Given my spray about a pointless circular definition in a recent Bill, I was interested to note the comments of the Chief Justice of the High Court about the excessive leeway given to the courts to define words like "good faith". In the case in point effectively it is left to the court to define broadband.
Note: My earlier comment was wrong the newly defined term is used in the Bill, but ot in such a way that a definition was required.
Friday, July 10, 2009
NBN Board speculation
The main stream media is now getting right into the NBN Board speculation game, with both the Oz and the SMH joining the fray.
Nothing particularly new or insightful. A great worry from the SMH story is the suggestion that a lawyer might get a start - I have a firm view lawyers are not needed on Boards. Every Board member should be well enough appraised of their own legal responsibilities and it is a failure of governance for the Board as a whole to rely on the legal expertise of one director. In brief, the most use that the director with legal quals can provide is to advise his/her fellow directors is that they should get legal advice from their law firm – but the directors cannot rely on the advice of their legally trained colleague when he/she advises them not to do so. So lawyers add no technical benefit.
Far from their touted belief that legal training provides a disciplined thought process of use in wider fields, in reality their training is very restrictive to a certain kind of linguistic deductive process that is anathema to creative thinking.
This doesn't mean that a lawyer should be excluded, just that they shouldn't be chosen so there is a lawyer. The suggestion that the author of the Australian competition law "bible" would be the lawyer is particularly odd, given that we'd hope the structural separation of the NBN means it is not embroiled in competition issues.
I'm finding the speculation numbing. I made my contribution on who should be appointed. Speculating on who will be is just column inches for bored journalists.
Nothing particularly new or insightful. A great worry from the SMH story is the suggestion that a lawyer might get a start - I have a firm view lawyers are not needed on Boards. Every Board member should be well enough appraised of their own legal responsibilities and it is a failure of governance for the Board as a whole to rely on the legal expertise of one director. In brief, the most use that the director with legal quals can provide is to advise his/her fellow directors is that they should get legal advice from their law firm – but the directors cannot rely on the advice of their legally trained colleague when he/she advises them not to do so. So lawyers add no technical benefit.
Far from their touted belief that legal training provides a disciplined thought process of use in wider fields, in reality their training is very restrictive to a certain kind of linguistic deductive process that is anathema to creative thinking.
This doesn't mean that a lawyer should be excluded, just that they shouldn't be chosen so there is a lawyer. The suggestion that the author of the Australian competition law "bible" would be the lawyer is particularly odd, given that we'd hope the structural separation of the NBN means it is not embroiled in competition issues.
I'm finding the speculation numbing. I made my contribution on who should be appointed. Speculating on who will be is just column inches for bored journalists.
Thursday, July 09, 2009
Public service and external consultants
Is the defence to complaints about the expenditure on consultants by the Australian Government that they inherited a broken public service?
Concern over "probity" reaches new levels of absurdity
An item in today's Age suggests there is a problem with a Ministerial adviser meeting with representatives of a successful tenderer two months before tenders were called.
Are they serious? In the matter there is evidently a Senate committee concern with the probit surrounding the award of the contract (raised by the displaced firms).
But please, does meeting with Ministers prohibit a firm from winning a contract? Do we really want our politicians living in a bubble?
My own experience is that the nature of probity advice to Government does not reflect the avice of ANAO. That advice is complete transparency, in practice it becomes absolute secrecy and attempts to remove Government completely. The current probity rules effectively prohibit a person with information that could suggest the tender is representative of poor policy and should be stopped from providing that information to the relevant decision makers.
We need to encourage communication between Ministers their advisers and Departments with industry, not discourage it. By all means provide some extra rules on transparency. But let's stop the nonsense that talking = corruption.
Are they serious? In the matter there is evidently a Senate committee concern with the probit surrounding the award of the contract (raised by the displaced firms).
But please, does meeting with Ministers prohibit a firm from winning a contract? Do we really want our politicians living in a bubble?
My own experience is that the nature of probity advice to Government does not reflect the avice of ANAO. That advice is complete transparency, in practice it becomes absolute secrecy and attempts to remove Government completely. The current probity rules effectively prohibit a person with information that could suggest the tender is representative of poor policy and should be stopped from providing that information to the relevant decision makers.
We need to encourage communication between Ministers their advisers and Departments with industry, not discourage it. By all means provide some extra rules on transparency. But let's stop the nonsense that talking = corruption.
Wednesday, July 08, 2009
Banking in Oz
Under the breathless headline the SMH today reported on a joint call by Joshua Gans, John Quiggin and four others for a new financial systems enquiry.
It appears that the idea of a "People's Bank" is people gleaning from the submission's suggestion of a Government institution with a stabilisation function in finance, particularly mortgage finance. This is based on the economists apparent concern about the instability created for the institutions of having an unmatched balance sheet, that is long term loans financed by short term deposits.
I can assure the economists that this is not a problem for banks in a world without derivatives. The "credit risk" or "market risk" can be calculated and managed. The risk comes if lending practices veer out of control, such as increasing exposure to assets undergoing rapid price increases.
The economists talk approvingly of the wonders of competition that swept through the Australian mortgage market with the development of the residential mortgage-based securities market and how supposedly this funding greatly advanced the regional banks. Actually, this market largely destroyed the economics of Australia's co-operative banking sector (at the same time as their long running income tax exemption was removed).
This market has been, of course, the real false dawn. This was a money market with no effective controls. The securities were traded by banks operating under Basel II rules, so the capital adequacy was measured on credit rating agency terms, and as the underlying assets were houses ... well they all got AAA. Meantime the move of so much housing lending "off balance sheet" means that prudential regulators couldn't use other devices, like changing the risk weighting of residential mortgages, to allow for the greater lending risk inherent in lending in a market with rapid asset price inflation.
By all means we should probably have the enquiry. But can we perhaps focus on how many of the problems we now confront have been created by economists peddling the snake oil of the efficiency of markets. Can we also recognise that a small dose of regulation might be better than a big dose of government guarantees.
It appears that the idea of a "People's Bank" is people gleaning from the submission's suggestion of a Government institution with a stabilisation function in finance, particularly mortgage finance. This is based on the economists apparent concern about the instability created for the institutions of having an unmatched balance sheet, that is long term loans financed by short term deposits.
I can assure the economists that this is not a problem for banks in a world without derivatives. The "credit risk" or "market risk" can be calculated and managed. The risk comes if lending practices veer out of control, such as increasing exposure to assets undergoing rapid price increases.
The economists talk approvingly of the wonders of competition that swept through the Australian mortgage market with the development of the residential mortgage-based securities market and how supposedly this funding greatly advanced the regional banks. Actually, this market largely destroyed the economics of Australia's co-operative banking sector (at the same time as their long running income tax exemption was removed).
This market has been, of course, the real false dawn. This was a money market with no effective controls. The securities were traded by banks operating under Basel II rules, so the capital adequacy was measured on credit rating agency terms, and as the underlying assets were houses ... well they all got AAA. Meantime the move of so much housing lending "off balance sheet" means that prudential regulators couldn't use other devices, like changing the risk weighting of residential mortgages, to allow for the greater lending risk inherent in lending in a market with rapid asset price inflation.
By all means we should probably have the enquiry. But can we perhaps focus on how many of the problems we now confront have been created by economists peddling the snake oil of the efficiency of markets. Can we also recognise that a small dose of regulation might be better than a big dose of government guarantees.
More on religion
In keeping with my policy of (mostly) alerting peole of when I blog about them I got a nice note back from Carmen Lawrence on my comments about Church and State. In brief she notes that an op-ed piece is necessarily truncated, and hence did not traverse some of the ground on the doctrine. She also noted that she did not think there was no place for moral philosophy, and that one of her biggest concerns had been the selective use by MPs of their religious beliefs - bringing them out on "so-called" conscience votes (as, for example, on abortion or euthenasia) but ignoring them on other acts like refugees, war and torture.
To add to the discussion, Michael Duffy wrote on the topic in the weekend SMH.
He refers to a new book called God is Back which apparently argues that religion is making a return in many places, including states that had tried to outlaw it. He notes;
Outside the West, religion has come back as a matter of sheer numbers, because the many efforts to suppress it during the 20th century have collapsed. The most important of these was communism but many non-communist leaders, in nations such as Turkey and Iran, also believed the path to prosperity lay in a modernisation that could be achieved only by reducing the role of religion.
This is a significant statement. Theses leaders have first realised that there needs to be a separation of church and state, but that this does not need to entail a campaign against religion.
Duffy goes on to hypothesise that the evangelical churches arose in the US because the doctrine of separation meant the churches had to rely upon conviction rather than coersion earlier than other countries. I have two difficulties with this view. The first is that I find the evangelical churches are closer to conmen than christians. The second is that the doctrine has been as real, while not being as written, in the UK as the USA.
To add to the discussion, Michael Duffy wrote on the topic in the weekend SMH.
He refers to a new book called God is Back which apparently argues that religion is making a return in many places, including states that had tried to outlaw it. He notes;
Outside the West, religion has come back as a matter of sheer numbers, because the many efforts to suppress it during the 20th century have collapsed. The most important of these was communism but many non-communist leaders, in nations such as Turkey and Iran, also believed the path to prosperity lay in a modernisation that could be achieved only by reducing the role of religion.
This is a significant statement. Theses leaders have first realised that there needs to be a separation of church and state, but that this does not need to entail a campaign against religion.
Duffy goes on to hypothesise that the evangelical churches arose in the US because the doctrine of separation meant the churches had to rely upon conviction rather than coersion earlier than other countries. I have two difficulties with this view. The first is that I find the evangelical churches are closer to conmen than christians. The second is that the doctrine has been as real, while not being as written, in the UK as the USA.
Those Democrats Again
While I have left the Australian Democrats (let's not go there) I still get their e-mails. I regard them as public documents.
