"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." Richard P. Feynman

Saturday, June 18, 2011

Labor's Euro vision a disaster for Australia!

In probably the single best article on the ramifications of the proposed carbon tax Greg Sheridan explains the dangers of following Europe , with the subsequent loss of democracy and increasing power of the non-elected central bureaucracy . Europe is an economic disaster zone and we should not allow the EU disease to infect our country!
Every Ozzie should oppose going down this slippery path vehemently before these incompetents "treaty" away our freedom and the right to make our own national decisions. We do not need foreign bureacrats to regulate us down to the level of how we handle our garbage during an industrial dispute!

IF a new federal tax of $11.6 billion represents economic reform, then the Australian political culture has changed fundamentally, and economic reform means roughly the opposite of what it meant under Bob Hawke, Paul Keating and John Howard.
"First, rectify the names," as Confucius said. The complete inversion of the language of economic reform under the Gillard government, especially in relation to the proposed carbon tax, is a clue to the much more fundamental question at hand.
Australia faces a profound and defining strategic choice. The carbon tax is part of that choice.
Our choice is not, as international relations experts sometimes allege, between the US and China.
Rather, it is whether Australia is to refashion the culture of its politics, economy and society along European lines or to continue the path we have generally followed of being somewhere along the US-East Asian continuum.
For some decades, Australia has sat between the US and Europe on a range of social, economic and cultural indicators.
We provide a social safety net more generous than the US but less comprehensive than that offered by European Union nations. We are more regulated than the US, less regulated than Europe. The state is a bigger part of our life, and our economy, than in the US, but a smaller part than in Europe.
The same is true of our strategic culture. We have a stronger and more vibrant military tradition than anywhere in Europe except Britain and France, but a weaker military culture than the US .
In foreign policy we are much closer to the US, hard-headed, pragmatic, jealous of our national sovereignty, much less interested than Europeans in pooling sovereignty in supra-national organisations such as the EU. The UN has a better name in Australia than it does in the US, but it has nothing like the legitimacy and normative power that it has in Europe.
On most of these measures, East Asia is closer to the US than it is to Europe.
The Gillard government is taking us down a European road. The carbon tax is a part of that, both in substance and in the style of its politics.
The Rudd and Gillard governments have been big-spending, budget-deficit governments. In Labor's first term, the justification was the global financial crisis. If the carbon tax passes at $26 a tonne, the federal government will have a magnificent new gusher of money to spend, for redistribution, social policy, whatever.
The US has a chronic budget deficit but does not embrace big government as an ideal.
Gillard's is a highly regulatory government. Re-regulating industrial relations, a la Europe, is central to this.
In the National Broadband Network the government is seeking to create a major, state-owned corporation, along classically European lines.
Economic reform for the past 30 years has meant deregulation, privatisation, surplus or balanced budgets, low inflation and free trade. It also has meant welfare reform to cut long-term welfare dependency. In Europe, this never caught on. Yet just as the Gillard government is moving decisively down the European road, the European model itself is in catastrophic collapse. The model can no longer sustain itself.
The common European currency, the euro, is a central cause of the inability of peripheral European states such as Greece to respond with policy flexibility through measures such as devaluation. Numerous European nations are on the brink of debt default. Germany is in a rolling process of bailout.
Unemployment is 20 per cent in Spain, 13 per cent in Greece, 11 per cent in Portugal, 10 per cent across the euro area.
Europe has made a comprehensive mess of illegal immigration, leading disenfranchised voters to parties of the far Right.
Europe plays a role in our carbon tax debate in several ways. Bizarrely, it is the government's model. The latest report by Ross Garnaut constantly extols Europe's emissions trading scheme.
Europe also sends us a steady stream of sanctimonious officials and busybodies to tell us our climate change policies are inadequate.
Even more important, perhaps unconsciously, the culture of European politics has seeped into the Gillard government's management of the carbon tax debate.
Ashton Calvert, a former head of the Department of Foreign Affairs and Trade, who served both Labor and Liberal governments, was perhaps the brainiest official I have met. He told me once that the EU was a menace to Australia in a quite specific way. The EU vastly over-regulated itself and thus suffered enormous, unnecessary, economic costs. It then tried to impose those costs on everybody else by transforming them into international norms and enforcing them by treaty.
The US was big enough to ignore the EU. Asian nations didn't feel bound by EU norms. But Australia and Canada were the two nations, both with wildly different economic structures from Europe, likeliest to suffer from European political imperialism.
There is always something undemocratic and tricky about the EU. If at all possible, it removes issues from democratic political bodies and puts them in the hands of Euro-bureaucrats. This fits perfectly with Garnaut's proposal that Australia's carbon reduction targets should be set by "independent", but of course appointed, officials.
