Where does the money come from to pay for education in PNG?

I didn’t have any intention of thinking about economics a few weeks ago when I was on a cruise ship, the Sun Princess, visiting Papua New Guinea and the Solomon Islands. It just happened.

 If you spend a lot of your life thinking about anything you find interesting you don’t necessarily stop doing that just because you are enjoying a holiday. That is what I tell myself anyhow.

One of the reasons people go on cruises, like the one I recently enjoyed, is to see something of the culture of the people in the countries they visit. That isn’t important to everyone. Some people are more interested in scenery, bush walking, swimming, diving etc. Others just want to enjoy the amenities offered by a floating hotel.

 A substantial proportion of people on our cruise were interested in local culture and history. That judgement is based largely on attendance at the lectures offered on those topics. There were not many spare seats available in the theatre seating a few hundred people – my guess is about a quarter of passengers attended the lectures. In addition, videos of the lectures were also available for viewing in passenger cabins.

Of course, when cruise ship passengers visit any small community they don’t get to observe people going about their normal daily activities. The arrival of the cruise ship disrupts normal activities. People who usually spend their time gardening, fishing or making handicrafts become merchants, guides and entertainers. Inevitably, the role of tourists as consumers and potential benefactors influences the culture they observe.

I don’t wish to imply that the cultural experiences we were offered were not authentic. The cultural festival staged for our benefit in Alotau provided a sample of traditional singing and dancing. The houses we saw on Kiriwina Island were places where people lived; the gardens provided food that people relied on for subsistence; the canoes we saw were normally used for fishing. I didn’t get the feeling of visiting a theme park that I had at times a few years ago on an Alaskan cruise (that was nevertheless enjoyable).

Some houses on Kiriwina Island

Of the places we visited, on Kiriwina lives of the people have been least affected by western influences. Even there, however, a group of village children, who were dressed traditionally, were raising money from the tourists by singing “Twinkle, Twinkle Little Star”. When I suggested to my guide, a year 10 student at the local school, that this song was part of a universal culture, he expounded eloquently on the importance of preserving local culture. I agree with him and hope tourism will help to preserve local culture. For my guide and most locals, however, the highest priority in obtaining money from tourists was to help fund education.

Wherever we went, people were raising money to fund local schools and pay school fees. From what I have heard when I was working in PNG a few years ago, the funds raised from tourists do not all end up being used for the purpose for which funds were donated. However, there is no doubt that education is widely seen by parents as a way for their children to obtain a better future. The children in some of the groups performing for tourists on Doini Island seemed to be doing a good job of raising money by entertaining tourists whilst also helping to preserve local culture.

Children on Doini Island raising funds to build a new classroom

The main reason why the government does not do more to fund education and health services is because PNG is a low-income country, lacking the tax revenue base that would be required to fully fund schools and basic health services. Politicians have promised to increase funding but have not delivered on those promises. If taxes were raised that would have an adverse impact on incentives - including incentives for village people to become involved in the market economy - and be unlikely to raise much additional revenue. Misuse of public funds is a serious problem, but it is unrealistic to expect that a huge pool of public funds would appear to fund education and health services if corruption could be eliminated.

During our visit to Rabaul I witnessed a discussion of education funding that left me feeling frustrated. The participants were an Australian tourist and a local tour guide. The discussion occurred on a small bus taking a group of tourists to see the area that had been devastated by the eruption of Mount Tavurvur in 1994.

Visiting a volcano at Rabaul

When our guide told us that she felt fortunate to be able to take on casual work as a tourist guide to help pay for the education of her children, the Australian tourist expressed the view that the PNG government should be paying for education. She went on to tell everyone how incredibly lucky we were in Australia to have a government that paid for education, health services and pensions.

Other passengers remained silent, but a man sitting in the front seat next to the driver looked over his shoulder to see who the woman was who was doing all the talking. Unfortunately, I didn’t have the presence of mind to ask the vocal tourist how she thought our government funded education, health services and pensions.

As the cargo cult dies out in PNG, the magic pudding cult has continued to grow in Australia, apparently now even seeking converts in PNG. 

Virgin Coconut Oil Rabaul

The same tourist bus provided us with an opportunity to see a small manufacturing plant making Virgin Coconut Oil. I don’t know whether the product has the health benefits that are claimed for it, but the process by which the oil is extracted from fresh coconut meat looks as though it should produce a better product than the oil manufactured from copra exports.

 Preparing coconuts for oil extraction

Manufacturing plants like this one may have potential to generate more income for local communities than is possible by exporting copra.

Copra awaiting export at Rabaul

If I let my imagination run wild it even seems possible that the manufacture of virgin coconut oil in Rabaul could be an example of the kind of development that could play an important role in enabling more widespread economic opportunities to emerge in PNG in the years ahead. If that can happen it might even be possible for village people to purchase better and more secure access to education, health services and the other things they want. 

Coming back to earth, the manager of Virgin Coconut Oil Rabaul mentioned that the business had obtained assistance from a government agency serving grower interests, the Kokonas Indastri Koporesen (KIK). A question that raises is why such assistance is necessary if the venture has potential to be profitable and provide more attractive remuneration for labour than is otherwise available. I don’t know what services the KIK provided in this instance, but I am sure that in a more normal market economy those services could have been provided by commercial enterprises with relevant technical knowhow, marketing links and other relevant resources. So, what prevents potential commercial partners, including foreign firms, from linking up with local firms to undertake ventures of this kind?

The underlying problem, as I see it, is that the profit motive doesn’t work very well in an economic environment where investors have reason to fear that profits are not safe from potential predators, including some within government. The assistance provided by KIK to processing enterprises is valuable in demonstrating the potential for value adding activities, but does not address the underlying problem.

It is difficult to see how the underlying problem can be solved in the near future. It will take a lot more than just announcement of economic policy reforms. Meanwhile, perhaps greater economic opportunities could be generated if the KIK and other commodity boards were given a more explicit role to facilitate additional investment in agriculture and related processing activities.

So, what is the problem with tolerance?

Anyone who claims to be in favour of individual liberty must view tolerance as a virtue. If you favour a political/legal order in which adult humans are responsible for managing their own lives, you must accept that this requires you to tolerate conduct that you don’t approve of, provided those responsible for that conduct do not interfere with the rights of others. Tolerance is a core value of western civilization. John Locke provided a powerful defence of tolerance in A Letter Concerning Toleration (1689) which was written in defence of religious freedom in the aftermath of the English Civil War.

