Should people seek contentment or accomplishment?

This is a tricky question, for reasons that will become apparent as you read on.

I have been thinking that one of the problems in using life satisfaction as a measure of human flourishing is that satisfaction implies contentment, and contentment may kill motivation to do things that are worthwhile. That has made me wonder whether or not it is possible for people to become too satisfied with their lives.

When I considered this issue in writing Free to Flourish, I concluded that despite such problems, life satisfaction might still be an adequate measure of human flourishing. I reached that conclusion on the basis of a comparison of different measures of subjective well-being by the British Office of National Statistics (ONS). The results showed a fairly high level of correlation (0.66) between responses when people were asked ‘How satisfied are you with your life nowadays?’ and ‘Overall, to what extent do you think the things you do in your life are worthwhile?’.

However, that doesn’t really answer the question of whether it is better for people to seek contentment or accomplishment. It may be possible that people obtain greater satisfaction from life when they seek worthwhile accomplishment than when they seek contentment. It may also be possible that contentment helps people to devote their lives to doing things that they consider to be worthwhile. Such ideas are neither new, nor necessarily inconsistent.

People may not actually need to choose between contentment and accomplishment. Perhaps we only think a choice has to be made because we tend to equate contentment with sloth and accomplishment with frenzied effort. It is not obvious that a choice has to be made if contentment means equanimity and accomplishment means achievement of a worthwhile goal.

My intuitions suggest to me that the important requirement for both contentment and accomplishment is for people to make conscious choices about their goals in life, rather than just drifting without purpose. As children, we are strongly influenced by parents, peers teachers etc. but as we grow to adulthood, we cannot fully flourish unless we make good use of our emotional and intellectual resources to manage our own lives.

So, where is the evidence that goal setting works?  When I went looking for such evidence, the first thing I found was a post by Ray Williams entitled ‘Why goal setting doesn’t work’ on the ‘Psychology Today’ blog. Williams presents several different arguments to cast doubt on goal-setting, but his most powerful point seems to be the following:

‘The inherent problem with goal setting is related to how the brain works. Recent neuroscience research shows the brain works in a protective way, resistant to change. Therefore, any goals that require substantial behavioral change or thinking-pattern change will automatically be resisted. The brain is wired to seek rewards and avoid pain or discomfort, including fear. When fear of failure creeps into the mind of the goal setter it commences a de-motivator with a desire to return to known, comfortable behavior and thought patterns’.

That left me somewhat confused, so I took advantage of the fact that Jim Belshaw was conducting a discussion about goal setting on his blog, to ask participants what they thought about Ray Williams’ contribution. One of the participants, Evan Hadkins, who has a particular interest in personal development issues, made the following comments (slightly edited):

‘The goal setting literature does emphasise being realistic (the usual acronym being SMART). This of course is a bit of a cop out - if the goal isn't achieved then it wasn't realistic for one reason or another.

His reductionist pleasure-pain/fear psychology is wrong. (He is not alone in this error.)

I think he is a bit unfair to the goal setters. Lots of them talk about goals serving your wider values and choosing carefully what goals you aim for.

As to being in the now: Our longings, regrets, memories, fantasies, visions, plans and everything else all occur now. He doesn't understand this. He is not alone in this misunderstanding.

Overall I think it is pretty sloppy and confused. Lots of the goal setting literature emphasises worthwhile aims and being careful what you wish for. And his advice about intentions has all the problems of change that he levelled against goal setting. But I do agree with what I think is his basic point: goals should be realistic and serve worthwhile ends’.

I agree with Evan’s comments. Evan’s point about reductionist pleasure-pain/fear psychology brought to mind the ‘no failure just feedback’ idea that I picked up from NLP practitioners a few decades ago. The point is that our responses to evidence of failure to attain goals depend on our attitudes. We are unlikely to be devastated if we value the feedback we obtain as providing opportunities to consider how we can improve our future performance.

Evan’s point about choosing carefully what goals you aim for brought to mind the NLP concept of a ‘well-formed outcome’, with its emphasis on specifying the goal in a way you find compelling and running quality control checks to make sure that the desired goal is right for you in all circumstances of your life.

My answer to the question I raised initially is that people should be seeking contentment and accomplishment, making conscious choices about the kind of life they want to lead, by pursuing goals they consider worthwhile and feel passionate about. In my view it is not possible for individuals to be fully flourishing if they just drift aimlessly – unless, of course, drifting aimlessly is a goal they choose to pursue with a great deal of passion.  

Do I agree with Steve Keen's views about the causes of the GFC and the NAR?

Who is Steve Keen? What is the NAR? And why am I wondering whether or not I agree with Steve Keen?

Steve Keen is an Australian economics professor, author of a book entitled ‘Debunking Economics’. His blog, ‘Steve Keen’s Debtwatch’, is dedicated to analysing ‘the collapse of the global debt bubble’. The NAR refers to the North Atlantic Recession, sometimes referred to as the Great Recession, that followed the GFC. I am wondering whether or not I agree with Steve Keen because of a comment on Jim Belshaw’s blog last Sunday. Jim wrote:

‘The second part of Winton's post focused on Irving Fisher's views is, if I interpret the argument correctly, very similar to views expressed by Professor Keen. Essentially, a key part of the problem was the combination of levels of private debt with income and price variations.’

Jim was referring to a post on this blog a couple of weeks ago: ‘Should the GFC be viewed as a 'balance sheet' recession of the kind Irving Fisher wrote about in the 1930s?’

My immediate response was to question whether it might be possible that I could express views similar to those of Professor Keen. While my views on economics have strayed somewhat from neoclassical orthodoxy in recent years, I still consider that the concept of equilibrium provides a useful starting point for economic analysis. Steve rejects all conventional neoclassical economics.

If my understanding is correct, there are two main elements involved in Steve’s views about the causes of the GFC and the following recession: Minsky’s financial instability hypothesis; and the concept of endogenous money creation.

Minsky’s financial instability hypothesis involves the idea that a growing economy is inherently unstable. Investments are initially conservatively financed, but it gradually becomes evident to managers and bankers that greater profits can be made by increasing leverage. Investors and bankers come to regard the previously accepted risk premium as excessive and to evaluate projects using less conservative estimates of prospective cash flows. The decline in risk aversion sets off growth in debt, growth in investment and growth in the price of assets. The euphoria is eventually brought to an end as rising interest rates and increasing debt to asset ratios affect the viability of many business activities. Holders of illiquid assets attempt to sell them in return for liquidity. The asset market becomes flooded, panic ensues, the boom becomes a slump and the cycle starts all over again. (That is an abridged version, excluding Ponzi elements, of a summary which Steve provides in his paper: ‘A monetary Minsky model of the Great Moderation and the Great Recession’).

The concept of endogenous monetary creation involves the idea that banks create credit in response to demand. If a bank lends me money, my spending power goes up without reducing anybody else’s. So, bank lending creates new money, and adds to demand when it is spent. From this perspective, ‘aggregate demand is income plus the change in debt’. (My training in economics and national income accounting makes it difficult for me to understand why or how that can be so. Nevertheless, let us proceed.) If my understanding is correct, Steve is arguing that quantitative easing does not increase the money supply, because banks don’t increase lending when central banks purchase bonds from them. (See Steve’s article: ‘Is QE quantitatively irrelevant?’).

