Tuesday, October 30, 2012

How should we describe the current imbalances within western democracies?

Nicholas Eberstadt’s answer to this question is fairly clear from the title of his recently published book, ‘A Nation of Takers, America’s Entitlement Epidemic’. Eberstadt describes the growth of welfare payments in the US, the decline of stigma against accepting help from the government and the growth of dependence on entitlements. He establishes that about half of the US population now live in households receiving some government benefits and more than 30 percent now receive means-tested benefits. He suggests that, with the growing numbers living on disability benefits, ‘gaming and defrauding of the entitlement system have emerged as a mass phenomenon in modern America’. He also suggests that the ‘taker mentality’ has gravitated toward ‘taking from a pool of citizens who can offer no resistance to such schemes: the unborn descendants of today’s entitlement-seeking population’.

The book also presents two dissenting views. William Galston argues that although many people have come to depend on entitlements to fund their living expenses, they have not become ‘dependent’ in the way that children are dependent on their parents. He suggests that much of the growth of welfare entitlements rests on ‘temporally extended interdependence’. One generation consents to helping to fund the retirement of their parents, with the expectation that the next generation will do the same for them. He acknowledges, however, that ‘something has gone awry’ when the current generation discharges its obligations by imposing heavier sacrifices on the next generation. He suggests that the moral issue is ‘generational selfishness’ rather than dependence. He agrees with Eberstadt that disability benefits are subject to serious abuse, but suggests that the willingness of people to take advantage of the system is not necessarily evidence of deep cultural change.

The main point made by Yuval Levin is that differences in vision about the relationship between government and the citizen – collectivism versus radical individualism – overlook the importance of the ‘space between the individual and the state’, which is occupied by the family, civil society and the private economy. He argues that the state gravely threatens the space for private life. He suggests that rather than dependence, the problem is more ‘a draining away’ of ‘civic energies by the effort required to sustain the liberal welfare state. The country ‘is increasingly exhausting itself’ not just because of the size of the entitlement and benefit regime but also because of its ‘immense inefficiency’. Levin suggests that rather than a nation of takers, America is ‘a nation at risk of becoming incapable of rising to the challenge of self-government’.

The different viewpoints presented in this book are highly relevant to some issues discussed in the book I am writing. One of the points I am making is that when governments relieve us of the need to exercise our power of self-direction, then our skills in running our lives will not develop properly and we are likely to remain dependent on government throughout our lives. That means I am in sympathy with the points that Nicholas Eberstadt is making. At the same time, the US does not seem to me to be a particularly promising place to look for evidence of dependence on welfare having a widespread adverse impact on the social fabric.

I also suggest in the book I am writing that there is a growing gap in many wealthy countries between the responsibilities that many people expect democratic governments to discharge and what governments are actually capable of delivering. Perhaps it could be described as a problem of dependence, in the sense of governments becoming addicted to ever more spending (despite rising debt levels or increased reliance on unstable revenue sources).

At times, I have described the problem as an expectations gap, implying that it has arisen because of inflated public expectations of what governments can do. But it isn’t particularly helpful to blame ‘the public’. The underlying problem is that political leaders who seek to place responsibilities on government that are beyond its capability do not suffer appropriate political consequences. So, we should be thinking about how political leaders could be persuaded to moderate their promises and focus more effort on delivering efficient government.

The diagram presented below seems to me to be a useful way to think of the issues involved.

It is interesting to consider where particular countries should be located on the diagram. The countries of southern Europe should obviously be placed near the bottom right hand side and the Scandinavian countries would be at the top right. Hong Kong might be toward the left at the top. But where should we place the US, or Australia?

Saturday, October 20, 2012

Is there more economic freedom in Australia than in 'the land of the free'?

It is difficult to believe that there could be less economic freedom in the United States than in Australia, but that is what economic freedom indexes seem to show.

The Heritage Foundation’s index currently has Australia in 3rd place, behind Singapore and Hong Kong, and the US in 10th place. The Fraser Institute’s index currently has Australia in 5th place and the US in 18th place.

Both the Heritage Foundation and the Fraser Institute have economic freedom in the US declining below that of Australia around 2008.  See Figures 1 and 2 below.