Tolerance is strongly related to the Golden Rule, to treat others as you would wish to be treated. Since all the major world religions subscribe to a version of the Golden Rule, it is not difficult for people from many different cultural heritages to understand the virtue of tolerance. Nevertheless, intolerance is still rife in many societies. For example, it is only too obvious that the injunction in the Islamic version that people should desire for their brothers what they desire for themselves, is not always interpreted to require tolerance of unbelievers.

The problem with tolerance, as Linda Raeder has explained in The Transformation of American Society, is that its meaning has tended to stray from the traditional definition: 

"The traditional definition of tolerance, according to Merriam-Webster, is the “capacity to endure pain or hardship; sympathy or indulgence for beliefs or practices differing from or conflicting with one’s own.” In other words, throughout most of Western history, tolerance has implied “putting up” with something that causes one pain, enduring something that one personally dislikes or of which one personally disapproves. A person does not “tolerate” beliefs or behavior that he enjoys or finds praiseworthy but rather those he finds somehow offensive or repugnant. In the social and political sphere, tolerance thus means permitting other people to think and behave in ways that one personally finds objectionable, distasteful, or even morally wrong."

The definition in the Concise Oxford dictionary (1982 edition) is similar, and includes explicit mention of “forbearance”.

The change in meaning that Linda observes in that in the context of contemporary multiculturalism toleration has come to mean accepting without judgment. She suggests that members of contemporary U.S. society have been taught that meaning by both popular culture and formal education at every level, from kindergarten to post-doctoral training. She goes on to observe:

"One consequence is a disturbingly passive generation that seems incapable of making, certainly reluctant to make, moral judgments of any kind. Young people have been taught that to make such judgments is “intolerant” of other “perspectives.” Self-censorship has become habitual among students shaped by Multicultural education, the mind unfamiliar with conceptual and moral discrimination. To exercise the capacity for critical evaluation - to “judge” - is regarded as wrong, intolerant."

I suspect that debasement of the meaning of tolerance has gone just as far in Australia as in the United States. In his CIS report, No Ordinary Garment? The Burqa and the Pursuit of Tolerance, Peter Kurti suggests that the contemporary exercise of tolerance often “avoids engaging in judgements about relative values” and “amounts to little more than a position of indifference to views and opinions”. He refers to the muting of criticism to the point where all behaviour is considered beyond judgment as ‘reverse zero- tolerance’.  He notes that reverse zero-tolerance admits no discretion as to the moral value of the position in question, including the acceptability of religious or cultural practices such as wearing a burqa.

How should we react to the debasement of the meaning of tolerance? Should we allow the advocates of cultural permissiveness to hijack the term in the way that advocates of collectivism hijacked ‘progressive’?  I am a person who advocates the progress of societies to provide greater opportunities for individual human flourishing, but I would rather not be labelled as a progressive. I wonder whether a time will come when I object to being described as tolerant.

In my view, it is important to preserve the traditional meaning of tolerance in order to be able to distinguish between behaviour that we judge to be unwise, immoral or likely be inimical to the flourishing of the individuals who indulge in it, and behaviour that we cannot tolerate and seek to prevent. There are more appropriate labels to describe the cultural relativists and ethical agnostics who argue that we should refrain from making judgements about the cultural practices and behaviour of other people.

As noted earlier, for anyone who claims to be in favour of individual liberty the dividing line between tolerance and intolerance is set at the point where behaviour infringes the rights of others.

It seems reasonably clear that a woman who wears a burqa is not infringing the rights of others. Unfortunately, I have to admit to being among those who feel uncomfortable when I see women wearing the burqa on the streets of Australia. It is possible that some of the women who wear the burqa do so as an act of religious piety, but I suspect that most are making a political statement to the effect that they are opposed to the cultural norms of this country. It might be their intention to make people like me feel discomforted by their apparel. But no-one has a right to be protected from feeling discomforted by the behaviour of others. Feeling discomforted is a lot different to feeling threatened. We can tolerate the burqa, in the same way we tolerate people with green hair and those who use profanities with the intention of offending us.

Some religious and cultural practices cannot be tolerated because they infringe the rights of other people. The list obviously includes acts of violence, including terrorism, honour killing and violence against children e.g. genital mutilation. It also includes threats of violence.

Of course, Australian legislators have not confined their activities to protection of individual rights. There is a vast amount of government intervention that seeks to influence the way people live their lives. Some of this can be justified on the grounds that it provides people with better opportunities than would otherwise be available to them e.g. public funding of education to help children to acquire useful skills. We should not tolerate children being prevented from accessing such opportunities as a consequence of the cultural traditions of their parents.

The Australian prime minister, Malcolm Turnbull, recently announced plans to strengthen the citizenship test to ensure that people granted citizenship share Australian values. Interestingly, a discussion paper that has been released by immigration department to promote public discussion of the issues doesn’t actually mention tolerance. I don’t see that as a problem. It is fairly clear that the main aim of the exercise is to avoid giving citizenship to people who can’t tolerate us -  those who seek to undermine our society.

There is not much that is peculiarly Australian about the “Australian values” listed in the discussion paper. The paper notes:

“Ours is a society founded on a liberal-democratic tradition in which the fundamental rights of every individual are inviolable”.

I can’t quote that without observing that it is aspirational rather than a description of current legislative practice in Australia. The important point is that those aspirations reflect the values of western civilization. Some might feel bemused that when attempts are made to identify Australian values what we end up with is a statement of the values of western civilization. But that is highly appropriate.  That is our cultural heritage!

Even when we attempt to use common Australian colloquialisms to describe our values we end up talking about the values of western civilization. Some people equate the “fair go” ethos with egalitarianism. I suspect many Australians would be suspicious of such terminology, but if you ask them whether giving people a fair go means recognizing that all people have equal rights, they would be likely to agree. That is what egalitarianism actually means, according to my old Concise Oxford as well as the Macquarie dictionary. Most Australians like to think that they take fairly seriously the idea that people deserve to be treated as equals in terms of their fundamental worth. Giving individuals a “fair go” entails, among other things, being tolerant of their conduct provided they don’t interfere with the rights of others.

How do we know what we value?

“Although feelings are the one output of the adaptive unconscious that is likely to reach consciousness, sometimes even feelings are unconscious. And other contents of the adaptive unconscious, such as personality traits and goals, are likely to remain beneath the surface, unavailable to conscious scrutiny (the beam of the flashlight).”

