Chapter 19 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974

Economic Nationalism and Foreign Investment



John Ray

THE AUSTRALIAN NATIONALISM that the Labor party is trying to foster is in principle something that conservatives heartily approve of. Two areas where they cannot be expected to approve of it, however, are where it implies a diminution of our family-type ties with Britain and where it clashes with our economic self-interest. Unfortunately, it is in their economic nationalism that the Labor party most clearly has the gut-reaction of the average Australian on its side: I refer to their opposition to foreign investment.

Foreign investment in fact seems to have almost no defenders in public life. The task of getting through to the average Australian the message that foreign investment is really a gift we are lucky to receive, is one of such great difficulty that wise politicians never attempt it.

That foreign investment is a gift to us can most easily be seen if we look at some overseas examples: Singapore. In the last fifteen years, Lee Kuan Yew has brought Singapore out of the underdeveloped world into the developed world. In fifteen years! Singapore is now one of the world's rich countries. We are used to accepting that Asian countries might in fact never catch up with the West. So how did Singapore do it? Foreign investment. In fact the economically sophisticated Singaporean leaders chased after foreign investment like no-one else before or since. They begged rich Americans to set up businesses and factories in Singapore and offered big incentives if they did. Foreign investors were even given reduced taxes to encourage them.

The reason is plain to see. In order to build factories and give the workers better machines to work with, someone has to save. They have to save large sums of money in order to buy what are called 'capital goods'. It is because he lacks the savings to buy capital goods, because he has only a wooden stick to plough with, that the average Asian peasant is so poor (poor by Western economic standards). Foreign investment, however, solves the problem overnight. Some American gives you his savings to work with. A gift! And it is a gift -- in spite of the fact that the American doesn't see it that way. He of course sees it as an investment earning interest. That investment, however, enables the Asian to earn by his labour not only enough to pay interest to the American, but also enough to buy far more for himself than he ever could before. Countries that receive foreign investment get most of the benefit of saving without actually having to do any saving first.

Foreign investment, then, is something that has benefits for both parties. The investor earns interest and the people receiving the investment increase their productivity per man. If that were not so, how could the two parties be persuaded to enter into such an arrangement?

In spite of the obvious differences between Australia and Asia, the same basic principles hold. Australians themselves do have a very high savings rate -- second only to Japan. This stems primarily from the high rate of saving among our migrant population. For all that, our savings are not adequate to take advantage of all the investment opportunities that we encounter. So we import other people's savings and give them a share of what those savings earn.

Unlike the Asian, we could perhaps afford not to have any foreign investment. If we did so, however, we would either have to increase our own savings rate or give up many of the productivity increases that we could have had. We would, in a word, be poorer.

Totalitarian countries have more choice. They can force their country to save more; simply by giving the workers minimum wages and having the government itself do the saving. That is how Soviet Russia progressed and how China may progress. That is doing it the hard way. Japan also did it the hard way. They progressed without much foreign investment because their workers voluntarily saved at an unprecedented rate.

If we want to do things the easy way, however, foreign investment is the way to do it. One way we could get by with less foreign investment would be to stop protecting so many of our industries. Because of Australia's high tariffs, precious savings are channelled off into industries where we are inefficient (relatively unproductive) -- such as making motor cars. Our own savings might go further if they were allowed to be more efficiently employed.

The disadvantage of foreign ownership is that we don't get all the benefit of new investment. It is, however, better to get some than none at all. Without foreign investment, our workers would still be working with older machines that give them only a fraction of the productivity that they have now. Higher productivity means higher wages so we benefit that way even though the foreign investor takes the profits as his benefit. We should not forget, however, that the foreign investor doesn't get all the profits. In relative terms, he doesn't have much left after our tax man is finished with him either. One possible unfair disadvantage that foreign investment brings is the 'marketing agreement'. This might happen if American Ford said to Australian Ford: 'You are making good cars that would sell well in Asia, but we forbid you to export them in case they compete with our American products.' If this happened, Australia would definitely be the loser.

Australia, however, currently seems to be the beneficiary rather than the loser from such arrangements. Foreign-owned firms account for a disproportionate part of our exports. They tend to export more than do Australian-owned firms. One reason for this could be that American multi-national corporations find that they encounter less resistance in Asia and elsewhere to a car produced in Australia than one produced in America. Australia is more popular internationally than is the U.S.A., so the product of the Australian subsidiary is more popular than is the product of the American parent firm.

It might be old-fashioned, but the simplest answer to anyone who advocates that we 'buy back the farm' is: 'Why?' We can only make ourselves poorer if we try.

Chapter 20 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


Why Some Prices Should Rise



By: MILTON FRIEDMAN

'WHEN THE PRICE of a thing goes up,' wrote the British economist Edwin Cannan, in 1915, 'a good many people ... abuse, not the buyers nor the persons who might produce it and do not do so, but the persons who are producing and selling it, and thereby keeping down its price ... It certainly would appear to be an extraordinary example of the proverbial ingratitude of man when he abuses the farmer who does grow wheat because other farmers do not ... But have we not all heard the preacher abuse his congregation because it is so small?'

This ancient article, from which I have taken my title, has been brought to mind by the oil crisis.

Time and again, I have castigated the U.S. oil companies for hypocrisy for loudly proclaiming their allegiauce to free enterprise yet simultaneously undermining free enterprise by seeking and getting special governmental privilege (percentage depletion, pro-rationing of oil, import quotas, etc.). Yet we shall only hurt ourselves if we let resentment at their past misdeeds interfere with our adopting the most effective way to meet the present problem.

Voluntary Co-operation

The current oil crisis has not been produced by the oil companies. It is a result of governmental mismanagement exacerbated by the Mideast war. The price of natural gas at the wellhead has been held down for years by government edict. Since 15 August 1971, the price of retail gasoline and of fuel oil has been held down the the successive phases. The result has been to encourage consumption and discourage both current production and the expansion of capacity. It took the Mideast mar to bring these evil effects of price-fixing to a boil.

If all Mideast oil is shut off, we shall have to do without some ten per cent of our present oil supplies. That is no tragedy. It means going back to the rate of consumption of 1970 or 1971 -- when no one thought we had a catastrophic shortage of fuel.

The most effective wav to cut consumption and encourage production is simply to let the prices of oil products rise to whatever level it takes to clear the market. The higher prices would give each of the 210 million residents of the U.S.A. a direct incentive to economise on oil, to find substitutes for oil, to increase the supply of oil.

How much will the price have to rise? No one can tell. But if consumption must be cut by ten per cent, it is hard to believe the price would have to rise by more than, say, double that percentage. A twenty percent rise in oil and gasoline prices would not be nice -- but consider the alternative.

Chance, Favouritism, Bribery?

The only alternative is exhortation backed by compulsion: artificially low prices accompanied by governmental rationing. This method induces each of us to oppose the general interest rather than to further it. Our separate incentive is to wangle as much as we can from the rationing authorities. And they can have only the crudest criteria to know how to distribute the limited supplies. They have no way to know whose 'need' is genuine and whose is artificial -- even if we put to one side, as experience warns us we cannot, special influence, corruption and bribery.

Two hundred and ten million persons each with a separate incentive to economise; or 210 million persons dragooned by men with guns to cut down their use of oil -- can there be any doubt which is the better system?

But, you will say, rationing by price hurts the poor relative to the rich. What of the poor man with his old jalopy as the only way to get to work? The answer is straightforward. If high oil prices impose special problems on some, let us provide funds to mitigate their problenn. Let us not impose compulsion and waste on ninety-five percent to avoid special measures for five per cent.

Note that what is called for is higher prices for oil products relative to other products -- not general inflation. Only some prices should rise.

The oil problem offers a particularly clear illustration of how the price system promotes both freedom and efficiency, how it enables millions of us to co-operate voluntarily with one another in our common interest. It brings out equally why the only alternative to the price system is compulsion and the use of force.

It is a mark of how far we have gone on the road to serfdom that governmental allocation and rationing of oil is the automatic response to the oil crisis. This will not prevent higher prices, which will in fact do the job -- but you may be sure that the rationing authorities will take the credit.



This chapter originally appeared as an article in "Newsweek", 19 November 1973, p. 49.

Chapter 21 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974

PROTECTING AUSTRALIAN INDUSTRY



By John Ray

To INTRODUCE THIS chapter, I want to quote extensively from an article by Peter Samuel which appeared in the Bulletin, 3 October 1970, pp. 24 & 25. The article went under the graphic, but entirely accurate heading: 'Now we know who the big spongers are'. Its figures are now somewhat dated but the message is still clear.

The nation's farmers are by no means Australia's greatest spongers on the public. The annual report of the Tariff Board presented last week estimated the value of tariff protection available to manufacturing industry as being worth some $2,710 million in 1967/68-sixteen per cent of the value of total manufacturing -production.

All told -- with direct subsidies, tax concessions and hidden subsidies -- the farmers are probably helped out to the extent of over $400 million a year. But this shrinks into relatively small proportions when put beside the hidden subsidies given to uneconomic manufacturing industry. On the Tariff Board's figures for 1967/68, this has probably now risen to $3,400 million this financial year, paid by Australians in the higher prices they have to meet due to the tariff barriers set up to control the import of foreign manufactures. (Not all 'available protection' is used, but a lot of industry uses all the protection available to it.)