The timing of the decline in US economic freedom as indicated by the Heritage Foundation’s index suggests that it may be largely associated with the aftermath of the Global Financial Crisis, but the Fraser Institute’s index has the decline beginning around the turn of the century. According to the Heritage index the main decline in recent years has been with respect to financial and investment regulation, but the Fraser index also shows a decline in other areas, including freedom to trade internationally.

If the decline in US economic freedom was related solely to re-regulation of financial markets, it might be tempting to dismiss it as some kind of necessary evil. Well, it isn’t, but that will not stop me from suggesting that financial re-regulation has been far from benign in any case. Rather than side-track myself on that issue, however, I will just link to a highly relevant recent article by Ken Rogoff.

There are several reasons why Australians should not take comfort from indexes suggesting that we now have greater economic freedom that the US. The most obvious is that it has occurred as a result of a decline in economic freedom in the US, rather than any recent reform efforts in Australia.

The second reason is because the measurement of economic freedom is difficult. I think the Fraser Institute and Heritage Foundation should be applauded for their efforts to define economic freedom precisely enough to enable it to be measured, but I don’t think their indicators adequately capture all relevant aspects of the regulatory environment. For example, in 2008, just before he left Australia, Phil Burgess made some important points about the regulatory environment in this country that would be difficult to capture adequately in economic freedom indexes.

Before I proceed further, I should remind you that Phil Burgess was one of the ‘three amigos’ who came here to help Telstra through a difficult period. If that doesn’t ring any bells, you might remember the very wise - and very public – investment advice he gave to his mother about not buying Telstra shares because of what the government was then doing to squeeze profit out of that company, not long after selling it to gullible investors.
The comment that Burgess made concerns the degree to which the ‘public order’ tends to dominate the ‘civic order’ in Australia. What he was talking about was that, compared with other liberal democracies, government leaders in Australia have a very high capacity to frame and control the public dialogue by virtue of agenda setting, money and expectations management. Counterbalancing voices of legitimacy and authority in the civic order – including business - are, by contrast, often muted and ineffectual. He suggests that is associated with a greater tendency for the civic leadership groups to play an insider’s game and focus on influencing politicians.

I think Phil Burgess is probably correct in his judgement, but I don’t have sufficient knowledge of the US to be sure. If he is correct, it would be fair to say that economic freedom indexes tend to over-state the extent of economic freedom in Australia relative to the US.

My third reason for not taking comfort from indexes showing economic freedom higher in Australia than in the US is that public attitudes are still more supportive of economic freedom in the US than in Australia. Data from the World Values Survey suggests that Americans are more strongly in favour of the existence of large income disparities as incentives (i.e. less in favour of redistribution to make incomes more equal), less in favour of public ownership of business, somewhat more inclined to say that competition is good and less cynical on the question of whether success comes from luck and connections rather than hard work.
All that suggests to me that it would not make sense to bet my life savings that the economic freedom will be greater in Australia than in the US over the next few decades. The only problem is that my modest life savings are actually almost exclusively allocated towards investment in Australia. It might be time for a re-think!

Sunday, October 14, 2012

Is the 'trial narrative' integral to emergence of the modern view of happiness?

‘Our own concept of happiness is, in its essentials, the eighteenth-century concept that emerges after the trial narrative has wrought its effects on the classical idea’
-                                                                       Vivasvan Soni, ‘Mourning Happiness’ (2010).

Mourning Happiness
 Soni argues that happiness has come to be viewed as ‘a mere emotion or subjective state’ and that this view of happiness is ‘hopelessly and inescapably private’. He contrasts that with the classical view in which happiness was ‘held to be the highest good for an individual, almost without question’.

The author argues that the trial narrative, referred to in the quoted passage, was introduced by Samuel Richardson’s novel, ‘Pamela: Or Virtue Rewarded’, first published in 1740. The novel tells the story of Pamela, a young servant girl, who resists harassment by her sexually predatory master until he comes to recognize her virtue and marries her. It is appropriate to describe it as a trial narrative because it involves the trial of the virtue of an innocent girl who suffers a great deal of misery and eventually obtains happiness (so readers are told) through an elevation in social status (brought about by marriage to the man who almost raped her). There are similar narrative themes in other novels in this period. I suppose a novelist could tell a similar story in the modern world, but the reward for virtue would more likely come in the form of an out-of-court settlement of a large sum of money.