The quoted passage is from Timothy Wilson’s book, Strangers to Ourselves: Discovering the adaptive unconscious. The author views the adaptive unconscious as a “necessary and extensive part of a highly efficient mind”. Its functions include “warning people of danger, setting goals, and initiating action in a sophisticated and efficient manner”.

The context of the quote is a discussion of introspection as a means by which people can “try to decipher their feelings, motives, traits, or values, not to mention what they want for dinner”. The “beam of the flashlight” refers to a metaphor in which the mind is thought of as a cave, with consciousness constituting those objects that are not currently in the beam of the flashlight. The quote seems to imply that our values and preferences are not necessarily easily accessible by just focussing our awareness inwards.

Tim Wilson argues that because people “cannot directly observe their nonconscious dispositions, they must try to infer them indirectly, by, for example, being good observers of their own behaviour”. He suggests that when we discover important truths about ourselves through introspection we do so by constructing stories about our lives, much as a biographer would. Trying to access unconscious goals and motives results in “a constructive process whereby the conscious self infers the nature of these states”.

I felt somewhat bemused when reading that - presumably because of my training as an economist. The idea of being able to discern our values and preferences from our behaviour seems to have more in common with the neoclassical economists’ notion of ‘revealed preference’ than with the view of many psychologists (and behavioural economists) that people are prone to make irrational choices because of cognitive biases that reflect non-conscious influences.

Of course, Tim Wilson does not suggest that the adaptive unconscious always makes the right choices for us. He notes that it is important to distinguish between “informed and uniformed gut feelings” by gathering as much information as possible to allow your “adaptive unconscious to make a stable, informed evaluation rather than an ill-informed one”.  His main point seems to be that in order to make good decisions, e.g. in choosing a spouse or buying a home, you need to avoid over-analysis by the conscious mind.

Does it make sense to try to try to infer your values from your past behaviour? If the aim of the exercise is self-improvement that approach might appear to be futile. If you see need for improvement in your behaviour, it isn’t immediately obvious how the values that can be inferred from your past behaviour could provide helpful guidance.

So, how can people bring their values to awareness in order to engage in self-improvement exercises? Tim Wilson has some suggestions, but before considering them it might be useful to consider approaches adopted by some psychologists engaged in therapy and personal training.

Acceptance and Commitment Therapy (ACT) places a heavy emphasis on living according to values, so the approach adopted by ACT therapists might be of particular interest. One approach used in ACT is the life compass, which ask people questions to elicit values in various domains of their lives – relationships, health, work, leisure etc. People are asked what is important or meaningful to them, what sorts of strengths or qualities they want to develop and what they want to stand for. That approach obviously works if you can find what you value by just shining the flashlight into your cave. But to do that you must have a fair amount of self-knowledge already, and you would probably have constructed a story about where your values have come from.

ACT offers a range of techniques to elicit values if they don’t readily come to consciousness. One technique noted by Russ Harris in ACT Made Simple is to imagine what you would love to hear people say about you, and what you stand for, in short speeches at your 80^th birthday party. (Dr Harris presumably doesn’t have many readers who are over 80.) In The Reality Slap, he suggests that it is also possible to elicit values by remembering a “sweet spot”, a memory that encapsulates some of life’s sweetness for you. After appreciating that memory, he asks people to notice the personal qualities they were exhibiting and what this reveals about the personal qualities they would like to embody.

The Authentic Happiness web site (stemming from Martin Seligman’s book of that name) has, among other things, an extensive questionnaire that enables people to discover their ‘signature strengths’. People taking the questionnaire are asked to what extent 240 statements describe themselves. The statements seem to be largely about dispositions rather than past behaviours, so seem to assume prior knowledge of dispositions.

The Enneagram Institute offers people an opportunity to discover more about their personality type through a questionnaire (the RHETI) which asks participants to choose between 144 paired statements relating to their past behaviour. One of the potential benefits of this approach is that it seems to offer a way for people to identify values that can guide them toward attainment of higher levels of personal development, without having to attempt to make fundamental personality changes.  For example, a person who has a persistent desire for self-control could see himself, or herself, as having many of the characteristics of a Reformer, and thereby see potential for growth by becoming more reasonable, and progressively acquiring greater wisdom. Some more examples might help to make the point: a person who seeks to avoid conflict through accommodation might have many characteristics of the Peacemaker, and see potential for growth by acknowledging her or his peacefulness and seeking to become indomitable; a person who is highly defensive much of the time might have many characteristics of a Loyalist, and see potential for growth by becoming more trusting, cooperative, reliable and courageous; and a person who is restless and constantly seeking stimulation might have many of the characteristics of an Enthusiast, and see potential for growth by becoming more productive and more grateful. Similar personal growth paths exist for the five other personality types.

A couple of the approaches described above bring values into conscious awareness through an explicit consideration of past behaviour. The sweet spot approach builds on selection of a particular memory, whereas the RHETI may help people to identify their potential by providing them with a systematic way to understand their past behaviour and personality. Unfortunately, although the RHETI is being widely used in personal training exercises, its predictions do not yet appear to have been subjected to a great deal of rigorous scientific testing.

One approach that Tim Wilson advocates is Pennebaker’s exercise which involves writing about the deepest thoughts and feelings associated with an important emotional issue. Although writing about emotional experiences is distressing in the short run, it apparently has positive long-run effects. The exercise seems to help people make sense of a negative event by constructing a meaningful narrative that explains it. A possible downside of this approach is that some people may dwell on negative life experiences by constantly revising their narratives. I expect that some people might also have a tendency to fuse with stories that make their lives miserable.

Tim Wilson acknowledges that some narratives are better than others. He writes:

"As with any biography, there are multiple ways of telling the story. A good biography, though, has to account for the facts of the person’s life and capture his or her inner goals and traits. The better a story does at accounting for the “data” of the person’s adaptive unconscious, the better off the person is. By recognizing their nonconscious goals, people are in a better position to act in ways to fulfill them, or to try to change them."

How can we change our non-conscious states in order to match our more positive self-stories? Tim Wilson suggests we follow Aristotle’s advice to acquire virtues by first putting them into action. We can change our feelings and traits by changing our behaviour. In order to “change some aspect of our adaptive unconscious, a good place to start is deliberately to begin acting like the person we want to be”.