The latest missive sent under the heading "What do Australian Democrats believe in?" states;
An important part of rebuilding a party is restating what it is you stand for. Often it is hard to condense that down in to something you can communicate quickly and easily.
To get started, we have defined our core beliefs: the central things we believe in that underpin all our actions, objectives and policy:
1. We should all be free to live our lives how we want to
2. Every Australian should have equal rights and opportunities
3. We should care for the world around us to sustain our resources, our economy, and the well-being of future generations
4. Our representatives should put the interests of people first, weighing all perspectives to develop fair, inclusive, and lasting solutions
5. We must take responsibility, individually and collectively, for our nation and its people
This is the start of the conversation. In coming weeks we will expand on these core beliefs to illustrate how they inform and direct all of the other elements that comprise what we stand for.
To join the forums on the Australian Democrats website to discuss how we express these belief and further define our values and objectives, you will need to become a member.
We hope you will join us in this conversation, and talk online and offline about what these beliefs mean to you and why you support the Australian Democrats.
So, talking of offline, principle 1 (the libertarian principle) is in conflict with principle 3 (what could be called the environmental principle) and to a degree principle 5 (the mutual obligation principle).
It is better written in a form in which the social nature of man and the principle of mutual obligation precedes the individual. Hence if I were building an amalgam political/moral philosophy, I'd start by noting that man is a social animal first.
Hence
1. Human economic progress has been delivered through co-operative endeavour, treating others as we would like to be treated ourselves. (The principle of mutuality)
2. There are many ways of achieving this co-operation, and we should be all free to live our lives the way we want to without interference if our choices do not infringe the princile of mutuality. (The principle of individual rights)
3. The consideration of the effects of our behaviour on others needs to consider future generations as well as our contemporaries. (The principle of sustainability)
4. The rights of all people are equal, irrespective of wealth, race or any other consideration. (The principle of equality)
5. Representative democracy is the most effective means of achieving these principles, and the principles themselves need to underpin the design of democratic forms. (The principle of democracy)
I could add a fair bit to this. It looks very similar to the Dems list, but is vastly different as it creates one structure and puts mutuality before individuality. Mutuality is NOT the same as collectivism.
The latest missive sent under the heading "What do Australian Democrats believe in?" states;
An important part of rebuilding a party is restating what it is you stand for. Often it is hard to condense that down in to something you can communicate quickly and easily.
To get started, we have defined our core beliefs: the central things we believe in that underpin all our actions, objectives and policy:
1. We should all be free to live our lives how we want to
2. Every Australian should have equal rights and opportunities
3. We should care for the world around us to sustain our resources, our economy, and the well-being of future generations
4. Our representatives should put the interests of people first, weighing all perspectives to develop fair, inclusive, and lasting solutions
5. We must take responsibility, individually and collectively, for our nation and its people
This is the start of the conversation. In coming weeks we will expand on these core beliefs to illustrate how they inform and direct all of the other elements that comprise what we stand for.
To join the forums on the Australian Democrats website to discuss how we express these belief and further define our values and objectives, you will need to become a member.
We hope you will join us in this conversation, and talk online and offline about what these beliefs mean to you and why you support the Australian Democrats.
So, talking of offline, principle 1 (the libertarian principle) is in conflict with principle 3 (what could be called the environmental principle) and to a degree principle 5 (the mutual obligation principle).
It is better written in a form in which the social nature of man and the principle of mutual obligation precedes the individual. Hence if I were building an amalgam political/moral philosophy, I'd start by noting that man is a social animal first.
Hence
1. Human economic progress has been delivered through co-operative endeavour, treating others as we would like to be treated ourselves. (The principle of mutuality)
2. There are many ways of achieving this co-operation, and we should be all free to live our lives the way we want to without interference if our choices do not infringe the princile of mutuality. (The principle of individual rights)
3. The consideration of the effects of our behaviour on others needs to consider future generations as well as our contemporaries. (The principle of sustainability)
4. The rights of all people are equal, irrespective of wealth, race or any other consideration. (The principle of equality)
5. Representative democracy is the most effective means of achieving these principles, and the principles themselves need to underpin the design of democratic forms. (The principle of democracy)
I could add a fair bit to this. It looks very similar to the Dems list, but is vastly different as it creates one structure and puts mutuality before individuality. Mutuality is NOT the same as collectivism.
Monday, July 06, 2009
Is this the first?
One of John Howard's lesser known achievements was to "rebrand" the Australian Government as ... the Australian Government. All Departments and agencies were required to replace any other brand and logo with a design that was the coat of arms, the words Australian Government above a line and the name of the Department or agency beneath it.
One of his justifications was to save on the expense of all the branding exercises undetaken in Government. The other was to make it clear to the citizenry, who don't always understand constitutional niceties, exactly who was both responsible and accountable for what the agency did.
ACMA has unveiled on its website a new look and feel, with a logo and different type face for the agency name. Apart from the fact this is the first agency I've seen break from the Howard edict, it is also one of the hideous blob logos that has emerged following the bold move of BHP Billiton. One of my former Unis (Macquarie) has replaced their lighthouse logo with similar blobs - a rebranding that quite frankly just emphasises that they are what the UK calls a "red brick" university. Sydney or NSW could never contemplate such a move.
I'd be interested in views on both the desirability of the Howard move (I originally thought it dodgy, but got to like it), and the specifics of the ACMA choice.
One of his justifications was to save on the expense of all the branding exercises undetaken in Government. The other was to make it clear to the citizenry, who don't always understand constitutional niceties, exactly who was both responsible and accountable for what the agency did.
ACMA has unveiled on its website a new look and feel, with a logo and different type face for the agency name. Apart from the fact this is the first agency I've seen break from the Howard edict, it is also one of the hideous blob logos that has emerged following the bold move of BHP Billiton. One of my former Unis (Macquarie) has replaced their lighthouse logo with similar blobs - a rebranding that quite frankly just emphasises that they are what the UK calls a "red brick" university. Sydney or NSW could never contemplate such a move.
I'd be interested in views on both the desirability of the Howard move (I originally thought it dodgy, but got to like it), and the specifics of the ACMA choice.
Gyngell loses it
I think the pressure on David Gyngell at Nine is showing. In the Oz he is talking about his new multi-channel and comparing it to Ten's "One" which is a sports channel. He says;
"One is the red-haired stepchild of sports rights," he said. "It's the stuff that no one wants."
Two things. The first is that Nine "has the stuff people want" - the French Open and Wimbeldon - and doesn't show it live or in full. I could understand that if showing the sport meant they had to disrupt an otherwise strong programming schedule. But they are showing "shyte" that rates accordingly.
Secondly, as the father of a delightful red-haired girl, I find the comment bizarre. I think the implication was meant to be a child who is obviously not genetically one's own, but I don't quite frankly get it.
Maybe some avid reader can explain exactly why a red-haired step-child would be unwanted!
"One is the red-haired stepchild of sports rights," he said. "It's the stuff that no one wants."
Two things. The first is that Nine "has the stuff people want" - the French Open and Wimbeldon - and doesn't show it live or in full. I could understand that if showing the sport meant they had to disrupt an otherwise strong programming schedule. But they are showing "shyte" that rates accordingly.
Secondly, as the father of a delightful red-haired girl, I find the comment bizarre. I think the implication was meant to be a child who is obviously not genetically one's own, but I don't quite frankly get it.
Maybe some avid reader can explain exactly why a red-haired step-child would be unwanted!
Exactly what are we supporting in Afghanistan
It remains the great concern about the war on terror in Afghanistan, that the government the Australian military is supporting is as arbitrary and theocratic as the Taliban. The only difference is that they don't sponsor international terrorism.
Paul Sheehan has highlighted this in a story in the SMH today, but he incorrectly calls it an issue of "feminism". The equal treatment of women in a democratic sense is really pre-feminist. Feminism is far more about recognising and combatting the systematic discrimination against women in a society that has notional equality; highlighting how the patriarchy keep women "in their place" without formal laws.
The Afghanistan case also covers issues other than the treatment of women. It is still consistently discriminating against Christians.
I do not understand quite why Australian troops are still deployed to defend such a regime.
Paul Sheehan has highlighted this in a story in the SMH today, but he incorrectly calls it an issue of "feminism". The equal treatment of women in a democratic sense is really pre-feminist. Feminism is far more about recognising and combatting the systematic discrimination against women in a society that has notional equality; highlighting how the patriarchy keep women "in their place" without formal laws.
The Afghanistan case also covers issues other than the treatment of women. It is still consistently discriminating against Christians.
I do not understand quite why Australian troops are still deployed to defend such a regime.
Minchin off target again
Senator Minchin’s only contribution to discussion on the national broadband network seems to be about why not to do it. In the Parliament he has complained about the cost, today in the SMH he is trying to mount fear and loathing over an aerial deployment.
However, the premise of his criticism is misplaced. The NBN fibre does not need to be additional to the two HFC networks. Instead it can and should replace them both. The technology likely to be deployed (passive optical networking) can provide an additional light wavelength to replace the two HFC networks that today basically carry exactly the same programming (especially since the conclusion of the Telstra/Optus content sharing deals). Unfortunately we haven't seen much discussion of this as the Implementation Study inches forward.
It is perhaps noteworthy that the coalition's political concession to public complaints about the aerial deployment, that is removing the planning exemption, coincided with when those networks stopped their further expansion. I could talk at length about how the campaign against overhead cabling was orchestrated by Telstra as a means to try to stall the Optus deployment, and that when it failed they instead resorted to following Optus up and dow streets "like a kid following an ice-cream truck" (thanks Jon Stretch for that line).
As an all optical cable (unlike the copper coax) it can be hung at the same level as electricity wires. This reduces the risk from contact with items travelling beneath the wires. The aerial component is often only the last run of the network and is only affected by the most local of actions disrupting the powerlines.
