Good government and liberalism


Alfred Deakin Lecture

May 6, 2014

I am honoured to have been asked by the Alfred Deakin Lecture Trust to deliver the Alfred Deakin Lecture this year.  When Alan Stockdale and I helped to found the Deakin lecture almost half a century ago, our hope was that it would provide a platform for the discussion of liberal ideas and their significance for government.  I believe it has done that.

These lectures have taken place in a variety of places and circumstances. It fell to me to chair the first of them on behalf of the Melbourne University Liberal Club. It was delivered by the then prime minister Harold Holt, who had some difficulty making himself heard over the howls of those who wanted a less liberal society than he did.

Tonight I want to take up one of the great underlying themes of these lectures over the years, and to reflect on the nature of good government, and its relationship to liberal thought.

Although the nature of good government is one of the oldest questions in philosophy, considered by both Plato and Aristotle some two and a half thousand years ago, it is also a question with a great deal of current resonance. We all want Australia to be well governed, and yet we know that from time to time we experience periods when the quality of government falls well below our hopes and, at times, even below our expectations.

In this pre-Budget period, the restoration of good government has once again become a national imperative, given its urgency by the fact that we have just passed through some six years that many would consider almost the epitome of bad government.  The government is almost under siege with advice about what it should do, from the Commission of Audit, from countless lobby groups, from Fairfax, News Limited and the ABC, and of course the Kemp-Norton Report on higher education.  The government has the task of deciding amongst them, and working out the best political path forward.

A concept of good government can be very useful to politicians, and indeed the parties promise it, in one form or another at every election.  Yet our political rhetoric often seems to suggest that good government is simply doing after the election what the party promised before, of finding and carrying out a mandate, almost regardless of what it has a mandate to do. Promises should be kept, but it is the content and ultimately the effect of policies that matter.

Tonight I propose to talk a bit about our political history, which I think clearly demonstrates that good government and election promises can be a long way apart. Having said that, our history also shows that when we make mistakes, our democratic institutions allow us to correct them.

The big question, of course, that I want to reflect on tonight is: what is good government, and how do we know it when we have it, or have had it?  And in thinking about this question I will not only see if there are lessons we can draw from our history, but also what liberalism has to tell us about government itself, and what it is capable of doing, and what it should better leave alone.

The Spirit of Liberalism

For Rumpole of the Bailey, the “golden thread” that ran through British law was the presumption of innocence.  If I can borrow his phrase, the “golden thread” that runs through liberalism is the presumption of competence.  People are capable of taking responsibility for running their own lives, with government providing the conditions that make it possible for them to do so.  Liberalism asserts that good government must be based on respect, not an assumption of incompetence; government should empower, not disempower, facilitate, not try to run people’s lives for them.  If governments act with respect towards their citizens, a happier, more peaceful, and harmonious, and prosperous society will be the outcome.

Liberal thought is best thought of as an accumulation of historical wisdom about how this can best be done. Much of early liberal thought was designed to protect individuals from governments that might arbitrarily interfere with their lives. When we look back to its earliest days, let us say from Magna Carta in 1215, liberalism has always nurtured a skepticism about, an awareness of the risks inherent in, government, and its earliest thoughts concerned the way in which government should be organized and the principles on which it should act, to prevent it arbitrarily disrupting the lives of its citizens.

Out of this early period, ideas such as the rule of law, enforced by an empowered and independent judiciary, emerged, to be followed by concepts of parliamentary control of taxation and spending, freedom of speech and press, equality before the law, and the rights of citizens to petition the government with their grievances and complaints without fear of retribution.

By the time the Americans declared in 1776 that they would seize for themselves “the rights of Englishmen”, they had conceived the idea or borrowed the idea that the power of government could be restrained checking and balancing the power of one institution against another, by the separation of powers, and by the devolution of government’s power through federalism. Our Federal Constitution incorporates these ideas. Indeed, in the hands of the Americans, the focus of liberal thought was beginning to shift to the equal and inalienable rights of all people to run their own lives and pursue the happiness they sought.

The matter of how government is organized is still of enormous relevance. If it were not we would not be talking so much today about bodies like the Human Rights Commission and laws such as freedom of information, or restrictions on political donations.  Yet liberalism is about much more than the structure of government.  It is about the spirit of government and the content of policies.  And it is impossible to discuss these without acknowledging the man whose work laid the foundations for understanding this spirit, the Scottish professor of moral philosophy, Adam Smith.