Of course, Australian manufacturing is far bigger -- production value is $7,500 million compared with agriculture's $2,000 million -- but even so the proportional rates of protection suggest that the manufacturers may be doing even better than the farmers. In the rural sectors some of the biggest industries -- wool and meat, for example -- get relatively little protection, whereas in manufacturing some of the biggest sectors get very high protection indeed. And for the first time some authoritative figures have been produced.

The figures show that some of the really big hunks of tariff protection are in unexpected areas of manufacturing. The controversial industries, such as textiles and chemicals, do not appear to have the relatively huge rates of protection that are generally attributed to them. The yarn and cloth industry has a few high rates, but their average effective rate of protection is forty-two percent, which actually puts them just below average. Chemicals and fertilisers have an average rate of thirty-seven per cent, motor vehicles sixty-seven per cent.

The huge lumps of available protection are in areas that the Tariff Board has never made full inquiries about. Fully $708 million worth of protection (a quarter of the total) is available to the metal manufacturers industry, which has average rates of tariffs of eighty per cent. Machinery has $484 million worth, with an average rate of fifty per cent. Besides these totals of protection the amounts for well-known protected industries such as textiles ($61 million) and chemicals and fertilisers ($71 million) look almost moderate.

The Tariff Board has been saying for three years now that it wants to get down to a review of these large, ultra-high protection areas of industry.

The Tariff Board is quite explicit about its objectives. In the context of the Government's general policy of 'protecting economic and efficient industry' it sees its role as being the support of low-and medium-cost industries and the containment of high-cost industries. As Mr Rattigan put it in an address to the Royal Institute of Public Administration in Canberra recently, the board `should encourage those industries which are more suited to the Australian environment and discourage those which are less suited to this environment.' He sees it as a national tragedy that so much Australian capital is tied up in small, relatively unproductive factories when foreign firms are coming in with most of the action at the immensely profitable big projects like Gove and Gladstone. The Tariff Board wants to encourage rationalisation of industry into fewer units so that capacity can be used more fully and economies of scale attained. It hopes to see more specialisation, too, to get costs down and improve the competitiveness of Australian manufacturing.

How have the Australian public been cheated into paying out (in the form of government sponsored higher prices) such huge amounts to support inefficient industries? They have been duped by an unholy alliance of short-sighted trade unions and self-interested big businessmen. These two normally opposing groups are united in one instance -- contempt for the consumer.

It is a sad thing that the very businessmen who commonly avow support for such traditional conservative economic principles as free competition and laissez faire government are equally commonly the first to abandon such principles when to do so seems to offer selfish economic gain. That, however is not as surprising as the fact that the ordinary Australian who pays the piper continues to tolerate it. The only reason he does so is that he has been bamboozled by fallacious and dishonest arguments. It is hoped that the present chapter will help lay all such arguments for protectionism to rest.

The basic point to be understood is that no Australian industry would need protection if it operated at world standards of efficiency. Only inefficient industries need protection. The protection usually consists of a customs tariff charged by the government to anyone who imports goods from overseas suppliers. The government makes overseas goods artificially dear so that the inefficient local manufacturer will still be able to find some customers. Instead of paying $1,300 or thereabouts for a Japanese motor car, the government forces us to pay $2,000. We are so much the poorer, and the only beneficiary is the local big businessman who, perhaps for reasons beyond his control (small markets etc. ), is too inefficient to be able to supply a car for $1,300.

'But imported goods are often made with cheap Asian labour. No local supplier could hope to keep up when he has to pay our workers so much more!' This is almost entirely untrue. The average standard of living in Japan is for all intents and purposes the same as our own. In any case, it does not matter. The Indian rice farmer's labour is infinitely cheaper than the labour of one of our farm workers and yet we sell rice to India rather than the other way around. The only reason our labour is so dear is that it is also very productive and hence more valuable. If the Indian farmer had our education, skills, capital and land to work with, his labour would be expensive too. The price of labour reflects its average value. If a man is paid less, his labour is on average worth less (is less productive). If this seems hard to believe, any elementary economics textbook will spell the argument (and the proof) out more fully.

**The big bugbear in the public mind about imports, however, seems to centre around the fear that buying imported goods will take jobs away from Australian workers. The trouble about this fear is that it was once a realistic and perfectly accurate one. In the modern post-Keynesian world, however, where governments know how to control employment to any level they desire, the problem is generally one of a shortage of workers and inflation, rather than unemployment and depression. Since Keynes made his discoveries about economic management in the late 1930s, we have never had another depression -- nor need we ever have one. Economists now realise that the key to full employment is an appropriate level of government spending. Tariffs or any other means of preventing unemployment are completely unnecessary. Even in the days when tariffs were used for this purpose they were almost totally ineffective because other nations tended to retaliate by levying tariffs on our exports too.

What does happen, however, is that once you have got tariffs, it does create unemployment if you remove them. Tariffs are not necessary to create employment but if you have them there are changeover pains that deter you from removing them. Tariffs are to an economy like drugs are to a drug addict: it hurts to give them up, but it is worthwhile in the long run. However, abolition or steady reduction of tariffs would lead to not permanent unemployment, but simply the necessity for people who are working in inefficient industries to change jobs. Such industries would have to close once protection was removed. All such transitional problems could be ameliorated by appropriate government action on the welfare front. People who were thrown out of work could, until they acquired a new job, be given an unemployment benefit equal to that amount which they had been earning. Shareholders of companies that were forced to close could also be compensated appropriately. In the long run, it would all be very much worthwhile in terms of the increased efficiency with which the resources of the country were deployed. The transition costs would be infinitesimal compared to the long term gains. If anyone is in any doubt of this, let them look again at the figures given above for how much protection costs us now and do not forget that such a cost occurs every year. It is not just a 'once and for all' cost. Eliminating such costs would be an incomparable gain.

The other main argument for tariffs is that they help Australia be self-sufficient for defence and strategic purposes. This is true up to a point. One of the first things Adolf Hitler did when he came to power was to make sure that Germany was as self-sufficient economically as it could possibly be. For us, however, self-sufficiency might be less important. This is particularly so when we realise that the next world war is unlikely to take more than half an hour. There is scarcely likely to be any advantage in being able to make one's own tanks or planes then. Self-sufficiency would have helped us in the first and second world wars, but it is 'too late to shut the barn door now that the horse has escaped'. The likely nature of world wars has changed and it is about time that we woke up to the fact and stopped preparing for the second world war all over again.

Realistically, the only wars we are likely to have are limited wars such as the Korean and Vietnam wars. In such wars we know from experience that there is no difficulty in getting supplies from overseas, therefore there is no point in paying the huge costs that self-sufficiency would require. Even with our present high levels of protection, we have nothing like self-sufficiency. Our front line aircraft, the F 111, is fully imported, as indeed are our front-line destroyers, submarines and tanks. Talk of military self-sufficiency as a justification for tariffs is the most blatant lie and sham. Perhaps the greatest illustration of the fraud involved in appealing to defence as a justification for tariffs is the case of the Victa Airtourer. If any industry is defence-relevant then it is surely our own aircraft industry. And yet our government refused the Victa company a protective tariff to help its light aircraft project to survive. As it happened, the patents, machines and rights to the aircraft were bought out by a New Zealand firm and we now import an improved version of the Airtourer from New Zealand for use by our armed forces. By contrast, the industries that do enjoy tariff protection in Australia include our own plastic Christmas tree industry. Which are more important to defence: plastic Christmas trees or aircraft?

Self-sufficiency in defence is an impossible objective for us. Defence equipment designed and manufactured here could not possibly be as advanced as imports from the U.S.A. and Europe and it would be infinitely more costly. All the research and development expense would fall upon us instead of just part of it. Accordingly, we must simply tailor our national policies with this reality in mind. Protecting our plastic Christmas tree industry or even our motor vehicle or electronics industry will not help at all.

One argument that economists do generally concede has some force as a justification for tariffs is that 'infant industries' should be protected. This argument is based on the fact that some industries do become more efficient with experience. The difficulty is in saying why this is a good thing. Why do we need an industry that is inefficient -- even if it is only for a short time? Why should our people subsidise the setting up expenses of some businessman by being forced to pay higher prices? If there is a need for the industry concerned and the country does benefit from having it, then a more appropriate way of giving it support would be by way of subsidy. That way the total cost would be on public display and would have to be examined and justified afresh in parliament every year. As it happens, however, most of the industries that the government protects are not so much infant industries as senile industries. The motor vehicle industry, for instance goes back to 1919 and yet it still needs huge protection. Even the manufacture of complete cars goes back to just after the second world war. When are the infants going to grow up?

There are other arguments for protection that occur from time to time but, whatever grain of truth they may contain, they could never be sufficient to justify the ramshackle edifice of tariffs that successive Australian governments have built up. In fact almost any rational or fully thought out policy towards tariffs would be better than what we have now. The only possible explanation for our present pattern of tariffs is the relative strengths of the pressure groups and special interests that secured them -- that secured them, almost invariably, against the public interest.

