It's still too soon to tell whether Tony Abbott's government is
pro-market or pro-business, but so far the evidence for the latter
stacks higher than that for the former.
The difference turns on
whether the pollies want markets where effective competition ensures
benefits to consumers are maximised and excessive profits minimised, or
markets where government intervenes to limit competition - often under
the cover of claiming to be protecting jobs - and makes life easier for
favoured businesses.
Will we see more rent-seeking or less under Abbott, more of what The Economist calls "crony capitalism"?
Will
firms or industries with rival interests do better from government
regulation if they're more generous donors to party coffers?
Abbott
and his ministers' intemperate attacks on the Australian National
University for its decision to "divest" itself of a few million mining
company shares for environmental or ethical reasons are a worrying sign.
Investors
shouldn't enjoy freedom to choose where they invest, regardless of
their reasons? ANU is different from the rest of us even though its
investment funds come largely from private donations and bequests? This
from a government keen to complete the de facto privatisation of
universities?
What is ANU's offence? Bringing ethical
considerations into investment? Or sounding like it believes climate
change is real and we should be doing something real about it?
Abbott
attacked ANU's decision as "stupid" and believes "coal is good for
humanity, coal is good for prosperity, coal is an essential part of our
economic future".
If ever there was an industry whose early
decline could be confidently predicted - as it is being by hard-headed
investors and bankers the world over - it's steaming coal.
Yet Abbott seems keen to change the rules of the formerly supposed bipartisan renewable energy target in ways that, by breaking long-standing
commitments to the renewables industry, would cost it billions and
blight the future of its employees, all to provide the government's coal
and electricity industry mates with temporary relief from the
inevitable.
The biggest problem with governments "picking winners"
is that they quickly regress to picking losers, helping industries
against which technology and other forces have shifted to resist the
market's pressure for change that would - almost invariably - make
consumers and the economy better off.
The proposals of the recent
draft report of Professor Ian Harper's competition policy review could
do much to strengthen the market's ability to deliver benefits to
consumers and roll back decades of accumulated rent-seeking and crony
capitalism.
The enthusiasm with which the Abbott government takes
up those proposals will tell us much about its choice between being pro
market forces or pro certain generous business donors to party funds.
A
particular area where sound competitive principles have been secondary
to special pleading from various interests is the regulation of
intellectual property, such as patents, copyright, trademarks and plant
breeder rights. Harper says our intellectual property regime is a
priority for review.
IP isn't God-given, it's a government
intervention in the market to limit competition with owners of the
patents and so forth for a limited period. It's a response to market
failure where the "public goods" characteristics of IP would otherwise
generate too little monetary incentive for people to come up with the
new knowledge and ideas that benefit us all.
In other words, it's a
delicate trade-off between government-granted monopolies to encourage
innovation, and competition to keep prices and excess profits down.
This
makes it ripe for rent-seeking: pressuring politicians to extend the
monopoly periods retrospectively (despite the lack of public benefit),
to allow loopholes that permit phoney "ever-greening" of drug patents
that would otherwise expire, to limit poor countries' access to
life-saving drugs at realistic prices and to ignore blatant gaming of IP
laws by two-bit operators that have never created anything.
Most
of these excesses are at their worst in the United States with its
easily bought legislature. The information revolution has made IP one of
America's chief export earners. And the free-trade preaching Yanks have
made advancing the interest of their IP exporters their chief priority
in trade negotiations such as the present Trans Pacific Partnership
deal.
As always, we have a tendency to give the Yanks whatever
they want. Trouble is, as Harper points out, Australia is and always
will be (and should be, given our comparative advantage in world trade) a
net importer of intellectual property.
Abbott has a further
temptation to be less than vigilant in pursuing Team Australia's best
interests: his chief media cheerleader, News Corp, happens to be the
twin brother of a primary beneficiary of the Yanks' efforts to advance
the interests of their IP exporters, 21st Century Fox.