I particularly want to mention Smith because, while in many ways, the lesson of one of his books, The Wealth of Nations, has come to underpin our understanding of economic life, the main message of his other great work, The Theory of Moral Sentiments, which should underpin our social legislation, is widely neglected. Its absence certainly distorts debate on S.18C of the Racial Discrimination Act.

Although the term ‘liberalism’, like the term, ‘the enlightenment’, came after Smith, it was Smith who first captured the spirit of liberalism:  that, in conditions of freedom, under just laws, human beings will create spontaneously a society, in which they will not only be at their most productive and therefore prosperous, but also at their most moral and most harmonious in their dealings with others.  The self-interest of people, as if  “guided by an invisible hand” under good government would create a better world.

The role for government to enable this to happen was that it should defend the country, stop citizens practising injustice and oppression against each other, and undertake public works and found public institutions which is was not in the interest of any citizen to do. Its role was to guard and foster the spontaneous order, and not disrupt it by unwise interventions or excessive interference with its operation.

As I said, in economics, we seem to have come to an understanding that this seems largely right, and that excessive or unwise regulation dampens enterprise, and the “animal spirits” which John Maynard Keynes argued were essential to economic growth.  It is the foundation for the current member for Kooyong’s war against regulation. But in social affairs, we still seem unclear about this, and are still inclined to resort to regulation, taxation and spending, when we may be better to step back and let the spontaneous order emerge.

Without the idea that people are competent to live their lives very satisfactorily by their own decisions and choices, and that all can benefit from the spontaneous interactions of people living under just laws, the spirit of liberalism does not exist.

Australia in the nineteenth century was in many ways an extraordinary demonstration of the truth of Smith’s ideas.

Nineteenth century Australia was the first great liberal age in our history. The liberal freedoms of speech, press, and religion were established from the 1820s. After democracy was won in the 1850s Liberal Parties of that name were established across all of Eastern Australia. Following Smith, government was assiduous in both public and private borrowing for public works and building public institutions, and, in the second half of the nineteenth century, through factory Acts, regulation of mines, of working hours, and through anti-sweating legislation, it worked hard to prevent the “injustice and oppression” of some citizens against others, and was a world leader in freedom of association for trade unions.

On the economic front, the general condition of pioneering Australia in the nineteenth century was one of economic freedom, and by the end of the century, using their freedom Australians had become the wealthiest people in the world with the highest per capita incomes and possibly the widest distribution of wealth of any western state.

On the social side also, a remarkable phenomenon occurred.  Though the churches were small and weak, and though the English political class and conservatives feared that putting all the convicts in one place would lead to complete moral degradation, everyone began to notice that the children of the convicts were an exceptionally moral group, underrepresented in the prisons and leading local communities.  Looking back, it seems that Australia was a unique demonstration of Smith’s ideas that a spontaneous moral order would arise out of the desire of people to be validated and trusted by others.  In a society that grew out of the convict heritage, moral institutions arose.

Self-interest, personal responsibility, spontaneous beneficial economic and social orders arising under governments that kept the peace and stopped the oppression of one citizen by another, these are key thoughts to hold on to as we think about the nature of good government.

I want to briefly mention two other key development which fed powerfully, but ambiguously, and still do so, into Australians’ ideas of good government, and which by the end of the nineteenth century had not only divided political Liberalism, but changed perceptions of the role of government.

One was the rise of humanitarianism.  This grew out of William Wilberforce’s successful Evangelical campaigns – in the face of prejudice and very powerful economic interests – to abolish slavery, and establish the idea that we are all members of a common humanity, entitled to equal rights and equal opportunities.  This idea gathered force as the century went on, embracing convicts, children, women and (with too little impact in Australia) native peoples.  The first impulse of humanitarianism, following Wilberforce, was to remove discriminatory laws and thereby free people from state imposed oppression; its second impulse was to get government to act altruistically to correct injustice and oppression,  and along the way it decided to set – what had then become – “orthodox economics”  – to one side.  Humanitarianism is a powerful impulse, but altruism, or good intentions alone, can lead reformers, and governments, astray.