The Revolution Inside

This guest post by Leah Goldrick was first published on her excellent blog: Common Sense Ethics

Peace and justice are two goals which the politically inclined often seek, but they are simultaneously inner qualities which a philosophical person must posses, not just external conditions which we would like to see in the world. If we want to see the world change we must first concern ourselves with healing our own lives.

In Xenophon's Memoirs of Socrates, Hippias tells Socrates that instead of always asking questions about justice, he would do better simply to say, once and for all, what justice is. Socrates replies: "If I don't reveal my views on justice in words, I do so by my conduct." A modern parallel to Socrates' statement can be found in Martin Luther King's quote, "Peace is not merely a distant goal that we seek, but a means by which we arrive at that goal.”

What Socrates wanted to show is that we can never understand justice if we do not live it. King similarly noted that we won't achieve peace through our actions if outwardly we are irrationally angry and inwardly we are a mess of anxiety and neurosis. We can't expect the world to give us better than we give the world.

In antiquity, philosophy was a way of life akin to therapy or care of the soul. Socrates, the Cynics, Aristotle, the Epicureans and the Stoics all stressed that we can achieve autarkia, or inner freedom independent of external events.[1] Autarkia is a self-sufficiency and peace of mind where we feel that we lack nothing, relying on our inner resources. To be liberated, we must turn our attention to the revolution within and to what we can control; our thoughts, emotions, and actions. In order to obtain autarkia or inner freedom, we must train ourselves for it. 

Ancient Philosophy As a Way of Life

Pierre Hadot was a historian of philosophy who is also just as rigorous a philosopher. He was aware of limits of specialization in academia and sought cross-specialization within Classics. In his excellent book Philosophy as a Way of Life, Hadot maintains that philosophy did not change in essence during the entire course of antiquity. However, it evolved away from a therapeutic, lived experience to a theoretical discourse during the Medieval and Modern eras.

Hadot is explicit that in antiquity philosophy was understood as a way of life. Ancient philosophy is therapy for the soul - the goal is very different from that of much modern philosophy, which is primarily an academic exercise in exegesis, although not exclusively so according to Dr. Greg Sadler.

For the Epicurean, Hadot notes that one form of philosophical therapy consists of bringing one's soul back to joy from the worry of living. Unhappiness comes as a result or worrying about things which are not to be feared or are beyond our control. By contrast, inner freedom or autarkia is deliverance from worry about things we cannot control. Worry about external conditions often takes precedence in our lives, often to the point that we neglect what is going on inside. [2]

Politics as Externals Beyond Our Control

One external that philosophical people often fixate on - and for good reason considering the many problems in the world - is politics. However fixation on politics can be a dangerous thing if we neglect to care for our own souls and to remind ourselves that for the most part, political issues fit squarely within the realm of things which we do not control.

This dilemma isn't new. In Plato's Symposium, Alcibiades remarks that Socrates has made him admit, "While I am spending my time on politics, I am neglecting all the things that are crying for attention in myself."[3] He goes on, "Socrates makes me admit to myself that even though I myself am deficient in so many regards, I continue to take no care for myself but occupy myself with the business of the Athenians."[4]

Socrates expected Alchibiades - and each person - to be excellent and rational and to care for their internal disposition. In this same vein, Hadot quotes George Friedmann’s La Puissance de la Sagesse (The Power of Wisdom) on the necessity of such a philosophical disposition for a politically oriented person:
Try to get rid of your passions, vanities, and the itch for talk about your own name, which sometimes burns you like a chronic disease. Avoid backbiting. Get rid of pity and hatred. Love all free human beings. Become eternal by transcending yourself.
This work on yourself is necessary; this ambition justified. Lots of people let themselves be wholly absorbed by militant politics and the preparation for social revolution. Rare, much more rare, are they who, in order to prepare for the revolution, are willing to make themselves worthy of it.[5]

What is being articulated here is a revolution inside, which is more important than political revolution. It is very difficult to live everyday life in a philosophical manner. We often fixate on the external conditions of life while neglecting what is going on inside of us. Philosophical exercises can us help in this regard.

Philosophical Exercises for Care of the Soul

Wisdom can be acquired through work on ourselves via ongoing philosophical or spiritual exercise. One philosophical exercise which we can practice everyday is essentially present moment awareness or attention to what we are doing, giving each thing its due. It's what Marcus Aurelius was talking about when he said:
Everywhere and at all times, it is up to you to rejoice piously at what is occurring at the present moment, to conduct yourself with justice towards the people who are present here and now, and to apply rules of discernment to your present representations, so that nothing slips in that is not objective. [6]

In Philosophy as a Way of Life, Hadot comments on therapeutic value of writing. Hadot notes that writing or keeping a journal helps you explain yourself to yourself. Writing takes the place of another person's eyes. The writer instinctively feels as though he is being watched. This process helps makes what was confused or subjective more objective and universal for the writer. One observes one self to see what progress they have made using writing as an exercise.

The final philosophical exercise to care for our souls is inner transformation. This is what Socrates and Martin Luther King implored us to do; change our way of seeing and living so that we are self-sufficient inwardly and so outwardly we become our political ideal. To understand our object, we must become our object. To understand justice, we must be just in our dealings with others. To get peace, we must have peace in our own lives:
The trick is to maintain oneself on the level of reason, not to allow oneself to be blinded by passions, anger, resentment or prejudices. To be sure, there is an equilibrium - almost impossible to achieve - between the inner peace brought about by wisdom, and the passions to which the sight of injustices, sufferings, and misery of mankind cannot help but give rise. Wisdom, however, consists in precisely such an equilibrium, and inner peace is indispensable for efficacious action. [7]


 Sources: 

1. Hadot, P. 1995. Philosophy as a Way of Life. Malden, MA: Blackwell. 266.
2. Ibid. 87.
3. Ibid. 90.
4. Ibid. 156.
5. Ibid. 81.
6. Aurelius, M. 1997. Meditations. 2:5.
7. Hadot, P. 1995. Philosophy as a Way of Life. Malden, MA: Blackwell. 274.

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What will government look like after the fourth revolution?

“Democracy in Australia is sinking into a self-destructive spiral. The sickness at its heart is the demise of individual responsibility and expecting more from the state when the national interest says state responsibilities should be cut, not increased. Our democratic system now works to undermine economic progress.”