My objection to the first element arises because I don’t understand why a growing economy should necessarily be unstable.  In my view, it is necessary to introduce into the analysis a ‘too big to fail’ policy, or something similar, to explain why banks have a tendency to take excessive risks. I have attempted to outline the regulatory issues involved in a previous post:

‘Governments seem to have managed somehow to get us into a vicious cycle where fears of contagion have led them to encourage major financial institutions in the believe that they were too big to fail, while the belief that governments would bail them out has led major financial institutions to take excessive risks. If we can't let big financial institutions fail when they become insolvent, perhaps the next best option is to find the least cost way of regulating them to make it less likely that they will become insolvent’.

My objection to the concept of endogenous monetary creation is that it flies in the face of the reality that monetary policy can increase and reduce the rate of growth in nominal GDP (aggregate demand). It would make more sense to explain the fact that money creation through quantitative easing did not result in an immediate increase in bank lending in terms of funds being used to meet demands for liquidity (or repair balance sheets) than to redefine the concept of money in order to claim that the money was not created.

   

In my view Scott Sumner is on the right track in arguing that nominal GDP level targeting (along a 5% growth rate) in the United States before 2008 would have helped greatly reduce the severity of the Great Recession:

‘One reason asset prices crashed in late 2008 is market participants (correctly) saw that the Fed had no plan to bring the US economy back to the old nominal GDP trend line’ (See: ‘A New View of the Great Recession’, Policy, Winter 2013. The article is gated, but Scott has expressed similar views on his blog.)

The idea of targeting nominal GDP, to bring it back to the old trend line seems to me to be similar to Irving Fisher’s advocacy of reflation, as discussed in my post about balance sheet recessions.

So, coming back to the original question, I agree with Steve Keen that debt is important in explaining the GFC and the NAR, even though I have a very different view about the way economic systems work.

Why was Tipperary 'prime in crime' in the early 1800s?

This question arose from my reading of ‘The Two Tipperarys’, by Donal Murphy. The book is primarily about the division of Tipperary into north and south counties in 1838. It was recommended to me as background reading on the life and times of people living in Tipperary in the 19^th Century. (I have some ancestors who came from that part of the world.)

Tipperary was apparently relatively peaceful during the Butler palatinate from c. 1200 to the early 1700s. By the mid 1830s, however, the county had established an unrivalled reputation for lawlessness. In 1836, the number of people committed for trial in Tipperary amounted to about 1.4 per cent of the population of that county, whereas the corresponding percentage for Ireland as a whole was 0.3 per cent.

After comparing the data of numbers of people committed for trial with data on the numbers of crimes reported, the author comments:

‘A crude comparison between the two sets of ratios seems to suggest that a higher number of persons per crime was also a Tipperary phenomenon – perhaps an early indication of a co-operative spirit in the county’.

There is also some evidence suggesting that a greater amount of crime went unprosecuted and unpunished in Tipperary than other counties. At the time, one judge described ‘a system of terror’ creating greater difficulties in administration of justice in Tipperary than in other counties. Another reason for many victims to be reluctant to report crimes would have been their limited faith in the administration of justice.

Donal Murphy does not devote much space to discussion of the causes of the high crime rate in Tipperary because it isn’t relevant to the main theme of his book. He suggests distress and famine as a contributing factor, with a crop failure in 1834 being described as a preview of the Great Famine which occurred a decade later. He also mentions ‘the flourishing state of faction fighting, violence for the sake of violence’. This involved personal and community vendettas erupting in gang warfare at town fairs. A variety of groups are mentioned, including the Caravats and Shanavests.

My search for more information about the Shanavests and Caravats led me to Paul Roberts’ contribution entitled ‘Caravats and Shanavests: Whiteboyism and Faction Fighting in East Munster, 1802-11’, published in ‘Irish Peasants, Violence and Political Unrest 1780 – 1914’, edited by Samuel Clark and James Donnelly. Whiteboyism is a generic term referring to outbreaks of agrarian terrorism between 1760 and 1845, primarily aimed at redressing economic grievances of poor farmers and rural labourers. This action was mainly directed against the rural middle class who were their immediate landlords, as a result of various forms of subletting.

The Caravats have their origins as primarily a Whiteboy movement and the Shanavests as primarily a middle-class anti-Whiteboy movement. Both groups were known by different names in different areas.

Paul Roberts suggests that Caravatism was the product of the wartime agricultural boom of 1793-1813, which increased demand for food and resulted in higher rents. This benefited the middle classes, who had long leases, and disadvantaged the poor, who were not protected by leases. The Caravats used terror against better-off farmers and other middle-class elements in an attempt to guarantee the poor access to land and food. Some of their gangs were also involved in other criminal activities such as highway robbery.

The Shanavest movement had links to nationalist political organizations, but it arose in direct response to Caravatism. Its activities included murders and assaults directed against prominent Caravats. Apparently, the political and religious alienation of the middle class from the state inclined them to look to their own resources, rather than to rely on the state for protection.

The activities of the Caravats and Shanavests began in the south of Tipperary, but by 1809-10 had moved to the north of the county and to other counties. The authorities intervened by increasing troop numbers, holding a special commission and arresting forty men involved in the disturbances. This brought the Caravat-Shanavest outbreak under control, but the two movements seem to have lived on with open feuding being pursued under a series of regional names.

Paul Roberts suggests that the economic basis of the feud would have weakened over time as nationalism gained ground among the poor between 1815 and 1845, and the worsening economic situation of the rural middle class after 1813 created fertile soil for cooperation across class divisions. That would explain why Donal Murphy describes the faction fighting in the 1830s as ‘violence for the sake of violence’.

In writing about ‘the good society’ on this blog and elsewhere, I have put a great deal of emphasis on the need for people to be able to live in peace with one another in order to enjoy the benefits of economic and social progress. The history of Ireland in the early part of the 19^th Century shows just how difficult it can be for people to live in peace when different groups perceive that others are treating them unfairly.

Should the GFC be viewed as a 'balance sheet' recession of the kind Irving Fisher wrote about in the 1930s?

I have been feeling a strong urge to write about the economic policies of the former government of our resurrected prime minister, Kevin Rudd. Whenever I begin to write on this topic, however, what comes to mind is my grandmother’s advice that if you haven’t got anything nice to say, perhaps you shouldn’t say anything. It might be churlish of me to attempt to remind people that Kevin – whom so many people seem to revere as much now as in 2007 – has a record of achievement that is somewhat less than perfect.

Fortunately, not everyone has such qualms and some excellent articles about the economic policies of the Rudd government have appeared in the media over the last week or so. The best newspaper article I have read so far is one by Henry Ergas, entitled ‘Rudd’s Real Record’, published in The Australian last Saturday (July 13, 2013). Ergas reminds us, among other things, that in 2009 Rudd mounted a massive scare campaign about the severity of the GFC in an attempt to justify a splurge of poor quality government spending.

I recall how Janet Albrechtsen suggested in The Australian at the time that the GFC provided Rudd and his treasurer, Wayne Swan, with an opportunity that they were only too eager to grasp:

‘The Rudd Government finds itself at a very fortunate juncture. As Rudd’s treatise in the present edition of The Monthly reveals, he can blame capitalism for the coming government extravagance funded by taxpayers. Prepare for Rudd’s hubris-filled pitch on how he “saved” capitalism and why you had to pay for it.’