The NBN has the possibility of improving the visual amenity in local areas. But it can do a lot more besides. We would be better served by Senator Minchin holding the Government to account on how they run the Implementation Study and how the Government will get outcomes like replacing both HFC networks than his continual negativity about the only plan in Australia to provide the infrastructure we need for the 21st century.
However, the premise of his criticism is misplaced. The NBN fibre does not need to be additional to the two HFC networks. Instead it can and should replace them both. The technology likely to be deployed (passive optical networking) can provide an additional light wavelength to replace the two HFC networks that today basically carry exactly the same programming (especially since the conclusion of the Telstra/Optus content sharing deals). Unfortunately we haven't seen much discussion of this as the Implementation Study inches forward.
It is perhaps noteworthy that the coalition's political concession to public complaints about the aerial deployment, that is removing the planning exemption, coincided with when those networks stopped their further expansion. I could talk at length about how the campaign against overhead cabling was orchestrated by Telstra as a means to try to stall the Optus deployment, and that when it failed they instead resorted to following Optus up and dow streets "like a kid following an ice-cream truck" (thanks Jon Stretch for that line).
As an all optical cable (unlike the copper coax) it can be hung at the same level as electricity wires. This reduces the risk from contact with items travelling beneath the wires. The aerial component is often only the last run of the network and is only affected by the most local of actions disrupting the powerlines.
The NBN has the possibility of improving the visual amenity in local areas. But it can do a lot more besides. We would be better served by Senator Minchin holding the Government to account on how they run the Implementation Study and how the Government will get outcomes like replacing both HFC networks than his continual negativity about the only plan in Australia to provide the infrastructure we need for the 21st century.
Glen Milne - Coalition Mouthpiece?
Well, well, well. Glen Milne doesn't like it when a politician, in this case, Kevin Rudd, decides he wants to hold the media to account. I guess in the Milne universe the media can hold politicians to account, but the media is only accountable to...Rupert? That has to be the case at the Australian as it wasn't accountable to readers (that is generating enough of them) nor to advertisers in all the years it made a loss.
I make the charge about Milne above based on one particular paragraph;
The alleged existence of the email rested on two substantial pillars. First the sworn testimony of a senior Treasury official, Godwin Grech, earlier that afternoon before a Senate committee. Grech swore, on balance, that an email existed.
As I've previously noted the reference to the Senate evidence as "sworn" evidence is a Turnbullism. The evidence isn't sworn. Turnbull could be excused for not knowing Senate procedure...but Milne?
Milne is at least good enough to note that when Rudd criticeses News Ltd he is going the whole lot, not just The Oz, but also the set of daily tabloids, unlike Andrew Bolt who claimed on Insiders that Rudd was only going the Oz. Milne defends the Steve Lewis story on the e-mails on tightness of deadlines.
As I have noted elsewhere (Crikey comments) Lewis was acting on the leak of a fraudulent e-mail. One hopes and expects that before this is all over he tells us who told him of the e-mail. We know he spoke to Grech a number of times, but the suspicion exists he was tipped off first. As it stands now it seems the e-mail was concocted to support the theory the coalition was running that Rudd's office intervened directly with Treasury officials on behalf of Mr Grant. The issue to be resolved is why and how. Lewis may be able to shed light on that.
Yes Lewis was duped. But at least News as an organisation could come out, take it on the chin and say, "You are right, we were duped. We are going to introduce new editorial procedures to guard against being duped."
As for the claim by Milne that what Rudd is asserting is almost censorship as in;
The new Rudd rules are these: if the Prime Minister declares something to be false then his denials are not simply to be recorded as part of a balanced story. The story itself is to be airbrushed out of history. The media must now take Rudd at his word. And act on that word.
Milne might like to consult his colleagues in the defamation space. It is one thing to publish something without a denial, it is another to publish something one day and the denial the next, it is a completely different activity to publish something that has already been denied. And it doesn't help to rely upon a defence that the issue was raised in the Senate Committee - the transcript clearly shows that Abetz was fishing and that the Treasury official was highly equivocal in his answer.
Milne concludes by stating;
The first principle of the journalists' code of ethics states: "Report and interpret honestly, striving for accuracy, fairness and disclosure of all essential facts. Do not suppress relevant available facts, or give distorting emphasis. Do your utmost to give a fair opportunity for reply." There was nothing in the reporting of the fake email affair that contravened that principle. Indeed the fact it's routinely referred to as the fake email affair makes that self-evident.
Except there was something wrong. The e-mail did NOT exist, there was suficient basis for believing it did not (would the PM really double down the bet of misleading by claiming there was no e-mail when others claimed to have it?). There were alternative ways to report the story - including leading with the denial.
As for my bigger claim about Milne, well I've blogged about him before. It is about time he did some real political reporting rather than just being the victim of those using him as a mouthpiece for their spin.
I make the charge about Milne above based on one particular paragraph;
The alleged existence of the email rested on two substantial pillars. First the sworn testimony of a senior Treasury official, Godwin Grech, earlier that afternoon before a Senate committee. Grech swore, on balance, that an email existed.
As I've previously noted the reference to the Senate evidence as "sworn" evidence is a Turnbullism. The evidence isn't sworn. Turnbull could be excused for not knowing Senate procedure...but Milne?
Milne is at least good enough to note that when Rudd criticeses News Ltd he is going the whole lot, not just The Oz, but also the set of daily tabloids, unlike Andrew Bolt who claimed on Insiders that Rudd was only going the Oz. Milne defends the Steve Lewis story on the e-mails on tightness of deadlines.
As I have noted elsewhere (Crikey comments) Lewis was acting on the leak of a fraudulent e-mail. One hopes and expects that before this is all over he tells us who told him of the e-mail. We know he spoke to Grech a number of times, but the suspicion exists he was tipped off first. As it stands now it seems the e-mail was concocted to support the theory the coalition was running that Rudd's office intervened directly with Treasury officials on behalf of Mr Grant. The issue to be resolved is why and how. Lewis may be able to shed light on that.
Yes Lewis was duped. But at least News as an organisation could come out, take it on the chin and say, "You are right, we were duped. We are going to introduce new editorial procedures to guard against being duped."
As for the claim by Milne that what Rudd is asserting is almost censorship as in;
The new Rudd rules are these: if the Prime Minister declares something to be false then his denials are not simply to be recorded as part of a balanced story. The story itself is to be airbrushed out of history. The media must now take Rudd at his word. And act on that word.
Milne might like to consult his colleagues in the defamation space. It is one thing to publish something without a denial, it is another to publish something one day and the denial the next, it is a completely different activity to publish something that has already been denied. And it doesn't help to rely upon a defence that the issue was raised in the Senate Committee - the transcript clearly shows that Abetz was fishing and that the Treasury official was highly equivocal in his answer.
Milne concludes by stating;
The first principle of the journalists' code of ethics states: "Report and interpret honestly, striving for accuracy, fairness and disclosure of all essential facts. Do not suppress relevant available facts, or give distorting emphasis. Do your utmost to give a fair opportunity for reply." There was nothing in the reporting of the fake email affair that contravened that principle. Indeed the fact it's routinely referred to as the fake email affair makes that self-evident.
Except there was something wrong. The e-mail did NOT exist, there was suficient basis for believing it did not (would the PM really double down the bet of misleading by claiming there was no e-mail when others claimed to have it?). There were alternative ways to report the story - including leading with the denial.
As for my bigger claim about Milne, well I've blogged about him before. It is about time he did some real political reporting rather than just being the victim of those using him as a mouthpiece for their spin.
Friday, July 03, 2009
Curious Release
Minister Conroy has asked for more NBN submissions. The release states;
Issues that interested parties may wish to address include:
The optimal access regime for the National Broadband Network, including, for example:
* the legislative obligations that should be required to ensure the National Broadband Network company operates on a wholesale-only, open access basis,
* the process for identifying services to be offered,
* how the prices and non-price terms and conditions of those services should be set, and for how long, and
* the role of the Australian Competition and Consumer Commission.
The appropriate equivalence obligation for the company and the services it offers, and how this would operate in practice.
The nature of ownership restrictions applied to private sector investors to protect the Government’s equivalence objective for the wholesale-only network.
Arrangements for the Government to sell its stake in the network.
Any other rights and obligations to be conferred on the company.
Interested parties are also welcome to provide their views on other aspects of the legislative framework for the company.
Submissions received will be provided to the Lead Advisor to the National Broadband Network Implementation Study.
Written submissions should be provided by 5:00 pm (AEST) Thursday 30 July 2009, and can be forwarded by email to nbnlegislation@dbcde.gov.au. Submissions may be made publicly available online.
Avid readers of this blog will know that I've addressed many of these already here. As a more formal submission this will require more depth and more alternatives to be considered. But unusually it looks like there is no discussion paper - none, nada, zippo. That could mean one of three things;
* the Government is determined to get the best thoughts available and so has resisted framing the discussion, or
* the Government has found it all too hard to frame a discussion paper, or
* they were expecting the lead advisor to frame the consultation paper but have realised they need to get on with it before they arrive.
Can anyone explain the ambivalence of the reference to the lead adviser? Why did they need to mention that the submission would be provided to the adviser? Did we think they wouldn't, why wouldn't a submission be provided to the lead adviser? What about any non-lead advisers the Government might appoint?
And exactly why did the request need to wait till now? What has changed since the Blue Book was published?
I have been known to be openly critical of the Department of Broadband, Communications and the Digital Economy for a very long time now. I'm sure there are very good reasons in their public service culture of why they give the impression of being unable to engage with the subject matter.