That is how Paul Kelly, Australia’s most widely respected journalist, concluded an article in The Australian a few weeks ago. The article entitled “Crisis time: We can take a stand – or solve a problem” (probably gated) was published on March 29.

As far as I can see there hasn’t been much public reaction to this article. Only a small proportion of the population read articles of this kind, and most readers would still feel complacent about the Australian economy and the future of democracy in this country. It will become easier to convince people that they should be alarmed about the self-destructive spiral when the crash is imminent. The malfunction began over a decade ago and it might be another decade, or more, before crunch time.

Some other informed commentators take a more optimistic view than Paul Kelly. For example, Gary Banks, former chairman of the Productivity Commission, acknowledges that policy development is now a problem. He has suggested the a “loss of policy capability within government – Commonwealth and State - is palpable and multidimensional”. He is hopeful, nevertheless, that the problem can be ameliorated by improvements to policy-making processes:

“Yet, if this diagnosis is correct, there is hope. Unlike the adverse changes evident in our parliaments and media, changes which are arguably reflective of changes in society itself, the decline in capability is not irreversible. Unless it is turned around, however, we cannot tell whether reform has truly become ‘too hard’, as many now seem to assume”.

A few years ago I was similarly optimistic. I still support efforts to improve policy capability within government. I agree with Gary that improvements to the policy-making system are an essential pre-condition for improvements in policy. However, I doubt whether much economic reform will be achievable until we see substantial changes in the rules of the political game that will provide political representatives with appropriate incentives to pursue the broader interests of the community, rather than the narrow interests that too many of them currently seek to protect. And, unfortunately, that seems unlikely to occur until a major economic crisis is upon us.

In his article, Paul Kelly drew inspiration from The Fourth Revolution: The global race to reinvent the state, by John Micklethwait and Adrian Wooldridge. 

The authors of this book make a case that western societies have seen three and a half revolutions in government over the last four centuries:

• The rise of the nation state in 17^th century Europe. Europe’s network of competing Leviathans threw up a system of ever-improving government.
• The rise of the liberal state in the 18^th and 19^th centuries following the American and French revolutions.
• The advent of the welfare state in the 20^th century.
• And the half revolution in the 1980s, associated with economic reforms promoting a partial return to classical liberalism in a few countries.

This history of the revolutions in government seems broadly accurate. Micklethwait and Wooldridge associate each of these revolutions with a notable contributor to ideas about government. In sequence, the four revolutionary thinkers they chose were: Thomas Hobbes, J S Mill, Beatrice Webb and Milton Friedman. It is possible to quibble about that choice, but I will refrain. I want to focus here on what the authors have to say about the fourth revolution.

The authors argue that the fourth revolution is occurring as a result of a confluence of three forces: failure, competition and opportunity.

• The West has to change because it is going broke:“Debt and demography mean that government in the rich world has to change. … For the foreseeable future the Western state will be in the business of taking things away – far more things than most people realize”
• Competition from the “Asian alternative” is prompting change:“Chinese-oriented Asia offers a new model of government that challenges two of the West’s most cherished values: universal suffrage and top-down generosity. This ‘Asian Alternative’ is an odd mixture of authoritarianism and small government, best symbolized by Singapore’s long-term ruler, Lee Kuan Yew”.
• There are opportunities to “do government” better: “New technologies offer a chance to improve government dramatically, but so does asking old questions such as the most basic question of all: “What is the state for?”

So, what will government look like after the fourth revolution? The authors would like to see greater individual liberty emerging as a consequence of reforms that reduce government spending and relieve governments of some of their responsibilities. I would too, but we need to be careful not to confuse what we hope will happen with what we see as most likely to happen.

Micklethwait and Wooldridge published their book a couple of years ago, but it was apparent even then that many voters were becoming cynical about politicians representing the mainstream political parties. The European Union had become a breeding ground for populists who were speaking out against “incompetent and arrogant elites”. Even then, that cynicism was also apparent elsewhere. The authors suggested:

“Such cynicism might be healthy if people wanted little from the government. But they continue to want a great deal. The result can be a toxic and unstable mixture: dependency on government on the one hand and disdain for government on the other”.

Perhaps the victories that the populists appear to be winning at the moment will cause the elites to become less complacent, and less incompetent and arrogant. The political cycle may be turning, as Tyler Cowan suggested in The Complacent Class (recently discussed here). Over the longer term, the elites may come to embrace dynamism, rather than protection of their professional turf, so we might see the battle lines being drawn more clearly between dynamism and stasis. That might correspond broadly to Tyler Cowan’s depiction of the political battle as between talent (human capital) and authoritarianism, stemming from underlying fears of disruption. Since this is also a battle between talented young people and fearful old people, in my view the odds favour talent in the longer term.

It would be easier to predict what government will look like after the fourth revolution if some western democracies provided models of a successful revolution in government. Micklethwait and Wooldridge suggest that reforms in Sweden, necessitated by economic crisis, have produced “a highly successful update of the old middle way”. New Zealand provides a model of what effective government can achieve following a natural disaster. The response to crisis in Sweden and New Zealand provides better protection for citizen’s rights than would adoption of something like Lee Kuan Yew’s model of technocratic government. However, democratic government in Sweden and New Zealand might well revert, within a few years, to taking upon itself more responsibilities, until another economic crisis ensues.

It seems to me that the fourth revolution is likely to involve changes in the rules of democratic politics. This might require constitutional change in some countries, but revolutionary change might be possible in Australia and other countries similarly afflicted by voter cynicism and political fragmentation, if the major parties were to adopt a convention for accountable government. What I have in mind is that the major parties should agree that whichever party wins government has a mandate from the people to implement the tax and expenditure policies it has taken to the election. What could be more democratic than that?

What reasons do we have to look forward to the future?

In his book, Progress: ten reasons to look forward to the future, Johan Norberg spends a lot of time looking back on progress that has been made. 