Whether we are prepared or not, we are now hearing Rudd’s hubris-filled pitch:

‘As you know, here in Australia, we deployed a national economic stimulus strategy, timely targeted and temporary, which helped keep Australia out of recession, kept the economy growing, and kept unemployment with a five in front of it – one of the lowest levels in the world.’

The hollowness of the claim by Rudd and Swan that the fiscal stimulus pulled Australia though the GFC has been demonstrated many times. For example, in an article entitled ‘Wayne Swan’s legacy of unrivalled incompetence’ in yesterday’s Financial Review (July 16, 2013), John Stone, former secretary to the Treasury, points out that the hubris of Rudd and Swan overlooks the strength of Australia’s fiscal position prior to the GFC, the role played by monetary policy, the underlying strength of Australia’s banks and the growth in China’s demand for our minerals.

John Stone’s article also raised the question I am intending to address here about balance sheet recessions. Stone suggests that the Australian Treasury had erred in seeing 2008-09 as another cyclical recession like that of 1991-92, rather than as a ‘balance sheet recession’ of the kind that Irving Fisher wrote about in an Econometrica article in 1933.

In my efforts to overcome my ignorance about the characteristics of a balance sheet recession I have managed to find an ungated copy of Irving Fisher’s article. Fisher suggested that in ‘great booms and depressions’ … ‘the big bad actors are debt disturbances and price level disturbances’, with other factors playing a subordinate role.

   

Fisher argued that it is the combination of over-indebtedness and price deflation that causes the depression:

‘When over-indebtedness stands alone, that is, does not lead to a fall of prices, in other words, when its tendency to do so is counteracted by inflationary forces (whether by accident or design), the resulting "cycle" will be far milder and far more regular.

Likewise, when a deflation occurs from other than debt causes and without any great volume of debt, the resulting evils are much less. It is the combination of both—the debt disease coming first, then precipitating the dollar disease—which works the greatest havoc.’

Fisher suggested:

 ‘it is always economically possible to stop or prevent such a depression simply by reflating the price level up to the average level at which outstanding debts were contracted by existing debtors and assumed by existing creditors, and then maintaining that level unchanged’.

That seems to me to be similar to the rationale for the quantitative easing policies adopted by central banks in recent years, following the failure of fiscal stimulus efforts. Lars Christensen, a market monetarist, has written more extensively about this similarity on his blog.

John Greenwood’s analysis, conducted in the spirit of Irving Fisher, suggests that some balance sheet repair has occurred in recent years in the countries most affected by the GFC, with greater progress having been made in the US than in the UK and least progress having occurred in the eurozone. 

Postscript:

An article by Max Walsh in today’s Financial Review (July 18, 2013), entitled ‘Rudd’s demands could exceed all expectations’, is another excellent article about the implications of the economic policies of the first Rudd government. Walsh refers to Rudd’s essay in The Monthly (February 2009) in which he sought to differentiate the economic ideology of the two major political parties in Australia. As might be expected, Rudd sought to portray his political opponents as extreme proponents of free market ideology, but he also portrayed the Labor party as being wedded to interventionism.

Kevin Rudd wrote: ‘Labor, in the international tradition of social democracy, consistently argues for a central role for government in the regulation of markets and the provision of public goods’. Max Walsh comments: ‘That’s a view that looks to be at odds with the deregulation and privatisation initiatives of the Hawke-Keating years’.

Viewed in that context, it seems to me that the most likely outcome of Kevin Rudd’s recent promise to pursue microeconomic reform ‘with new urgency’ will be further restriction of economic freedom and lower productivity growth. 

Do 19th Century principles of political economy explain British policies towards the Irish during the great famine?

This question has arisen from my reading of ‘The Great Famine’, by Ciarán Ó Murchadha. But I have an interest in the question for two additional reasons: I have some Irish ancestors who would have been affected by the great famine; and in the course of my work as an economist I have developed a great deal of respect for 19^th Century political economics.

I found Ó Muchadha’s book to be enlightening in explaining why a substantial proportion of the Irish population were heavily dependent on potatoes and highly vulnerable when crops were destroyed by a fungal disease in most of the years from 1845 to 1849. Prior to the famine, about one-third of the population was completely dependent on potatoes because no other crop could provide as much nutritional value from small plots of land. Over 600,000 households subsisted without tenure rights on small plots of land under the conacre system, which gave them access to land in exchange for their labour. A further 300, 000 cottier households had a more formal tenancy relationship which entailed working for set wages, which were offset against the rent for their plots. Many tenants on small holdings paid their rents in cash rather than by providing labour, but were also completely dependent on potatoes for subsistence. 

In the decades leading up to 1845, access to land for potato-growing was becoming more difficult, partly because of an increasing tendency for landowners to consolidate holdings for grazing purposes. In their struggle to obtain access to land it had apparently become common for poor people to offer more rent than they could possibly pay, in the hope that once possession was obtained it would be less bothersome for landlords to reduce rents than to initiate eviction proceedings. The transactions costs associated with evictions were often substantial. Tenants had a set of ‘tradition-sanctioned’ modes of proceeding under cover of darkness against people whom they believed to be perpetrators of injustice. 

Such secret society activity did not persist after 1847, however.  By that time, those who would have been likely to exact retribution for evictions were apparently ‘for the most part dead, in the workhouses, in prison or had departed overseas as emigrants or as transported felons’. The famine added impetus to the number of evictions, not just because many tenants were unable to pay rent, but also because landlords anticipated that their rates would rise dramatically to pay for relief under the Poor Law. Evictions would have substantially increased the death toll from the famine, but from a landlord’s perspective, consolidation of holdings was necessary in order to avoid bankruptcy.

The relief provided by voluntary contributions and the British government was not sufficient to prevent over a million deaths occurring during the famine period. The British Treasury spent about £8 million on famine relief in Ireland, much of which consisted of advances that were intended to be repaid. The government’s contribution was relatively small by comparison, for example, with the £69 million spent on the Crimean War of 1854-1856. The government could have done more to help the Irish without causing much hardship within Britain.

So, why didn’t the British government provide more help to the victims of the Irish famine? The explanation offered by the author is as follows:

‘Political economy … combined with ‘providentialist’ and ‘moralist’ views, provided the assumptions underlying the decision-making of the small London-based political elite whose views translated into legislation for Ireland, and none of whom ever witnessed its effects first hand’ (page 194).

However, that doesn’t line up well with what I know about the views of prominent 19^th Century political economists. For example, in discussing the limits of laissez faire in his book ‘Principles of Political Economy’, published in 1948, J S Mill wrote:

‘Apart from any metaphysical considerations respecting the foundation of morals or of the social union, it will be admitted to be right that human beings should help one another; and the more so, in proportion to the urgency of the need: and none needs help so urgently as one who is starving. The claim to help, therefore, created by destitution, is one of the strongest which can exist; and there is prima facie the amplest reason for making the relief of so extreme an exigency as certain to those who require it, as by any arrangements of society it can be made.’