Under a system of complete free trade Australia would of course be a much more specialised country. We would do fewer things, but do them better. We would, however, not necessarily become merely a quarry or a farm for the world's more industrialised nations. Australia exports now many industrial products -- including steel. Most of these industrial exports would continue. They already comprise roughly a quarter of what we export and should in fact become even more competitive if tariffs were abolished. This is because tariffs are a devaluation substitute and tariff abolition would necessitate a devaluation. A devaluation, however, would mean that our manufacturers would get more Australian money in exchange for overseas currency, so they could afford to cut their overseas price. Even if our exports of manufactured goods did not expand what is wrong with being a big supplier of primary goods? Expanding world populations and rising living standards ensure that food-producing industries have a great future. To be a primary producing country may in fact be a great advantage and the highroad to wealth.

We now know also that tariff cuts are politically practicable. The twenty-five per cent tariff cuts ordered by the ALP government are a great departure from traditional trade-union protectionist policies, but they do set a precedent which others could follow. Any government that has the interests of the Australian consumer -- and that means all of us -- at heart will continue the program of gradual tariff cuts until the Department of Customs and Excise has been completely abolished.

POST-PUBLICATION ADDENDUM

** Events have since overtaken this comment. In the early 1970's Keynesian anticyclic policies did seem to be working in the Australian economy. Very soon after that they stopped working, however, and it is now clear that the principal government policies needed to secure low rates of unemployment are continuing pressure on labour-market rigidities and maintenance of a stable money-supply.

Most unemployment is in fact caused by government meddling -- usually but not entirely under Leftist influence. Official disincentives to employment such as payroll tax, generous welfare payments to the unemployed and the unrealistically high minimum hourly rates of pay enacted under strong union pressure are the biggest influences preventing full employment in Australia in the early 21st century.

It may also be noted that in the 30 years since the chapter above was written, Australia did greatly reduce its level of tariff and other protection to industry but -- thanks largely to labour market reform -- still had a level of unemployment that was lower than many if not most other affluent countries. The most instructive comparison was with the heavily protected European Union. Did the high EU levels of protection mean that EU countries had low levels of unemployment? Far from it. The level of unemployment in most EU countries was in fact roughly DOUBLE the Australian level. So much for protection!

Chapter 22 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


Cutting Up The National Cake



By: PETER SAMUEL

In an excellent essay on the problems of Western governments in the journal Commentary, Professor Wildavsky makes the simple observation, 'We are all, in fact, doing better and feeling worse'.

It is ironic indeed that just when it becomes trendy to say that we need not be so concerned about economic growth, there is an unprecedented outbreak of material demands from all sections of Western societies. Never before has there been such a scramble for personal economic improvement, as evidenced in the long hours people are working, the proportion of households taking second jobs and of course the spiralling demands of wage and salary earners. There is a new harshness to the business of dividing the national cake.

Ideological knee jerks

Perhaps there is nothing more destructive a government can do than further misplaced feelings of deprivation among one section of the community. It is difficult to know just what motivates government spokesmen when they champion one supposed class of 'wage-earners' against the rest. It may be the ploy of playing the politics of the numbers game, and being on the side of the many against the few. It may be just an ideological knee-jerk reaction born of years of Labor politics. But it would be very worrying if they really believed their propaganda, about wages being a sadly declining share of national income.

It is possible to go to great lengths with the national income statistics, making different adjustments for different legitimate purposes and to choose different base and end dates and to come up with a perplexing variety of percentages. The crude figures on wages and salaries as a proportion of gross domestic product show a rise over the last twenty-five years-from about fifty-four per cent to sixty-two per cent. That, of course, is only the beginning of an argument about income shares. It can be said that there have been structural changes in the economy with the sectors employing few wage and salary earners declining (farming, small shops, etc.) while those employing a large proportion (the financial institutions and government bodies) have grown. Certain sectors of the economy can be left out of calculations and statistical weighting techniques applied to the data, giving different answers to the question about changes in income shares.

The worker share

This is precisely what a much quoted officer, Mr Tilling, in Mr Clyde Cameron's Department of Labor in Melbourne, has been doing. Tilling's statistical work on income shares is in a draft paper entitled 'Labor's Share in National Income,' for the Department of Labor.

Cameron has quoted the figures which suit his case about the plight of the working classes, but quoted them completely contrary to the conclusion reached by Tilling. Open government may not extend to official publication of Tilling's findings, but a leaked version of Tilling's paper states in its conclusion:

'The evidence appears to generally support the hypothesis of long-run stability in distributive shares. The gross functional distribution of the national product has not changed significantly in favour of either labour or capital since 1953-4. Between 1948-9 and 1953-4 there was a clear decline in the share of wages and salaries in national income. Farm income spiralled upward, because of a very rapid rise in commodity prices: There was an equity case during that period for upvaluations of the Australian currency to distribute the benefits more broadly.' There can be no question but that there was a definite decline in that period in wages in relation to national product. But if the extraordinary Korean war boom is left out and the series examined from then onward, Tilling, after all his statistical analyses, concludes there is no significant long-run movement up or down, although of course there are fluctuations year by year.

The real facts

Tilling's draft paper is also worth quoting on another point: 'The conclusion (of stability in income shares) is not without importance from an industrial relations viewpoint. Recently many trade union leaders have expressed the view that labour's share has fallen over the past quarter of a century. This attitude may have had a not insignificant effect on the level of industrial disputation in recent years. It is hoped that the evidence submitted in this study will enable a better appreciation of the facts of this question.'



This chapter originally appeared as a column in "The Bullettin", 10 November 1973, p. 72.

Chapter 23 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


The Traps of The 'Needs' Concept



By: PETER SAMUEL

One of the most intriguing aspects of the 1972 election campaign was the extent to which the Australian Labor Party exploited the word 'needs'. A great portion of their more subtle campaign appeal was based on the use of that word to project a non-ideological, pragmatic, let's-get-the-experts-in approach to the business of government. In the huge areas of education and health there is an explicit commitment to establish independent commissions of recommenders, who would look at the total national picture and pronounce upon the 'needs'.

It is probably a brilliant political campaign technique to make -- a proposal for this kind of decision-making. The people are probably fed up with buckpassing between the various levels of government and receptive to the idea of a government which will take national responsibility. They are also deeply suspicious about politicians making the decisions. They are probably equally suspicious of organisations called departments because these are familiar bureaucratic institutions, remote from their real needs and slow to move. So, the idea of something new called a commission sounds good. But what does it all mean really?

A little understanding of economics informs one that there is hardly ever such a thing as an absolute, clearly definable 'need'. In certain dire circumstances individuals do have critical needs which must be satisfied regardless of cost -- people dying of thirst in a desert will pay absolutely anything for water, to quote the classic case of an absolute need. But most of the time need is a highly relative and conditional reality, and it is misleading to speak of it as if it is a simple concept.

There are in the real world usually only such things as 'need-ifs'. There is a need for $A million for education if we want to educate B million people, if we want to provide a C/D student staff ratio, if we allocate E square metres of science laboratories per student, if we provide F language modules, G class rooms, and so on indefinitely, defining the way in which education will be organised and provided for.

Even that leaves aside the matter of resources available, and the question of choice, as to how far resources will be deployed in the direction of education as against other community uses. 'Needs' start off as sounding like a simple, pragmatically determined thing but end up in reality being the product of a highly complex set of equations into which have to be fed a whole series of sensitive and debatable judgments about which people will disagree.

To give to any one institution, whatever you call it, the right to determine 'needs' is to give it very great power. The present government has had its flirtations with the 'needs' method of decision making. It has established a universities commission, and talking to state universities' administrators one gets the impression that virtually all decisions about the future of university education are now made in the offices above the Reserve Bank building near the Canberra law courts.

The commission must start each so-called needs estimation by an exercise in wheeling and dealing with the Treasury and various ministers to determine, first of all, what will be a realistic kind of budgetary increase in total governmental expenditure on universities. It will only recommend what it knows beforehand is a politically acceptable call on the Commonwealth budget.

Then, with some overall expenditure ceiling in mind, it assesses the submissions of the various universities bidding for money for the next three year term. It is rarely a matter of the commission simply dictating what each shall do. There is a certain amount of give and take between the Universities Commission and each of the university administrations (if only for the sake of the quieter life), but in the end the commission determines most of the details of development in each university. It lays down target figures for staff-student ratios, which new teaching courses and research departments shall be established, and whether car parking structures or student residences will be financed.

Outside finance can occasionally be mobilised but that becomes a very delicate matter, for the grand commission in Canberra is always liable to say: 'well, if you can yourselves raise money for those car-parking structures, why cannot you raise that money yourself for the landscaping you are asking for.' Or: 'if you can finance those student flats from bank loans, why cannot you use that money for college accommodation instead of expecting us to finance it?' Any show of independence whatever is liable to invoke the penalty of withdrawal of financial support elsewhere, so open is the concept of need.