In brief, his ten reasons for optimism are:

1. The incidence of famine has declined. Only a few hundred years ago famine was a fairly regular phenomenon, occurring more than twice a century even in countries like France. In recent years the death toll from famine has been only about 2% what it was a century ago, even though the world population has increased fourfold.
2. Sanitation improvements since the “Great Stink” in London in 1858 have helped improve longevity and reduce infant mortality over much of the world. About two-thirds of the world’s population now has access to proper sanitation facilities.
3. Average life expectancy in the world is now 71 years, having risen from 31 years in 1900.
4. Poverty has declined because of economic growth. In the early part of the 19^th century the standard of living of the average world citizen was equivalent to that of the average citizen in the poorest countries today (e.g. Haiti, Liberia and Zimbabwe).
5. Violence has declined. For example, the annual European homicide rate declined from 30 to 40 per 100,000 people in the 14^th century to around 1 per 100,000 in recent years.
6. Although environmental damage tends to increase initially with economic growth it subsequently tends to decrease as people become wealthier. Technological advances seem likely to enable future generations to reduce climate change risks and still enjoy higher living standards.
7. Literacy levels have risen with economic development. The global literacy rate rose from around 21% in 1900 to 86% in 2015.
8. Freedom has increased. Slavery is now banned just about everywhere. Democracy now limits the abuse of government power in many parts of the world. Economic freedom has risen: the global average rose from 5.3 to 6.9 on the Fraser Institute’s ten-point scale between 1980 and 2013.
9. There has been growing recognition of equality of rights, irrespective of ethnicity, gender and sexual orientation.
10. Children are now seen as worthy of being given the best conditions for a long and happy life, rather than as resources for the household economy to exploit.

Many readers of this blog will probably be thinking at this point that they already knew most of that. However, readers of this blog tend to be exceptionally well informed. In the epilogue of his book Johan Norberg provides evidence that in the broader population most people consistently underestimate the progress that has been made. For example, in the U.S. apparently 66% of the population think that world poverty has almost doubled in the last 20 years, and only about 5% are aware that it has almost halved over that period.

This book provides a vast amount of useful ammunition for those of us trying to get the message across that “the good old days” were not so great.

However, I doubt whether the ten reasons provided will actually encourage many pessimists to look forward to the future. It is too easy to acknowledge the progress that has been made and yet to hold to pessimistic views of the future. The author acknowledges that being worried about the future may be in our genes:

“The hunters and gatherers who survived sudden storms and predators were the ones who had a tendency to scan the horizon for new threats rather than those who were relaxed and satisfied”.

The author also acknowledges threats to progress such as large scale war, more extensive terrorism with advanced technology, climate change and more large scale financial crises. He is most concerned that “people led by fear might curtail the freedom and the openness that progress depends upon”.

On a more optimistic note, he observes that in our era of globalization many countries now have access to the sum of humanity’s knowledge and are open to the best innovations from other places. “In such a world, progress no longer depends on the whim of one emperor”.

Johan Norberg’s message is not one of complacency. He claims that the book was written as a warning not to take progress for granted and that is the message of his final sentence:

“If progress is to continue, you and I will have to carry the torch”.

That means, in my view, that we will need to encourage people to contemplate optimistic visions of how the future might evolve.

Is the cycle of political complacency beginning to turn in the United States?

The villain in Tyler Cowen’s latest book, The Complacent Class: The self-defeating quest for the American Dream, is “us”. Tyler is writing about America, but much of what he has written is relevant to other high-income countries. The problem, as Tyler sees it, “is that peace and high incomes tend to drain the restlessness out of people”. Many people have become complacent – “satisfied with the status quo”. Most people don’t like change much and “they now have the resources and the technology to manage their lives on this basis more and more, to the country’s long run collective detriment”.

Tyler has not persuaded me that complacency is a problem of itself. It would be nice to be able to feel more complacent. (According to Tyler’s questionnaire - international version here - I am a striver: “You embrace newness, but you need to strive harder to break the mold”.) As I see it, complacency only becomes a problem when people are complacent about things that they have good reason to be alarmed about.

Tyler provides a fair amount of evidence that Americans have become more complacent. For example:

• ·         People now switch jobs less frequently.
• ·         Geographical mobility has declined.
• ·         There has been a decline in start-ups relative to total business activity.
• ·         There are fewer unicorns (miracle growth firms).
• ·         Market concentration has risen.
• ·         There is more pairing of like with like e.g. people are choosing marriage partners with similar education levels, and housing is more segregated by income and race.
• ·         Upward mobility in income and education has stopped rising.
• ·         People are now more inclined to stay at home and use delivery services.

That is all very interesting. It changes my perceptions about America. I have to get used to the idea that Americans are no longer as mobile and innovative as they were a couple of decades ago. But that does not necessarily mean that complacency is a problem. If peace and high incomes have made Americans more complacent, isn’t that a good thing? There is not much point in striving for more of anything once you are satisfied with what you have already. How is complacency leading to bad outcomes?

When Tyler looks in detail at some of these changing characteristics, he points to the failure of political decision-making to cope with interest groups seeking to protect themselves from change. How does complacency come into that? The NIMBY advocates who are using their political muscle to protect their interests against higher density building can hardly be described as complacent. The people at Donald Trump’s rallies who are supporting his policies to protect jobs - by reducing immigration and constraining import competition - do not seem complacent. The complacency must lie with the general public, who are not yet sufficiently outraged by the stasists to cast their votes for candidates who will constrain their political influence.

Tyler’s discussion of declining geographical mobility provides a good example of political market failure. He points to research showing potential for a substantial increase in GDP if more people were to move from low-productivity cities to high-productivity cities. Regulatory constraints prevent this from happening:

“Residents in Manhattan, San Francisco, and many other high-productivity locales just don’t want all of those new people moving in, and so they have passed overly strict building and land use regulations or in some cases they have limited infrastructure so that adding more residents just isn’t practical. Without good bus or subway connections, for instance, a lot of neighbourhoods just don’t work for people with jobs downtown”.

Tyler uses the terms ‘stasis’ and ‘dynamism’ quite frequently in this book, but I couldn’t find any reference to Virginia Postrel’s pathbreaking book on this topic, The Future and Its Enemies, published 18 years ago (my discussion here). I would have been satisfied with a footnote to explain how Tyler’s views build on, or differ from Virginia’s views. Similarly, it would have been nice to see a footnote discussing the affinity between Tyler’s views and Mancur Olson’s argument that stable societies tend to accumulate distributional coalitions that slow down their capacity to adopt new technologies and reallocate resources. See: The Rise and Decline of Nations.

Early in the book Tyler suggests that “the growing success of the forces for stasis” are linked to complacency. That argument has most force it the final chapters of the book where he discusses politics.