Ciarán Ó Murchadha implies that his view is based on research by Peter Gray, which demonstrates

 ‘that the ideological framework was part of a wider set of beliefs shared across the British political spectrum, including the conviction that the Famine had been sent by providence, and that it furnished the British state with both the opportunity and the moral authority to reform Ireland thoroughly’.

A paper by Peter Gray has explained British policies towards the Irish in terms of

‘a readiness to attribute mass famine mortality in Ireland to the wilful immorality of the Irish, and to insist on the implementation of the penal mechanism of the poor law on all social classes’.

Immediately afterwards, Gray adds:

‘This, rather than any unthinking adherence to “laissez faire” is what informed the doctrine of “natural causes” in the latter stages of the Irish famine’ (IEHC 2006 Helsinki Session 123).

It seems to me that British views relating to providence and morality might have been advanced by English people to avoid acknowledging that they did not feel much sympathy for starving people in Ireland. In his book, ‘Why Ireland Starved’ (1983) Joel Mokyr suggests:

‘It is not unreasonable to surmise that had anything like the famine occurred in England or Wales, the British government would have overcome its theoretical scruples and would have come to the rescue of the starving at a much larger scale. Ireland was not considered part of the British community. Had it been, its income per capita may not have been much higher, perhaps, but mass starvation due to a subsistence crisis would have been averted …’ (p 292).

Even though Britain and Ireland were part of a political union, there are strong historical reasons why many British and Irish people did not see each other as members of the same community. There is evidence that British political economists, including J S Mill, shared the prejudices against the Irish of many other British people. But the principles of political economy espoused by 19^th Century political economists did not require the British government to allow large numbers of people to die during the Irish famine. 

Do Australians elect the prime minister?

In a recent post entitled ‘The importance of representative democracy’, my friend, Jim Belshaw, takes the Leader of the Opposition, Tony Abbott, to task for saying that the Australian people elect the Prime Minister.

Jim writes:

‘They don't, nor should they if you want to maintain our current system of Government’. Maybe you don't so, so present your alternative.

In our system, Parliament is the supreme being. Parliament appoints the Prime Minister by awarding confidence. It is Parliament that stands between us and the overbearing coercive power of Executive Government.’

It seems to me that while Jim is technically correct, it has been unusual for party leaders to be deposed while their party is in government. That has led to a situation where most people have tended to vote for party leaders and perceptions of leadership have a massive influence on the popularity of political parties. The recent lift in the Labor party’s electoral prospects did not occur because of some radical change in the party’s policies. It occurred because caucus elected a new leader.

As previously noted, I am pleased that the Labor caucus has restored Kevin Rudd to the leadership and have given voters the opportunity to vote against him. It does seem reasonable for voters to expect that the leader of the party they vote into office will remain prime minister until they vote him or her out of office. On the basis of Labor’s recent track record, however, it also seems reasonable for voters to question how long Kevin Rudd will remain prime minister if Labor is returned to government. Will Kevin Rudd again be replaced by his deputy next time around? Could a vote for Kevin end up as a vote for Albo?

Unfortunately for the line of argument Tony Abbott seems to be running, the Liberal party also has recent form (in Victoria) in deposing an elected leader while it is in government. And it is possible to imagine circumstances arising where a vote for Tony might end up as a vote for Malcolm. Some voters might view that as a good reason to vote Liberal!

What effect will it have on our system of government if it becomes become more common for prime ministers to be deposed by their own parties? I’m not sure. If it makes voters focus to a greater extent on policies rather than the personalities of leaders that would be a good thing. However, I don’t think that will happen. It seems more likely to attract attention to the personalities of the leader’s rivals in his or her party and could lead to greater political instability as those rivals seek to exploit their popularity with voters. But it may also cause voters to pay more attention to the ability of current leaders to work harmoniously with their rivals. People may become more conscious that when they vote for clowns they end up with a circus.

I am broadly in agreement with Jim about the importance of parliament and representative democracy. I don’t want to change the system. In practice, however, I don’t think parliament does much to protect us from what Jim describes as ‘the overbearing coercive power of Executive Government’. Thank God that we also have a constitution, rule of law, regular elections, two houses of parliament, and a federal system of government.

Another important merit of our representative system of democracy, with single member electorates, is that it normally produces accountable government. One party or stable coalition normally wins a majority of seats and is able to form a government that usually lasts until the next election is held. The elected government doesn’t have unlimited power to implement the policies it is elected to pursue, but it can be held accountable for the policies that it implements.

By contrast, when overall budgetary and regulatory outcomes are the result of unstable alliances involving minor parties and independents, voters have great difficulty in holding any party accountable. 

What is so good about 'Send Round the Hat?'

‘Now this is the creed from the Book of the Bush--

Should be simple and plain to a dunce:

"If a man's in a hole you must pass round the hat--

Were he jail-bird or gentleman once."

Henry Lawson, a renowned Australian bush poet and story teller, used that verse to begin his story, ‘Send Round the Hat’. The story is based on his experience in the Bourke district of New South Wales in the early 1890s and would have been intended to be read mainly by Australian pastoral workers.

I came to re-read the story a month or so ago when I was asked to recommend some historical references for an Argentinian visitor who was interested in the cultural tradition in rural Australia of people sticking together and supporting each other in this vast harsh land. I suggested that ‘Send Round the Hat’ was excellent.   The comment that came back was: ‘Not necessarily that easy for an Argentinean to understand!’

That response is fair enough. There are probably a lot of Australians who would also struggle to understand English as it was spoken in rural Australia in the 1890s.

 Some people might even struggle to understand the message of the poem quoted above. A person who is ‘in a hole’ is in a difficult situation, often involving a financial problem. To ‘pass round the hat’ is to ask people to donate money to help the person concerned – traditionally, by asking them to place a contribution into a hat. The message is to be kind to people who are in difficulty, irrespective of their background.

The storyline is very simple. The author presents a series of anecdotes to explain how Bob Brothers (more commonly known as the Giraffe or Long-‘un because he was tall) has gained a reputation for passing around the hat to help others. He tells us that Bob is always the first to make a contribution when he passes around the hat and that he sometimes has to borrow money in order to do this. The story ends with Bob’s friends stealing his hat and passing it around to raise money to help him on his way back to Bendigo in Victoria to marry the girl he loves.

The story is brought to life by Lawson’s description of the characters involved and their attitudes. Most regard Bob Brothers as a nuisance, or pretend to. One of the characters, Jack Mitchell, is even permitted to suggest that Bob is ‘is one of those chaps that is always shoving their noses into other people’s troubles’ because of ‘vulgar curiosity and selfishness’. According to Jack’s theory, Bob makes his collections because he is ambitious and likes public life.

Fairly early in the story, Lawson has Bob explain his philosophy as follows:

"The feller as knows can battle around for himself," he'd say. "But I always like to do what I can for a hard-up stranger cove. I was a green-hand jackeroo once meself, and I know what it is."

Bob was saying that he does what he can to help strangers in need because he knows what it is like to be one. The ‘feller as knows’ would have a great deal of local knowledge and networks to support him. A ‘hard-up stranger cove’ is a stranger with little money. A green-hand jackeroo is an inexperienced worker in the pastoral industry.