The ALP has said it wants to apply the university commission model in the areas of health and pre-tertiary education, which will mean that its commissions in these fields will deal with the fates of more than 10,000 schools and the several thousand hospitals, nursing homes and other health institutions. A number of questions are left quite unanswered: (1) what role, if any, remains for the state education and health departments, (2) what independence will remain for supposedly independent schools and hospitals.

It is perhaps not very fashionable (though there are some signs it is becoming more so) to say that this is entirely the wrong direction in which to move. We should be moving to diffuse power and let much more of it rest in the hands of the customers and clients of education and health services.

The way to this ideally would be to let the providers of services offer all the varieties of health and education service they can with the appropriate price tags, and to let people make their choices. This way the providers of services --they could be government outfits, teachers' co-operatives, church organisations, businesses, or whatever --would be innovative and flexibly responsive to the sensitivity and infinite variety of different needs which people have. By placing a price tag directly on the education or health service being offered, people's ideal-world 'needs' would automatically be reconciled with realities of scarce resources.

But the prevailing community philosophy towards such things as health and education is profoundly paternalistic, and for the moment it is prepared to leave most of the decisions to politicians and bureaucrats. It will be interesting to see whether the community is prepared to leave all the decisions to needs-assessing commissions in Canberra.



This chapter originally appeared as an article in "The Bulletin", 2 December 1972, p. 56.

Chapter 24 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974

The first part of this chapter appeared as an article in Nation Review, 18 May 1973, p. 946.

The National Health and the Case for Prepaid Medical Care



John Ray

No freedom for doctors?

THE LABOR GOVERNMENT'S attempt to deny doctors the right to choose their employer is a violation of one of our most basic democratic rights. Labor has made it clear that its ultimate objective is to turn all doctors into salaried public servants. Anybody who has had first hand experience of government bureaucracies (and who hasn't?) ought to be resisting with all their might and main this attempt to bureaucratise medicine.

We all know how contemptuously public servants treat us: Do we really want to convert our friendly family doctor into this sort of indifferent, impersonal public employee? Under the present system the doctor has some incentive to communicate with and endeavour to understand his patients. He might lose our custom (and his income) unless he does. By contrast, nothing but a bomb can shift a public servant.

One also wonders where Mr Cameron is now. We are so used to hearing him defend unionists and their strikes by talking of their right to withdraw their labour if things don't suit them. What about doctors? Don't they have similar rights? Mr Cameron's guiding rule seems to be that a Labor government should champion any claim that unionists make and do everything to see that unionists get their way. What about the AMA -- the doctors' union -- why aren't they included in his patronage? To be consistent he should be defending their right to determine their working conditions as vigorously as he has defended the rights of other occupational groups.

The problem

It is also clear that there is a shortage of doctors. Anybody who has had to spend hours in a waiting room knows that. It is equally obvious that totally free medicine would encourage yet more people to go to doctors for even minor complaints. Do we really want to wait even longer in waiting rooms while doctors see all the extra people? That is what Labor seems bent on condemning us to. Are they suddenly going to create a couple of thousand extra doctors out of thin air to cope with all the extra patients? It is about time they told us. As far as one can see at the moment we are going to have poorer medical service under Labor -- not better.

Perhaps the saddest aspect of the whole affair is that better alternatives to achieve Labor's stated objectives of improving the availability of medicine are already available. If only Labor had the imagination to learn from other people's experience there would be no need for any of the present commotion.

One solution

One alternative that would achieve more than Labor's present scheme, and do it with a minimum of unwelcome change, would be to pass a law requiring medical benefit funds to give special low rates to people in the low income brackets. If, as Labor says, the Funds are making too much money, this should certainly solve the problem while providing the social justice that Labor is so concerned about. Under these circumstances Labor could also then afford to protect people from themselves by passing a law making it compulsory for everyone to join a Fund of their choice. Since Labor is going to take compulsory health contributions out of our pay anyhow, why not make those contributions payable to private Funds if people so desire?

Economies of scale?

One reason that the average man sees for supporting a government monopoly in the health care field is that it must surely be more efficient to have one large government scheme than a whole lot of competing little ones. Surely there is much duplication of effort that could be avoided.

To say this is to ignore the most fundamental rule about bureaucracies: the bigger they get the more inefficient they get, the harder it is for them to change when circumstances demand it or opportunity presents itself.

But why then do factories get economies of scale whereas bureaucracies do not? Is it not trying to have one's cake and eat it too when invoking economies of scale to defend big business and then denying economies of scale in attacking government enterprises?

The inconsistency is only apparent and springs from a failure to distinguish what it is that enables economies of scale. Among the causes of economies of scale are: fuller utilisation of plant, specialisation of labour, splitting of productive tasks into maximally efficient units, maximum spreading of 'setting up' costs and maximum spreading of fixed overheads such as research and development costs or purchase of licenses. There are however also some 'DISeconomies of scale'. There are some influences which work to make size bring increasing unit costs. One of the most widely quoted of such influences is in fact bureaucratisation and the poorer intrafirm communications it brings. Yes, bureaucratisation is not unique to government. Even large private firms can suffer from it. So much so that there is in theory always an optimal size for any business enterprise -- the size at which diseconomies begin to exceed economies of scale. If businesses grow beyond this size, they grow less efficient, not more so.

One very good example of recognition of this fact is that of the world's largest corporation -- General Motors. General Motors had to face the fact, some time ago, that the bigger a bureaucracy gets the more it is a source of inefficiency. Its theoretical advantage -- co-ordination of the effort of a wide range of people -- was recognised to be, in practice, very much outweighed by its disadvantages -- slowness and distortion of information transmission, and consequent slowness and poor quality of decision-making. The result of recognising this was a radical one: General Motors split itself up into four almost completely independent divisions, each of which went its own way largely without consulting or co-operating with one another. In fact, they became fierce competitors with one another. Now General Motors was not doing all that for the good of the public. They were doing it for the quite selfish reason that they knew they had to keep costs down if they were to maximise their profits. They knew small bureaucracies were more efficient than larger ones.

So while one large health bureaucracy may seem more efficient in theory, we have every reason to believe that it would not be so in practice. Size promotes inefficiency and lack of competition creates inefficiency. We can do without inefficiency from both sources.

The best solution

The best health scheme of all is prepaid medicine. This was an idea initiated in the United States by the Kaiser Corporation for its employees. Under this system you have a network of private hospitals or medical centres and you subscribe a regular monthly amount to the hospital nearest you -- not to some independent medical benefits fund. You are then entitled to free or very low priced treatment at that hospital and all other hospitals with which that hospital has a reciprocal agreement. A small additional charge could also be made if you go to a hospital other than your own. The effect of this arrangement is that the hospital has an incentive to get you well as quickly and as efficiently as possible. You have already paid them your money. They don't gain any more by you staying in longer. If they are inefficient, they will have to charge higher subscriptions to cover their costs and this would encourage you to transfer your subscription elsewhere. In other words, inefficient or unpleasant hospitals would lose all their subscribers and collapse. They, would have though every incentive to make your stay as pleasant, as effective and as short as possible.

'As short as possible' does not of course imply that inattention or hasty care can be expected under this system. Obviously, a complaint not attended to properly early in its course would only worsen and involve the hospital in even more expense.

If the Labor government is going to spend money on health, it would be best spent giving loans and subsidies to encourage the setting up of such private comprehensive medical centres and hospitals.

What remains unsaid

In the confrontation between our Labor government and the doctors, there is a lot that neither side will tell the public. There is more to the debate than meets the eye and what is being concealed is explosive indeed.

What no-one is saying is that the government does have power to fix doctors' fees. And, equally culpable, no-one is saying that this would lead to patients being shunted through doctors' consulting rooms at thirty second intervals. The federal government has the power, but is rightly afraid to use it.

Under the Labor health scheme the patients' bills will be paid by the government, if -- and here is the catch -- the government approves of the doctor who sent the bill. As soon as the Labor scheme is introduced, the government has a weapon that could force doctors to toe the line on any issue the government chooses to name. At any time the government could -- either by legislation or by regulation -- declare that any doctor who refuses to fall into line over some issue would be 'non-participating' in the government health scheme. This means that if you go to such a doctor, you have to pay every cent of his bill out of your own pocket. That doctor would lose most of his business overnight and would have to give in to the government's demands.

We have every reason to believe that the Labor government will use the power of price control that this gives it. Doctors' fees will in fact be pegged. Any doctor who raises his fees will be declared 'non-participating'. It would be too good a chance for a socialist government to miss.

As soon as the government pegs doctors' fees, however, the same thing will happen that always happens when prices are pegged. There will be a diminution of supply. When President Nixon pegged the price of meat, it simply meant that many Americans could get no meat at all -- at any price. Doctors will alter the supply by collecting the same fee for a shorter consultation. The 'supply' of consultation time will be reduced. In a word, doctors will take more of their rewards in the form of leisure time -- something they are very short of at the moment.

This is the meaning behind the vague phrase the doctors have used over and over again in their dispute with the government: 'Decline in the standards of medical care'. This decline is what they say concerns them in the government's scheme, but because they are afraid to spell out what they mean by it, the public gets the impression that it is all waffle designed to excuse the doctors' stick-in-the-mud attitudes. It is not waffle. The danger is a real one. The government scheme will make medical care harder to get and of a lesser standard. Lives will be lost because if it. Any system that gives the doctor a vested interest in spending as little time as possible with his patients is stupid indeed. Out of sheer self-interest such a scheme must be rejected. The quality of medical care will only be at a maximum if the doctor is encouraged to spend more time with his patient not less.

