Friday, November 04, 2022

The Albanian thinks democracy is under threat

He is too sweeping. He himself is a very popular leader and Scott Morrison must the be the most wishy washy authoritarian ever. So where is the threat to democracy in that?

The USA could be a better case for a breakdown of democracy, with the Left going all out to suppress conservative comment. They have censored one of my blogs, even. But the election underway there at the moment will see the Left lose control of Congress so that will put a stop to any new moves in that direction

Russia, Iran, China and the African and Arab states are a different matter, of course. Democracy has never flourished there

Anthony Albanese says the hammer attack on US Speaker Nancy Pelosi’s husband, Paul, is a symptom of the increased polarisation and extremism of political discourse across the West.

“The attack on Mr Pelosi was horrifying – to think that something like that could happen,” the Prime Minister said in an exclusive interview.

Mr Albanese described dem­ocracy as “fragile” and said the contest between democracy and authoritarianism was part of the broader strategic competition between democracy and the various different types of authoritarianism around the world.

“Democrats have to stand up for democracy; we can’t duck these issues,” he said.

Mr Albanese was critical of his predecessor, Scott Morrison, for not denouncing former US president Donald Trump for inspiring the riots on Washington’s Capitol Hill on January 6 last year by supporters who believed the presidential election had been stolen.

“Then prime minister Scott Morrison was alone, really, among democratic leaders in not calling it out; in the UK, France, Germany, Canada, it was called out and it should have been,” he said. “The circumstances in the US, with people almost in paramilitary gear, is a concern. That concern has been expressed, quite rightly, by President (Joe) Biden.”

Mr Albanese said he has been worried for years about increasing extremism and intolerance in political exchanges.

“Much of the debate in politics generally has got far worse” during the quarter of a century he had been in parliament, he said.

Mr Albanese has drawn attention to increased polarisation, to people suffering “conflict fatigue”, and to the role of social media.

“The way political discourse is being conducted is far less civil. I think it is of real concern,” he said. “I can look at any time at a ­social media feed of mine and find something (in response) that is completely over the top.

“You see the rise of social media where people, sometimes anonymously, behind anonymous handles, will say things that they would never say face-to-face. “That then leads to responses and to an escalation that is ­extraordinary.”

All of this, he said, had a damaging effect on politics itself. “It undermines people’s participation in the process,” Mr Albanese said. “I think for young people considering going into politics, they’ve got to worry about what will be said about them. They’ve also got to worry about what’s on their social media feed from 30 years ago.”

Such entries furnished “gotcha” moments to be used against people, he said. “We’re going to end up with no one who has ever done anything interesting participating.”

The Prime Minister also called for media companies to take a more discriminating attitude to what they allowed to be published and broadcast: “Some of the media commentary is far more aggressive and I think that media operators have a responsibility to be more responsible about that.”

He contended that much of the political debate carried out on social media was far too ­simplistic: “A lot of these issues don’t have a 24-hour time grab, or don’t have an easy sound-bite grab. Dealing with the energy crisis, for example, is not a simple thing.”

Most of all, he wanted people committed to democracy from all parts of the political spectrum to behave with civility and to defend democratic principles.

“Sophistication in political dialogue is an asset,” he said. “It’s something that we have that differentiates us from the lack of political discourse in Russia, for example.”

Mr Albanese made his remarks as part of the most wide-ranging and forthright interview he has done on foreign policy and national security since coming to office in May.


A tertiary tragedy

Of the assorted areas of life that have deteriorated over the neoliberal era – energy costs, health, and trust in institutions – has there been a greater erosion in esteem than that of higher education? The state of the Australian academy evokes Oscar Wilde’s refrain that’s all that’s now known is ‘the price of everything and the value of nothing’.

This wasn’t always the case. Australia – given our history – has never been an apogee of the intellect. Our Anglo-European inheritance did once furnish us with an estimable academy, but we were one of the first places in the modern world to establish secular universities in the spirit of the Athenian model, and one of the first to offer tertiary education to women.

The establishment of an Australian academy was, as Governor-General Sir Charles Fitzroy remarked upon the founding of The University of Sydney in 1850, a development undertaken for the ‘advancement of…morality, and the promotion of useful knowledge’; an institute erected ‘for the promotion of literature and science’, with entrance not contingent on religion nor social-status, but on ‘the basis of academic merit’, as MP William Wentworth would confirm.

It was a noble intention that would come to fruition as our academy spawned a range of world-renowned figures. Inter alia, the Princeton philosopher Peter Singer and entertainer – and Dame Edna herself – Barry Humphries emerged out of The University of Melbourne. While at The University of Sydney, the Kid from Kogarah, Clive James, and acclaimed art critic Robert Hughes were fellow alumni back in the 1950s. Other notable names, like opera singer Dame Nellie Melba and Nobel-prize-winning author Patrick White, were an integral part of our academic and artistic milieu.