Or maybe it is just me - over recent times I've experienced people in both the private and public sector whose aproach to life is to take the boss's instruction and implement it. Pity is that they don't really understand the boss's instruction or the boss didn't know enough to instruct the right thing. From my earliest days in the workforce I learnt to ask clarifying questions of instructions. No one else seems to - so rubbish piles on rubbish.
I think I forgot to take my pills.....
Issues that interested parties may wish to address include:
The optimal access regime for the National Broadband Network, including, for example:
* the legislative obligations that should be required to ensure the National Broadband Network company operates on a wholesale-only, open access basis,
* the process for identifying services to be offered,
* how the prices and non-price terms and conditions of those services should be set, and for how long, and
* the role of the Australian Competition and Consumer Commission.
The appropriate equivalence obligation for the company and the services it offers, and how this would operate in practice.
The nature of ownership restrictions applied to private sector investors to protect the Government’s equivalence objective for the wholesale-only network.
Arrangements for the Government to sell its stake in the network.
Any other rights and obligations to be conferred on the company.
Interested parties are also welcome to provide their views on other aspects of the legislative framework for the company.
Submissions received will be provided to the Lead Advisor to the National Broadband Network Implementation Study.
Written submissions should be provided by 5:00 pm (AEST) Thursday 30 July 2009, and can be forwarded by email to nbnlegislation@dbcde.gov.au. Submissions may be made publicly available online.
Avid readers of this blog will know that I've addressed many of these already here. As a more formal submission this will require more depth and more alternatives to be considered. But unusually it looks like there is no discussion paper - none, nada, zippo. That could mean one of three things;
* the Government is determined to get the best thoughts available and so has resisted framing the discussion, or
* the Government has found it all too hard to frame a discussion paper, or
* they were expecting the lead advisor to frame the consultation paper but have realised they need to get on with it before they arrive.
Can anyone explain the ambivalence of the reference to the lead adviser? Why did they need to mention that the submission would be provided to the adviser? Did we think they wouldn't, why wouldn't a submission be provided to the lead adviser? What about any non-lead advisers the Government might appoint?
And exactly why did the request need to wait till now? What has changed since the Blue Book was published?
I have been known to be openly critical of the Department of Broadband, Communications and the Digital Economy for a very long time now. I'm sure there are very good reasons in their public service culture of why they give the impression of being unable to engage with the subject matter.
Or maybe it is just me - over recent times I've experienced people in both the private and public sector whose aproach to life is to take the boss's instruction and implement it. Pity is that they don't really understand the boss's instruction or the boss didn't know enough to instruct the right thing. From my earliest days in the workforce I learnt to ask clarifying questions of instructions. No one else seems to - so rubbish piles on rubbish.
I think I forgot to take my pills.....
Cartel criminalisation
In a worrying trend I again find myself in agreement on the conclusions of a CIS publication, this time Jason Soon on criminalisation of cartels.
I will disagree with Jason on whether cartels do or do not have detrimental effects on consumer welfare. I'm actually open to the idea that sometimes they won't. What I will agree on is that criminalisation is poor policy.
Firstly it is unlikely to work effectively as an upfront deterrent. Anyone in business knows that someone already prepared to enter into a cartel under existing law is either foolish (they don't know the law), deluded (they think they are cleverer than regulators) or arrogant (they think the law doesn't apply to them). Increasing the penalty is unlikely to change behaviour before the fact. However, after the fact higher penalties make defectio from the cartel more risky.
As game theorists will tell you, cartels can't exist because the incentive to defect is higher than the incentive to stay. But if defection carries prosecution risks (those you defected on turn whistleblower) then the law against cartels becomes the mechanism to deter defection.
The other issue is that if a cartel has caused consumer detriment, no criminalisation action is effective in recovering the lost welfare.
If business is complaining about these laws they only have themselves to blame. Over the last ten or more years the main business response to concerns about merger activity has been to note that it is not industry concentration that matters, only the collusion between the concentrated players (ignoring completely how tacit collusion occurs more easily in concentrated industries). The claim has in efect been let more mergers through, just focus on collusion.
And that is exactly what we've got. Virtual inactivity in deterring mergeres and criminalisation of cartels.
It is entirely the wrong approach. Industry structure is what counts most. And yes, it is better that the small struggling firm goes broke than gets merged with the bigger firm. Letting mergers happen like this might seem good for shareholders, but it works against the idea of "creative destruction" promoted by the big end of town.
I will disagree with Jason on whether cartels do or do not have detrimental effects on consumer welfare. I'm actually open to the idea that sometimes they won't. What I will agree on is that criminalisation is poor policy.
Firstly it is unlikely to work effectively as an upfront deterrent. Anyone in business knows that someone already prepared to enter into a cartel under existing law is either foolish (they don't know the law), deluded (they think they are cleverer than regulators) or arrogant (they think the law doesn't apply to them). Increasing the penalty is unlikely to change behaviour before the fact. However, after the fact higher penalties make defectio from the cartel more risky.
As game theorists will tell you, cartels can't exist because the incentive to defect is higher than the incentive to stay. But if defection carries prosecution risks (those you defected on turn whistleblower) then the law against cartels becomes the mechanism to deter defection.
The other issue is that if a cartel has caused consumer detriment, no criminalisation action is effective in recovering the lost welfare.
If business is complaining about these laws they only have themselves to blame. Over the last ten or more years the main business response to concerns about merger activity has been to note that it is not industry concentration that matters, only the collusion between the concentrated players (ignoring completely how tacit collusion occurs more easily in concentrated industries). The claim has in efect been let more mergers through, just focus on collusion.
And that is exactly what we've got. Virtual inactivity in deterring mergeres and criminalisation of cartels.
It is entirely the wrong approach. Industry structure is what counts most. And yes, it is better that the small struggling firm goes broke than gets merged with the bigger firm. Letting mergers happen like this might seem good for shareholders, but it works against the idea of "creative destruction" promoted by the big end of town.
More on e-books
As the proud owner of an iLiad (thanks Grahame) and a compulsive book buyer I am developing an obsession with e-book readers though the bad news is that there is not much happening in Australia.
Google and Sony have announced a tie up but that is no use as Sony doesn't sell theor reader in ustralia (I've asked them why - I'll let you know when they reply).
Meanwhile in the US there are some prepared to call it game over already for Amazon and the Kindle.
My new crusade is going to be in Government publications. Increasingly the only way to obtain them is electronically, but usually formatted for an A4 printed pdf. I can read these on my iLiad, but I need to zoom it to remove the page boarders. Would it be too much to start a campaign that as well as publishing reports in *.pdf and *.doc that they do them in the mobibook format? Then we can save alll those trees (everyone prints them) and also be able to carry less back and forth!!!
The new AGPS - coming to an e-book near you.
PS I've been informed by a reader that my earlier comment about the idiocy of the phrase "published on the Internet" is about a phrase that is itself redundant. My informant wrote;
These ‘must be published on the internet’ clauses are just spin. When something is a legislative instrument, that means it’s an instrument made under the Legislative Instruments Act which implemented a register of instruments (Federal Register of Legislative Instruments – pronounced ‘frilly’ if you hang out with law librarians). Anything on the register is published on the web ie comlaw, so those publication clauses are redundant. The register was created to deal with the problem that instruments were being made all over the place, often without anyone knowing where they all were.
Google and Sony have announced a tie up but that is no use as Sony doesn't sell theor reader in ustralia (I've asked them why - I'll let you know when they reply).
Meanwhile in the US there are some prepared to call it game over already for Amazon and the Kindle.
My new crusade is going to be in Government publications. Increasingly the only way to obtain them is electronically, but usually formatted for an A4 printed pdf. I can read these on my iLiad, but I need to zoom it to remove the page boarders. Would it be too much to start a campaign that as well as publishing reports in *.pdf and *.doc that they do them in the mobibook format? Then we can save alll those trees (everyone prints them) and also be able to carry less back and forth!!!
The new AGPS - coming to an e-book near you.
PS I've been informed by a reader that my earlier comment about the idiocy of the phrase "published on the Internet" is about a phrase that is itself redundant. My informant wrote;
These ‘must be published on the internet’ clauses are just spin. When something is a legislative instrument, that means it’s an instrument made under the Legislative Instruments Act which implemented a register of instruments (Federal Register of Legislative Instruments – pronounced ‘frilly’ if you hang out with law librarians). Anything on the register is published on the web ie comlaw, so those publication clauses are redundant. The register was created to deal with the problem that instruments were being made all over the place, often without anyone knowing where they all were.
On blogs and the Digital Economy
I've been promising Kate Lundy I'd have a look at her revamped website. I'm extremely impressed. I first commented on politicians web presence back in September 2006. I subsequently took down the links to those sites because Senator Bartlett ceased to be a Senator, and Kate Lundy's site started to fade. I've reinstated the latter now.
The interesting thing about the new Lundy site is that it is "only" a blog. It shows just how effective a blog can be. It made me reflect on the whole concept of a "blog". In the initial incarnation they wre just a tool for recording a sequential list of entries - just literally on online (binary) log. The various popular blogging tools like Blogger and WordPress have been adding more and more features - features which I'm mostly ignoring - I'm attached to my original 2003 blog look and feel.
But blogs now range from the items like Senator Lundy's to my other favourite the simple clean lines of Breakfast Politics. Those of us in corporate land who've been close to company website design will know that the breakthrough on a company site comes when you can move to a "content management system" rather than every page requiring some IT coding. Senator Lundy started out like many of us creating content through the wonders of raw HTML.
Ultimately blog software/services is now offering a really cheap and effective content management system, especially for sites that have got a small number of authors. There are still blogs like mine - much of which is just my own mental note taking.
One recent post of Senator Lundy's I wanted to comment on was her CeBIT speech. This marked a big return by her to the ICT industrt development field, which is marrying up with her championing of Government 2.0.