How to pay doctors less

There is only one way to both increase the quality of medical care and make it cheaper for the public. That is to go back to the cause of high medical fees. Just to slap control on fees is like sitting on the valve-of a pressure-cooker in order to keep the steam from whistling out. The proper way to do it is to turn down the gas which is causing the steam to flow.

The cause of high medical fees is that there are too few doctors being trained. Following the laws of supply and demand, this means a limited supply of medical services and hence a higher price. The reason too few doctors are being trained is that the doctors themselves do everything possible to keep it that way. They like their high incomes so they have a vested interest in reducing the number of students getting through medical courses. Hundreds of high school students with good matriculation passes are refused entry to medical schools every year. This creates an artificial scarcity of doctors. People who want to train as doctors are not permitted to do so.

The doctors themselves have an almost watertight reply to charges such as this. They say they must maintain 'high standards' for such a vital profession. Critics charge that the standards are too high that many applicants who are now rejected could in fact become good doctors if given the chance. How you prove the case either way is anyone's guess. One indication might be that lower standards in the past and lower standards overseas seem to have worked well enough. Why have the standards steadily risen in recent years?

One thing is certain, however; even by the doctors' own standards there are still a large number of students who qualify for admission to study medicine, but who are excluded by medical school quotas. Even by doctors' own standards, there are more qualified students than there are places for in our universities. It is these students whom the government should be using to give the community better and cheaper medical care. In short, the government needs to accelerate the rate of building of medical schools. Some of our universities at the moment have no medical schools at all.

If the government spent on extra medical schools only part of the money it is already going to spend on subsidising doctors' fees, it could have many more medical graduates and, in real terms, the price of medical care would fall. In the long term, in spite of the reduced subsidy, patients might be paying no more than under the present system. The difference would be that there would be more doctors around and hence more medical service available to the community.

There is no reason why doctors' earnings should not be among the lowest in our community. As a rough general rule there are two ways somebody can be paid-either in money wages or in 'conditions'. People in occupations that are looked down on usually get high money wages: e.g. tradesmen and truck-drivers. People in "soft" jobs, such as government clerks, get quite poor money incomes. In isolated cases, however, such as doctors and airline pilots, strong union activity or other collusive activity has succeeded in getting both good conditions and good wages. In the case of doctors, the good conditions consist of very high public esteem. Many people would work as doctors just for the respect it earns them, even if the monetary benefit was much worse than it is at present.

And make no mistake, it is not their receiving a high income which gives doctors status. It is the fact that we allow them to interfere with our own bodies. This is something that we would normally greet with hostility so in order for us to allow doctors to do it, we have to attribute high status to them. This would happen whether or not the doctor was in receipt of a high income.

Because doctors are paid so highly in respect and prestige, therefore, we could afford to pay them less in money and still have considerable numbers of people willing to be doctors. The only reason they have high money wages too, at the moment, is because of their own restriction on the number of doctors made available. This must be broken down. Artificial scarcities in vital services cannot be tolerated in any community, and such things are an example of the worst abuses of monopoly. They can only be condemned as an evil.

Basically, then, the Labor government's actions so far are an attempt to treat the symptoms while ignoring the disease. The disease is the shortage of doctors. The symptom is the high price of medical care. The pity is that the attempted cure of the symptoms will worsen the disease. Between the stupid policies of the government and the selfish policies of the doctors, the poor old consumer of medical services (i.e. most of us) will receive even worse service than before.

In conclusion, we need not nationalised medicine, but a simple provision that everybody must have medical benefits payments deducted from his pay. What fund (or hospital, in the case of prepaid schemes) the payments go to should be the business of the taxpayer -- as it has always been. The government has a mandate to make health contributions compulsory and there is no need for, or advantage in, a new grandiose, cumbersome and inefficient government monopoly. If this was done it would not give the government a stick to threaten the doctors with and we might retain, or better, our present standards of medical care while extending those standards to the whole of the community. If the government wants to improve the present standards of care without it costing us more in doctors' fees, it could as a first step see that every Australian university has its own medical school. The ones already a-building are only enough to keep up with normal increases in demand. We need more doctors, not more bureaucracy.

Chapter 25 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


Dr. Jim's Moral Indignation Meter



By ALAN FITZGERALD

'Dr Cairns and his Department of Overseas Trade will boycott a Portuguese trade mission to Australia in protest against Portuguese colonial policy in Africa'- News item

Dr Jim's magic moral indignation meter sounded the alarm yesterday after a test run over all Australia's existing trade relationships. As a result an official of the Overseas Trade Department announced that it was now policy that Australia should not promote trade with any nation except the Republic of San Marino.

'Unfortunately, although San Marino survived Dr Jim's moral indignation test they don't sell us anything but pretty coloured postage stamps,' he said.

'So far as we can discover there's not much scope for us to sell them anything but glue.' In a hastily called Press conference Dr Cairns amplified his new policy as being consistent with his attitudes to foreign affairs over many years past.

'You all know of my concern for the rights of minorities everywhere and my opposition to regimes whether of the left or the right which infringe on the rights of man.

'There can be no double standard,' said Dr Cairns. 'In trade we cannot make a moral distinction between communist and fascist regimes which impose their authority on unwilling subjects.

'Both are evil and must be opposed. Therefore today I cancelled the Australia-China trade treaty because of continued Chinese military action against the people of Tibet and the imprisonment without trial of patriotic Tibetans opposed to outside intervention in their own affairs.

'I have also recommended to cabinet that we should cease trading with the Soviet Union until the cruelly oppressed Czechoslovak people gain their liberty.

'So long as we trade with Russia we condone the rape of Czechoslovakia carried out in 1968 by the Warsaw pact armies at the behest of the Kremlin,' said Dr Cairns, turning quite red with indignation.

'We must not also forget the other nations of Eastern Europe which are little better than de facto colonies of the Soviet Union, whose puppet regimes do not enjoy the popular support of the people. Think of Hungary, Bulgaria, Poland and East Germany and you will realise why we should impose a boycott.

'My sense of outrage-always to the fore in Cambodia and Vietnam-is no less directed at the Soviet Union over its subjugation of the peoples of Estonia, Latvia and Lithuania.

'Just because these events took place a long time ago and in far away places does not make them less intolerable to my finely honed sense of justice.

'Of course I am not only concerned with communism but also with right wing regimes in Rhodesia and South Africa.

'In calling for sanctions of greater severity to be imposed against these two governments I wish to affirm my support for majority rule. 'I do this despite the evidence in the rest of Black Africa that democracy is no more than a sham, with military regimes and one party states being the norm.

'The imprisonment of political opponents, and cessation of what we know to be civil liberties has caused me to call with equal fervour for a boycott against Uganda, Tanzania, Nigeria, Ghana and the rest of these bogus parliamentary democracies.'

Dr Cairns went on to denounce Cuba, Mexico, Algeria, Argentina, Chile, Panama and the Falkland Islands.

Dr Cairns made a point of singling out Yugoslavia for particular criticism because of its suppression of civil liberties in Croatia.

'My support for the heroic struggle of the Croatian people to achieve freedom is well known. The imposition of a trade boycott on the Tito regime is the most tangible support we can give to the revolutionary cause of the Croatian people.'

Dr Cairns said Australia by cutting off trade with ninety-nine per cent of the rest of the world was clearly demonstrating its unbiased commitment to furtherance of freedom, justice and liberty for all people.

'The trade we will lose by this action will be more than compensated for by export of my moral indignation meter, patent pending,' he said.

(This chapter originally appeared as a column in "The Bulletin", 25 August 1973, p. 17.)



Post publication note

Dr. Jim Cairns was a far-Leftist senior minister in the short-lived Australian Labor Party government led by Gough Whitlam in the early 1970s.

Chapter 26 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


Plastic Radicals in Academe



By JOHN SARUM

University wasn't always a plastic scene. For hundreds of years after the Middle Ages, for all that it had become a playground for the children of the rich, it retained a residue of the old idealism of a community of scholars, devoted to the search for truth and subject to rigorous intellectual discipline. This residue has vanished --or perhaps it didn't survive transplantation to the colonies. Look round Kensington, Baby. Where are the men who study the mind of man? (there's Sid Lovibond, giving electric shocks to rats). Who can tell us about the great spiritual achievements of our people expressed in literature? (well, Harry O. is great on deciphering C17th handwriting). What of the philosophers, in their eternal search for Truth, Beauty and Goodness? (watch Frank V. doing symbolic logic). Who studies the many problems of our society? (Sol Encel can't even get his statistics right and George Shipp is using his to prove that TV announcers have opinions). And tell me, who studies the living things in our environment, now in such grave peril? (the Romans had a saying, De mortuis nil nisi bonum; in this case it had better be nil).