The Australian academy – including the CSIRO – was also the site of inventions of major historical importance. It’s no exaggeration to say that without Australian inventions – like Wi-Fi, the bionic ear, or the airplane ‘black box’ – many of the advances and comforts of modern life wouldn’t be with us.

Yet such developments are a far cry from our current academic state. Alongside a decline in public literacy and numeracy – even among teachers – and a deterioration in school performance, as evident in our PISA results, hardly a day goes by without a major malfeasance at one of our tertiary institutions.

As a recent article in The Australian starkly observed, the Australian ‘education experience is just a sham’ with plagiarism and cheating rife. Alongside sector-wide contract cheating, there are now common examples of students who’ve faked their way through their entire degree.

There is a favoured method involving students bypassing university plagiarism software by employing ghostwriters in poor yet English-proficient places like East Africa. As one ghostwriter remarked: ‘I have some students who I have worked for since their first year and I’ve done all the assignments until they graduate.’ Adding that what really worried him was the ‘the medical students who have never done even one assignment since their first day’.

Like our ‘Most Liveable Cities’ crown, our position in the recently-published Times University Rankings is a partial reflection of our institutes and not a more acute gauge of the whole. Indeed, 60 per cent of these rankings are based on the narrow notions of research and citation, while only 30 per cent is given over to the more fundamental practice of teaching.

On top of this are increases in class sizes and a decline in academic standards, with the latter evident in the fall in the use of final exams and the consequent increase in group assignments. That is, assessments designed to help weaker, overwhelmingly foreign, students slide through on the coattails of their more competent classmates.

Universities are now engaged in a sleight-of-hand in which the content remains the same, yet the onus is taken off the individual. For as commentator – and ex-student – Meshel Laurie noted of her university experience: ‘It’s a neat trick: group assessment (with groups allocated by instructors) in courses overloaded with full-fee-paying, non-English speaking students means the English speakers bear the burden of catching the others up, translating the course content for them, and helping them pass.’

Thus – like our cities’ ostensible liveability – our university results are useful fodder for the marketers; but in reality, our universities are the educational equivalents of fast-food outlets whereby an outwardly attractive appearance belies the utter lack of sustenance found within.

Given such sophistry, what has caused this fall from grace? And why it allowed to persist? The sad fact is that in opposition to the crucial role that is still performed by parts of our universities in training our doctors, lawyers, and engineers – vast swathes of the sector are now nothing more than a warehousing program for young and a ‘degree factory’ run along economic lines for favoured interests.

Of these interests, the biggest beneficiary has been the foreign students themselves – particularly those from the developing world. Our top ten source countries are dominated by nations from what was once known as ‘third-world’ with the top three – China, India, and Nepal – comprising well over 50 per cent of our overall annual intake. It is a fact made more acute by the rapid increase in total numbers, with the amount of international students in Australia almost doubling between 2010-20.

Australia has by far the largest per capita presence of foreign students of any place in the world, at over a quarter of our tertiary cohort. Our universities have come to function not as a place of education, but as a means to a first-world wage and living conditions, and an indirect route to permanent residency: with a sizeable minority of ‘students’ (around 16 per cent) obtaining residency after their studies.

This trend is further reinforced by the vast numbers who don’t obtain residency, but who nevertheless stay on in one form or another: with ‘more international students than ever…remaining in Australia for up to four years on graduate work visas following their studies’. The figure is made worse by the non-negligible number who – both here and in the UK – simply overstay their visas and remain here illegally.

A cynical interpretation could be that these things don’t really matter, as long as such incidents remain isolated and the integrity of the academy remains. Yet unsurprisingly, the entrance of a raft of non-native students into a nation’s tertiary-education sector, often with little knowledge of its history, culture or customs – or even its language of instruction – has not proven salutary.

English language requirements are often forged and pre-university preparatory courses are little substitute for years of immersion in the ideas and idiom of instruction. Some students even regress in their English the longer they are here, rarely leaving their first language enclaves of their home and place of work.


Gas price caps a cure worse than the disease

When a good becomes scarcer, the logical response is to reduce its demand and increase its supply.

The “solutions” that are being floated to the recent surge in gas prices would do the exact opposite. Were the price spikes merely transient, the resulting damage might be acceptable. There is, however, no reason to believe they are a passing phenomenon.

It is true that the higher prices reflect the war in Ukraine, with the sanctions on Russia unleashing a worldwide scramble for alternative sources of natural gas.