Political Liberalism was increasingly torn between those who supported new kinds of policies to reshape the economic and social order on democratic and humanitarian grounds, and those who believed that liberal ideas, including economic liberalism  (then called political economy, derived from Smith) contained stern warnings about the harmful consequences of too much economic regulation on national progress.

The second development flowed on from the establishment of democracy. Democracy inspired Australia’s leaders and many of its people with almost unbounded hope. Australia, a land with many immigrants seeking to start a new life, became, and remains, a very optimistic country.  This optimism, rather than unusual social, industrial or economic problems, is the main reason for what happened next.

With its politics fuelled by hope and good intentions, Australia became one of the most experimental and innovate countries in the world in expanding the role of government into economic and social life, firstly through protecting new industries against competition, then laws decreeing maximum working hours and minimum wages, then a race-based immigration policy to prevent racial conflict, then compulsory arbitration by judges of workplace disputes, then the state encouragement of trade unionism,  many of which seemed to come together in an isolationist outlook that Australia could do best if it excluded the rest of the world.  The more liberal-minded were more skeptical of this isolationism , but Labor embraced it with a passion. Out of that experience there is much to be learned about the relationship between good government and the understanding of the leaders of political parties about the desirable role of government.

Step back for a moment. As a people, for the last 114 years since Federation, we have been attempting, through depressions and wars, to discover the kind of government that best suits us as we go about our daily lives. We are each of us engaged – as Thomas Jefferson immortally said – in the pursuit of happiness.  In the course of this pursuit we keep hoping that we will discover a way of governing ourselves that best empowers us – and all our fellow citizens – to live the kind of lives we want, to set our own courses in life, and to pursue them with a respect for the right of all others to do the same, to bring up our families, to look forward to our posterity, and contribute what we can to making the lives of our fellow citizens, and the rest of those who inhabit this world with us, better.

It is obvious that none of us knows exactly how to achieve this, and collectively we have been swayed by different views – and sometimes, utopian visions – over the years.   Our history can be thought of as an extraordinary experience of trial and error as we have attempted to find the role for government that suits us best.

Overall, we have been remarkably successful in our quest.  A 2009 survey by The Economist ranked Australia first out of 33 nations on levels of trust, admiration , respect and pride in their country, with a score of 90 out of a possible 100.  According to the 2013 OECD Better Life Index Australia was the society with the highest overall level of well-being of all countries. Australia’s stock of social capital might, by this measure, be said to be the highest in the world – giving Australians an extraordinary capacity to further lift the quality of their lives, further unleash human potential and expand their capacity to pursue happiness – if they knew how to do so.

These are grounds for optimism. But both our current condition and our history warn us that we can’t count on good government. Good government, like liberty itself, and not coincidentally, requires eternal vigilance, and the orange lights are flashing.

Winston Churchill famously said that democracy was the worst form of government except for all the others.  If we think of government as a vehicle we try to drive, driving democracy takes a lot of skill, and democracy itself creates a number of problems that we will struggle to handle without a well written and well read handbook in the glove box.   It will not surprise you when I say that that handbook spells out a political philosophy.

To understand the need for the handbook, lets have a closer look at democracy.

Democracy and interests

The most significant thing that democracy did was to politically empower self-interest.  Government responding to the interests of the few became government responding to the interests of the many.

Although there is much talk these days, as there has been often in the past, about corrupt lobbying and buying of favours, our democratic heritage tells us that the crush of interests to get in to see and persuade government is entirely legitimate, and properly handled can be a great contributor to good government. We all have interests, and we are all partisans in our own cause. Each person, group and institution knows its own interests better than anyone else, the experiences of people vary widely as does their expertise, and much of the information provided, including signals that there are problems that need to be corrected, are invaluable to politicians and to governing well.

The question tonight is, how do you govern well in such a context?  Deakin and Fisher, Menzies and Chifley, would all have said that the most essential requirement for handling this feature of democracy is the personal honesty and integrity of the politician.  Without honesty and integrity, the pressure of interests will inevitably lead to favouritism and corruption.