Academia was once a way of life in itself --a rejection of ordinary values, a complete personal commitment to knowledge and the things of the mind. They lived with their books and their students, and formed a trade union to protect the interests of their scholarly profession. These unions were the first European Universities. Or in a quite different tradition, a Chinese philosopher tells us: 'A sage teaches in five ways. The first is by a transforming influence like that of timely rain. The second is by helping the student to realise his virtue to the full. The third is by helping him to develop his talent. The fourth is by answering his questions. And the fifth is by setting an example others not in contact with him can emulate'.

Such were the traditional conceptions of an academic. Who at Kenso even comes close to them? We all know about the dreadful man who, though a full-time member of University staff, was unavailable to see students nine to five, Monday to Friday, because he also held a full-time job in the city; but think of the others. How many academics wait round after lectures to discuss things with their students? How many drink with them, or share any social, intellectual or recreational activities with them? How many even think of doing so? Can you imagine an academic who lives with his students? Most of them have cosy homes in the suburbs and live like superior bank-clerks; which is probably a nice way of life, but it is not an academic one. "By their fruits ye shall know them"; if you want to know about the fruits of an Australian University, read The University Experience by Graham Little. The effect of three years at University on the Arts and Science students he interviewed was zero.

Of course, Arts and Science aren't the only faculties, and the University isn't just a playpen for the rich any more. It is once again a training place for the poor but able student, as it was in those first, far-off mediaeval days. A kid from the slums, if he can make it through our unspeakable high-school system, has as good a chance as the feudal peasant's brat whose intelligence attracted the attention of a wandering friar or an unusually able parish priest. With a good brain and lots of luck, today's peasant can get a cadetship of some sort and make it to a white-collar job, professional status and the suburbs, say as an engineer (without a brain, he can always be a high-school teacher). But he will need luck, and a lot of hard work, and a very thick skin. For the ambitious slum kid slogging his way up the social ladder is not really acceptable to the Uni crowd. Engineering is not a fashionable course. Student style is still set by the rich kiddies in their playpen.

Of course, the rich brats flirt with Marx (as they have since the 'twenties). Especially his early work ["Grundrisse"], which Marx himself rejected, because it doesn't involve nasty difficult things like economics. They talk a lot about 'The Workers' and 'The People' and 'The Masses'. Mostly they've never worked in their lives, except for a summer vacation job at DJ's [Department Store], and they despise any beer-swilling, football-following unintellectual Alfs they actually meet. ('Alf is their word, popularised by those naughty but oh so witty boys from Oz). You can see their total inability to communicate with ordinary Australians when they try to talk with ordinary Australians who happen to be black at Abschol demonstrations. They despise the worker's ambition for a better home for his family from its sand-blasted glass front door to its wall-to-wall carpets, his pride and joy in his car, his harmless entertainment watching teev or sport. They have no conception of his heroism in the drudgery of his daily life, his courage in the face of difficulties they never face, his devotion to his family, his ill-expressed but often profound wisdom about men and affairs, his quick nose for the slightest hint of a phoney (their blindness to this last hardly surprises). They sneer at his son battling his way through engineering and playing Rugby [football] on Saturdays. Perhaps the workers are not very admirable in many ways, but it is odd that those who profess to champion them should emphasise their deficiencies so much. (This characteristic of student radicals to rubbish the working classes refutes the otherwise plausible explanation of a University as an institution to care for those unable to reconcile conflicting beliefs -'cognitive dissonance' as it is called. Students are as good at it as anyone.)

The nearest we've seen to the Student-Worker Alliance was a lady graduate student who shacked up with a wharfie [longshoreman]. Naturally, for it wouldn't do to flout the really fundamental social norms, he was an exceptional wharfie, with an honours degree in Arts. (The reaction of students to the relationship, before they found out that last significant fact, was very revealing.) Naturally too, he was not a success in his unusual vocation, and was chucked off the wharves.

Lots of the rich kiddies play prols, of course, and move out to the slums in a brave gesture of independence. They disturb the sleeping locals with expensive stereograms and send their washing home to Mummy. But when the shit hits the fan it's marriage and a steady job and a home in a good suburb. The number of self-styled radicals, student editors and so on who have already started buying a Nice Home is extraordinary; although some are sufficiently snobbish (or awake to a good investment) to put their money down in some newly-fashionable area like Balmain. Of course it's rude to point out such inconsistencies, or compare their sound investment with the bourgeois life-style they reject or the proletarian aspirations they despise. But it helps to clear up their views on private property; where your treasure is, there shall your heart be also.

In fact, of course, they are bourgeois to the core. Their drug market works on straight free enterprise principles, and they're all in it for the money. They outdo each other with clothes, records, the whole, fashionable status symbol scene in a way embarrassing to a pleb who merely likes his new car. Beads do not a rebel make, nor tie-dyed clothes a rad. Look at the litter they leave and see what they think of pollution. Watch how they treat their birds and see what they think of Women's Lib. Watch how they treat each other and see what sort of society they believe in.

The University itself has adapted to its dual role as a degree factory for the ambitious poor and a playpen for the idle rich. There are courses to train the slobs to be respectable, useful members of society, in a job with a white collar requiring some responsibility and not much imagination. These courses perhaps overemphasise the lack of imagination, but the customers don't want it anyway. They just want to learn how-how to make four times as much as their old man --and the University teaches them how, by the book. No questions welcome. They'll come out competent accountants, economists, engineers --and if their creativity is crushed who cares? They're 100 per cent up on where their fathers were.

And there are courses for the gigglers who are here to fill in a few years on their oldies' money. Things like academic discipline and intellectual integrity would just be a nuisance in these courses, so they wither away. After all, what the little darlings really want to talk about is themselves --their wonderful new Youth Culture and Pop stars and weekends in the country smoking grass. Relevance, they call it. Throw in some long words and a smattering of history and the arts, so that they can feel superior to the slobs outside working. And the University lets them, with only a few formalities like reading-lists (any recent paperback will do) and tutorials (in which they get bombed anyway) and exams (as easy as possible -- they pass if they have long hair and up-to-date clothes, which after all is what they're here for). And we'll get the student paper to publish junk on fashionable upper-middle class conversation pieces like pollution and antipsychiatry and women's lib, so they'll know what to talk about. They can write some of the articles themselves and see their names in print (but for God's sake don't criticise what they've written, their little egos couldn't stand it). With issues like these, they can even feel they're important agents of social change as well. Forget the fact that once something's been taken up bv Time Magazine it's no longer new, but already being pushed into the collective unconscious so the masses won't be too shocked when something's done about it. (Australia is the only country in the world where the people who call themselves intellectuals read Time). Then they'll be trained for their role in society-making conversation at business lunches and cocktail parties --and they'll be able to look back and tell their kids how they were wild and Red when they were young.

That's all this place is, Baby --a combined Finishing School and Tech. College. So much for Aberlard and Mencius and Socrates, so much for scholarship and teaching as a way of life, so much for the search for truth. Who needed real Universities anyway?

This chapter is taken from the text of a leaflet circulated some years ago at the University of New South Wales by the then Liberal and Country Party club.



POST-PUBLICATION NOTE:

In converting printed matter to html I am normally rigorous in ensuring that there are no differences between the original and the html version. In this case only, however, I have spelt out a few abbreviations and inserted explanations of a few references. I have done so in the hope of making the chapter intelligible to a wider audience than the rather limited audience for which it was originally intended. I myself taught at the University of New South Wales from 1971 to 1983 and see much truth in what the author describes. The University of New South Wales is one of Australia's major universities. I have lost track of the author of the article but I hear that he has gone on to worse things.

Chapter 27 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


The Vietnam Protest



By ALAN REID

THE VIETNAM MORATORIUM CAMPAIGN COMMITTEE has 'black banned' ALP Victorian MHR Gordon Bryant. He is debarred from addressing meetings sponsored by the VMC. In taking this action, the VMC has discredited itself far more effectively than the Gorton Government, for all its attempts, has succeeded in doing.

For some time ALP parliamentarians, including Mr Bryant, have suspected, indeed been convinced, that an influential section of the VMC leadership was more interested in a Communist-NLF victory in South-East Asia than in peace in that region. But in their eagerness to secure peace they closed their eyes to this disturbing fact, probably in the hope that their convictions were wrong and that they should give their associates the benefit of the doubt and the credit for good intentions. But the action taken against Bryant has confirmed the correctness of this viewpoint.

Bryant is an old-fashioned radical. He has not succumbed to the modern habit of applying dual standards, observing one standard if he is protesting against the action of a country operating a system of parliamentary democracy, and another standard if the action is performed by a country which belongs to the Communist world or by a group that is supported from within the Communist world.

Bryant, an ex-soldier who served with the Australian Forces in World War II, is an ardent pacifist. He thought that the leaders of the VMC also believed in peace.

Even on Wednesday (the day before the VMC issued its 'black ban') he could not resist supporting the cause of the VMC because, apparently, he still forlornly hoped that they stood for peace for all men, not just selected men. 'People like myself are associated with moratoria ... (because) we want wars to stop and people to stop killing each other,' Bryant told the House of Representatives. 'It is not a question of being left, right, or centre.'

