Margo has started putting some responses to my piece
on the third way up on her Web Diary. I probably can't respond to all of them, but this was worth a comment, which I have sent to her, but publish here as well (and I acknowledge comments from Rob Schaap that I've incorporated, that is, stolen).
Response to David Eastman
(Third Way Revisited - Longing for the past)
David Eastman writes:Tim Dunlop argues long, intricately and passionately against the Third Way from a traditional leftist position, but his case against the Third Way has to be judged `Not Proven'. It is argued politically, not objectively. It seeks to attack, and not offer alternatives.
I must admit I can never understand this sort of 'criticism'. Of course I argue politically: on matters of social issues, how do you do anything else? I have an opinion; I make a case. My article is therefore political. Big deal. To quote that great journo, Martha Gellhorn: "Write what you see. I never believed in this objectivity shit." Which is not to say (lest David jump at the bait) that there is no such thing as objectivity, only that the sorts of issues that the Third Way raises are inherently political. And no, I didn't in the 13,000 word critique of the 3W offer an alternative to it, though one is implied. Again, so what? David should stick to criticising what I did write, not what I didn't write.
David: 2. Tim's argument is internally incoherent. He presents a damning indictment of his Second Way (Economic Rationalism). He also (quite rightly) mentions that the Third Way seeks to humanise capitalism through an envelope of policy and regulation that constrains the free market. But he ignores this distinction in concluding that failings in naked, free-market economics systematically undermine the Third Way.
I don't ignore it at all. I argue that a reliance on 'free markets' undermines the 3W's humanising project. David's point here completely sidesteps the issue. I'd further ask: given the 3W wishes to 'outsource' most economic control from individual states to non-democratic quasi-private institutions like the world bank, what institutional framework does the 3W offer to replace the institutions of the state that have been the one only source of mitigation to the excesses of the market? Without such alternative institutions it is difficult to see how they are going to 'humanise' anything.
3.In describing the Third Way as a synthesis of two principles often considered contradictory, Tim relies on a traditional, bi-polar political spectrum. He discards the Third Way simply because it combines elements traditionally considered left and right. I'm reminded of a brilliant web diary piece from Christopher Selth last year (Left, right ... how politics will march forwards, 27/9/01, reproduced below). It demonstrates ably the possibility that the political spectrum can now be defined in more than one dimension. Many of our elites, often economically right and socially left would agree that the underlying philosophy politics is changing.
I understand perfectly that a new synthesis can arise from a reconsideration of former opposites. My point is that the third way doesn't do this: I don't miss the possibility, I argue they fail to deliver. Partly this is because what little of 'the left' is in the third way is purely rhetoric - it is not really leftist at all, and therefore David's 'multi-dimensional synthesis is non-existent because the elements necessary for it to occur aren't there in the first place. In short, David needs to show what is 'left' about the 3W, which might be difficult for him in the short-term as he also says 'I'll confess to being poorly read on the topic and only intuitively familiar with its principles.' 'Intuitively familiar? - how does this sit with your avowed need for objectivity?
4. Tim discounts the purported distinction between the Third Way and Economic Rationalism to zero, without presenting any evidence to support this. He presents no analysis of how effective Third Way principles might or might not be in mitigating the pain caused by free market economics.
The point is, they don't offer any such principles, making it a bit hard for me to present them.
5. Tim's piece presents and analyses examples poorly and (by admission) incompletely to support its position. For example, an attestation that dairy deregulation has failed is what I would term an IBA (Intellectually Blank Assertion) when presented without any evidence as to the impacts on all stakeholders. Has the price gone up? Dunno, haven't seen the evidence. Have displaced dairy farmers been successfully re-integrated to society? Dunno, no evidence for or against presented in this piece.