Tyler makes the point that much of the U.S. federal government budget is locked in to spending programs that are politically untouchable. Political change occurs at the margin and is the result of complex battles among interest groups, political manoeuvring and use of public relations campaigns. The Trump administration is unlikely to change this situation much. The pre-allocation of tax revenues will ultimately become unsustainable:

“At some point this country will face an immediate crisis, and there won’t quite be the resources, or more fundamentally the flexibility to handle it”.

Tyler presents a view about the tendency of governments to take on more responsibilities than they can cope with effectively that is similar to the view I expressed in Chapter 8 of Free to Flourish. I argued that there is a growing gap between the expectations that many people have of what democratic governments can deliver and what they are capable of delivering.

However, Tyler seems to present a more optimistic view of the ability of western democracies to reform themselves rather than to collapse and to be replaced by authoritarian regimes. That is just my impression. I find it hard to point to particular passages that support that view. The scenario that Tyler presents of a possible future that would be more dynamic does not feature less dysfunctional government, although smaller government may be implied.

Although I'm not sure why, after reading the book I was left feeling hopeful that the cycle of political complacency has reached its peak and that, over the next few years, American politics might become less shrill and more focused on problem solving. Perhaps the actions of the Trump administration will further erode political complacency in ways that will lead to a public reaction favouring a more constrained role for government. So, democracy will probably survive in the U.S. I’m also reasonably confident that a fiscal crisis in Australia will eventually result in rule changes needed to make democracy sustainable in this country. I’m less complacent about the future of democracy in some of the countries of southern Europe. 

Postscript
Tyler Cowan has provided some grounds for optimism in a recent Cato article entitled "Between authoritarianism and human capital". An extract:

"So we’re going to see a kind of intellectual war, and possibly war in other, more violent forms too. That war, using that word in the broadest sense possible, will be between today’s amazing accumulated stock of human capital — and the emotional momentum behind authoritarianism, which is encouraged by the political fraying that stems from underlying fears of disruption.

Right now, I’d still put my money on the positive side of talent and human capital. But in recent times, I can’t say I’ve seen the odds moving in my favor."

Should trade policy be about "the art of the deal" or about facilitating economic growth?

"We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs.  Protection will lead to great prosperity and strength" - Donald Trump, Inaugural Address, Jan. 20, 2017 

How should the Australian government respond to the potential for the crazy trade policies of President Trump to take the world into a new era of trade protectionism? Since Trump’s inauguration the depth of his commitment to trade protectionism has become clearer. In my view we should be prepared for the unravelling of much of the international trade liberalisation encouraged by the U.S. in the latter half of the 20^th Century.

If the Australian government continues with the current directions of international trade policy – viewing trade policy from an economic diplomacy perspective – there is a real risk that it will take ill-considered retaliatory action to foreign protectionism. Politicians who put their faith in trade diplomacy – the art of the export deal – think that they are pursuing the national interest when they make access to the Australian market contingent upon foreigners allowing our exporters to gain access to their markets. In terms of that mindset, if foreigners restrict access to their markets, it would appear logical for us to retaliate.

By contrast, political leaders who view trade policy as part of economic growth policy are more likely to keep in mind that the substantial trade liberalisation effort that Australia has made over the last 40 years has occurred unilaterally, rather than as part of any international deal. A growth policy perspective recognises the contribution that unilateral trade liberalisation has made to our prosperity.

The substantial trade liberalisation efforts made in Australia since the beginning of The Tariff Review, established in 1971, have all occurred for domestic reasons. Except for the 25 percent tariff cut of 1973, which was motivated primarily by macro-economic objectives, all of the reductions in industry assistance have occurred primarily to promote the micro-economic reform objective of providing incentives for greater productivity throughout the economy. That applies to reductions in non-tariff barriers, including reform of agricultural marketing arrangements, as well as reductions in reductions in tariff barriers.

As with other microeconomic reform policies, trade liberalisation efforts in Australia have not been pursued with equal enthusiasm by all governments. However, a sustained push toward trade liberalisation was initiated by Bob Hawke (then prime minister) and Paul Keating (treasurer) in May 1988 as part of a major package of microeconomic reform measures. In delivering the statement, Keating commented:

“The way forward for Australia is not to be closeted and sheltered, but to be open and dynamic, trading aggressively in the world. Only this kind of economy can provide the employment and rising living standards that Australians aspire to”.

In the light of the toxic political environment currently prevailing in Canberra it is worth remembering that those reforms were facilitated by support from the Liberal–National Party Opposition.

The trade liberalisation that was being undertaken in pursuit of microeconomic objectives was subsequently ­offered, and accepted, in Uruguay negotiations as our market-opening contribution to global trade reform. As the Tasman Transparency Group has noted, this approach enabled us to secure all the gains available from trade negotiations — the major gains in efficiency from reducing the barriers protecting our less competitive industries, as well as those available from access to external markets. That exercise should have provided the model for all subsequent international trade negotiations.

Unfortunately, the opportunity for further gains from the pursuit of microeconomic reforms has been missed in subsequent trade negotiations. Australia’s agenda in recent negotiations establishing a range of preferential trading agreements (PTAs) was simply a market access wish list. Following the conclusion of PTAs, governments have measured their success solely on the basis of whether the outcomes improved access to external markets.

The academic research that the Department of Foreign Affairs and Trade is now sponsoring on “the effectiveness of economic diplomacy in contributing to Australia’s exports and inflow of foreign investment” does not seem to be directed at answering a comprehensible, policy-relevant question. Research being undertaken by the Productivity Commission on implications for Australia’s trade policy of possible international shifts towards a more protectionist stance seems more likely to provide a basis for sensible policy development.

Previous research on the consequences of PTAs suggests that there are no grounds for complacency that the economic benefits even exceed costs. For example, using an analytical framework developed by the Productivity Commission to assess our much-heralded trade agreement with the United States, Australian National University economist Shiro Armstrong found that the agreement was responsible for reducing — or ­diverting — $53.1 billion of trade with the rest of the world. He has suggested that “the data shows that … Australia and the United States … are worse off than they would have been without the agreement”. 

Recent Australian governments have at times acknowledged that trade policy should be part of a wider productivity promoting agenda. Nevertheless, the government seems to have been at a loss to know how to counter the argument that Australian governments should be seeking to provide a level playing field for domestic industries vis a vis subsidized foreign competitors. This argument has figured prominently in lobbying in some quarters for further government assistance by way of anti-dumping action and government procurement preferences. The government has been slow to point out that if we are to use a playing field analogy – and our interest is in promoting the wellbeing of Australians rather than conducting trade wars – the relevant basis for comparison is the relative assistance levels of different Australian industries. As a rule, if industries need assistance to compete internationally, they can’t be making efficient use of resources. 