The main reason why I consider ‘Send Round the Hat’ to be excellent is because Lawson is using the story as a gentle way to suggest to his readers that kindness involves helping strangers as well as your mates (friends and people you know well) and fellow members of trade unions, religions and ethnic groups.

The anecdote that makes the point most strongly, in my view, is the description of Bob’s attempt to take around the hat for the benefit of a sick Afghan camel driver:

‘Some years before, camels and Afghan drivers had been imported to the Bourke district; the camels did very well in the dry country, they went right across country and carried everythink from sardines to flooring-boards. And the teamsters loved the Afghans nearly as much as Sydney furniture makers love the cheap Chinese in the same line. They love 'em even as union shearers on strike love blacklegs brought up-country to take their places.

Now the Giraffe was a good, straight unionist, but in cases of sickness or trouble he was as apt to forget his unionism, as all bushmen are, at all times (and for all time), to forget their creed. So, one evening, the Giraffe blundered into the Carriers' Arms--of all places in the world--when it was full of teamsters; he had his hat in his hand and some small silver and coppers in it.

"I say, you fellers, there's a poor, sick Afghan in the camp down there along the----"

A big, brawny bullock-driver took him firmly by the shoulders, or, rather by the elbows, and ran him out before any damage was done. The Giraffe took it as he took most things, good-humouredly; but, about dusk, he was seen slipping down towards the Afghan camp with a billy of soup.’

The point being made was that Bob was even prepared to pass the hat around among bullock-drivers - a notoriously tough and profane group - asking them to make a contribution for the benefit of an economic competitor belonging to a different religious and ethnic group.

‘Send Round the Hat’ might not be great literature, but it makes some important points about the inclusiveness, or otherwise, of Australia’s cultural heritage of supporting people in need. After re-reading it I am still of the view that the tradition of passing around the hat has always been largely about ‘looking after your mates’. However, I greatly admire Henry Lawson’s attempt to promote higher ideals.

Do you know what?

Kevin Rudd is back. He is rocking around the place, cooking with gas. But will he be able to save the Labor party? On the face of it, there is a natural complementarity between his two philosophical approaches and a complementarity that could be developed further in the direction of some form of conceptual synthesis. All he has to do is to reverse engineer and start at the third year and move back to the first.

You might be thinking that is just a load of balderdash, a load of absolute bunkum. Well, fair shake of the sauce bottle! Let’s be fair dinkum.

It seems to me that Kevin 07’s second coming has brought humour back into Australian politics. I had to laugh when, just after his re-election to leadership of the Labor party, he said that there is too much negative personal politics in Australia and that ‘all this must stop’. He didn’t seem to be aware of the irony of saying that after having told us earlier in the day that he was contesting the leadership of the Labor party in order to ‘prevent Mr Abbott from becoming prime minister’. It would be hard to imagine anything more negative and personal than a political campaign to prevent another person from being elected.

Unfortunately, I don’t think Kevin would have known he was joking. I don’t think he knew he was joking either during the 2007 election campaign when he accused John Howard of engaging in an ‘irresponsible spending spree’ and said that this ‘reckless spending’ must stop. I didn’t know he was joking then, either. I thought that we had seen a convergence between the two sides of Australian politics and that the Labor party under Kevin Rudd would give high priority to responsible economic management. I even hoped that it might pursue productivity-enhancing reform with some vigour.

Looking back now, I must have been aware that some of the policies announced by Rudd were jokes played on a gullible electorate. For example, I must have suspected that fuel watch and grocery watch were political exercises designed to tell voters that Kevin was listening to their concerns and was prepared to engage in frenzied activity to give the appearance of doing something about them without actually doing anything. I suppose I thought that all governments have a tendency to play those kinds of games.

However, it is now clear that nearly all Kevin Rudd’s policies were like that. Rudd’s first government was like a swan attempting to do backstroke. Rather than gliding effortlessly across the surface of the water, with all its energy being expended below the surface, there was a lot of splashing around in public and a tendency to move backwards. It was as though Rudd saw his purpose in politics as being to just splash around and improve his popularity rating.

My book, Free to Flourish, contains the following suggestion:

‘A more critical attitude should be taken toward the efforts of politicians to be seen to be responding to public opinion. Democratic politics is reduced to comedy when individual members of the public look to politicians for leadership when forming their opinions and politicians look to public opinion polls in developing their policies. Politicians should be expected to maintain principled positions that are not blown around by changes in public sentiment.’

There is no prize for guessing which politician was at the forefront of my mind when I wrote that.

Like many other people in this country, I feel that the Labor caucus has righted a wrong in restoring Kevin Rudd to leadership of the Labor party. It is pleasing that those voters who are able to see through the practical jokes that Kevin 07 played on them (and himself) when he was previously prime minister have now been given the opportunity to vote against him.

What is life like for a Bhutanese asylum seeker living in Germany?

A few days ago Hemlal Mainaly, a Bhutanese asylum seeker living in Germany, offered to provide information for my blog about the problems he has encountered. I decided to interview Hemlal because of my interest in Bhutan. However, his responses remind me that whatever problems people like Hemlal may pose for the governments of countries in which they seek asylum, they are seeking opportunities for happiness that most other people take for granted.

An edited version of the interview follows:

Hemlal, would you please introduce yourself to readers of Freedom and Flourishing?

I am a 33year old single male, currently living in Germany at Hodenhagen. I have studied applied science, and have obtained a Bachelor of Science (B.Sc) from Tribhwan University, Kathmabdu Nepal.

I am the youngest member of my family. My parents, both age 67 years, have been living in the US at Syracuse, NY since 2010 under a UNHCR resettlement program. I have 5 sisters, four of whom have also been living in the US. My brother, travelled to the Netherlands in 2005 and his political claims were recognized immediately by the Netherlands authorities. He obtained Netherlands citizenship through naturalization in 2011.

Why did you leave Bhutan?

The government of Bhutan confiscated my immovable properties and terminated the nationality of my parents at gun point. It accused us of involvement in the democratic and peaceful protest that took place in 1990 in Bhutan. The royal authorities declared us traitors and at forced us to sign the ‘’voluntary’’ emigration form.

I left Bhutan in 1991 when I was just 12. We migrated to Nepal and lived at the Bhutanese Refugee Camp at Beldangi 2, aided by UNHCR.

How did you come to live in Germany?

The failure of 16 rounds of bilateral negotiations between the governments of Nepal and Bhutan to resolve the refugee problem left no hope of dignified repatriation of refugees to Bhutan. The degree of frustration among young refugees increased and the security situation became fragile. Insurgent groups formed within the refugee communities aiming to begin armed revolution to Bhutan. The position of those opposed to such groups became insecure as refugees started killing each other in an astonishing way.

Meanwhile, third countries had developed proposals to resolve the Bhutanese refugee problem by offering voluntary resettlement. The resettlement proposals added butter on the fire in the refugee communities. The communities divided, one side accepting resettlement while the other maintaining that dignified repatriation was the only the solution.

I campaigned for third country resettlement for a long time while living at Kathmandu, the capital of Nepal. As a result, threats were made on my life and I was not able to go back to the refugee camp. I escaped to Germany in 2007 for my own safety. I had to leave Nepal to protect my life.

What have you been doing since you went to Germany?