But what is the best technique for riding this vehicle called representative or liberal democracy? The politician who concludes, even honestly, that the art of politics consists in meeting as many of the claims of the most influential interests as possible, and trying to balance the claims against each other is making a fundamental mistake that will certainly not lead to good government.   It is self-evident that these claims will not fit together to add up to some community interest, because many conflict with each other, and benefits or privileges for some are bought at the expense of others.  We have seen selfish self-interest play out today in crony capitalism and privileged unionism, but even altruism can lead to bad consequences if poorly directed, since what counts is not motivation but results.

This intense pressure of interests on government has led to a phenomenon in democratic states that is troubling, but, I think, not uncontrollable: the continuing growth in the size of government, that is, the expanding reach of government into economic and social life through regulation, and the constant upward pressures on government spending.  The French social scientist Alexis de Tocqueville as long ago as the 1830s noted that source of this was private interest and warned of the danger of a democratically authorized despotism. He wrote about those who want government to intervene on their behalf that :

“Such men will freely admit the general principle that the state should not interfere in private affairs, but as an exception, each one of them wants the state to help in the special matter with which he is pre-occupied, and he wants to lead the government to take action in his domain, though he would like to restrict it in every other direction. As a multitude of people, all at the same moment, take this particular view about a great variety of different purposes, the sphere of central government insensibly expands in every direction, although every individual wants to restrict it…”.

But all the pressures in democracy for the growth of government are not economic. As humanitarian ideas gripped Britain’s political class later in the nineteenth century, and laws to regulate behavior in a moral direction became more common, John Stuart Mill spoke of the constant interference and pressures for conformity that arise from the widespread desire of people to make their own opinions into rules of conduct for others – a tendency that he believed could only be controlled by a strong moral presumption against it. Herbert Spencer spoke of the danger of each adult being converted into a “grown up baby”, a phrase that gives him some claim to be the author of the concept of the ‘nanny state’.

As government grows, the number of those with an interest in its size increases. Politicians, courts and public service departments all have their own interests. For politicians their main long term interest is in controlling each of the institutions of government, and in isolating themselves from special interest pressures. Taken together, the interests of our institutions tend to press towards bigger rather than smaller government: courts expand their role, departments the numbers of officers and programs. Yet one of the main reasons that I believe the growth of government is not uncontrollable is our own national experience, and, my belief that it is possible over time for what Mill called “a strong moral presumption” to be erected against the efforts of some to impose their own mere opinions as rules for others.

Australia has grown government, and then in important respects shrunk it again, and it is helpful, if this is what we want to do today, to understand why.

The Great Turnaround

By 1930 Australia seemed to be a textbook example – perhaps the most vivid in the world – of the risk that de Tocqueville had identified.  The size of government had exploded in Australia as a result of a whole variety of special interest pressures, including from the self-interest of politicians, that democracy had unleashed.

The problem of corruption weighed on politics then as now, and the idea of the authority independent of politics to provide railways, roads, tramways, telephones, water, gas and other services took hold as a solution to the problem.   As a result of politicians seeking then, as now, ways of governing that avoided corruption, and hopefully make technically sound, expert, decisions, Australia had developed a massive so-called ‘independent’ government enterprise sector that the Liberal politician and scholar Frederic Eggleston concluded at the time in his book State Socialism in Victoria was larger than in any other country except the Soviet Union of the day.

But Australian big government was then much more than giant government service monopolies. Australia had by then also achieved the second highest level of industry protection in the world after the United States, probably the most regulated product and labour markets of any democratic country, and national debt at over 100 per cent of GDP.  Other countries would not lend to us, and when commodity prices fell, in the Great Depression we suffered one of the highest unemployment rates in the world.

I shall simply assert tonight that the extended period of poor government up to 1930 was largely the outcome of the pressure from special interests for benefits and privileges, including compensation for the benefits and privileges acquired by others, that the nation’s leaders failed to control.

As the economist Edward Shann said in 1930, “Clever men stampeded the democracy into measures seemingly designed to make our economy a hermit one”. But he warned, presciently: “The more the policy of a hermit Australia succeeded, the more surely would it bring slothful intellectual standards, and as a consequence, material decay, until, with scorn, some sea power from the world where necessity had maintained knowledge and energy knocked in the closed door”.  In 1942 Japan, as a consequence of its campaign to open markets by force, attacked and bombed Australia.