If the Australian government is serious about its commitment to lift national productivity it should place trade policy in the Treasury department – the department with central responsibility for facilitating economic growth. This would add some much-needed economic discipline to the conduct of trade policy as we face a more difficult world trading environment. The last thing we need in this environment is a bureaucratic structure for trade policy that is biased toward mindless deal-making and retaliation

Is a fixed mindset more realistic than a growth mindset?

Before I got far into Carol Dweck’s book, Mindset, I was confronted by the thought that the author might classify me as having a fixed mindset rather than a growth mindset. Dr Dweck is an eminent psychologist who has conducted a great deal of research on mindsets. She suggests that if you believe that your intelligence “is something very basic about you that you can’t change very much” you have a fixed mindset, but if you believe that you “can always change how intelligent you are” you have a growth mindset.

In considering those propositions (along with a couple of other similar ones) my mind turned initially to research showing that for most people IQ tends to remain fairly stable throughout life. That must mean that existing IQ is a good predictor of future IQ. If you choose an individual at random it would be safe to bet that their IQ is not likely to change much. 

However, after a few moments I realized that I was adopting what I call a spectator mindset. I was considering the relevant literature like a spectator who is not personally involved. I had overlooked the fact that the author was asking whether I agreed with certain beliefs about the potential for my intelligence to change.

When I began to think from a personal perspective, books by Norman Doidge on brain plasticity came to mind. From a personal viewpoint, I think it makes sense to view your intellectual capacity in much the same light as your physical fitness. Your brain is like a muscle – use it to make it strong. Or, at my age, if you don’t use it you lose it!

As I read further into the book I discovered that, like many other people, I alternate between fixed and growth mindsets.

I was induced to read Mindset, by an article by Nela Canovic on the Quora site where people were discussing the most important thing they have learned in life. The article got me wondering how closely Carol Dweck’s distinction between fixed and growth mindsets corresponds to the distinction between spectator and player mindsets that enabled me to greatly improve one aspect of my life about 14 years ago. It makes sense for a spectator to focus on what she or he expects to happen, but to be successful at anything you need a player mindset – to focus on your intentions. That is one of the most important things I had learned from life. (I have recently written about it on this blog.)

My concern in this post is with the realism of different mindsets because I don’t think it serves us well to maintain delusions about ourselves.  As I see it, human flourishing depends, to a large extent, on realism – seeking understanding about important aspects of your own life and human life in general, and being disposed to act on that understanding when circumstances permit. As previously discussed on this blog, that view has been reinforced by my reading of Wellbeing: Happiness in a Worthwhile Life, by Neera Badhwar, a philosopher.

As I see it, fixed and growth mindsets must both be closely related to the meanings that people give to their experiences, and how those meanings or interpretations shape their intentions and future behaviour. Is a growth mindset more realistic than a fixed mindset?

Carol Dweck suggests that the fixed mindset – the belief that your qualities are carved in stone – “creates an urgency to prove yourself over and over”. She adds:

“If you have only a certain amount of intelligence, a certain personality, and a certain moral character – well, then you’d better prove that you have a healthy dose of them. It simply wouldn’t do to look or feel deficient in these most basic characteristics”.

The book emphasises is that this mindset gives people one consuming goal – proving themselves: “Every situation calls for a confirmation of their intelligence, personality, or character”. In this mindset people tend to avoid coming to terms with reality if reality doesn’t validate their views of their own qualities.

What about the people who have a fixed mindset which involves labelling themselves as stupid, erratic, neurotic, lacking in willpower, or manifesting some other quality associated with poor performance? The author doesn’t give much attention to the potential for people to develop fixed mindsets which involve labelling themselves as poor performers. That could be because she sees fixed mindsets as stemming largely from attempts by parents and teachers to boost the self-esteem of children by telling them how clever they are, and so forth.

In her discussion of willpower, the author’s main emphasis is on the potential for people who believe they have strong willpower to fall into the trap of firmly resolving to do something, then failing to act according to their intentions because they make no special efforts to do so. She doesn’t mention that people who have come to label themselves as lacking in willpower might give up making resolutions to do things that could improve their lives. Perhaps that point is too obvious.

When I went looking in the book for recognition of the potential for people with fixed mindsets to label themselves as poor performers, I did find some. For example, there is recognition of this in the author’s discussion of the higher incidence of depression among students with fixed mindsets, and in her discussion of the learning potential of inner-city children who have been labelled as retarded or emotionally disturbed. The author also writes:

“People tell me they start to catch themselves when they are in the throes of the fixed mindset – passing up the chance for learning, feeling labelled by a failure, or getting discouraged when something requires a lot of effort. And then they switch themselves into the growth mindset …”.

Carol Dweck explains:

“The growth mindset is based on the belief that your basic qualities are things you can cultivate through your efforts. Although people may differ in every which way – in their initial talents and aptitudes, interests, or temperaments – everyone can change and grow through application and experience”.

 

The author refrains from making unrealistic claims about what can be achieved with a growth mindset. She suggests that people with a growth mindset don’t believe that with proper motivation and education anyone can become an Einstein or a Beethoven. They believe that “a person’s true potential is unknown (and unknowable); that it is impossible to foresee what can be accomplished with years of passion, toil, and training”.  As discussed in an earlier post, practice in being alert to opportunities could also be expected to expand growth potential.

In the growth mindset people accept both failure and success as providing learning opportunities. The most important questions: What can I learn from that experience? How can I use it as a basis for growth?

Mindset contains important messages about ways in which parents, teachers and coaches can encourage children to adopt a growth mindset. Carol Dweck considers the message of praising effort rather than outcome to be too simplistic.  She now advises teachers and parents “to praise a child's process and strategies, and tie those to the outcome”. In my view she is encouraging realistic appraisal of personal performance and potential for improvement.

My bottom line: Don’t fool yourself that you are being realistic if you adopt a fixed mindset about your intelligence, personality or moral character. Everyone is a work in progress. We make progress by learning from experience.


Postscript:
My attention has been drawn to a study by Yue Li and Timothy Bates that has failed to replicate Carol Dweck's findings regarding praise of intelligence of children and children's beliefs in the malleability of their basic ability. Please see comments below for further information.