She has married the two in her call for "clear policy and requirements around open standards and open access, particularly to public data." (I found this interesting given my October 2007 post in which I wondered about the benefit in Government investing in an pen source operating system for households). What I think she could do more of is marrying that with here sentiments on the ICT sector as a whole;
We need to seriously look at the ICT investment opportunities in Australia to help grow and support the local ICT sector. Every company that has to move overseas is a company that is taking smart Australians and smart ideas away from the Australian economy.
I come from a school that believes that you dn't necessarily need the whole sector to profit from it, nor that to aid the sector you necessarily need to invest in it. The growth of the ICT sector in Australia probably relies more on contnuing to train real engineers, physicists and mathematicians rather than the coders who populate IT courses. It also requires some investment in more economists trained in developmental and growth economics rather than the developed economy micro and macro bull that constitutes most economic discussion, and, far worse, economic policy formulation.
But the ay of bringing some of these things together is more direct funding of education or development fellowships that get Australians directly engaged in the standards forums around the world. In short Government investment to turn Australia into a (global) standards maker not taker.
Meanwhile I note that the Digital Economy directions paper will be launched on 14 July. Despite all the efforts to get interest across broader industry in DE issues, I note that the three organisations sponsoring the launch are The Australian Computer Society (ACS), the Internet Industry Association (IIA) and the Australian Information Industries Association (AIIA).
Really we will only progess the DE discussion if we do break out of this club.
The interesting thing about the new Lundy site is that it is "only" a blog. It shows just how effective a blog can be. It made me reflect on the whole concept of a "blog". In the initial incarnation they wre just a tool for recording a sequential list of entries - just literally on online (binary) log. The various popular blogging tools like Blogger and WordPress have been adding more and more features - features which I'm mostly ignoring - I'm attached to my original 2003 blog look and feel.
But blogs now range from the items like Senator Lundy's to my other favourite the simple clean lines of Breakfast Politics. Those of us in corporate land who've been close to company website design will know that the breakthrough on a company site comes when you can move to a "content management system" rather than every page requiring some IT coding. Senator Lundy started out like many of us creating content through the wonders of raw HTML.
Ultimately blog software/services is now offering a really cheap and effective content management system, especially for sites that have got a small number of authors. There are still blogs like mine - much of which is just my own mental note taking.
One recent post of Senator Lundy's I wanted to comment on was her CeBIT speech. This marked a big return by her to the ICT industrt development field, which is marrying up with her championing of Government 2.0.
She has married the two in her call for "clear policy and requirements around open standards and open access, particularly to public data." (I found this interesting given my October 2007 post in which I wondered about the benefit in Government investing in an pen source operating system for households). What I think she could do more of is marrying that with here sentiments on the ICT sector as a whole;
We need to seriously look at the ICT investment opportunities in Australia to help grow and support the local ICT sector. Every company that has to move overseas is a company that is taking smart Australians and smart ideas away from the Australian economy.
I come from a school that believes that you dn't necessarily need the whole sector to profit from it, nor that to aid the sector you necessarily need to invest in it. The growth of the ICT sector in Australia probably relies more on contnuing to train real engineers, physicists and mathematicians rather than the coders who populate IT courses. It also requires some investment in more economists trained in developmental and growth economics rather than the developed economy micro and macro bull that constitutes most economic discussion, and, far worse, economic policy formulation.
But the ay of bringing some of these things together is more direct funding of education or development fellowships that get Australians directly engaged in the standards forums around the world. In short Government investment to turn Australia into a (global) standards maker not taker.
Meanwhile I note that the Digital Economy directions paper will be launched on 14 July. Despite all the efforts to get interest across broader industry in DE issues, I note that the three organisations sponsoring the launch are The Australian Computer Society (ACS), the Internet Industry Association (IIA) and the Australian Information Industries Association (AIIA).
Really we will only progess the DE discussion if we do break out of this club.
Thursday, July 02, 2009
Popular Economics and understanding markets
When I was younger I was entranced by the magazine called Popular Mechanics because it had all these cool projects where you could make mechanical and electrical things. Having the attention span of a gnat, and eight thumbs and two fingers I never did any of them though.
But you could almost run one now called Popular Economics wit the number of books that are addressing some big economic issues in a both academic and poluar way. A couple that fall into that vain are The Origins of Wealth and The Company of Strangers. These two in particular are books with an intened audience outside the academic economics community that both deal with the idea of economic progress as an evolutionary process - and hence the term evolutionary economics.
It is an interesting juncture for the intellectual move this way, given that Darwin got some of the evolution ideas from reading the economist Malthus. There are many i the evolutionary club who will date formal evolutionary views to Alfred Marshall who is more generally seen as the father of the marginalist school that created the familiar mathematical model of equilibrium.
Anyhow, my purpose in this brief post is to try to bring together a number of strands of heterodox economics. By definition heterodox economists are defined by what they are not rather than what they are. What they are not is orthodox - where orthodoxy is defined as the machinary of economics built on the framework of equilibrium between demand and supply.
As a consequence there are many strands of heterodox economics, including the Marxist and the feminists. There are also the variants suc as the New eynseian economists - though there disagreements may be more within the orthodox club than outside it.
There are four elements I want to discuss here, they are institutional, behavioural, evolutionary and complexity. Going through them in order the institutionalists argue that there are many things going on in an economy other than markets and that a proper understanding requires an understanding of these other things - which can be thought of as various unwritten rules. The behavioural have their gripe in the observation that real economic decision makers (consumers) aren't the rational calculators of theory and that they deviate in a number of significant ways. Key among these are that they actually favour fairness, that they value something they have more than something they may get (the endowment effect) and that they value something they can get now more than just the time preference of money more than getting it in the future.
The evolutionary view is built on the idea that the economy isn't just static, nor that it is just trying to find its equilibrium but that it continues to change over time. The term evolutionary is used to refer to the idea that the change occurs through small amounts of continual changes, some of which get reinforced because they work and others die out because they don't. The twop books referred to above focus on this evolutionary process. The first mentioned talks about evolution in both physical technology and social technology. The second book talks about it more ostensibly as institutions, the social rules and norms as well as characteristics like money and banking.
Finally complexity economics says that even if you did have the kind of forces back to an equilibrium described in orthodox theory the actual dynamics of the mathematics indicate that the macro effects of all those forces could be as complex as weather patterns on which the Lorenz equations and butterfly effects are based.
There are a couple of points I wanted to emphasise here. The first is the close relationship between evolutionary and institutional economics. This is because what is evolving is the institutions or social technology.
The second observation to make is that if individuals did behave the way that the orthodox economists believed then this evolution wouldn't have occurred. The Company of Strangers book points out that humans are the only animals that rely upon non-relatives for obtaining our food. For the social institutions that enable that to hapen to evolve out of earliest man we actualy had to have the altruism and trust genes.
Put another way, if individuals only acted in immediate self interest and were ambivalent betwee today and tomorrow there would not have occurred a framework in which sufficient trust could evolve to make exchange happen, and nor would an environment arisen where what we think of as "the accumulation of capital" could have occurred. (Note capitalism in some definitions is identified more by the accumulatuion of capital than by the reliance on markets).
This leads me into a related but different discussion - the idea of a market and what they are good for. In the process I will defend Hayek.
In the conception of the market of both Hayek and Adam Smith the market "works" because the market provides a way for the transmission of massive amounts of information about preferences and production costs, far more than could be handled in a command economy.
This varies dramatically from the actual assumptions of the neoclassical analysis which is based on he assumption that the market works BECAUSE consumers and producers are fully informed.
The interesting point is that these are not in conflict in a stable environment. They are not in conflict because they work together, in an evolutionary way. At teach point the market is informed from the market trades before, each set of market trades provides the information for the next. In very simple dynamic models these get mapped as cobweb diagrams.
What we learn though is that in the face of "discontinuous" change markets WILL fail. They will fail because the market is trading on the old information. Of course, the definition of "dicontinuous" may be circular - we know it was discontinuous because the market failed.
The recent examples are the dot.com boom and bust and the sub-prime crisis. The discontinuous changes were the advent of the internet and the advent of new capital adequacy rules incorporated in the change from Basel I to Basel II.
What is the significance of all this? it means that from a public policy standpoint we need to take particular care over what will be the market consequences of big changes. Most importantly we need to be prepred to use every means abvailable to dampen exuberance following a change because it is most likely a consequence of a positive feedback loop in the twin role of the market described above.
Finally a comment. When I was thinking of this earlier and the Company of Strangers book I was thinking that specialisation of labour was the "dual" of a market. You can't get a market without specialisation and there is no point in specialisation without a market. But it isn't the case, because you can also have specialisation in a hierarchy. But it does highlight again why Williamson named his book Markets and Hierarchies and why I need to go get a copy.
But you could almost run one now called Popular Economics wit the number of books that are addressing some big economic issues in a both academic and poluar way. A couple that fall into that vain are The Origins of Wealth and The Company of Strangers. These two in particular are books with an intened audience outside the academic economics community that both deal with the idea of economic progress as an evolutionary process - and hence the term evolutionary economics.
It is an interesting juncture for the intellectual move this way, given that Darwin got some of the evolution ideas from reading the economist Malthus. There are many i the evolutionary club who will date formal evolutionary views to Alfred Marshall who is more generally seen as the father of the marginalist school that created the familiar mathematical model of equilibrium.
Anyhow, my purpose in this brief post is to try to bring together a number of strands of heterodox economics. By definition heterodox economists are defined by what they are not rather than what they are. What they are not is orthodox - where orthodoxy is defined as the machinary of economics built on the framework of equilibrium between demand and supply.
As a consequence there are many strands of heterodox economics, including the Marxist and the feminists. There are also the variants suc as the New eynseian economists - though there disagreements may be more within the orthodox club than outside it.