There is no good way to describe this other than as government failure on a massive scale.  Since then, we have turned it around. The government enterprises have been largely sold off, the last vestiges of industry protection are being dismantled, there has been substantial deregulation of the organized marketing and product licensing in the primary industry sector, and, at least by the end of the Howard government, the national debt was net zero.  It is true that reform of the labour market has happened and been partly reversed, but from being the Greece of the British Empire in 1930 Australia by 2001 had become the ‘miracle’ economy of the western world.

How did this turn-around occur, and what can we learn from it about the foundations for good policy in Australia?

If we take the long view it probably began with the establishment of an economic profession in Australia, led by people such as Shann, in the 1920s, that was able to provide the analysis that began the task of establishing in economic policy Mill’s strong presumption against policy based on nothing more than good intentions, mere or poorly substantiated opinions and utopian dreams.

It was also a result of the intellectual leadership of liberals such as Frederic Eggleston who showed the falsity of the idea that because government enterprises were in some metaphysical sense “owned by the people” people would feel some personal responsibility for their success. In fact as he wrote in his classic book, “nobody was interested but the Interests’, and the sweetheart deals these promoted eventually helped to undermine public support for the concept., while the pressure not to make profits robbed the government enterprises of capital.

But it was not just good economic analysis, nor good administrative analysis, that produced the turnaround.   The war created a sense of crisis and the belief that after it we would have to do better as a country, but in my view the single most important factor, without which our country today might be a very different place, was the change in the political party system brought about by Robert Gordon Menzies.

By the Second World War, Menzies had come to believe that the Australian party system was deeply flawed as an instrument of good government. In The Forgotten People, he said: “For a generation now, in Australia and elsewhere, we have not being doing our best with democracy. On the contrary, we have frequently done our worst”.

It had been the political parties, with the best of intentions, but pandering to the parochialism, nationalism, and utopianism mouthed by special interests, that had taken Australia down the fateful road, and it would have to be the political parties that would need to do the hard work of reform.

There was nothing inevitable about the transformation that occurred, but there were features of Australia that contributed to Menzies’ success.

Party Structure and Philosophy

Special interests seek to control political parties or influence them from the inside, focusing their attention back on the interests of the few rather than the many. For Menzies, the capacity of a political party to control and rise above the crush of special interests was fundamental to good government, and for him two things were critical: a party structure that was independent of special interests, and a party philosophy that provided the arguments and ideas to evaluate the interest claims and allow a broad public interest case to be articulated on the public platform.

Menzies had grown up in an idealistic Liberal family and its values of personal integrity and service dominated his life. From the time he had entered State politics in Victoria in 1927 he had become increasingly concerned that even on his own side of politics, policy seemed to be about gratifying special interests, business, church and union. In 1937 he had resigned over what he saw as the selfish unprincipled attitude of the Country Party towards national insurance, and he was deeply concerned worried by the influence exerted through the business finance committee of the party on pre-selections, policy and its attempts to decide the parliamentary leadership.

The only alternative to a government dominated by special interest, he believed, was to have a philosophy of government within which their representations could be assessed and by which they could be countered. This, he believed, would help members of parliament deal with the special interests, and it would sustain them, as it sustained him, in the battle of ideas that was at the heart of electoral politics and policy making.  At the founding conference of the Liberal Party of Australia in Canberra in October 1944 Menzies said that it would be a principal aim of the new party – and he described it as a matter of “desperate importance” to Australia – to “revive liberal thought”.

Menzies’ Liberal Party would be structured to keep the special interests outside, collecting its own finance, and having strong constitutional procedures for preselections, with the responsibility for policy and leadership placed firmly in the parliamentary party, but open to the ideas of the grass-roots membership. It would govern not on pressure but on principle. The maintenance of a party free from improper lobby group influence that overwhelms policy principle is a continuing task, which Tony Abbott, we read, has set himself to undertake, and which is very much in the tradition of Menzies himself.

For Menzies, as for Deakin, the key flaw in the Labor Party structure was the  rule that gave the party organization outside parliament the power to determine policy. This rule offered power without responsibility to external interests, and  it tempted utopian socialists, Irish nationalists, and other elements strong in the union movement to grab control of the party organization to press their special interest views.  The susceptibility of the union movement to utopian and class war attitudes, which supported its special interest in its own influence, had given Australian politics an extraordinary character, and constantly threatened to push policy away from the interests of all as liberals understood them to be.