Since the beginning of 2007, I have been doing absolutely nothing. My political asylum petitions have been refused by the German Federal Office for Migration and Refugees and by the Federal Court for irrelevant and incredible reasons. The German authorities accused me of leaving Bhutan voluntarily. They claim that Bhutanese who were expelled following the 1990 protests are not political refugees.

Currently, I have a short residency permit  for the period of six months issued in November 2012.This is something like temporary toleration and valid  as long as the authorities are not able to get travel documents for my deportation to Bhutan . The Bhutanese Embassy at Brussels has apparently not responded to inquiries from the aliens authority.

I have no travel documents, but I am not able to take an integration course. My residency permit does not give me the right to leave German territory. I do not even have the right to visit the Netherlands to see my brother.

Do you consider conditions for asylum seekers in Germany are better or worse than in other countries?

To be very honest, on the basis of my suffering in Germany for last seven years, I caution refugees around the globe please never to step into Germany seeking protection. This is the worst place for refugees and asylum seekers. In the name of giving protection, this jurisdiction destroys the lives of thousands of refugees. They suppress people mentally and paralyse them.

Many resettled Bhutanese refugees have told me that the conditions of life for asylum seekers in other EU states are far better than in Germany, and conditions for asylum seekers in Australia, Canada and the US are also better than here. I would like to express heartfelt thanks to the US government for resettling over 70 thousand Bhutanese refugees at a time when it has been struggling to cope with economics crises. The Bhutanese refugee community will remember this act of kindness for all time.

What are your hopes for future?

I have tried all possible ways to obtain refugee status, but without success. I feel hopeless, helpless and paralysed. My future seems very gloomy, terrible and pathetic. I do not know what will happen from one day to the next.  I have no future prospect in Germany. I would request assistance from all the third countries who have been resettling the Bhutanese refugees.

I also request the diplomatic missions of USA, Australia and all core groups states to pressure the German authorities to open their eyes to the suffering of refugees. There is too much suffering. Enough is enough!

How should we encourage kindness?

Kindness is the greatest of all virtues. That is not just my opinion - the importance of kindness has been widely acknowledged for thousands of years. Some prefer to say that charity or love is the greatest virtue, but that seems to me to amount to the same thing. The concept charity or love that has particular virtue is loving-kindness. 

Psychological research provides support for the view that kindness is worth encouraging. Apart from obvious benefits to the recipients, there is evidence that kindness also has positive spill-over effects. Research by Simone Schnall and colleagues indicates that when people see another person perform a good deed they are more likely to be helpful to others. Such behaviour seems to be linked to feelings of elevation.

There is also evidence that kindness is good for those who practice it. Research by Barbara Fredrickson, Bethany Kok et al suggests that when people generate feelings of loving-kindness they tend to experience improved physical health (measured by cardiac vagal tone). The research suggests that perceptions of positive social connections with others account for the link between positive emotions and improved physical health.

I feel slightly embarrassed to be writing about the merits of kindness and how we should encourage greater kindness. That is partly because I am aware of shortcomings in my own behaviour. The main reason, however, is that the merits of kindness have been so widely acknowledged for such a long period that it probably seems platitudinous for someone like me to be asking people to consider how we should encourage it.

Some of my friends might think I should leave advocacy of kindness to religious leaders such as the Dalai Lama (who is currently in Australia preaching kindness) and focus my own efforts on promoting more widespread understanding of the merits of free markets in enabling individuals to promote the good of others by pursuing their own interests. I urge those friends to read on and to further consider the relationship between kindness and self-interest.

I think economists, among others, should be considering how to encourage kindness because incentives to engage in beneficial economic activities are likely to be greater in societies in which people are kinder. That proposition is not new. It is more usually stated in terms of the importance of trustworthiness in reducing transactions costs, including costs of contract enforcement and protection of persons and property. It seems reasonable to assume that kind people are generally more trustworthy than unkind people.

Are western societies becoming less kind? The answer seems to me to depend on the time frame considered. There seems to have been a secular trend toward greater kindness and less violence in western societies, as Steven Pinker has argued (see an earlier post for relevant comments). Over recent decades, however, there does seem to be increased incivility in many aspects of life including politics and workplaces.

Incivility in politics was very obvious in Australia last week, but I want to focus here on evidence of widespread and increasing incivility in workplaces. In 2011, about half of the workers included in a large US and Canadian study (by Christine Porath and Christine Pearson) claimed to have been treated rudely at work in the past week, whereas in 1998 only a quarter made that claim. Claims have been made that a similar epidemic of incivility is also occurring in Australian workplaces.

I doubt whether the incidence of incivility has actually doubled. It is possible that many people have become more sensitive to criticism of their performance and perhaps more prone to interpret constructive criticism as incivility.

Nevertheless, Porath and Pearson provide impressive evidence that incivility in workplaces is not a trivial matter. Those affected claim that it causes them to reduce their work effort. Managers spend a lot of time dealing with the aftermath of incivility. And customers are turned away when they witness disrespectful behaviour among employees.

Perhaps the most obvious way to reduce incivility is by making rules that will discourage offending behaviours. I suspect, however, that a plethora of rules is an ineffectual way to encourage kindness. The apparent increase in incivility has occurred at a time of increased regulation to prevent extreme acts of incivility (e.g. discrimination on grounds of race, gender, religion, sexual orientation, disability). Workplace bullying could be expected to thrive in environments where staff are unable to achieve expected outcomes without breaching rules of conduct intended to prevent incivility.

Most of the recommendations made by Porath and Pearson to reduce incivility do seem likely to encourage more kindly behaviour in workplaces. They suggest, among other things, that leaders should look to their own behaviour, take more account of civility in hiring staff and reward good behaviour. Interestingly, such remedies would seem fairly obvious to any business leaders concerned to promote the interests of shareholders. Incivility in workplaces will presumably become less of a problem as business leaders become more aware of its effects on the bottom line.

More generally, it seems to me that the best way to encourage kindness is to make people more aware that kindness is good for those who practice it.  

What has been the most important milestone in replacing tyrannical government?

This question was prompted by a visit to the new Museum of Australian Democracy at Eureka (MADE) at Ballarat in Victoria. I was impressed by the material presented about the Eureka rebellion of 1854, the culmination of a protest by self-employed gold miners against an oppressive licence fee, levied irrespective of the amount of gold found. Taxation without representation was one of the miners’ grievances, but it is not clear how many miners saw an extension of voting rights to all adults as an objective of their protests. 

The material presented in the display includes the following statement by Peter Lalor, a leader of the rebellion, a couple of years later when he was a member of the Victorian parliament:

‘I would ask these gentlemen what they mean by the term “democracy”. Do they mean Chartism or Republicanism? If so, I never was, I am not now, nor do I ever intend to be a democrat. But if a democrat means opposition to a tyrannical press, a tyrannical people, or a tyrannical government, then I have been, I am still, and will ever remain a democrat'.

Lalor seems to have had in mind a definition of democracy similar to that later adopted by Karl Popper, which emphasizes the importance of being able to dismiss governments that have tyrannical tendencies. Unfortunately, the granting of voting rights to all adults does not always prevent the emergence of governments that act tyrannically with the support of the majority.

