-Palerang Libraries.

Q&Alt-Right

The ABC is under intense scrutiny from News Corp’s battery of scribes to avoid any hint of a leftward lean. Prime Minister Turnbull’s office felt it necessary to directly intervene against Emma Alberici’s analysis of tax paid by corporations. It seems his office thought that too much emphasis was placed on company revenues rather than profits, creating the impression that these companies were tax dodging freeloaders, rather than legitimately tax minimising freeloaders.

 

So in the wake of such scrutiny on ABC partisanship, I was intrigued to see this week’s edition of their flagship discussion program, Q&A. Q&A brings together a panel of guests from across the political and media spectrum to face questions from a general public audience, and in concept is an excellent idea to encourage political accountability and debate within the country. In practice, it felt like I’d stepped into a Sargon of Akkad live stream.

Continue reading “Q&Alt-Right”

Are Markets Democratic?

The pricing mechanism inherent in markets allows each consumer’s choices to influence the success of a product or company. Conservatives and liberals both assert that product boycotts and consumer activism are effective ways to have our voices heard. Liberals boycott companies associated with Trump’s business empire, while conservatives employ the same tactics in support of their own aims. Nobel prize winning economist Milton Friedman asserts that markets, unlike political channels, permit wide diversity through a system of proportional representation – “each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit.”

 

But just how democratic are markets?

 

As an example of a democratic system we can consider the Dutch House of Representatives, which has 150 members chosen through proportional representation. Each citizen is eligible to vote and each gets only one vote. Every citizen’s vote has the same value. After the votes are tallied, the seats are allocated to parties in proportion to the number of votes they received using a quota method. This gives a diverse representation of people’s views, from the People’s Party for Freedom and Democracy, supported by 21.3% of people in 2017 for 33 seats (or 22% of the total) right down to the Forum for Democracy, with 1.8% of the vote and 2 seats. The way in which each vote is counted varies between systems (for instance in Australia, where our votes go towards the winner of each geographical seat), but the central principle remains. We are all equal. We all get just one vote, regardless of status.

 

In the analogy of markets to democracies, each dollar is a vote. A consumer boycott campaign reduces a company’s profits in proportion to the number of dollars which aren’t spent. The simple number of people boycotting the company makes no difference. A support campaign acts similarly, increasing the company’s profits only in proportion to the additional dollar spend of the supporters. We can only continuously spend the money we earn, so both our ability to reward and punish companies in the market is tied directly to our income. A person’s disposable income determine’s the value of their vote and thus their voting power within the market.

 

In a perfectly equal society then, markets would then be democratic with each consumer having equal voting power. Unfortunately, our society doesn’t come close to this ideal. As a simple example, women in Australia earn 87% of what men do. So when voting in the market, on average a woman’s vote is worth only 0.87 male votes, as they have proportionally less dollars to spend. Consider a company which might take a sexist stance in their advertising. They could gain 1000 male customers and lose 1100 female customers, yet the market vote would deliver them more profits through the higher average incomes of men, even though more people disagree with the stance than support it.

 

The gender pay gap, though real, is small compared with the discrepancies which exist across other strata of society. Consider the income distribution in the USA: The top 10% of people have 47% of the income, while the bottom 50% of people have only 13%. This means that the average person in the top 10% has 18x the market voting power of their counterpart in the bottom 50%. A boycott by half the population could be cancelled out by the top 10% each increasing their spend by just under a third. Markets don’t care who the dollars come from, just that they keep flowing in. To correct Mr Friedman’s analogy, each man can indeed vote for the colour of tie he wants, but only the wealthy man gets it; the poor man with little market power can only hope that some rich men share his views.

 

Investments provide an even starker image, as a consumer’s voting power there is determined not by their income but by their wealth. The wealth distribution everywhere is more unequal than income, and again the US data is illustrative. The top 1% have 39% of the wealth, the next 9% (from 90-99% in the distribution) have 34%, while the bottom 50% of people have a combined net worth of zero. So the direction of investment is almost entirely determined by the top 10%, with the poorest 50% able to provide no input whatsoever. Is it any wonder that venture capital continues to demonstrate itself entirely out of touch with real people? Why tech entrepreneurs continue to ignore women, people of colour and the poor? In a society built around markets, those with no money have no say.

 

We do have a word for this kind of system, where a small elite has all the power. But that word isn’t democracy. It is an oligarchy.

Pokies

The prospect of gambling brings to mind the glittering lights of Las Vegas, but its real home is a dingy RSL club in Western Sydney. Here, countless desperate folks see their only chance at escape within the tawdry reels of what is euphemistically called ‘gaming’. These dens of inequity ensnare the poor, the uneducated and pensioners with little to live for but the promise of riches through feedback specifically designed to trick players into taking just one more spin. Loyalty programs turn saps into VIPs and give them a free spin every visit to re-engage those gambling faculties and maintain the addiction cycle. Australia leads the world in gambling spend per person, thanks to these obiquitous poker machines. We spend $1,273 per adult each year on gambling in this country. More than half of this expenditure is taken up by the particularly loathsome category of poker machines.