Far from being an intellectually blank assertion, the evidence about the price of milk is overwhelming, not least by that old fashioned empirical method of going and buying some. Try and find anyone anymore who argues that the price of milk has gone down thanks to deregulation (even Paul Kelly and Imre Salsinszky have given up this line). In the deregulated market, Coles and Woolies put their milk business out to tender and half a billion dollars was wiped off the farmgate price of milk (see Mark Westfield's interesting article in the Australian business section 13 Feb '02). Some of this was passed onto consumers, most wasn't: it went into Coles' and Woolies' bottom lines (registering Woolies CEO as a corporate genius and pumping Woolies share price and even their operating profitability). However, by October 2001, even Woolies realised the trouble this was causing producers (farmers) and offered to renegotiate the contracts. Corbett said he hoped the processors would pass on part of the wholesale price increase to dairy farmers "in distress". The price went up by 15cents a litre (having dropped by perhaps 10cents a litre immediately after dereg, according to the ACCC) and has since risen again. As to whether those hundreds of farmers forced out have 'reintegrated into society', well, the answer is mixed. The ones who committed suicide haven't (of which, according to various farmers I've spoken to, there are at least 5 cases). Some have found other work, I'm sure - perhaps Neil Baker, a former dairy farmer who has contributed to WebDiary in the past would be a better person to talk with. Anyway, my basic point was that dairy deregulation was a farce, no matter what your economic preferences are, and that it seriously called into question the almost religious faith 3Wers have in competition policy. Even Woolies CEO, Roger Corbett agrees with me, a remarkable thing given that Woolies were undoubtedly the biggest beneficiary of dereg. Speaking of the deregulation of the market he has said: ""I think it's quickly becoming a disgrace for Australia," and that "My strong view is the time has come for Australia to produce a green paper that canvasses these major issues, followed by a government white paper...It's my view that the debate should be bipartisan....My argument is that it's a community-wide problem for all of us in Australia....I think the time has come in terms of a fair go that we as a country at least have a fair dinkum attempt at government level of having a strategy and a policy that everyone understands."
The bottom line is, just because someone doesn't include every bit of supporting evidence for every point they make, is no reason to presume they don't have the evidence, and it is therefore a bit risky to dismiss their comments as 'intellectually blank assertions'.
David: Tim's analysis of the Boston Bakery draws parallels between the former, artisan (my term) workforce and their output and the much smaller factory baker workforce, their technological solution and the impact on their lifestyles, while ignoring the impact of that change on the displaced bakers. If 20 factory workers replaced 80 artisans, what happened to the other 60? Unemployment in Boston (using this as a parallel for western economies as a whole) hasn't exploded through economic development. While a handful is no doubt unemployed (around 6% on average here), how many displaced artisans joined or started boutique bakeries? How many bought Bakers Delight franchises? How many are now happily real estate agents, dog washers or the like?
Again, David is chastising me for what I haven't written, rather than for what I have. I would counsel him, however, not to rely on unemployment statistics, when one hour worked in a week is considered to make you 'employed'. With such rubbery figures, any interpretation is possible. As to how many people have ended up in other work, well about 27. I suggest also that he reads the book I took the example from: Sennett, Richard The Corrosion of Character.
David: Tim's economic analysis is coloured by his guilty until proven innocent view. His attestation that free trade policy had little to with the express economic development of nations like Singapore and Japan, Korea et al ignores the facts. Free trade policy in their customer jurisdictions made these countries success. By granting them access to large and hungry markets for their inexpensive and rapidly improving products the West helped them grow. Surely, this only strengthens arguments made by the proponents of globalisation that the best way to obliterate world poverty is through free trade. Tim's revisionist analysis is incomplete.
Actually, it strengthens my argument (why do touts for economic rationalism always to fail to follow what is being said when people question their certainties?) As Dr Aaron Oakley so ably pointed out on these pages, these countries are not examples of free trading miracle economies but of ones where strong central governments had serious control over resource allocation. It's you, David, who have the facts wrong.
6. Tim's analysis ignores the temporal dimension of economic change. If change and globalisation create short-term losers today, (and certainly they do) the theory says this is for the longer term good. More efficient distribution of economic resources will improve future welfare. Fewer unnecessary dairy farms means less pollution. Fewer dairy farmers means less subsidies in future. As I understand it, the Third Way seeks to lubricate this transition by creating substantive support mechanisms and change programs for people displaced by economic development as, ironically, was attempted in the case of dairy deregulation.