The aspect of MADE that I found most confronting was the attempt to put the Eureka rebellion into context in a timeline for the development of democracy. According to the timeline presented, the most significant event following the Magna Carta was the French Revolution. That seemed odd to me because the French Revolution replaced a form of tyranny with something worse – a reign of terror!

Other aspects of timeline presented tend to glorify revolution. For example, the display invites visitors to view Karl Marx as a hero of democracy.

MADE’s problem probably stems from the definition of democracy it adopts:

People + Power = Democracy.

Which people? What power? The definition fails to recognize that different people have different interests and that the success of some groups in obtaining favours from governments must be at the expense of other groups. It fails to distinguish the desirable features of a democratic regime from the tyranny of the mob. It also fails to recognize that tyrants often portray their efforts to exercise unlimited power as being in the interests of ‘the people’ - and often have substantial popular support.

My visit to MADE occurred while I was reading The Oxford History of Britain, edited by Kenneth Morgan. The chapters by John Morrill and Paul Langford, dealing with the Stuarts, the Civil Wars and the eighteenth Century, seem to be particularly relevant in considering the most important milestones in replacing tyrannical government. My reading has given me the impression that prior to the 17^th Century, politics in England (and in many other countries) was essentially authoritarian. In England, politics was dominated by the hereditary rights of sovereigns and competition to impose particular religious doctrines in order to make people less sinful. During the 17^th Century in England the idea that religion should be viewed as largely a private matter began to gain acceptance and the hereditary rights of sovereigns became less influential.

It seems to me that the Glorious Revolution of 1688 should be viewed as the most important milestone in replacing tyrannical government.  By legitimizing the replacement of James II with William and Mary, the propertied classes represented in parliament were rejecting the idea that ancestry should determine who has the right to exercise political power. The Glorious Revolution was followed by the Toleration Act of 1689 which gave formal recognition to religious pluralism, and was an important step toward giving equal rights to followers of all religions. 

Is ambition making you miserable?

A guest post by Kelly Opferman (further information below) to open up discussion on an interesting topic.

There have been some interesting discussions recently about the role that ambition plays in our overall feeling of happiness, including one piece in The Atlantic. The question is whether or not your reaching for career success undermines your sense of happiness and your overall well-being. There has not been a conclusive answer to the question, but the consensus seems to be that  is indeed a trade-off that you make when you shift your focus to your career and other accomplishments.

Here are a few reasons why too much ambition may be undermining your happiness and maybe even making you miserable:

Comes at the Cost of Relationships

The primary reason why your ambition could by making you unhappy is that it comes at the cost of your relationships. Tim Kasser, the author of the book The High Price of Materialism, argues that the pursuit of money, possessions and social status creates distress and lowers well-being, primarily because of the damage that such pursuits inflict on relationships.

Researchers John Helliwell and Robert Putnam found in a 2004 study that marriage, family, social ties, civic engagement and working relationships all had a significant impact on happiness.

If it is our relationships that make us happy, then neglecting these in the pursuit of our ambition can cause us to become profoundly unhappy.

Leads to Loneliness

Conventional wisdom says it's lonely at the top. That's because you don't have time for relationships when you are putting in the long hours to achieve your goals or try to gain prominence in your workplace. Even if you manage to maintain relationships while pursuing your ambition, you likely won't have the time that you would like to spend with those people and to enrich your relationships.

As a result, you will have achieved great successes, but it will likely feel empty. You may feel happiness at having accomplished something great, but the victory will feel hollow when you don't have those strong personal connections to form the foundation for a happy life.

Creates a Lot of Stress

Working long hours without making time for family and friends can lead to unhealthy levels of stress, which can bring down your mood and put you at risk for a number of health problems. A new study in the Journal of Applied Psychology found that ambition is negatively associated with longevity -- meaning that ambitious people are likely to live shorter lives. Ongoing high levels of stress can lead to depression, sleep problems, and a number of other chronic health conditions. Not only can it reduce your overall feelings of happiness, but it can also shorten your life span.

The researchers in the Journal of Applied Psychology said that more research is needed to determine the real link between ambition and happiness. However, the research that has already been done shows that there is reason to believe that the more ambitious you are, the less happy you are likely to be.

What are your thoughts? Do you think that ambition can make you miserable? Share your thoughts in the comments!

The Author:

Kelly Opferman is a seasoned writer who at this time focuses on her site at: http://www.autoloancalculator.org. Her educational background includes finance, teaching, and economics.

Postscript by Winton

I have now had an opportunity to read a version of the article in the Journal of Applied Psychology, that Kelly refers to. The overall findings in the article, by Timothy Judge and John Kammeyer-Mueller, suggest that the effects of ambition are generally favourable for the individuals who have it. The qualification about longevity seems to me to be more about inconclusive results than evidence of a negative relationship. The authors found that ambition is positively related to educational attainment, incomes and satisfaction with life.

The study seems to be soundly based. Data are from the Terman life cycle study in the US, involving a sample of 717 individuals followed over seven decades. The most important qualification about the sample is that subjects were chosen for inclusion in the Terman study because they were assessed to have high ability.

The definition of ambition used by the authors is ‘persistent and generalized striving for success, attainment and accomplishment’. It is measured by a combination of self-assessment and parental assessment of whether the individual has ‘a definite purpose in life’ and whether ambition is listed among the individual’s most favourable qualities or lack of ambition is listed among the individual’s most serious faults.

In their suggestions for further research, the authors acknowledge that the effects of ambition may depend on the goals that are sought. For example, other research suggests that people who seek fame or wealth for the pleasure they imagine that it will bring them, are less likely to have happy lives than those who have nobler ambitions.  

Should Australians be more concerned about budget deficits or big government?

We live in strange times. A few months ago, when the Australian government had little hope of achieving its promised budget surplus, it seemed likely to face severe punishment for fiscal mismanagement. Since then the short term budget situation has worsened, but the treasurer has been able to mount a plausible argument that this has happened as a result of factors beyond the government's control. Wayne Swan has been able to argue that 'we've had this sledgehammer smash into our revenues' as a result of the high dollar and lower commodity prices. The federal opposition, fearful of being labelled as favouring 'mindless austerity', has now walked away from its commitment to have a surplus in its first year of office. So, the government seems to be off the hook!

Rather than showing contrition, Wayne Swan seems to be taking advantage of the situation to engineer a change in public attitudes towards deficits. His recent criticism of European finance ministers for their austerity policies must have been intended largely for an Australian audience. Wayne must know that the Europeans have not chosen austerity. With few exceptions, European finance ministers would love to be able to follow his example of ongoing increases in government spending. Austerity has been forced upon them as a consequence of decades of profligacy.

I suspect that Wayne Swan is denouncing option A (austerity) so severely because he favours option D (deficits for a decade). The next budget should confirm whether or not my suspicions are well-founded. The big test is whether it presents a plausible route to budget surplus within a few years, or whether he tries to make ongoing deficits look respectable.