The Australian Labor Party is a stark example of the consequence of the special interest capture of a governing party. The consequential clash of interests within the party has destroyed Labor Party leaders, Labor governments and Labor oppositions. It produced the collapse of the national government during World war one, the breakdown of the Scullin government during the Great depression, and the split leading to 23 years in opposition in 1954.  Two of Labor’s prime ministers crossed over to the other side of politics: Watson and Hughes, and one Labor Treasurer also, Lyons, while the health of two prime ministers, Fisher and Curtin, was arguably destroyed by the strain of managing the ceaseless war for organizational control between the anti-capitalist utopians and the more liberal socialists. There is surely little argument that both Rudd and Gillard are the latest victims of this disastrous party structure.Labor provides a cautionary tale about what happens to political leaders who, because of their party constitution, are never able to resolve the tension between special interest and the interests of all.  It took a brilliant ex-union leader, Bob Hawke, to manage this best of all, but though by the 1980s he had been persuaded by the upsurge of liberal thinking, and by Paul Keating, and was greatly aided by bipartisanship from John Howard on key reforms, this period of economic reform has proved an aberration for Labor, and the fundamental character of the pressures in his party remained and have reasserted themselves.

For Menzies, liberal thought and good government were all about the elevation of the individual.  The public interest, he believed, consisted in the shared interests of each of the individuals who made up society. While every individual was different, and each had, Menzies believed, a divine spark within them, each shared common interests which it was the obligation of government to attempt to advance.  What united all the thinkers whose thoughts had fed into the liberal tradition: Smith, Bentham, Wilberforce, the Scottish poet Robert Burns, John Stuart Mill and others, was their belief in the equal and common dignity and potential of every individual person, and their respect for the right and capacity of each person to manage their own life.  This was what ‘liberty’ or ‘freedom’ meant.

Menzies brought back to the centre of Australian politics and government, through the Liberal Party, the understanding that the power of creativity, innovation and invention, of enterprise, and entrepreneurship that drove economic and social progress came from the individual and nowhere else, and that it was the shared interest of all, the public interest, for government policy to recognize that freedom was essential for those capacities to be expressed.

Economic liberalism was but one aspect of his wider philosophy of government and society. His emphasis on choice in health, education, housing, low debt, restraint in spending, his belief in private enterprise, reward for effort and opposition to centralized economic planning, all reflected his deep sense of the spirit of liberal thought  – that people knew their own best interests, that education and reason would empower them to achieve these interests, and that Australia would thrive if government supported them in their endeavours by good laws and honest administration. Sound budgeting was not just a financial and economic imperative, it was a moral imperative, demonstrating respect for those who were called upon to pay for government.

Yet despite the growing understanding of good government that has come from the revival of liberal thought, and the growing amount of analysis of policy and ideas on good government coming from think tanks such as the Grattan Institute, the Institute of Public Affairs, the Centre of Independent Studies, and from the Australia and New Zealand School of Government, and other sources, the contradictory pressures for government to extend its controls over people’s lives, while pursuing policies intended to empower others and equalize opportunity, continue.

Good process, which pays due attention to good analysis, is essential, Back of the envelope calculations of the cost of a National Broadband Network do not cut mustard. But achieving good government is about more than good process. It has a great deal to do with the understanding and principles that politicians bring to their task.

While the lesson that society works well in the economic sphere when government does not try to replace the market and regulates only to secure justice (in the traditional sense) and probity is now much better understood, the same lesson has yet to be learnt in the social sphere.  And, from a democratic point of view, we need to be alert to the continuing efforts of our politicians to relieve themselves from the pressures of democracy by overregulating the political process itself.  NSW politicians are paying a heavy price for making laws that seek to restrict or ban legitimate democratic lobbying.  Property developers are as legitimate an interest as trade unions and have as much right to make political donations. The High Court recently threw out the NSW laws attempting to interfere with the latter.  The proper law is one that secures transparency. Actual corruption should be punished, but the NSW laws are illiberal and undemocratic.