But the sanctions are not about to be lifted; and even if they were, the supply disruptions will have a lasting impact in making relatively stable producers, such as Australia, more attractive to global buyers.

As those buyers switch from less to more reliable sources, demand for our exports will increase, placing added pressure on domestic gas availability and further raising prices.

The Albanese government will therefore face mounting calls to intervene on consumers’ behalf. The question is whether it can do so in ways that facilitate, rather than impede, Australia’s adjustment to the gas market’s new realities.

The strongest case for intervention is in respect of households. While welfare payments are indexed (and hence will adjust automatically as rising energy prices push up the consumer price index), most residential consumers remain fully exposed to price hikes. The Ukraine war and its consequences for energy bills are hardly events they could have insured themselves against; it can make sense for the government to step in as an insurer of last resort, smoothing the cost of wars, like that of pandemics and natural disasters, over time.

Providing low and middle-income earners with cash transfers that offset the war-related component of the price increases would be the best way of fulfilling that role. As consumers would still face the higher prices, their incentives to economise on energy would be undiminished, particularly if the transfers were clearly time-limited. Overall, the adjustment process would be neither slowed nor blunted.

In contrast, the approach many European countries have adopted of subsidising and/or capping power bills is administratively simpler but – unless the subsidies apply only to a basic level of energy use – has the perverse effect of boosting energy demand, aggravating the underlying problem.

The case for assisting commercial and industrial users is much weaker. Unlike residential consumers, whose incomes are largely fixed in the short term, businesses can raise their prices – and when cost increases affect entire industries, they typically do.

To that extent, their viability is determined through changes in the level and structure of prices. Moreover, because it is the firms that make the greatest use of gas that will have to raise their prices most, allowing the price mechanism to work will shift demand from energy guzzlers to more energy-efficient firms and products, curbing gas consumption and dampening the price spikes.

A hands-off approach consequently has compelling merits. But that is not going to quell the calls for a mandatory code that forces the major gas exporters to supply part of their output to the domestic market at a low, administratively determined, price.

Viewed in historical perspective, those proposals are a throwback to the days before the Fraser, Hawke and Keating governments progressively dismantled the byzantine regulations that kept the prices domestic oil and gas producers received below world levels. Unfortunately, in a far more globalised market, the current proposals could prove even more harmful than their unlamented predecessors.

To begin with, even assuming the schemes were workable, the assistance they provide would be completely untargeted. Far from rewarding firms that had economised on the use of gas, the largest benefits would flow to the firms that had cut back least; as those firms used the subsidies to displace more efficient rivals, overall productivity levels would fall, and living standards with them.

Nor is that effect likely to be trivial: in his classic study of broadly similar schemes, Yale’s Paul MacAvoy found those misallocations meant that each dollar in mandated sales cost the economy two.

Compounding the damage, artificially low, capped, prices would encourage gas to be used instead of other energy sources, whose prices would remain more volatile. Domestic demand for gas would therefore rise, slashing national income both by forcing gas producers to forgo higher-priced export sales and by promoting a use of resources that took no account of relative costs.

And as firms locked in gas-intensive methods of production, repealing the scheme would become ever harder, perpetuating the damage.

Last but not least, retrospectively imposing the proposed mandates on the gas exporters would deter new investment by directly reducing their profits and increasing sovereign risk.

The proponents of these schemes strenuously deny that investment would be chilled. But as far back as 1980-81, assessments by Treasury, the Industries Assistance Commission and the OECD all concluded that the two-price schemes had (in the words of the OECD) helped precipitate the “sharp decline in exploration activity throughout the 1970s”. To believe reinstating them in new form would not undermine the development of desperately needed supplies is as inconsistent with decades of careful analysis as it is with common sense.

As a result, were the proposals adopted, we would find ourselves in the worst of all possible worlds: greater demand, lower supply and pervasive inefficiency.

Despite that, the government may eventually feel obliged to increase the domestic availability of gas, particularly to the major industrial users.

In that event, it should purchase the gas at world prices and then require those users to bid for it in a competitive auction. That would ensure the gas went to the firms that expected to extract the greatest value from its use – and unlike the proposed schemes, whose economic costs are completely opaque, the difference between the amount taxpayers had paid for the gas and the receipts from its sale would transparently indicate the subsidy that was being provided.

In the end, if the current crisis is as deep as it is, and the prospects so alarming, it is because our gas market has been comprehensively distorted by ill-conceived policies.

Governments have stymied gas supply by prohibiting onshore development – while greatly increasing gas demand, both by encouraging the massive deployment of renewables (which, being highly intermittent, had to be matched by quick-start, gas-fuelled capacity) and by accelerating the decommissioning of coal-fired plants.