How might Mr Swan attempt to make ongoing deficits look respectable? He would probably find it difficult to argue in favour of never-ending fiscal stimulus: even Keynesians would have to acknowledge that fiscal stimulus for more than 5 or 6 years in a row could be difficult to justify. Perhaps he will attempt to advance a dodgy argument along the lines that low world interest rates provide Australia with the opportunity to borrow at low cost in order to pay for increased investment in human capital (implementing Gonski proposals for increased education funding) and help us to meet the challenges of the Asian century (whatever that might mean). He could suggest that such a policy would raise productivity and thus generate income streams that would enable the debt to be serviced without any problems. (I think the argument is dodgy because the Gonski proposals are unlikely to have much impact on productivity – but that is another story.)

Would the electorate buy such an argument for ongoing fiscal deficits? Jacob Greber has an interesting article in this weekend's Financial Review ('Swan changes his tune', p 16) in which he argues that voters may care about budget deficits far more than the government anticipates. He points to a Nielson poll suggesting that the percentage of voters viewing a surplus as a high priority rose after the government abandoned its promise of a surplus in the current fiscal year. A poll in February suggested that 54 percent of voters viewed a surplus as a high priority (up from 49 percent before the promise was abandoned), and 41 percent (down from 45 percent) viewed it as a low priority.

I hope Greber is right, but I think public opinion is likely to become more favourable to dodgy arguments for increasing government debt if a surplus can only be achieved during the next few years through tax increases or substantial cuts in government spending. I suspect a majority for voters would favour increasing debt to fund additional education spending if an option was presented to them in those terms.

In my view, Government debt is still at a sufficiently low level in Australia that it could not plausibly be argued that servicing that debt is likely to present a problem in the near future. The government's failure to achieve a budget surplus this year is only of consequence because it is muddying the waters about the importance of maintaining fiscal discipline as it runs away from that stupid promise. Irresponsibility is being heaped upon stupidity.

In my view there is reason to be concerned that the cautious attitudes that Australians have shown toward increasing public debt in recent decades could be quite a fragile phenomenon. John Daley has expressed a similar view in his report for the Grattan Institute, Budget pressures on Australian governments:

'There are concerns that this public attitude may be eroded by several years of budget deficits, and the accompanying rhetoric justifying this in both Australia and overseas. Public concern about deficits may also be affected by promises for specific costly programs and political attitudes projecting a belief in the ability of government to cure all social ills'.

Daley's report provides an excellent overview of the contribution of increases in different forms government spending to budget deficits. Growth in spending on health seems to present the biggest challenge.

However, Daley seems to be more concerned about the potential for budget deficits to increase than about the growth of government spending. He is at pains to point out that budget deficits can be a problem in countries with relatively low levels of government spending as a percentage of GDP and that size of government in Australia is relatively low by OECD standards. He argues on historical grounds that 'successful budget repair invariably involves both tax increases and expenditure reductions'.

Stephen Anthony's report for the Minerals Council, A roadmap for fiscal sustainability, seems to imply that we should be concerned about the growth of government spending over the longer term, even if tax revenue could be lifted sufficiently to prevent fiscal deficits from growing. His projections suggest that the federal government will still have a structural deficit a decade ahead even if it manages to restrain spending to a rate below the growth rate of the economy. His recommendations include elimination of up to $15 billion in poorly targeted outlays as well as institutional reforms to re-orient fiscal strategy around a structural budget measure designed to prevent spending from blowing out of control when commodity booms result in windfall tax revenues.

Andrew Baker's report for the Centre for Independent Studies, Target 30 – Tax-welfare churn and the Australian Welfare State, provides some clues as to where poorly targeted outlays might be found. The report suggests that around one-half of government welfare spending in Australia is due to tax-welfare churn, where government taxes middle and high income earners and then returns those taxes in the form of welfare benefits, usually with conditions and requirements attached. Baker argues for reductions in government spending in specific areas of churn, with savings returned to taxpayers through reduced taxes.

In considering whether Australians should be more concerned about the budget deficit or big government, some consideration should also be given to the question of Australia's ability to cope with big government. As I pointed out in Free to Flourish countries differ greatly in their ability to cope with big government. For example, Sweden seems to have been able to cope with government spending that is still around 50 percent of GDP without huge problems so far, whereas the Greek economy was exposed to a great risk of calamity before its government spending reached that level.

Where does Australia stand? It seems to me that the political institutions and public administration of this country are struggling to cope with existing responsibilities. It makes no sense for governments to be spending more and taking on additional responsibilities when they cannot even sort out which level of government has responsibility for what function.

That leaves me more concerned about big government than about the budget deficit. The federal government should be castigated for allowing government spending to increase faster than GDP. 

Does our hope for social progress depend on improvement of human nature?

John Gray's recent book, 'The Silence of Animals' is subtitled: 'On progress and other modern myths'. My main reason for reading it was to see whether it provided a serious challenge to the positive view of progress presented in my book, Free to Flourish.

From what I had read of John Gray's writings over the last decade I had expected that The Silence of Animals would be a book that could only be enjoyed by people who like wallowing in hopelessness. I was pleasantly surprised that I had a positive reaction to most of the book.

Rather than suggesting that we should wallow in hopelessness, the author argues the merits of contemplation, 'as an activity that aims not to change the world or to understand it, but simply to let it be'.  But how has it come about that increasing numbers of humans now have the capacity to devote some of their time to such an activity? Without acknowledging it, the author seems to me to be endorsing the progress that has given more people the luxury of being able to spend time observing the natural world, without having to focus on the usefulness of animals and environments as sources of food, shelter and other necessities of life.

As I see it, this book does not actually make a cogent case that human progress is a myth. The author's target seems to be a rather different beast - the idea that human nature improves along with the growth of knowledge. He writes:

'Science and the idea of progress may seem to be joined together, but the end-result of progress in science is to show the impossibility of progress in civilization. Science is a solvent of illusion, and among the illusions it dissolves are those of humanism. Human knowledge increases, while human irrationality stays the same. Scientific inquiry may be an embodiment of reason, but what such inquiry demonstrates is that humans are not rational animals. The fact that humanists refuse to accept the demonstration only confirms its truth'.

That is beside the point. As the author must once have known (as a person who has read the works of Friedrich Hayek) what most of us perceive as progress can be viewed as a process whereby the evolution of superior social rules has enabled some groups to flourish and for the rules of the more successful groups to become identified with civilization. This process does not depend upon human rationality. In fact, Hayek observed that in view of the rapid changes in human society that had occurred over the last eight thousand years it is not surprising that adaption of the 'non-rational part' of humans 'has lagged somewhat', and that 'many of his instincts and emotions are still more adapted to the life of a hunter than to life in civilization' (CoL, 1960, p 40).

The examples that John Gray gives of irrationality and inhumane conduct under communism and Nazism are also beside the point. The view that we are better people than our Stone Age ancestors can probably be dismissed as hubris, but that doesn't mean that there has been no social progress over the last eight thousand years.

In order for John Gray to persuade me that progress is a myth he would need to establish that the rules of the game of modern societies have reduced the opportunities for people to have happy and meaningful lives.  In my view that would be an impossible task and it is not surprising that the author does not attempt to do this. Our hope for progress does not depend on improvement of human nature. It depends on maintaining rules of the game that enable people to live in peace, to realise their potential as individuals and to enjoy a measure of economic security.

This book would have been much better if the author had defined his target more carefully as the myth of improvement in human nature or the myth of human superiority. Even as it stands, however, the book is not as bad as I thought it might be.