 

Australia has the second highest number of poker machines in the world, 195,631 at last count which places us second only to the USA (but with a much higher number per capita). This makes one poker machine for every 95 adults. Of those machines, nearly half are in New South Wales, which records an abominable machine per 65 people. Consequently, the average New South Welsh adult loses $1,580 per year gambling(roughly 2/3 of that on the pokies), or about $30 every week. We lose $23.7B each year on a turnover of $204B to the gambling industry. To put these numbers in perspective, the agriculture industry earned profits before tax, depreciation, etc of $21.1B last year, while the construction industry earned $43.2B.

 

What these statistics conceal however is that not all of us gamble. The HILDA survey found that 8.1% of Australians play poker machines once or more a month. So neglecting the (likely only small) losses of irregular players, each poker machine player loses $8,023 a year on the pokies alone. Eight thousand bucks per person per year, so more than the average household spends on electricity, gas, clothing, footwear and telecommunications combined! Losses per player are likely higher within NSW alone, but HILDA doesn’t break down participation to state levels. Even worse, the HILDA survey asked gamblers how much they thought they spent on a monthly basis. Pokie players underreported their losses by a factor of six compared with the industry data, demonstrating how the tricks of the machines cause addicts to lose track of their spending.

 

HILDA does break down demographics, so we can see who these players are. Poker machine gamblers are disproportionately poorer, less educated, more likely to be indigenous, of lower socio-economic status, older and more likely to be on government assistance than the general population. So those who are compelled to throw their money away are also those who can least afford it. Pokies steal from the poor addicts and give to the rich owners of these suburban casinos, who are commonly professional sporting teams. This isn’t just a moral issue, but also one of social justice.

 

How have we got to the point where pokie addicts each sacrifice eight thousand dollars every year to these one armed bandits? Governments are well aware of the clear and present harm which they are doing to the community, with multiple studies undertaken and maverick NXT leader Nick Xenophon starting his career as a ‘No Pokies Independent‘. One major problem is that state governments have themselves become addicted to the taxes pokies bring in. Government revenue from gambling comes to $6B across the country, making up around 8% of taxation taken in by the governments of New South Wales, Victoria, Queensland, South Australia and Tasmania and 12% in the NT. Both major parties have also been given hefty donations from hotels and clubs, with $6.6M donated to Labor and $4.4M to the Liberal and National parties since 1998. This includes $3M just from Clubs NSW (split $1.2M to Labor and $1.8M to the LNP), the statewide representative group for the clubs which hold most of these machines. So there is quite an incentive to maintain the status quo.

 

Is it any wonder that the government’s committment to problem gamblers focuses entirely on overseas online sports betting, which accounts for only a small sliver of the gambling pie? Or that the most recent Productivity Commission report into gambling found that “people’s willingness to pay for gambling over alternative products reveals their underlying preferences” rather than addiction and so “gambling provides significant enjoyment for many Australians”, in a classic case of the economist’s ignorance of reality? Both governments and the parties who run them have been entirely captured by this callous industry which sells an illusion of glamour coating an exploitative core.

The Russia Excuse

The election of Donald Trump was the rebel yell of the forgotten seeking an alternative to the neoliberal status quo. Any alternative. He not only smashed the overton window, campaigning on policies which were outside the narrow acceptable margins, but his manner was also entirely outside the established norms. For a press which is more used to challenging politicians on procedural rather than policy grounds, these mannerisms were particularly offensive. Democratic pundits and pollsters refused to believe that such a man could win. When faced with the choice between four more years of status quo neoliberalism and a loose cannon promising to drain the swamp, the disenfranchised masses opted for the Trump, hoping for a wrecking ball.

 

The liberal press and democratic establishment still refused to believe it. An odious man who refused to hide his racism and sexism behind any of the obligatory smokescreens could not beat their golden girl, the pre-ordained first woman president. In the world of Red Brand versus Blue Brand, each occupying the sensible centre with a different sales pitch, such a result was unthinkable. So they rejected reality and substituted their own.

 

The conservative right understood that politics was a class war rather than a beauty pageant, as demonstrated by the rise of the Tea Party. The liberal media and political establishment instead had so thoroughly oriented themselves towards the market that even elections were understood as a marketplace of ideas, one where facts and reasonableness would outshine emotional appeals. Educated coastal elites saw Trump’s statements fact-checked and the charlatanry at the core of his being digested by the media. But desperate folks in the rust belt left behind by neoliberalism only saw a successful man promising that he alone could fix their problems. Whatever his faults, he offered the strugglers something different, the chance of something better. With the status quo offering only continued despair, these folks grabbed onto the only life-raft they were offered.

 

If America was already great, as the Clinton campaign asserted, then there would be no reason for these folks to make such a desperate choice. With Democrats having controlled the presidency for 16 of the past 24 years, the degredation of the rust belt couldn’t be palmed off as the fault of the conservatives. It was the direct result of neoliberalism; of the third way policies which liberals had espoused. Their governance, supposedly from the left, had driven the poor to such desperation that they were willing to burn it down and start again. This was understandably hard for the liberal establishment to accept.