There are four elements I want to discuss here, they are institutional, behavioural, evolutionary and complexity. Going through them in order the institutionalists argue that there are many things going on in an economy other than markets and that a proper understanding requires an understanding of these other things - which can be thought of as various unwritten rules. The behavioural have their gripe in the observation that real economic decision makers (consumers) aren't the rational calculators of theory and that they deviate in a number of significant ways. Key among these are that they actually favour fairness, that they value something they have more than something they may get (the endowment effect) and that they value something they can get now more than just the time preference of money more than getting it in the future.
The evolutionary view is built on the idea that the economy isn't just static, nor that it is just trying to find its equilibrium but that it continues to change over time. The term evolutionary is used to refer to the idea that the change occurs through small amounts of continual changes, some of which get reinforced because they work and others die out because they don't. The twop books referred to above focus on this evolutionary process. The first mentioned talks about evolution in both physical technology and social technology. The second book talks about it more ostensibly as institutions, the social rules and norms as well as characteristics like money and banking.
Finally complexity economics says that even if you did have the kind of forces back to an equilibrium described in orthodox theory the actual dynamics of the mathematics indicate that the macro effects of all those forces could be as complex as weather patterns on which the Lorenz equations and butterfly effects are based.
There are a couple of points I wanted to emphasise here. The first is the close relationship between evolutionary and institutional economics. This is because what is evolving is the institutions or social technology.
The second observation to make is that if individuals did behave the way that the orthodox economists believed then this evolution wouldn't have occurred. The Company of Strangers book points out that humans are the only animals that rely upon non-relatives for obtaining our food. For the social institutions that enable that to hapen to evolve out of earliest man we actualy had to have the altruism and trust genes.
Put another way, if individuals only acted in immediate self interest and were ambivalent betwee today and tomorrow there would not have occurred a framework in which sufficient trust could evolve to make exchange happen, and nor would an environment arisen where what we think of as "the accumulation of capital" could have occurred. (Note capitalism in some definitions is identified more by the accumulatuion of capital than by the reliance on markets).
This leads me into a related but different discussion - the idea of a market and what they are good for. In the process I will defend Hayek.
In the conception of the market of both Hayek and Adam Smith the market "works" because the market provides a way for the transmission of massive amounts of information about preferences and production costs, far more than could be handled in a command economy.
This varies dramatically from the actual assumptions of the neoclassical analysis which is based on he assumption that the market works BECAUSE consumers and producers are fully informed.
The interesting point is that these are not in conflict in a stable environment. They are not in conflict because they work together, in an evolutionary way. At teach point the market is informed from the market trades before, each set of market trades provides the information for the next. In very simple dynamic models these get mapped as cobweb diagrams.
What we learn though is that in the face of "discontinuous" change markets WILL fail. They will fail because the market is trading on the old information. Of course, the definition of "dicontinuous" may be circular - we know it was discontinuous because the market failed.
The recent examples are the dot.com boom and bust and the sub-prime crisis. The discontinuous changes were the advent of the internet and the advent of new capital adequacy rules incorporated in the change from Basel I to Basel II.
What is the significance of all this? it means that from a public policy standpoint we need to take particular care over what will be the market consequences of big changes. Most importantly we need to be prepred to use every means abvailable to dampen exuberance following a change because it is most likely a consequence of a positive feedback loop in the twin role of the market described above.
Finally a comment. When I was thinking of this earlier and the Company of Strangers book I was thinking that specialisation of labour was the "dual" of a market. You can't get a market without specialisation and there is no point in specialisation without a market. But it isn't the case, because you can also have specialisation in a hierarchy. But it does highlight again why Williamson named his book Markets and Hierarchies and why I need to go get a copy.
Backhaul and all that
The Department of Broadband etc has issued its request for tender (DCON/09/47) for the regional backbone blackspots program. I was promising myself I wouldn't buy into this but....as you all know I can't help myself. In no guise did I make a submission to the discussion paper and I haven't read those that were made (yet).
There are three parts of this program that worry me. The first is the voodoo economics. The second is about (the lack of) public information. The third is ultimate ownership.
Economics from another planet
The RFT says;
In regional areas where there is a lack of competitive backbone services there is little pressure on a wholesale supplier to offer low prices and higher quality services. This can mean that internet service providers and other service providers have limited scope to make new and/or higher quality services available to consumers in those areas at prices that are competitive, when compared to similar locations that have alternative backbone supply options.
This statement is potentially correct. However, the competitive state of backhaul provision is one of only three potential causes of higher backhaul prices.
The first cause is distance. Clearly the cost of building a fibre from point A to point B is a linear function of the distance from A to B. Most of the cost is in the installation of the fibre and bugger all is in the terminal gear. The further you start from where you need to get the traffic (in the first instance a mainland state capital) the higher the cost, and hence price.
The second is traffic density. A fibre can carry a whole lot of data. But the cost per megabit sent is the cost of the whole fibre divided by the total megabits sent. So if the backhaul is going to a small community the "price of backhaul" will be dearer than the going the same distance to a bigger community.
Only the third is the one mentioned in the RFT. That is the established theory that a monopolist will price above marginal cost, while a competitive market will price at marginal cost. There are a some important provisos though. The theory asumes a rising supply curve, but as we know our fibre will have economies of scale over all possible traffic volumes. The average cost curve slopes down and marginal cost is at all times below average cost. Even the competitive market won't price at marginal cost. The theory also assumes full competition and adding only a second provider means we get at best a duopoly. The theory of duopoly pricing is more complex. The Cournot outcome, which is based on the assumption that providers compete on quantity resolves to a point where prices are still marked up over marginal cost but at a rate equal to the sum of the squares of the market shares of the competing firms (the HHI). Bertrand version is competition on price and ultimately suggests that the provider who can achieve the lowest cost will eventually win the entire market. In other words pricing will reach the competitive model but once it does one firm ceases to exist and you get monopoly again.
Far more troubling are the conclusions of both an experimental (from slide 44) model or a more correct mathematical one, that competitive firms don't price at marginal cost. In one description of this tacit collusion is an emergent property of the dyanamic market. Through repeated iterations the two firms realise they can maximise profit by sharing the market at the monopoly level of output.
At this point empirical cases will be raised. That wherever new backhaul has been built the existing backhaul prices drops. Well that might be true - but unfortunately all too often the price drops to short run marginal cost as the incumbent is now prepared to treat fixed cost as sunk. It is a noted failure of competition policy - notably anti-competitive conduct laws - that this pricing behaviour by the incumbent is not drawing any consequence. But the second failure of competition law is that the transmission service is already a declared service. The ACCC has faffed around on pricing but ultimtely the Minister could simply use his determination powers under Part XIC to set a transmission (backhaul) price.
In fact, there is an even simpler version to incent the incumbent to price at long run marginal cost. That is to make a competition law that a monopoly provider cannot drop their price AT ALL once someone else enters the market. To deter efficient entry which would make the incumbent asset redundant the monopolist has to prce to the Chicago School assumption of long run marginal cost pricing for entry deterrence.
So building the additional infrastructure is not waaranted to reduce the monopoly pricing - there are better ways to do that. Building the infrastructure won't otherwise reduce average cost it can only increase it.
Lack of information
The only logical reason for a fibre backhaul program is therefore providing fibre where there is none now. That is the case on some of the proposals - e.g. fibre that goes through Barcaldine shire. However the citizenry whose money s being spent here doesn't know where there is fibre and where there isn't. This is despite the Howard Government's Broadband Blueprint proposal;
Access to efficiently-priced backhaul is important in a competitive market because it allows new carriers to provide a service in places where they do not own their own networks. The more competitive the backhaul networks the lower the prices
that will be paid by consumers. In the past, commercial sensitivities have prevented sharing of the extent of networks across Australia, particularly backhaul. For the benefit of all providers and government these issues need to be resolved as far as possible. For the benefit of all providers, the Australian Government will continue to work with industry to develop an interactive map of backhaul supply.
The theme was repeated in the Framework for the Future report from the Regional Telecommunications Review;
2.5.3: The Australian Government
a. regularly collect and prepare records of backhaul infrastructure for use by other Australian Government agencies for public policy purposes, and
b. assess the costs and benefits of making this information available to relevant market participants.
The Government Response was poor in this regard noting;
The outcome of the National Broadband Network process may have implications for the issues identified by this recommendation. Accordingly, the Government will consider this recommendation once the outcome of the National Broadband Network process is fully known. This will enable outcomes of the process to be factored into the Government’s consideration of this recommendation.
So the Government will decide AFTER the backhaul tendering process whether to obtain and release the data that would be useful BEFORE it. Sounds like sound public policy (not) to me.
Ownership
Finally we come to the position of ownership. The RFT comments;
The Commonwealth's preferred model is that the Commonwealth will own the fibre and other passive/physical network elements, which may be transferred to the NBN operating company (NBNCo).
This I don't understand. We are investing in "competitive" backhaul but we may transfer that to the new monopoly access company (yes it will be a network level monopoly - I'm cool with that. I don't want two fibres.) The last place this backhaul should wind up is in the hands of NBNCo.
Conclusion
So there we have it, a tender designed to build new backhaul to reuce the cost (huh?) to places that we the public don't know have how much fibre (three fibres leave the NT already - one to Broome, one to Mt Isa and one dwn the guts through the Alice to Adelaide)and to be owned competitivly by the new monopoly. Oh and in the midst of all that the actual price per Mbps or MB on the new fibre is part of the tender process - but it won't be the same as, say, Gosford.
Hopefully more logic will inform the Implementation Study. But as I write that I note that there does not xist anywhere a statement of the scope of the "Implementation Study" - the most we have is the information in the REOI. First the timetable;
The indicative timetable for the NBN implementation study involves:
a) Engagement of Lead Adviser for the implementation study late June 2009;
b) Engagement of further specialist advisers by the Lead Adviser in consultation with the Department in late July 2009;
c) Commencement of the implementation study mid 2009;
d) Interim implementation study report during second half of 2009;
e) The completion of the final implementation study report in early 2010; and
f) Government consideration of the implementation study report following completion of the implementation study in early 2010.