The Gillard government has been consistently tricky, in a very European way, in the politics of the carbon tax. It ruled out a carbon tax before the election last year. Then it decided to introduce one three years before the voters could pass a judgment on it.
Meanwhile, it has spent a vast fortune of taxpayers' money on a series of government bodies, headed by Garnaut, Tim Flannery and other long-term friends of the Labor Party, to conduct an incessant campaign of indoctrination in favour of government policy.
With Australia having a very European-style public broadcaster in the ABC, which is ideologically in favour of the carbon tax and inherently inclined to accept the Garnauts and Flannerys as embodying a kind of wisdom and virtue above politics, this is a plausibly effective strategy.
It is much less a strategy of persuasion, however, and much more a strategy of coercion. Indeed, Garnaut rejoiced in a speech at the "narrowing" of the debate in recent months.
Now the government has gone a step further, announcing a $12 million taxpayer-funded advertising campaign to support the carbon tax. This seems to be in addition to a further $13m set aside in the budget for a similar process.
It is perfectly true that the Howard government spent money in exactly the same way. It was an anti-democratic abuse of process when Howard did it and it is an anti-democratic abuse of process now.
And of course it embodies a central paradox. If it is so overwhelmingly clear that the best way to respond to the still uncertain science of climate change is through a carbon tax, then why is the Gillard government so hopelessly incapable of winning the argument through its own powers of persuasion?
At the same time, elite opinion has simply rubbished and rejected the Coalition's direct action plans to reduce carbon emissions by 5 per cent. There is hardly a single person in Australia who knows more about this subject than the opposition's Greg Hunt, who has been studying it for many years. Yet the elite media, overwhelmed by Garnaut, Flannery and limitless other pro-government propaganda, has not given his plans any serious consideration.
But here is a deeper paradox still. Garnaut's latest report is a partisan abuse of process. It is an extremely flawed document that is misleading about the international scene. It pretends the whole world is as obsessed with reducing greenhouse gas as Garnaut himself is. The strategic object of this deception is obvious.
If the Australian people can be convinced that they alone, among all the nations of the world, do not take this problem with the proper seriousness, that they alone are redneck enemies of "economic reform", then they might be shamed into supporting a carbon tax. They might even be threatened into it.
Trade Minister Craig Emerson this week told parliament that if Australia didn't have a carbon tax then other nations would impose punitive tariffs on us.
But other nations here can only mean Europe, and it would have to impose similar tariffs on the US, Canada, Japan, South Korea and all the many other nations that do not have carbon taxes.
Indeed, as the infinitely better Productivity Commission report noted: "No country imposes an economy-wide tax on greenhouse gases or has in place an economy-wide ETS."
Is it not possible there are sensible reasons no other country has an economy-wide carbon tax?
But to sustain the fiction that the rest of the world is obsessed with climate change and acting with resolution and boldness, Garnaut must take the declaratory aspiration of every other nation as though it were settled, concrete policy.
Thus Garnaut declares: "US officials at the highest levels state that the emissions reduction target will be met, despite the absence of a national market-based instrument for securing that result."
This is a heroic, indeed ludicrous, position.
But here is the larger paradox. Garnaut is stating with his usual faux-infallibility that the US, where there is absolutely no bipartisan support for action, will succeed absolutely with its direct action plans. But at the same time, the routine assumption of all Garnaut's media acolytes is that Tony Abbott's direct action plan is a ridiculous fraud.
In its first six years of operation, the EU ETS has raised just $2.5bn and covered only a small part of the economy. That means the European ETS has not been central to carbon reductions in Europe.
In fact, as usual, the Europeans rigged this process from the start. They chose 1990 as their base year because that was the year of peak European emissions. The decommissioning of east European industry, the conversion in Britain from coal to gas, and the presence of nuclear power, none of which involved any sacrifice, allowed the European emissions reduction.
Even the British commitment to halve greenhouse emissions by 2025 is much less than meets the eye. Prime Minister David Cameron has made it clear he has an escape clause. This commitment will be reviewed in 2014 and if the rest of Europe is not on the same path, a highly unlikely eventuality, Britain will change its course.
In Australia the polls do not support a carbon tax. Like the US, our democracy is vigorous and the public has a history of rejecting elite solutions if they are costly and unpractical, and provided they are opposed by a portion of the mainstream political parties.
It may not be designed for this purpose but the carbon tax is part of a combination of policies that would massively increase the size of the state, bring much greater regulation to economic life, entrench European economic and political norms, and demonstrate a way for voters to be browbeaten into acceptance of a policy they don't like.
The democratic way to win a policy argument is to champion it clearly, argue for it convincingly and win an election. The European way, with its tricks and deceits, is much less attractive, and generally produces much less satisfactory policy.

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