 

But what if the people didn’t really vote for Trump? Then the illusion could be maintained, the crippling effects of neoliberalism on communities could be ignored again. America was already great so the electoral college couldn’t be blamed, nor the other absurdities of the voting system (Tuesday elections, first past the post, etc). The problem had to be international. ‘Fake News’ provided an initial suggestion – scammers from Macedonia were duping Americans with misinformation. But between the adoption of the term by Trump against those who criticised him and the generally dreadful quality of the US media, this couldn’t be sustained.

 

Who had they been trained from birth to fear? The Soviet Union. Nothing riles up Americans like a good old fashioned red scare. Despite the absence of anything remotely socialist in modern Russia (thanks in part to US support for Yeltsin selling off the state to his oligarchic mates), Putin’s KGB history provided enough connection to tap into a fear which has been built at a cultural level. So the spectre of Russian hacking was invoked, which went down a treat with the public. Throw in any past connections between Trump and Russia to demonstrate this, and you’ve got a media show which can go on for months. America is already great, our neoliberal policies are fine, but our nefarious enemies will do anything to stop us.

 

Updates on the Mueller investigation are given pride of place daily in the American media, with much of the remaining space for politics taken up with disgust at Trump’s Twitter feed for breaking political norms. This has effectively crowded out discussion of what the regime is actually doing, which is mostly the very same neoliberalism the Democrats support. The Trump administration sells weapons to Saudi Arabia to use in their war on Yemen. So did Obama. Trump gave a massive tax cut to business. Obama cut tax on business too. By moving the focus to Russian interference, the liberal and media establishment can avoid discussing the failures of neoliberalism which Trump continues to perpetuate. By avoiding policy, they starve the oxygen from other challenges to the status quo. Massive corporate donations to the Democrats would be lost without support for neoliberalism, while the media is increasingly owned by oligarchs who favour business interests.

 

Russia probably did try to influence the election. Anything which shows democracy as chaotic supports Putin’s autocratic rule at home, and a reality TV star as US President certainly fits in that category (as does Brexit). But to suppose that this is a calamitous injustice as the extent of coverage suggests is to be willfully ignorant of recent history. The Soviet Union didn’t just post fake tweets, it actively ran political parties promoting its interests overseas. But while the Soviet/Russian state interfered in 36 foreign elections between the end of World War 2 and 2000, one other country managed more than double that number, with 81. That other country? The United States of America.

 

US interference in the affairs of other nations goes far beyond just intervening in elections to support their interests. The American state apparatus has supported coup after coup, from Iran to Guatemala, Chile to Grenada and across the world. For the US establishment to suddenly consider Russian email hacking to be beyond the pale shows either complete ignorance or breathtaking hypocrisy. But when their media has continually downplayed the extent of US involvement in these actions, one can understand the American public playing along. The conflation of freedom and free markets has propagandised these folks to believe the US is the capital of democracy rather than of the unrepentent capitalism which has driven 13% of their population into poverty. So they swallow the line and wait with baited breath for each update on the Mueller investigation, hoping that this leak will be the one which sinks Trump. Then democracy and civility will be restored, as a less vulgar Republican continues with the policies which drive the shrinking middle class into destitution.

The Unexamined Lives

We are all free to choose our own purpose, our own values and to make our lives our own projects. In a world without godly codes, everything is permitted and it is up to us both as individuals and as members of the greater mankind to decide what is good and just. Our own choices and actions demonstrate what we see as good, and our society’s conception of ‘good’ is the sum of our individual choices. So far, so Jean-Paul Sartre. But most of the folks who make up our society don’t ever actually consider their values or examine their lives the way a bourgeois philosopher might. How many amongst us have ever really considered the meaning of their lives beyond simple surface level goals?

 

For most of us, our values aren’t defined by a heady contemplation of ethics – we muddle along and try to make the best of the limited information which is readily available. At best, our ethics are informed by looking at parents and role models, at worst by simple osmosis from the society in which we are immersed and only in the case of rare individuals through active contemplation. So if, as Sartre asserts, “everything happens to every man as if the entire human race was staring at him and measuring itself by what he does”, what happens when the bulk of people are not actively choosing, but merely being swept along in their unexamined lives?

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Marriage Equality Predictors

The ABS released the results of Australia’s survey into the legalisation of gay marriage today. The headline result was a win for the ‘Yes’ vote, with 61.6% of the vote which should translate into legislation in the near future. Thanks to the release of data per electorate, we can also use this to take a look at what sorts of communities were more supportive of the change. As a pure issue of social liberalism versus conservatism, this gives us the opportunity to consider positions of groups of people solely on an axis of social issues, rather than conflating them with economic issues as is the case in general elections. As the data is only detailed down to a per electorate basis however, we do need to consider that across an electrorate there may be substantial variation as well as a cacophony of variables acting in multiple ways, so these are certainly guides rather than anything genuinely scientific.

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