It is therefore hardly surprising that the lights are now flickering – nor that when they’re on, they are scarcely affordable. With year after year of failed interventions finally coming home to roost, squaring the error would be the greatest folly of all.


Wishful thinking about wind and solar is going to come up against reality soon ... and there will be a world of pain in the awakening

This time last year one bitcoin was worth more than $98,000. Today it is worth just more than $32,000, a 60 per cent decrease in 12 months. If you were around or were involved with cryptocurrency communities a year ago, it was common to see and hear vainglorious claims about the potential of bitcoin to replace the US dollar, revolutionise the financial industry and save the world.

Much of that rhetoric has quiet­ened after this year’s crash, which has wiped nearly $US2 trillion ($3.14 trillion) off the cryptocurrency market. But the pain felt by everyday retail investors who bought into the hype and risked (and lost) their savings remains real. Go online to Reddit forums and one can read stories posted by real people describing their investment in crypto as the biggest mistake of their life.

Story after story shows ordinary people glimpsing financial freedom, only for it all to vanish in a matter of hours during the crash. At one point during the market collapse this year, the top-voted post in the Reddit cryptocurrency forum was a link to a suicide prevention hotline.

In a recent podcast with psychologist Steven Pinker, respected 98-year-old investor Charlie Munger says the biggest mistakes he has made in his long career were born out of wishful thinking.

Wishful thinking is the bias we succumb to when we are unable to separate what we want to be true from what actually is true and what is rational according to the evidence we have in front of us. At its core, wishful thinking is an inability to deal with reality as it is and an unwillingness to update our beliefs when new evidence emerges.

In financial bubbles, the wishful thinking of a single investor multiplies. When we invest in an asset or industry with all of our friends, and we all want the same investment to succeed, wishful thinking dovetails with conformity, creating what I call “wishful groupthink”. When wishful groupthink is infused with politics and ideology, it becomes cult-like, impervious to reason and impervious to new evidence.

The cryptocurrency bubble is one of many examples of wishful groupthink. Another is the overwhelming hype associated with renewable energy technologies, specifically wind and solar. While the scaling up of such projects in Australia is remarkable – and the increasing output of clean energy impressive – much of the ideological rhetoric remains overcooked, overhyped and down­right irresponsible.

It is claimed by Climate Change and Energy Minister Chris Bowen and the teal independent MPs that renewable energies will a) reduce emissions and b) make Australia a “renewable energy superpower” while c) creating jobs and d) lowering power bills – all at the same time. It would be nice if this were true. And it is understandable that many people want this to be true. But reality has a way of making itself known, and much of this hype eventually will lead to pain.

The claim that the renewable energy industry will create a surplus of jobs (notwithstanding those jobs that will be lost when coalmines shut) lacks specificity. The assumption seems to be that once coalmines close, miners who may be used to living in one location, with families and community connections, suddenly will want to move from place to place as itinerant construction workers. Of course, this might happen. But it is by no means guaranteed. In reality, this is a risky bet. But our government presents it as a sure thing.

While the claims about job creation seem overhyped, the assertions that solar and wind will lower our electricity prices are far more irresponsible. It is true that renewable energy is cheap on sunny and windy days. But it is also true that on such days wind farms and solar panels deliver excess energy that stresses the electricity grid.

The 2016 blackout in South Australia was found to be caused partially by the shutdown of the state’s wind farms due to volatile weather, in particular excessive wind. So while solar and wind can deliver abundant energy at certain times, and while this abundant energy may be cheap, the mistake is to assume this translates into cheaper energy bills. It doesn’t because when the overall system is stressed, more intervention is needed, and more intervention naturally leads to higher prices. How could it not?

But what about batteries? Batteries are great, but they need to be built before we can use them and almost every country is scrambling to build batteries at the same time. This demand drives up prices. The idea that such costs will never be passed on to the consumer is fanciful.

Many claims about renewables, as with cryptocurrencies, sound grand in theory. String a few abstract concepts together, sprinkle with jargon, marinate in ideology and boom, a claim can sound plausible to the untrained listener. And while it may be true that we need to transition to renewables to meet our net-zero obligations, and that we can scale up solar and wind rapidly with enough government subsidy, this by no means guarantees cheaper power prices for consumers or ensures jobs for those bearing the brunt of the transition.

It would be better if our leaders, and the Energy Minister in particular, were honest with Australians about the pain and hardship our energy transition will bring. Given that the public is overwhelmingly supportive of action on climate change, this would be real leadership, which might be rewarded by the elect­orate. But concealing the difficulty and engaging in wishful thinking will lead only to more shock and anger down the track when promised outcomes fail to materialise.

As Munger says, to be rational we need to “recognise reality even when you don’t like it – especially when you don’t like it”.




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