From a broader policy perspective, it is not just that government should foster and strengthen free people as they seek to build, in Denis White’s phrase in The World of Man, their ways of life.  It is that government’s capacity to intervene successfully is actually very restricted.  A teacher of mine at Yale, Charles Lindblom, explained it this way: “Government” he said, “is all thumbs, no fingers”.    It can pursue big projects with its laws and spending, but it stumbles on sophisticated and detailed interventions. It is also an information bottleneck.  It is, frankly, impossible for governments to acquire the information they would need to successful introduce detailed regulation of any area of life. Lindblom called this the limitation of  “small brain, big problems”.

Friedrich Hayek, in an article that contributed to his Nobel prize, overturned decades of belief in the efficiency of centralisation promoted by the socialists by pointing to the fact that most of the information needed to make societies work is in the minds of individual citizens and can never be centralised in government.  The collapse of the central planning regimes of communism – the most exaggerated expression of government as thumbs-  and their replacement by the ‘fingers’ of price-governed markets is the clearest possible demonstration of the validity of his point.

The limits of government often lead to policy creating the opposite results that were intended.  Welfare was intended to help indigenous communities, but Noel Pearson, with other indigenous leaders, has told us that in remote indigenous communities “welfare poison” is significantly responsible for the social dysfunction, violence and abuse that occurs.  Communities, he says,  are built by individuals responsible for their lives, not by government, and the wrong interventions can undermine and destroy lives.

Despite large increases in spending per student in schools since 2000, identified by the Grattan Institute, literacy and numeracy standards have fallen and in comparison with other nations Australia has slipped back in science and mathematics learning. Plain packaging laws appear to have been accompanied by an increase in the trading of tobacco.

Though some businesses continue to press for protection of their enterprises and industries from competition, the abandonment of industry protection as a policy was based on a recognition that it was not only discriminatory, and therefore contrary to the democratic idea of equal laws, but it dulled innovation, created inefficiency, destroyed jobs, was impossible once established to limit or control, and stirred both domestic and international conflict.  A future prime minister George Reid, relying on Smith, told his Liberal colleagues in 1903, “the fight for protection [is] a fight against the progress of the world”, and so it proved to be.  That free trade is now accepted by all developed countries as the correct policy principle is evidence of the powerful truth that the interests of all can be better served if government steps back.

Again, when a Human Rights Commissioner tells us that without S.18C RDA the darker side of human nature will be unleashed, he obviously has no concept of the capacity of a free society to develop a moral order. Liberal thought, with the wisdom of our democratic history behind us, tells us that a good society is created not by pursuing the illiberal with tribunals, punishments and bans, but by the morality that grows out of the desire of people to be validated by the good opinions of others. It is this, not law that has made Australia one of the least racist societies in the world.

Australia’s liberal and democratic ethos is powerful, and most of us know that the lives of all are improved by living in a culture that is tolerant and accepting of diversity, that is intolerant of racism, religious sectarianism, homophobia, misogyny, class prejudice, and xenophobia, that accepts people for what they are, and assesses them, not on their social location but, as Martin Luther King said, on the quality of their characters.  Liberal thought tells us that good policy is not about races, classes, genders, believers, churches, other institutions, systems, or even nations if individuals are unjustly treated or ignored. Policies that focus on privileges for collective categories and ignore individual impacts will create perceived injustice and will fail.

I conclude on this note:

The most powerful force, over time, in Australian democracy has proven to be the interest of voters in running their own lives. It is not because they are selfish but because they believe in themselves. Ultimately, liberal thought – encompassing the democratic, egalitarian and humanitarian ideals – points us to the essential – fundamental – truth that good government must be based on the acknowledgement that it is individuals who matter; that it is their desire to achieve better lives for themselves and their children, to make their own ways of life, that is the driving force of improvement in the world, that it is freedom that encourages people to plan and save to realize their dreams, and that it is the experience of being personally responsible for our lives in a condition of democratic freedom that teaches us the morality that every person deserves respect.

It is the role of government to tend and foster these qualities, to respect the citizens, and persuade them with reasoned argument, to represent their best side and be their agents in putting in place the policies that will preserve their democratic rights and their capacity to realize their potential.  Political parties with sound philosophies of government that give them the capacity to manage the pressure of special interests and argue their case on the public platform can do this. No country has demonstrated this better than Australia.








David Kemp