How could our modern concept of happiness emerge from the trial narrative? Soni’s answer is ‘reification’. The main point he is making is that when happiness is viewed as a reward it becomes identified with specific things such as positive feelings, wealth and marriage, rather than being the subject of a narrative which responds to the question of whether an individual has had a happy life (without specifying in advance what that might mean). The author spends a few hundred pages explaining this, so please don’t rush to judgement about the quality of the argument on the basis of my attempt to sum it up in a few words.

The general line of argument seems to me to be plausible. Trial narratives might not have been invented in the 18th century, but the author seems to be successful in establishing that they became common around that time. His explanation for reification of happiness makes sense. 

However, there is an alternative, less complex, explanation for reification of happiness. With advances in science and technology and the spread of education following the Enlightenment it is reasonable to expect that people in Europe would generally have tended to became more aware of the consequences of the choices that they were making in all aspects of their lives.

The author seems to me to draw a long bow when he attributes the choices that some people currently make, for example the choice to work longer or harder now in order to obtain greater happiness later in their lives, to the power of the trial narrative in modern thinking. People may see themselves as making sacrifices now in order to obtain greater rewards later, but that is no reason to question their capacity for self-direction by implying that they are subconsciously following some kind of script which requires them to undergo a trial of their virtue.

The author attempts to link the trial narrative to Immanuel Kant’s argument that ‘the sovereign who wants to make the people happy according to his concepts’ is likely to become a despot. Surely Kant’s argument that people differ in their thinking about happiness to such an extent that it cannot be ‘brought under any common principle’ deserves to be considered on its merits. If pursuit of happiness is viewed as a collective goal, rather than an individual right, is there not a real possibility that collective efforts to make individuals happy will end up making them miserable?

I found Soni’s discussion of what he describes as ‘the erasing’ of the political concept of happiness during and following the American revolution to be interesting and illuminating. However, I don’t think he is correct in his view of the consequences of failure to include collective pursuit of happiness via government as an explicit goal in the US Constitution. He suggests that ‘without the open and indeterminate horizon of happiness to guide our politics, the state of legitimacy in which we live can have no other purpose beyond maintaining itself’ (p 479). That seems to me to devalue the intended role of the state in defending the rights of citizens to pursue happiness as they see fit and the contribution of civil society to the pursuit of public happiness. And I doubt whether he is correct in implying that Jefferson, the main author of the Declaration of Independence, saw individual pursuit of happiness as a purely private and domestic matter. It seems likely, as suggested by Darrin McMahon (‘Happiness’, p 325-6), that Jefferson's view of the individual pursuit of happiness included a strong dose of doing publicly useful things. McMahon notes that Jefferson was familiar with the work of Francis Hutcheson who argued that people tend to obtain ‘private pleasure’ by ‘constant pursuit of publick Good’.

It is interesting to speculate what effect the inclusion of a goal of pursuit of collective happiness in political constitutions might actually have on public policies. Bhutan’s experiment with gross national happiness (GNH) suggests to me that it would be likely to result in further reification of happiness. Applying a national happiness yardstick to all aspects of public policy tends to make the happiness objective more specific. Pursuit of GNH seems to be evolving increasingly toward specific policies such as discouraging smoking and encouraging organic farming. The niggling concern, lurking at the back of my mind, is that pursuit of GNH could actually impact negatively on the ability of individuals to live happy lives. Sending people to jail for possessing tobacco products or pesticides seems to me to be unlikely to help them to live happy lives.

Finally, I don’t think our modern view of happiness is quite as shallow as Soni implies. While it is common to view happiness as purely an emotion, when you ask people whether they have had a happy life the response you are likely to get is a narrative – a story of flourishing or languishing, or more likely periods of both flourishing and languishing. I am reminded at this point of the findings of Dan McAdams’ narrative research (discussed briefly on this blog here and here) which suggests that the life stories of many people involve redemption themes. In these stories the narrator encounters many obstacles and suffers many setbacks but eventually develops toward actualization of an inner destiny.

