Monday, 04 February 2013

A distorted democracy

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The “reasonable person” test has been the basis of criminal law for centuries. Imagine, just imagine, if it were applied to government spending and policy? 

Do you ever wonder why there aren’t more terrorist attacks? I do. It’s so easy to inflict harm on a massive scale. Use a car to plough through a bunch of people at an intersection. Build a crude bomb and take it to a stadium. Hijack a plane and crash it into something. 

The latter is less difficult to execute than you’d think. In the wake of September 11, airports and airlines were forced to ramp up their security. It applied to light aircraft too. At Moorabbin, a small airport near Melbourne, mainly used for recreational flying and training, they erected barbed wire fences around the perimeter. You can only enter using a thing called an Aviation Security Identity Card. It costs a few hundred dollars and isn’t easy to get.

What’s the point? In country airports it’s common for pilots to leave aircraft keys within the aircraft, doors unlocked. Many of the planes are 20 to 40 years old, so either way they’re pretty easy to hot-wire. Take a ladder and a blanket to get over the fence and you’ve got access to a batch of missiles weighing over a tonne and capable of travelling at a few hundred kilometres an hour. There’s no reason an Al Qaeda couldn’t steal a fleet of planes, stuff them with homemade bombs and do some pretty serious damage.

For some reason they don’t. I’m not interested in why, although I am glad. My point isn’t that aviation security is lacking. It’s that we let our fears override common sense – the common sense being that you can never really prevent terrorism – and then translate those fears into bad regulation.

Examples of disproportionate reactions to perceived threats are all around us. 

This phenomenon is at play over in Fukushima, where 160,000 people were forced to leave their homes, food supply has been tarnished and 130 square kilometres of land was left uninhabitable. As a result of public pressure Japan shut down all of its nuclear power plants. The ripples around the nuclear debate were felt as far afield as Germany and Australia. 

Stanford University says 600 mostly frail people died of natural causes during the evacuation and estimates that, long-term, there will be around 130 radiation-related deaths. 

All of this is tragic and none of it was necessary. But whether it is sufficient justification to close the door on a cheap and efficient source of power for one of the most densely populated and natural resource-deficient places on the planet is another question. When Japan shut down the reactors, its imports of gas, oil and coal increased by 25 per cent, costing an extra $55 billion in just one year.

The price of the clean-up is estimated at $130 billion – including land buybacks, decontamination and compensation. But imagine a parallel universe where the rest of the country’s reactors kept humming along and the $55 billion dedicated to fossil fuel imports was instead saved for other areas of the budget like health and welfare. We’d only need that to happen for two-and-a-half years before the business case for nuclear became viable again. 

The risk is, however, that sentiment will continue to be reactive rather than rational, and the plants will stay dormant. This is the effect of emotion on public policy: distortive, and ultimately destructive.

Every time a government doesn’t allocate 100 per cent of its money to health, we are saying that other things like education and roads and fighter jets are more important than the preservation of life. For every dollar we don’t contribute to foreign aid – where the value for money is infinitesimally higher than if it were spent at home – we’re saying that we value Australians more than foreigners. For every cap we place on refugee intake, we’re saying that we prize cultural purity over the probable persecution of someone who ostensibly threatens it. 

These aren’t things which any government or most of its subjects would openly admit to. They are implied. 

Imagine if we didn’t spend money sustaining the elderly and terminally ill. Change the criteria from sustenance-at-all-costs to quality-of-life units instead. We’d get more bang-for-buck with low-hanging fruit like cancer screenings, dental care, HIV education and vaccinations in the third world.

Or what about relinquishing support for the car industry. In the 2010/11 financial year, the government handed out $1.2 billion in subsidies for a workforce of 45,000. That’s $25,000 of assistance per employee. In a single year. Think of what an entrepreneur or homeless person or investor could do with that money. 

Yet we keep the price of sending a letter at 60c no matter where you are in the country, despite it costing a lot more to transport something from Mildura to Broome than it does from Sydney to Melbourne. We allow people to take advantage of cheap real estate on the urban fringe but spread the cost of providing less efficient roads, health and education facilities across the whole tax base. We give Tasmania 3.6 per cent of GST receipts despite it containing only 2.1 per cent of the population. 

In the parallel universe devoid of feelings, more people live longer. Unsustainable industries fail but the ones left behind prosper by a greater factor. The youth can afford homes because we don’t inflate house prices by compelling workers to funnel money into superannuation. We send signals about the true costs of living in far-flung places where service delivery is expensive, and people vote with their feet. Adelaide disappears and Melbourne prospers. 

How about it?

Humans are a sentimental bunch. We’re Jack’s-as-good-as-his-master fiscal equalisers surgically attached to the fair go and the safety net. We’re distracted by visible things like car manufacturing, farmers’ livelihoods and shark attacks but ignore the unfashionable abstracts like productivity, chronic disease and the service economy.

A callous person might say that we’re slowing down evolution. The penchant for reactive public policy results in inefficient resource allocation. Tall poppies are cut down and our weak are propped up – whether they be individuals, states, services or ideas – and progress is stifled.

Populism is intrinsically linked with the distortion. A stable democracy balances the whims of the masses with entrenched imperatives. That’s why we have minimum electoral terms, compulsory voting, unrepresentative houses of review and unelected judges – all brakes on popular will and most of them sensible. 

Imagine a system where we got everything we wanted. Tax breaks and stimulus packages would be de rigueur, murderers would be stoned in the street, minorities would wither on the vine and corporations would degrade the weak so long as it aligned with the profit motive. The proletariat would riot on Toorak and Vaucluse. 

It would be anarchy.

It’s intuitive to think that freedom is aligned with rational decision-making. But I am coming to think that liberal traditions are the best protectors of logic and stability, while our freedoms are the most susceptible to emotional corruption. 

So what do we do about it? There are so many elementary ways in which money could be better spent. If you believe Twitter we could get the ball rolling by castrating the media, banning polls or even doing away with democracy. No thanks. 

Emotions have an often intangible value. It doesn’t matter that the rate of firearm homicide was a relatively low 0.3 per 100,000 before Port Arthur or that I’m more likely to be eaten by a shark than murdered on a train; I still want gun control and don’t mind the idea of station security. We want to feel safe, so we come up with visible methods of self-appeasement. If you discount emotion you dismiss our humanity.

How about instituting a system of evidence-based decision-making. Have a cost-benefit analysis framework with some kind of universally agreed on metric, like economic value or satisfaction units, and apply it to every piece of proposed legislation. Build a polity that can address its own disproportionality, recognising that things within its domain, like criminal behaviour and economic activity, will always follow a path of least resistance. 

Stop wasting resources on the pavlovian and encourage electors to gain some perspective. Convince me that guns don’t actually need to be controlled, and that I’m pretty safe catching the train home at night. 

Sam Encel

Sam Encel is a risk management consultant, carbon dioxide producer and self-loathing Liberal. He moralises in 140 characters or less at @samencel

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