The REOI was still quite vague about the scope of the implementation study;
The Department is seeking to appoint a high calibre recognised expert as Lead Adviser to provide high quality and timely advice throughout the National Broadband Network implementation study and to manage the production of an integrated implementation study report, that ensures that all issues are appropriately covered. It is expected that the implementation study will examine and provide advice on a wide range of commercial, financial, project management and governance and telecommunications issues relevant to the National Broadband Network.
Though the services required went into a bit more detail about the implementation study;
The implementation study will be multi-disciplinary and will need to include analysis and recommendations encompassing:
a) Advice as required in support of proposed legislation relating to the operation and governance of the network company, the regulatory regime, and ownership restrictions for retail telecommunications providers and other investors as required;
b) Advice on the overall funding requirements for the network rollout (quantum and profile) beyond the $4.7 billion initial funding injection;
c) Development of strategies to maximise the scope for private sector investment in the network company, subject to appropriate ownership restrictions and appropriate terms and conditions for participation;
d) Advice on the optimal capital structure for the network company over time;
e) Development of detailed commercial/financial and engineering analysis of the network roll-out and the implications for the network company;
f) Advice on how best to structure NBN Company arrangement from the outset so that the Government’s long term objective of privatisation can be accommodated;
g) Development of plans for the integration of the Tasmanian operation and backhaul network into the overall national broadband network;
h) Network design consistent with the Government’s objectives;
i) Development of strategies to provide procurement opportunities for local businesses;
j) Develop a detailed implementation plan for the roll-out of the National Broadband Network;
k) Development of recommendations as to the appropriateness of any foreign ownership restrictions for the network company;
l) Development of a risk management strategy for the national broadband roll-out; and
m) Stakeholder consultation.
So the Department in charge of the Implementation Study in issuing a request for expressions of interest for a lead adviser successfully communicated that it did not at that time have a fully detailed specification of what the study actually is (and to any extent prioritised network design as the EIGHTH item on the list), a read of the REOI left one unsure as to whether the Study was being conducted by the Department with the assistance of the lead adviser or by the lead adviser as a report to the Department. Maybe the Request for Tender issued to only a shortlist made that clear but I don't think that is public.
Hopefully all will be clear soon though as the REOI indicaed that the services of the Lead Adviser would commence in week commencing 6 July.
There are three parts of this program that worry me. The first is the voodoo economics. The second is about (the lack of) public information. The third is ultimate ownership.
Economics from another planet
The RFT says;
In regional areas where there is a lack of competitive backbone services there is little pressure on a wholesale supplier to offer low prices and higher quality services. This can mean that internet service providers and other service providers have limited scope to make new and/or higher quality services available to consumers in those areas at prices that are competitive, when compared to similar locations that have alternative backbone supply options.
This statement is potentially correct. However, the competitive state of backhaul provision is one of only three potential causes of higher backhaul prices.
The first cause is distance. Clearly the cost of building a fibre from point A to point B is a linear function of the distance from A to B. Most of the cost is in the installation of the fibre and bugger all is in the terminal gear. The further you start from where you need to get the traffic (in the first instance a mainland state capital) the higher the cost, and hence price.
The second is traffic density. A fibre can carry a whole lot of data. But the cost per megabit sent is the cost of the whole fibre divided by the total megabits sent. So if the backhaul is going to a small community the "price of backhaul" will be dearer than the going the same distance to a bigger community.
Only the third is the one mentioned in the RFT. That is the established theory that a monopolist will price above marginal cost, while a competitive market will price at marginal cost. There are a some important provisos though. The theory asumes a rising supply curve, but as we know our fibre will have economies of scale over all possible traffic volumes. The average cost curve slopes down and marginal cost is at all times below average cost. Even the competitive market won't price at marginal cost. The theory also assumes full competition and adding only a second provider means we get at best a duopoly. The theory of duopoly pricing is more complex. The Cournot outcome, which is based on the assumption that providers compete on quantity resolves to a point where prices are still marked up over marginal cost but at a rate equal to the sum of the squares of the market shares of the competing firms (the HHI). Bertrand version is competition on price and ultimately suggests that the provider who can achieve the lowest cost will eventually win the entire market. In other words pricing will reach the competitive model but once it does one firm ceases to exist and you get monopoly again.
Far more troubling are the conclusions of both an experimental (from slide 44) model or a more correct mathematical one, that competitive firms don't price at marginal cost. In one description of this tacit collusion is an emergent property of the dyanamic market. Through repeated iterations the two firms realise they can maximise profit by sharing the market at the monopoly level of output.
At this point empirical cases will be raised. That wherever new backhaul has been built the existing backhaul prices drops. Well that might be true - but unfortunately all too often the price drops to short run marginal cost as the incumbent is now prepared to treat fixed cost as sunk. It is a noted failure of competition policy - notably anti-competitive conduct laws - that this pricing behaviour by the incumbent is not drawing any consequence. But the second failure of competition law is that the transmission service is already a declared service. The ACCC has faffed around on pricing but ultimtely the Minister could simply use his determination powers under Part XIC to set a transmission (backhaul) price.
In fact, there is an even simpler version to incent the incumbent to price at long run marginal cost. That is to make a competition law that a monopoly provider cannot drop their price AT ALL once someone else enters the market. To deter efficient entry which would make the incumbent asset redundant the monopolist has to prce to the Chicago School assumption of long run marginal cost pricing for entry deterrence.
So building the additional infrastructure is not waaranted to reduce the monopoly pricing - there are better ways to do that. Building the infrastructure won't otherwise reduce average cost it can only increase it.
Lack of information
The only logical reason for a fibre backhaul program is therefore providing fibre where there is none now. That is the case on some of the proposals - e.g. fibre that goes through Barcaldine shire. However the citizenry whose money s being spent here doesn't know where there is fibre and where there isn't. This is despite the Howard Government's Broadband Blueprint proposal;
Access to efficiently-priced backhaul is important in a competitive market because it allows new carriers to provide a service in places where they do not own their own networks. The more competitive the backhaul networks the lower the prices
that will be paid by consumers. In the past, commercial sensitivities have prevented sharing of the extent of networks across Australia, particularly backhaul. For the benefit of all providers and government these issues need to be resolved as far as possible. For the benefit of all providers, the Australian Government will continue to work with industry to develop an interactive map of backhaul supply.
The theme was repeated in the Framework for the Future report from the Regional Telecommunications Review;
2.5.3: The Australian Government
a. regularly collect and prepare records of backhaul infrastructure for use by other Australian Government agencies for public policy purposes, and
b. assess the costs and benefits of making this information available to relevant market participants.
The Government Response was poor in this regard noting;
The outcome of the National Broadband Network process may have implications for the issues identified by this recommendation. Accordingly, the Government will consider this recommendation once the outcome of the National Broadband Network process is fully known. This will enable outcomes of the process to be factored into the Government’s consideration of this recommendation.
So the Government will decide AFTER the backhaul tendering process whether to obtain and release the data that would be useful BEFORE it. Sounds like sound public policy (not) to me.
Ownership
Finally we come to the position of ownership. The RFT comments;
The Commonwealth's preferred model is that the Commonwealth will own the fibre and other passive/physical network elements, which may be transferred to the NBN operating company (NBNCo).
This I don't understand. We are investing in "competitive" backhaul but we may transfer that to the new monopoly access company (yes it will be a network level monopoly - I'm cool with that. I don't want two fibres.) The last place this backhaul should wind up is in the hands of NBNCo.
Conclusion
So there we have it, a tender designed to build new backhaul to reuce the cost (huh?) to places that we the public don't know have how much fibre (three fibres leave the NT already - one to Broome, one to Mt Isa and one dwn the guts through the Alice to Adelaide)and to be owned competitivly by the new monopoly. Oh and in the midst of all that the actual price per Mbps or MB on the new fibre is part of the tender process - but it won't be the same as, say, Gosford.
Hopefully more logic will inform the Implementation Study. But as I write that I note that there does not xist anywhere a statement of the scope of the "Implementation Study" - the most we have is the information in the REOI. First the timetable;
The indicative timetable for the NBN implementation study involves:
a) Engagement of Lead Adviser for the implementation study late June 2009;
b) Engagement of further specialist advisers by the Lead Adviser in consultation with the Department in late July 2009;
c) Commencement of the implementation study mid 2009;
d) Interim implementation study report during second half of 2009;
e) The completion of the final implementation study report in early 2010; and
f) Government consideration of the implementation study report following completion of the implementation study in early 2010.
The REOI was still quite vague about the scope of the implementation study;
The Department is seeking to appoint a high calibre recognised expert as Lead Adviser to provide high quality and timely advice throughout the National Broadband Network implementation study and to manage the production of an integrated implementation study report, that ensures that all issues are appropriately covered. It is expected that the implementation study will examine and provide advice on a wide range of commercial, financial, project management and governance and telecommunications issues relevant to the National Broadband Network.