Bryant was on the side of the (leftwing) angels when he was fulminating about the inquiry of Australian troops being involved in South Vietnam, where he views the conflict as being a civil war. He was applauded during this period as a great, enlightened, and liberal Australian.

Then Bryant went to South-East Asia with a parliamentary delegation. He admits that he went there with preconceived notions -- that in common with many of his fellow Australians he had accepted uncritically the leftwing propaganda line that the replacement of Prince Sihanouk in Cambodia was a military coup, that the United States and South Vietnam were unjustifiably invading Cambodia and that the North Vietnamese presence in the country was merely an understandable reaction to this U.S.-South Vietnamese aggression.

A big, cheerful, irrepressible man, Bryant claims that in Cambodia he merely used his eyes and asked questions continuously. He summed up his findings in the House of Representatives in this way:

'Cambodia was a completely innocent bystander and not involved (in the North-South Vietnamese conflict) at all. In 1954 the North Vietnamese signed an undertaking to respect the boundaries of Cambodia. In the past two or three years Prince Sihanouk became increasingly disturbed about the pressure of North Vietnamese troops on the Cambodian border. There was nothing much he could do about it ... I, for one, did not get the whole straight until I turned up in Phnom Penh. On March 18, the National Assembly of Cambodia removed its confidence, as it was put in a motion, from Prince Sihanouk. They replaced him with Chen Heng, the chairman of the National Assembly ... A few days later Cambodia started negotiations with the North Vietnamese and the National Liberation Front. Negotiations were broken off after a couple of days and the North Vietnamese commenced military operations. It was not until five weeks later that the Americans entered Cambodia.'

The leaders of the VMC, of which his ALP colleague, Dr J. F. Cairns, is the chairman, took action.

They debarred him from speaking at VMC-sponsored meetings. Apparently you can speak against aggression only in selected areas of the world. If you speak against aggression in non-selected areas you are out. Bryant was left like a shag on the rock as far as Dr Cairns and Opposition Leader Gough Whitlam were concerned. Dr Cairns said, 'I would not myself have supported or initiated any action against Gordon Bryant, but I think the VMC has the right to do so.'

Asked if the ALP would reconsider its support for the VMC in view of the VMC's attitude on Bryant, Mr Whitlam took refuge in 'No comment'.

Fellow peace supporter Barry Cohen, new ALP MHR for Robertson, showed like Bryant that he was not a 'double standards' man. Describing the VMC's action as 'undemocratic', Cohen announced that he was dissociating himself from VMC activities while the ban on Bryant remained.

The VMC not only discredited itself more ably than its opponents have ever succeeded in doing, it provided a case history of the 'dual standards' in operation.



This chapter originally appeared as an article in "The Bulletin", 12 September 1970, p. 21.

Chapter 28 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974


Sport and the Anti-apartheid Movement



By BOB ELLIS

KEEPING SOUTH AFRICAN cricketers out of Australia and forbidding them to practise their art because of what they believe is as tryannous as keeping Cassius Clay out of the boxing ring and forbidding him to practise his art because of what he believed.

It's as tryannous as sending Daniel and Sinyaevsky to Siberia and forbidding them to practise their art, because their views were different from the views of their party, or blacklisting Dalton Trumbo and forbidding him to practise his art because he may or may not have been a Communist.

On what grounds do you think Bradman or Trumper should have been prevented from playing international cricket, or Rosewall or Laver from playing international tennis? Can there be any? Is there anything Robert Graves could say that could justify the confiscation of his pen, or anything that Malcolm Muggeridge could preach that could justify the cutting off of his broadcasts? Is there any political movement that Godard could support that would justify the confiscation of his camera?

Yet this is what the evangelists for freedom of expression propose to do with the South African cricketers-two or three of whom are as great as artists in their chosen field as any of the above-to prevent them from practising their art.

And what is the reason? Not that, like Cassius Clay, they actually believe in racial separatism--it seems that a great number of them are actually opposed to it -- but that their government believes in racial separatism and practises it.

This, of course, is as ludicrous as banning the works of Solzhenitsyn because his government believes in anti-semitisrn though he himself does not. It is the equivalent of banning the works of Arthur Miller because his government believed in McCarthyism though he himself did not. It is the equivalent of banning the performance of the music of Theodorakis because his government believed in censoring Socrates, though he himself did not.

It is as idiotic as banning M.A.S.H. from the country on the grounds that it came from America, and the American government believes in bombing Vietnam, though the film itself opposes it. It is as lunatic as banning the Russian Olympic team from the country because it does not contain any card-carrying capitalists, or banning the American Olympic team from the country because it does not contain any card-carrying Communists. It is as farcical as preventing Sir Robert Helpmann from dancing until McMahon repeals the White Australia policy.

When will the addled evangelists of the left-wing learn that their business is to promote the maximum of human happiness rather than the maximum of futile spite?

What good will it do if the best cricket team in the world is prevented from coming here? Thousands of cricket lovers will be deprived of a summer's pleasure, and will vote Liberal. Thousands of white South Africans will feel the more persecuted and will vote Vorster. Thousands of black South Africans will be warned off their local cricket fields, lest they should prove a political nuisance. Thousands of left-wing liberals will feel they have done their bit, conveniently forgetting that the only way they will change South Africa is by going to war with it.

And millions of Australian voters, their views about the riotous pinkoes confirmed, will high-tail it for the Liberal Party, and stay there. The Liberal Party will reign for a generation, and five million young Australians will grow up under what amounts to a one-party police state.

And what will be gained? The easing of a few of the aggressive drives of a few people who, having defeated every purpose they could possibly have stood for, are now feeling proud of themselves.

But of course, to the idealistic left, none of this matters. Human happiness and its furtherance doesn't matter a damn. All that matters is that you take a stand. All that matters is that you poke an ugly face at what you happen to believe is tyranny, even if that brings a worse tyranny in its wake.

They wouldn't dream of boycotting Australian cricket because of the way we treat our Aborigines, though our Aborigines are far worse off than most Bantu. Oh, no. Evil is always somewhere else, far enough away for them not to have to actually deal with it face to face.

Supposing the South African team actually came here. Supposing they were invited to speak at an anti-apartheid rally. Supposing they spoke. Supposing even one of them spoke. Oh, what a reverberation was there. And how their masters would tremble.

Supposing that happened, and tell me why it would not, would it do more to bring down apartheid, or would it do less? But no. Forget I suggested it. Throw out the baby with the bathwater. That's what you're here for. Take your stand on principle. That's the name of the game. Let civilisation wash away in the wake of your principles. That's the point of the exercise. Let the niggers go hang. Let the right of the artist to practise his art unhindered go hang. You've got to look at yourself in the mirror. That's what really counts.

You've got to live with your conscience. You've got to make the kind of stand that doesn't actually endanger you. That's what the little left liberal is made of. And in front of that resolve, the happiness of the whole damn world can go to blazes.



This chapter originally appeared as an article in "The Sunday Review" (later "The Nation Review"), 16 April 1971, p. 788.



Post-publication note

Bob Ellis is a well-known loose cannon in Australian political journalism but he has his lucid moments. The above was one of them.

Chapter 29 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974

Free Speech Versus Leftist Censorship



John Ray

THAT LEFTISTS will resort to physical attack to suppress or discourage views contrary to their own is no delusion. It is a matter of public record. Two instances most relevant are the treatment of Arthur Jensen and Hans Eysenck. Like myself, both of these are social scientists who have publicly taken what is to Leftists the 'wrong' point of view on racial questions.

Jensen is famous as the man who set out all the evidence that American negroes are at a genetic disadvantage as far as intelligence is concerned. A more unpopular or unfashionable point of view it would be hard to imagine. As such it is a point of view particularly in need of protection. The doctrine of free speech is about protecting unpopular points of view. Popular viewpoints don't need protection for their freedom of expression. One would think, therefore, that Leftists (if you believed their propaganda) would be most scrupulous in their dealings with Jensen. The opposite is true. He has been persecuted by his academic colleagues (social science academics are massively Leftist in their political views), subjected to physical attack, and had bricks thrown through his window by student activists.

More recently, H. J. Eysenck, an ex-German Jew who suffered under Nazism and who would have some claim to being regarded as the world's most eminent living psychologist, joined the 'Jensen camp' by publishing a book on race which even suggested that the Irish might, genetically be of inferior intelligence. I personally found this a deliciously hilarious suggestion. But what was the response of the Left? I quote from the Sydney Morning Herald, 10 May 1973: 'Students punched and kicked a professor of psychology as he tried to deliver a lecture at the London School of Economics yesterday. Professor Hans Jurgen Eysenck had just begun his lecture with the words "I have no wish to say anything controversial" when about fifteen students leaped on to the platform and attacked him. He was sent reeling, his spectacles were smashed and his face slightly cut.' I would suggest that there could be nothing more cowardly, nothing more Nazi-like, than this mob violence unleashed by these fifteen young men against one old man.

Extremists of both the Right and the Left do resort to political violence when the rest of society lets them. Normally, no-one is so let. In our society, however, the extremists of the Left have hoodwinked people into thinking that their parroting of humanitarian intentions is sufficient guarantee of the righteousness and benevolence of their deeds. I would submit to the contrary: that people who think they act in the name of humanity are very much like the officers of the Spanish Inquisition who thought they had God on their side. Their mistake is the arrogance of thinking that they alone know what humanity needs or should have. There is no more dangerous cloak for evil deeds than the mantle, of good intentions.

