In political economist Mancur Olson's pathbreaking book, The Rise and
Decline of Nations, published in 1982, he argued that a country's
economic stability ultimately leads to decline as it becomes
increasingly dominated by organised interest groups, each seeking to
advance their interests at the expense of others.
By contrast, countries that have a collapse of the political
regime, and the interest groups that have coalesced around it, can
radically improve productivity and increase national income because they
start with a clean slate in the aftermath of the collapse. Examples are
the rapid growth of postwar Germany and Japan, as Wikipedia reminds us.
Professor Ross Garnaut has argued that Australia is unlikely
to see another era of extensive micro-economic reform because of the
growth in rent-seeking behaviour since the days of the Hawke-Keating
government.
What these days passes for the political debate seems to be
dominated by ''distributional coalitions'', in Olson's phrase, arguing
for ''reforms'' from which the chief beneficiaries would be their good
selves, or desperately opposing government reforms that would impose
even the most modest sacrifice on their members.
What gets me is how blatantly self-seeking our lobby groups
have become. It is as if the era of economic rationalism - with its
belief that the economy is driven by self-interest - has sanctified
selfishness and refusal to co-operate for the common good.
Another explanation may be the growth of a lucrative
rent-seeking industry. These days far more people make their living
lobbying for interest groups than did so in the 1980s.
When your livelihood depends on convincing your clients their
money is well spent, it's hardly surprising these ever-multiplying
industry groups, corporate ''government relations managers'' and
freelance lobbying firms make so much noise and are so untiring in their
efforts to extract concessions from government.
The relationship between elected governments and bureaucrats,
and the professional lobbyists, is unhealthy. In an ever more complex
world, governments seek to consult ''stakeholders'' before implementing
policy changes.
But some stakeholders - those that spend most on lobbyists -
are more equal than others. And too many politicians, private-office
advisers and bureaucrats retire as gamekeepers to become poachers. The
fact that ex-Coalition lobbyists do better under Coalition governments,
while ex-Labor people do better under Labor governments is a sign that
this is not an innocent, arms-length, information-gathering exercise.
Meanwhile, the business of opposition has degenerated into
automatic opposition to any and every unpopular government decision,
even though this requires parties to turn their rhetoric on its head
when they move from opposition to government.
Labor's attempt to exploit public anxiety over the Abbott
government's inability to solve the deep-seated and long-running
commercial challenges faced by hard-pressed manufacturers and airlines,
while advancing not a shred of credible alternative policy, is
despicable. Just as despicable as when Tony Abbott did it to Labor.
It's finally dawning on people that major and genuine reform
requires a degree of bipartisanship at the political level and a spirit
of give-and-take on the part of powerful interest groups. But these
prerequisites are further away than ever.
Instead what we get is lowest-common-denominator politics
from the pollies and rent-seeking posing as ''reform'' from the interest
groups. This is particularly true of business lobby groups - the big
miners, the financial services sector, the hotels and the registered
clubs, for instance - because they have the most money to invest (and I
do mean invest) in rent-seeking.
There does seem to be one spark of potential progress,
however. Perhaps because of its organic links to big business, the
Abbott government seems to have realised something Labor never did:
giving in to rent-seekers doesn't make you any friends, it just makes
things worse.
Yielding to my pressure for a concession never satisfies me,
it just shows me you're an easy touch and prompts me to think of
something else I want. Meanwhile, giving me a lolly just makes my rivals
envious and prompts them to demand theirs. Bad inevitably leads to
worse.
Joe Hockey and Abbott have been courageous in ignoring the
begging bowl of the least competitive end of manufacturing and, it
seems, Qantas. It's too early to say whether this constitutes a
consistent attempt to turn back rent-seeking or just prejudice against
certain industries but not others - though it would be idle to expect
absolute consistency of principle from any flesh-and-blood government.
The way Arthur Sinodinos has been cutting back investor
protections at the behest of the greediest industry of them all -
financial services - under the guise of reducing ''red tape'' raises the
possibility that rent-seeking via the budget is verboten, but not
rent-seeking via regulation. We shall see.