Having read and thought about ‘Mourning Happiness’ I admire the ambitious attempt made in this book to identify the dominant narrative theme in our modern lives. In the end, however, I am not persuaded that the dominant narrative themes in our modern lives stem from Richardson’s ‘Pamela’ and similar 18th century novels. Perhaps it might be just as valid to argue that the dominant narrative themes in our modern lives stem from Homer’s ‘Odyssey’or the biblical story of Job. I suspect it might be an impossible task to identify the different themes in mutually exclusive ways and to disentangle their influence from other factors that impact on on the way we currently view happiness.

Sunday, October 7, 2012

How should we get started with self-publishing?

A guest post by Sarah Rexman:

Getting a book published can be a long, uphill battle. After facing dozens of rejections, you may start thinking that you just don’t have what it takes – that maybe you weren’t really meant to be an author after all. The reality is that much more than talent determines whether your book will be accepted by a traditional publisher, including market trends, the timing, and even the person who happens to pick up your book from the slush pile.

You don’t have to wait for all these elements to align and get accepted by a traditional publisher in order to be published. With the increasing popularity of e-readers, many authors are finding success publishing their own books and selling them to readers directly.

Here’s what you need to know about how to get started with self-publishing to realize your dream of becoming a published author:

Choose an Outlet

There are many sites that sell self-published e-books, including giants Amazon, Smashwords and Lulu. Each of these sites has a different user base and different rules for how to format, upload, and distribute content. They also offer different models for compensation, with different commission rates based on the parameters you choose for selling your book.

Take the time to get to know each of these sites and decide if you want to sell on one of them or all of them and what the advantages and disadvantages will be.

Format Your Book

Once you know where you intend to sell your book, you can figure out how to properly format it. Each site will have its own guidelines for formatting the book, and it may take you awhile figuring out how to get your book just right to meet those guidelines.

You will also need to design a creative cover for your book. If you aren’t able to design the cover yourself, you can hire a freelance designer to create one for you.

Get Reviews

Good reviews will help you build buzz around your book and sell more copies. You can get more reviews for your book by sending it to bloggers, book reviewers for local publications, and even to family and friends.

While it is OK to ask for reviews from family and friends, you should be careful not to influence the content of those reviews. If your readers suspect that your reviews are not honest, they may reject your book.

Market Your Book

In addition to getting good reviews for your book, you must also market it to build buzz and promote sales. You can start a blog, host contests in which you give away copies of your book, or even buy online advertising to promote your book.

Don’t stop at formal marketing. Be prepared to talk up your book to anyone you meet. Carry business cards with information about your book. The next time someone asks you what you do, tell them that you’re a published author and hand them your business card.

Publishing your own book is not a difficult process, but it will take the same kind of dedication it took for you to write your book in the first place. When you’re finished, you will be able to say that you are a published author and can find success on your own terms.

Sarah Rexman is the main researcher and writer for bedbugs.org. Her most recent accomplishments include graduating from Florida State, with a degree in environmental science.  Her current focus for the site involves researching updated websites.

Addendum by Winton

Sarah’s offer of a guest post on this topic came at an opportune time since I am currently considering publication options for the book I am writing.

Self-publishing seems to me to be an attractive option for the reasons Sarah mentions, but also because it gives authors greater control of the process. I recently learned that authors often don’t even have much say over the titles for their books when they use traditional publishers.

The main considerations for me in choosing a method of self-publishing are to obtain a professional-looking product, access to the main sites that sell e-books and a small print run, while containing costs.

Jim Belshaw had some relevant discussion on his blog a few weeks ago.  Jim suggested that it might be worth considering use of an aggregator, such Australian e-book publisher (AEP) to put content into the right form and arrange for its lodgment with the e-store.  As Jim says, a price has to be paid for this, but it makes things simpler. Since AEP offers a range of different services it would not be necessary to get them to take over the whole publishing exercise.

Another option I am thinking about is the use of Dpublishing, which has links to Dymocks book stores. Dpublishing seems to provide good guidance on formatting etc and makes it easy to also have a printed version of the book. The downside is that Dymocks does not have links to Amazon, so I would need to arrange separately to get the book in suitable form to be sold on Kindle.