It's becoming a cliche to quote Keynes on this, but it remains the best response. When chided by free marketeers that even if 'free markets' weren't working now they would work 'in the long run', Keynes replied: 'In the long run we are all dead.' As a side point, dairy dereg (again) has caused more pollution, not less - see Dr Jim Scott (UNE) for the most thorough analysis.
David: Tim's analysis seems predicated on a dated view of sovereignty. Today's sovereign states are largely geopolitical constructs, as were their predecessors dating back to Stone Age times.
Um, 'largely'? Try entirely. There are no naturally occurring states that I know of. What's your point?
David: From the tribe, through the fiefdom, the city-state, the empire, the colony, the nation and the supranational federations now emerging, sovereignty has evolved. Globalisation is this process fuelled, as arguably it always has been, by improved information flows and technology.
And who fuels the information and technology? And to what end? And part of the point I was making, which you seem to have missed is that the new technologies commodify information and therefore tend to lock it up rather than disperse it. If you disagree with that, it would at least make for a more interesting discussion if you wanted to argue the point.
David: If the Third Way tolerates a managed short term dislocation in a developed market (say, for example killing Australia's uncompetitive textile industry) in return for creating many more jobs elsewhere (productivity is much lower in poor countries), and if in turn that sustains and delivers self-esteem to many more humans in less developed worlds, isn't that a good thing? Does the fact that `they' are not `we' prevent us from acting in their interests?
Now who's making assertions? Where your evidence for even half of this? The creation of jobs is one thing economic rationalism in Australia is particularly poor at, though advocates are more likely to blame 'outdated' employment laws etc. it's worth reading Quiggin and Langmore on this topic (though, as usual, and to pre-empt pointless finger-pointing, there are no knockdown arguments, I know, I know) or you could try the very recent J. Borland, B. Gregory and P. Sheehan, Work Rich, Work Poor, Inequality and economic change in Australia, Centre for Strategic Economic Studies, Victoria University, 2001 which paints a less than rosy picture than you seem to be hinting at (asserting) here.
David: Viewed collectively, nations and their societies are at very different levels in Maslows hierarchy (see chiron). Tim's view of economics and communities is based squarely on a parochial frame of reference within a society seeking self-actualisation. What about those societies for whom the basic needs have not yet been met. Could we be morally obliged to further their fundamental needs over our luxuries? Our broadly Judaeo-Christian faiths speak of the common man, not of arbitrarily defined nationalities.
I'm sorry, but this is waffle. How do you get this out of my article? Again, pots and kettles should watch who they accuse of 'assertion'. But to take up the point briefly, why does David think that some societies are without necessities while others bathe in luxury (and more insanely, why does he seem to imply that I approve of it?) You might want to look at your basics of market allocation (the worth of which, remember, I am sceptical of) and consider why we have millions affected by diseases like TB and AIDS while the market is busy withholding drugs from poor countries thusly affected, while at the same time allocating such marvels as Viagara and fat-burning pills in more affluent markets. Of course, in market terms, this might be legitimate 'allocation', but if David doesn't think it is, then he should be agreeing with my analysis, not arguing with it. Don't ask me rhetorical question about morality - ask 'free markets'.
David: Despite his avowed contempt of sentimentality for the past, the community dislocation Tim laments late in the piece suggests a profound longing for earlier times and telegraphs our natural fear of change. My interpretation of the Third Way recognises this and seeks to mitigate it. Tim seems to discount the value of this out of hand. Tim's view seems to be more that change is inherently bad.
Now David seems to think he knows what I 'really' think. Is this what your 'arguments' against me are reduced to, mindreading? So I can disavow certain beliefs as carefully as I like, but on David's reading, I'm actually hankering after 'earlier times'. What is a person to say to an assertion like this? Why do you think I'm lying? All I can say is ask anyone who knows me and they will tell you I hanker not for 'earlier times'. I am at one with PJ O'Rourke: "If you think that, in the past, there was some golden age of pleasure and plenty to which you would, if you were able, transport yourself, let me say one single word:"dentistry".
All in all, I'm grateful to David for taking the time to make such a lengthy reply, but I have to say that I think he seriously misrepresents my argument, my methodology, and my intention. Still, you don't write pieces like I did on the Third Way and think the people it threatens aren't going to try and strike back.