Though the services required went into a bit more detail about the implementation study;
The implementation study will be multi-disciplinary and will need to include analysis and recommendations encompassing:
a) Advice as required in support of proposed legislation relating to the operation and governance of the network company, the regulatory regime, and ownership restrictions for retail telecommunications providers and other investors as required;
b) Advice on the overall funding requirements for the network rollout (quantum and profile) beyond the $4.7 billion initial funding injection;
c) Development of strategies to maximise the scope for private sector investment in the network company, subject to appropriate ownership restrictions and appropriate terms and conditions for participation;
d) Advice on the optimal capital structure for the network company over time;
e) Development of detailed commercial/financial and engineering analysis of the network roll-out and the implications for the network company;
f) Advice on how best to structure NBN Company arrangement from the outset so that the Government’s long term objective of privatisation can be accommodated;
g) Development of plans for the integration of the Tasmanian operation and backhaul network into the overall national broadband network;
h) Network design consistent with the Government’s objectives;
i) Development of strategies to provide procurement opportunities for local businesses;
j) Develop a detailed implementation plan for the roll-out of the National Broadband Network;
k) Development of recommendations as to the appropriateness of any foreign ownership restrictions for the network company;
l) Development of a risk management strategy for the national broadband roll-out; and
m) Stakeholder consultation.
So the Department in charge of the Implementation Study in issuing a request for expressions of interest for a lead adviser successfully communicated that it did not at that time have a fully detailed specification of what the study actually is (and to any extent prioritised network design as the EIGHTH item on the list), a read of the REOI left one unsure as to whether the Study was being conducted by the Department with the assistance of the lead adviser or by the lead adviser as a report to the Department. Maybe the Request for Tender issued to only a shortlist made that clear but I don't think that is public.
Hopefully all will be clear soon though as the REOI indicaed that the services of the Lead Adviser would commence in week commencing 6 July.
Church and State
On the back of some new research by Anna Crabb that shows the number of references to religion in parliamentary speeches has been increasing, Carmen Lawrence has weighed in with a piece that claims the principle of the "separation of Church and State" means politicians should not bring their religious views into the parliament.
Lawrence tries to make a distinction between religious beliefs and political philosophy, and attempts to argue that politicians should be uniformly avoiding basing their arguments on the former but rely only on the latter. She seems to base this view on a claim that this is the interpretation of the separation of church and state. She is wrong in her interpretation of the doctrine, and she is wrong in claiming that political philosophy should be the only under-pinning.
Let's first traverse the separation doctrine. Its origins are England over the period of the Tudor and tuart monarchs. We know one part of the subtext well, the English religious separation from Rome under Henry VIII and the subsequent trevails between different positions, with a number of monarchs favouring a reunification with Rome. Against this plot was the coincident plot of the reformation i the church itself, with a wide array of new variants emerging all generally described as protestant.
The settlement that became known as the separation of church and state however really only found its highest point with the establishment of the USA. In many ways the constitution of the US brings together an interesting amalgam of the political philosophy concepts that peaked in the (by then) United Kingdom in the Glorious Revolution, and the principles of democracy that developed in the 18th century. The US experience was particularly focussed because a number of US communities had developed from people who were effectively "religious exiles".
It is noteworthy that the Glorious Revolution was not so much about religion as about "arbitrary government" that was a fellow traveller with the Catholic view of monarchy in which the church was a united part of government, and which thus promoted the absolute authority of the monarch guided by the church.
Unsurprisingly to those who study the developmental side of institutional economics the two countries that most embraced the doctrine of separation and its "dual" the end of arbitrary government, the UK and Netherlands, were the two countries whose economies broke from the European pack. Rule of law, in other words, matters.
Neither country in going down that route was any less "christian". The separation of church and state was not a presecription that society had to be aetheistic. Indeed it can also be argued that one of the most important values outside of rule of law to get a market economy to develop is that piece of religion often referred to as the Golden Rule - in the christian case best summed up in "Do unto others as you would have others do unto you". (Interestingly a moral value actively rejected by Ayn Rand though an essential assumption in Adam Smith's writing).
It is important to note that many countries struggling with their economic development, especially those in the Islamic world, suffer because the theocratic state is be definition an arbitrary one.
It is also important to note that the biggest element of the separation argument is the religious tolerance angle, that the state will permit any religion to be practiced. This is another distinguishing feature of the Islamic states - they tend to not only be prosletysers but also seek to banish the infidels.
Now to the second error. Political philosophy only relates to political action - moral philosophy is what guides individual action. Historically religion has involved twin elements of theology and moral philosophy. The aforementioned "golden rule" and the ten commandments are the most important elements of that moral philosophy. One of the features humanists need to develop is a strong moral philosophy. It gains its distinction by being based on either its practicality or equity (or both) whereas the religious versions tend to get theirs from the idea the moral code has been commanded.
Now some religious people would even be prepared to admit that their current religion is a combination of both the theologically decreed and a social construct - not least through the treatment of major festivals. (Think Christmas).
The Australian Democrats leading into the 2007 election were seriously considering making a major campaign theme of the separation of church and state, especially focussed on the concern about the use of religious organisations as the channels for social programs (including pregancy couselling) and the funding of religious schools. Why they did not pursue it I don't know - I suspect because in the end they couldn't reconcile the message on separation from the idea of being anti-religion. The Democrats have a high support base amongst christians, especially those from the Uniting Church (I knew one branch with three Reverends as members).
Lawrence in her piece comes across the same - staying out of the chamber during prayers. I confess I share her concern about the exclusively christian nature of these prayers. I think I've written before about the solution I thought of for this problem when it was proposed that non-christian religious leaders be invited to say "prayers" prior to council meetings - any faith is welcome so long as they can (a) demonstrate that they preach religious tolerance from their own "pulpit" (or equivalent) and (b) that the prayer itself is focused on seeking guidance for the deliberations of the council, and includes a reference to those deliberations being conducted without concern of race or creed. I'd hope that an atheist would not find the sentiment of such a prayer such that they need to absent themselves, and culd find merit in the sentiment in a humanist sense.
The doctrine of separation of church and state is important both morally and economically. Those who wish to promote it need to couch their arguments in terms of religious tolerance not as being anti-religion, and they need to admit the importance of moral philosophy as well as political philosophy.
Lawrence tries to make a distinction between religious beliefs and political philosophy, and attempts to argue that politicians should be uniformly avoiding basing their arguments on the former but rely only on the latter. She seems to base this view on a claim that this is the interpretation of the separation of church and state. She is wrong in her interpretation of the doctrine, and she is wrong in claiming that political philosophy should be the only under-pinning.
Let's first traverse the separation doctrine. Its origins are England over the period of the Tudor and tuart monarchs. We know one part of the subtext well, the English religious separation from Rome under Henry VIII and the subsequent trevails between different positions, with a number of monarchs favouring a reunification with Rome. Against this plot was the coincident plot of the reformation i the church itself, with a wide array of new variants emerging all generally described as protestant.
The settlement that became known as the separation of church and state however really only found its highest point with the establishment of the USA. In many ways the constitution of the US brings together an interesting amalgam of the political philosophy concepts that peaked in the (by then) United Kingdom in the Glorious Revolution, and the principles of democracy that developed in the 18th century. The US experience was particularly focussed because a number of US communities had developed from people who were effectively "religious exiles".
It is noteworthy that the Glorious Revolution was not so much about religion as about "arbitrary government" that was a fellow traveller with the Catholic view of monarchy in which the church was a united part of government, and which thus promoted the absolute authority of the monarch guided by the church.
Unsurprisingly to those who study the developmental side of institutional economics the two countries that most embraced the doctrine of separation and its "dual" the end of arbitrary government, the UK and Netherlands, were the two countries whose economies broke from the European pack. Rule of law, in other words, matters.
Neither country in going down that route was any less "christian". The separation of church and state was not a presecription that society had to be aetheistic. Indeed it can also be argued that one of the most important values outside of rule of law to get a market economy to develop is that piece of religion often referred to as the Golden Rule - in the christian case best summed up in "Do unto others as you would have others do unto you". (Interestingly a moral value actively rejected by Ayn Rand though an essential assumption in Adam Smith's writing).
It is important to note that many countries struggling with their economic development, especially those in the Islamic world, suffer because the theocratic state is be definition an arbitrary one.
It is also important to note that the biggest element of the separation argument is the religious tolerance angle, that the state will permit any religion to be practiced. This is another distinguishing feature of the Islamic states - they tend to not only be prosletysers but also seek to banish the infidels.
Now to the second error. Political philosophy only relates to political action - moral philosophy is what guides individual action. Historically religion has involved twin elements of theology and moral philosophy. The aforementioned "golden rule" and the ten commandments are the most important elements of that moral philosophy. One of the features humanists need to develop is a strong moral philosophy. It gains its distinction by being based on either its practicality or equity (or both) whereas the religious versions tend to get theirs from the idea the moral code has been commanded.
Now some religious people would even be prepared to admit that their current religion is a combination of both the theologically decreed and a social construct - not least through the treatment of major festivals. (Think Christmas).
The Australian Democrats leading into the 2007 election were seriously considering making a major campaign theme of the separation of church and state, especially focussed on the concern about the use of religious organisations as the channels for social programs (including pregancy couselling) and the funding of religious schools. Why they did not pursue it I don't know - I suspect because in the end they couldn't reconcile the message on separation from the idea of being anti-religion. The Democrats have a high support base amongst christians, especially those from the Uniting Church (I knew one branch with three Reverends as members).
Lawrence in her piece comes across the same - staying out of the chamber during prayers. I confess I share her concern about the exclusively christian nature of these prayers. I think I've written before about the solution I thought of for this problem when it was proposed that non-christian religious leaders be invited to say "prayers" prior to council meetings - any faith is welcome so long as they can (a) demonstrate that they preach religious tolerance from their own "pulpit" (or equivalent) and (b) that the prayer itself is focused on seeking guidance for the deliberations of the council, and includes a reference to those deliberations being conducted without concern of race or creed. I'd hope that an atheist would not find the sentiment of such a prayer such that they need to absent themselves, and culd find merit in the sentiment in a humanist sense.
The doctrine of separation of church and state is important both morally and economically. Those who wish to promote it need to couch their arguments in terms of religious tolerance not as being anti-religion, and they need to admit the importance of moral philosophy as well as political philosophy.
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