In the end I decided to publish the book as a Kindle eBook at Amazon. My comments can be found in a later post.

Monday, October 1, 2012

Is it the duty of government to realize the good life for all citizens?

‘If the first goal of the individual is to realize the good life for himself, the first duty of the state is to realize, insofar as it lies within its power, the good life for all citizens’.

How Much is Enough?: Money and the Good Life By: Edward Skidelsky,Robert SkidelskyThe quoted passage is from ‘How Much is Enough?’(2012) by Robert Skidelsky - a biographer, economics professor and member of the British House of Lords - and his son. Edward, a philosopher.

Some readers might think that the quoted passage implies support for the view that it is the role of government to ensure that individuals have the freedom to realize the good life as they choose. That is far from what the authors have in mind, however.

Robert and Edward Skidelsky are unashamedly paternalistic in their views on the role of government. They recommend that governments should promote the good life by taxing the rich more heavily, imposing sumptuary taxes, regulating labour markets more extensively, disallowing tax deductions for advertising, and imposing more restrictions on international trade and capital flows. They see such interventions as necessary to ‘free up’ more time for leisure, reduce income inequality, improve the social bases of health, personality, respect and friendship, and help people to live in harmony with nature.

The authors describe their policy approach as ‘non-coercive paternalism’ because it involves incentives and disincentives rather than commands. Yet coercion must still be involved. The authors do not suggest that people who do not share the Skidelsky view of the good life would be exempt from compliance with their proposed taxes and regulations.

How do the authors make a case for paternalistic interventions to encourage people to live the good life? J M Keynes (later Lord Keynes), a famous economist, plays an important role in their story. In 1928, Keynes predicted that within 100 years humanity would be able to satisfy all its material needs by working at most three hours a day. For a time, it seemed as though this prediction might prove to be correct, because a substantial proportion of the benefits of rising productivity were being realized through greater leisure. The Skidelskys suggest that at the beginning of the 1970s it looked as though the rich part of the world was close to ‘the dawn of universal abundance’.

What went wrong? The explanation offered by the authors is that governments shifted to a market-based philosophy when Margaret Thatcher and Ronald Reagan came to power. They acknowledge that free marketeers made some telling points about the crisis of Keynesian economics (the combination of rising unemployment and rising inflation) resulting from attempts to pursue full employment through fiscal deficits. But they claim that the oil price hikes of 1973 and 1979 played a bigger role in exposing economic rigidities and paving the way for a move toward free market policies.

So, how could a move toward greater freedom discourage people from choosing ‘the good life’? The authors’ explanation seems to have two components.

First, they argue that a free market economy gives employers power to make employees work longer hours. That doesn’t make sense to me. If large numbers of workers wanted to work shorter hours, surely it would be in the interests of employers to find ways to accommodate their desires. Over the last 40 years, it seems to me that working hours have actually become more flexible, with a move toward casual employment and greater willingness of many employers to allow workers to take time off to meet family obligations.

Second, the authors claim that capitalism rests on an endless expansion of wants: ‘It has taken away the consciousness of having enough’. The authors see advertising as the major culprit:
‘Advertising may not create insatiability, but it exploits it without scruple, whispering in our ear that our lives are drab and second-rate unless we consume “more”.’

This seems to me to be another weak point in the story. Advertisers didn’t suddenly begin to whisper in our ears with the move toward freer markets in the 1980s. They were whispering in our ears during the 1950s and 60s, when working hours were declining. And it is possible for people to cope with the whispering and to decide for themselves how much is enough. A lot of people choose non-materialistic lifestyles. Many of those who choose to work long hours and/or multiple jobs do so in order to enjoy a more relaxed lifestyle at a later stage of their lives.

I disagree profoundly with the central argument of this book that governments should construct incentives and disincentives to guide people to adopt that particular perception of the good life. Nevertheless, I enjoyed reading ‘How Much is Enough?’ I agree with much of the discussion of the concept of happiness and strongly support the view presented there that a happy life is more than just a string of agreeable mental states. I admired the way the authors developed the idea that we should consider harmony with nature as part of the good life for humans.

In a personal sense, I find myself substantially in agreement with the authors’ vision of the good life. If they had confined themselves to sermonizing I would be cheering instead of jeering.