Nor am I overgeneralising from the above examples. The violence and destructiveness of Left-wing unionists, peace demonstrators and anti-apartheid demonstrators is well-known. In earlier years I was on several occasions attacked by enraged Leftists for daring to hold up a 'conservative' placard at Vietnam demonstrations. 'Freedom to agree with me' is the only freedom most Leftists seem to know.

Of course Leftist coercion is not only limited to something as unsubtle as physical violence. Cutting off communications seems to be the latest device among Australian Leftists. I refer to the action in 1973 of the postal union (led by the avowedly Communist Jim Slater ) in cutting off postal services (mail) to right-wing members of our Senate because they failed to pass a law the Leftists favoured. This was an unparalleled interference with democracy beside which their cutting off of communications with France pales into insignificance. Fortunately, it was a ban that was lifted a few days after it was imposed. One can imagine the frantic 'phone calls Prime Minister Whitlam must have made to Jim Slater.

Whitlam himself, however, is not averse to using the same weapon if he thinks he can get public support for it. I refer to the move by his government to cut off the mail and phones to the Rhodesia Information Centre. I would submit that, in general, any move to interfere with freedom of communications strikes at the heart of a free society. It is probably even more potent than bashing your opponents up. In a mass society such as our own, mouth to mouth communication is not sufficient to organise resistance to a tyrant. Other, more efficient means of communicating with whole masses of, people must be open. It is for this reason that when there is a revolution in a banana republic the first place they head for is the local radio station.

Attack on the communicators, interference with the means of communication or some form of censorship are the hallmarks and chief props of totalitarian dictatorships. Can we be blind or indifferent to the fact that in Australia it is the Left from whom we have this to fear?

As yet another expose of the fundamentally violent, dishonest and totalitarian nature of the Left -- particularly the student Left -- I append two newspaper clippings which show how even the advocacy of 'peace' can be made the occasion for violence. Goebbels is the man most often associated with the 'big lie' technique (saying one thing and doing the opposite), but his counterparts today are to be found on the Left.


APPENDIX I

The following report appeared in the "Australian", 10 August 1973, . 4 under the heading 'Saigon envoy spat on by students'.

Radical left-wing students at La Trobe University, Melbourne, yesterday spat on the South Vietnamese counsellor to Australia, Mr Luu Tuong Quang.
About 200 hostile students met Mr Tuong in the east lecture theatre, passed a motion asking him not to speak, and ordered him off-campus.
When the organisers of the lecture hustled Mr Tuong to a faculty office in an adjacent building the 200 students then followed and tried to break in.
Mr Tuong, surrounded by members of the Democratic Club, was rushed to a car, but angry students surrounded it and tried to stop it leaving the campus.
The protesters were led by Mr Barry York and other members of the Workers Student Alliance.
Mr Tuong lost his diplomatic aplomb only once during the half-hour incident when he saw South Vietnam's flag being burned.
He then attempted to grab a North Vietnamese flag and throw it into the flames, but six burly students surrounded him and wrenched it from his hands.

'Reactionary'

When a senior tutor in political science, Mr Gerald Henderson, offered Mr Tuong refuge in his office, the students packed the corridor and began beating on the door and screaming abuse.
The university's acting vice-chancellor, Professor A. L. Wardrop, ordered them to disperse.
Mr Tuong said: 'At no time did I fear an outbreak of violence. After all this is an Australian university and we are in a civilised country.
'Unfortunately I've got a bit used to these things happening. 'Most of these students are reactionary conservatives in spite of the fact they call themselves the radical left.
'They deny other people the right to speak and the right to be heard.'


APPENDIX II

The following report appeared on page one of the "Sydney Daily Mirror", 23 April 1971.

MELBOURNE, Friday. -A police guard was attacked and beaten up by vandals who defaced the Shrine of Remembrance with white paint early today.
The word 'peace' in 3 ft letters was painted on six of the seven main pillars of the Shrine at the entrance in St Kilda Road. Four ban-the-bomb signs were also painted in white on the pillar supports beside the steps to the Shrine.
Police said the unarmed police guard was attacked by four youths at 12.15 a.m.
The guard, Constable T. L. Wratten, 37, of the Government House Guard, was knocked to the ground on the steps of the Shrine and suffered cuts to the head and face and abrasions.
He was wearing police uniform.

Fled in car

Constable Wratten told police he disturbed two young men who were painting letters on the Shrine.
He was grabbed from behind by two other men, who had been hiding behind a nearby wall.
After attacking Constable Wratten, the four youths fled in an early model red sedan car.
Police failed to trace the car or the youths.

Chapter 30 from: J.J. Ray (Ed.) "Conservatism as Heresy". Sydney: A.N.Z. Book Co., 1974

MURPHYISM



John Ray

'MURPHYISM' might be a good name for Australia's equivalent to America's 'McCarthyism'. In the fifties, US senator Joe McCarthy made himself notorious by his witch hunt against 'reds' in American public life. To be a 'communist' was almost a crime and anyone of leftist sympathies ran the risk of being persecuted.

Senator Murphy's hunt for 'fascists' among our migrant community seems remarkably similar. The only difference is that this time it is the leftist who is doing the witch hunting. Large numbers of people whose only crime is that they oppose communist totalitarianism have been harassed by the police without as yet producing one shred of evidence about organised Croatian terrorism that would stand up in a court of law.

Murphy was also exposed in the Senate for conveniently forgetting to mention a report from the chief of Commonwealth police that there was 'no viable evidence' of such activity in Australia.

It is also now obvious that even the visit here by Yugoslav prime minister Bijedic was a put up job -- arranged solely to give Murphy some pretext for his crackdown. Over $100,000 of public money was spent to bring Bijedic here for one hour of talks with Whitlam -- talks for which the need is unknown to this day.

Bijedic did nothing, said nothing and saw practically no one. Yet the whole visit was one of Labor's finest dramatic performances -- unprecedented security arrangements and an equally unprecedented 'raid' by one arm of government on another.

If there was so little for Bijedic to do and to talk about, why couldn't Whitlam just have phoned him? It would have cost the taxpayer a lot less.

I am not of course saying that Croatian organisations do not exist in Australia. What those organisations consist of is the question. There are indeed Croatians in Australia who have fled communism and who hate what they have fled. In memory of the one period when their nation was independent they do sometimes take upon themselves the name 'Ustashi'.

The question is what harm do they do to Australia? Trotting out old pictures of what the world war two Ustashi did is about as relevant as accusing Australian communists of the crimes committed by Stalin.

Bomb-planters and other criminals do exist here and must be dealt with if and when they are found. So far there has been no proof that any of them were Croatians -- let alone executives or even members of Croatian expatriate organisations. All Murphy's raids turned up were a few allegations against Croats for weapon possession. A raid on Serbs, or even Australians for that matter, might have produced a similar small proportion of weapon owners.

What we have to fear is that shortly senator Murphy will be deporting Croatians to Yugoslav firing squads on evidence as flimsy as any Joe McCarthy ever used -- on evidence for instance that they applied the name 'Ustashi' to themselves or expressed a wish for the violent overthrow of tyranny as they see it. For a Yugoslav to be an anti-communist may soon become a crime.

Just a little more of the stage management we saw in those days in 1973 and the average Australian may come to accept that Croats are a threat and that to say of a man that he is one of the Ustashi is sufficient grounds for his deportation. One can only hope that any Yugoslav migrants so threatened will have the right to appeal to a judge to see if they have committed any other crime than being right wing.

It would be a sad day indeed if someone who had fled communist totalitarianism for a land of liberty found that the land of liberty was so paranoid that it sent him straight back whence he had come.

'But what about the training camps they are supposed to have in Australia?' someone will ask. Again, I am quite certain that such camps exist. They need not however be devoted to illegal ends. It may not be generally known that Ukrainians and other refugee groups also have such camps -- ones where the youth of the particular ethnic community attend in uniform, do physical fitness courses and receive some semi-military training (As, indeed, do the Boy Scouts).

For the representatives of an oppressed community who see communism as menacing everything they hold dear, such responses are understandable. It is equally understandable that such camps pose no threat to us or our system. They simply represent a preparedness that our governments otherwise have always seen fit to encourage (the myth of the citizen soldier) -- through such organisations as rifle clubs, the cadet corps and the CMF.

If the present government wishes to claim that such organisations are subversive, they have a heavy burden of proof upon them. Boy Scouts beware!

No doubt left wing Labor feels it was persecuted when the Liberals were in power. Now they want their turn at the persecution game. After so many years out of power they could be feeling an almost physical need to get their own back.

At the risk of being terribly corny, however, two wrongs don't make a right.


POST-PUBLICATION ADDENDUM

My reference above to one arm of government raiding another is covered at some length here. Excerpt: "Gough Whitlam said nine months into his prime ministership that the Commonwealth Police raid on ASIO headquarters in Melbourne was his government's "greatest mistake"."