Recently, the Australian Broadcasting Corporation broadcast a series, The Killing Season, containing interviews with the main actors of the Labor Party’s governments from November 2007 through September 2013.
As luck would have it, browsing through the DVD collection at my local library recently I found a copy of the twenty-year-old series, Labor in Power, which contains interviews with the main actors of the Labor Party’s governments from early 1983 through to early 1993 (obviously, given when it was made, the series neglected to cover the last three years of the Keating Labor government – I suspect the producers looked at the polls in 1992, deduced that Labor would lose, had some contracts drawn up and agreed, and started making the series – Labor’s victory over Hewson’s Liberals thus came as much of a shock to them as to everybody else).
I thought Labor in Power was far superior to The Killing Season. LIP looked at all aspects of the government – the personalities, the achievements, the policy failures – and had a cast of intelligent people reflecting intelligently on their decisions and behaviour. The colour, as you might expect, was provided mostly by Keating, but also by Hawke, as they reflected on their relationship – first cooperating, then competing, and finally at each others’ throats. V. sad that they have fallen out – for all their faults, they are two exceptional characters and Australia was, on balance, well served by them.
In contrast, TKS, as its name suggests, focusses mainly on the duelling between Rudd and Gillard over the leadership. There’s a lot there, but not really much new, except for each of their justifications and explanations for their actions. And the policy and administrative achievements and failures get short shrift. Which is a shame, because the six years that these two were in power were undoubtedly the years of the worst, most incompetent, and most wasteful in Australia’s history. The policy failures are manifold and egregious.[Perhaps that is why the outrageously left-biased ABC didn’t cover the policies – they didn’t want to draw attention to the disasters.]
Watching the two in somewhat brief succession, the contrast between the personnel of the Hawke and Keating governments, and the Rudd and Gillard governments, is striking. The Hawke-Keating personnel are serious people dealing with difficult issues from a starting position of difficulty, and making a reasonably good fist of them. Bob Hogg is tremendously impressive, a man of real ability and insight.
On the other hand, we have the Rudd-Gillard personnel: a bunch of stuffed shirts, empty vessels, sociopaths and number-crunchers – hollow and unserious people dealing with difficult issues from a starting position of strength, and making an absolute meal of everything they touched. Even Rudd’s greatest triumph, his handling of the global financial freeze, left Australia in a debt-hole from which it is unlikely ever to climb out and has created a huge moral hazard in the banking sector, the bill for which will come due when the housing bubble which Rudd encouraged eventually bursts.
Anyway, there is something relevant to our purpose here at Stebbing Heuer, and that is the assessment of the characters in LIP as to why they muffed up economic policy in the late 1980s and created the conditions for a horrible, desolation-wreaking recession. The insights begin at the 21 minute mark of the 4th episode. I’ve quoted the relevant personnel in full, beneath headings that I think summarise the categories under which they fall.
1. Strategic assumptions versus tactical indicators:
John Button: I attended a meeting in late ’89, in Canberra: the opening of the Zionist Federation building. I remember one prominent businessman telling me there, ‘There are only two people in this room who believe you’ll win the next election: me and my wife. And we’re not sure.’ And I said: ‘Well, why’s that?’ And he said ‘Well, everybody in this room is starting to do it hard.’ And he pointed at people around the room who were having severe financial problems with their businesses. I did tell somebody in the Treasurer’s Office that I’d had that experience and he said: ‘Well, why doesn’t somebody tell us these things?’ I said: ‘I’m telling you now. That’s why I’m here.’ …
Bill Kelty: First time I saw Bob after he’d won the election I think I said that: ‘I’ve just got a great feeling that I think this is going to be hard, Bob. This is going to be much harder than we’ve thought. This economy’s going to dip much greater than we think. And that the forecasts you have are wrong.’
John Button: So I felt very isolated in that period. I think nobody wanted to hear what I was saying, or believe what I was saying. I mean, this is not in any self-justification, I mean I think the difference was I was hearing constantly from business and unions and others about the problems that they were encountering. And I once recalled talking to a business leader about it, I said: ‘Why don’t you go and tell the Prime Minister, and others.’ He said: ‘They’re not listening. They won’t listen. They’re deaf,’ he said.
Michael Duffy (Attorney-General): It did worry me that people were not listening, either in the bureaucracy or even at a political level, to in fact what was very obviously the case by the last quarter of 1990 that if the brakes were not released, it wasn’t a matter of the economy slowing down it was a matter of the economy collapsing. And that was patently obvious if you were representing an area like Holt [Duffy’s electorate], centred on Dandenong. That was the area which did knock the stuffing out of you. If you look through the period of ten years of government and you said: ‘Well, when did you become, for the first time, depressed about the direction it was going?’, it was when in fact we ran into trouble on the employment side …
Error and misunderstanding:
Bob Hogg (ALP National Secretary): I don’t think there was that degree of understanding in government. Some ministers, but not enough, and certainly not within the Prime Minister’s Office, and for that matter the Treasurer’s. So I think that was probably, if you looked at a period where the government policy was just wrong and damaging that was the period.
Strategic Assumptions vs. Tactical Indicators:
Bob Hawke (Prime Minister): The proper conduct of economic policy involves, I think, being prepared to listen to anecdotal evidence. But you’ve also got to know that, particularly in these times, it’s not as though, ‘Here is a difficult situation, and there is an easy alternative.’
Belief Preservation, Shooting the Messenger:
[From the introduction – this quotation appears out of phase but is relevant] Bob Hogg: In response to these arguments, essentially one was just derided as an economic illiterate, and put down.
[Also from the introduction] Graham Richardson, Environment Minister: Trying to tell Paul [Keating] anything is a very difficult task. Trying to tell him he’s wrong is well-nigh impossible. I tried a lot of times but I don’t think I got through much.
John Button: Bob Hawke would laugh sometimes and say: ‘Well, you’re a gloomy bastard,’ and things like that, when we were having a talk, privately perhaps. But, or he would say: ‘I’ve heard something different.’ In cabinet, one or two times he was pretty hostile to what I said. Pretty hostile …
Paul Keating (Treasurer): The government’s forecasters – the Treasury, the Reserve Bank, the Department of Finance, etc – were saying: ‘Look, don’t worry, we’re not going to lose any production. We’re just going to cut demand away. It’ll work out as planned.’ Well it didn’t. See, governments, in the end, can act intuitively, can act on advice, can act on a combination of intuition and advice. But when all of its forecasters – the statistician, the Reserve Bank, the Treasury, the Department of Finance, the Department of Prime Minister & Cabinet – all come together and tell you: ‘Look, by our best reckoning, this is where you’ll be,’ who are you to say: ‘Oh, that’s wrong’?
Strategic Assumptions vs. Tactical Indicators, Shooting the messenger:
Michael Duffy: You would be treated very dismissively, with respect to what was referred to [as] anecdotal evidence, that in fact was far better informed than anything, anything we were getting out of Treasury, Finance, or Prime Minster & Cabinet. And that, I think, when you look back, is very very worrying: that in fact we were acting on information that was just wrong. And, worse than that, there were people in that government who were saying that.
One point also arises, which I first mentioned in the post concerning John Fraser’s ‘bubble!’ call on the Sydney property market: at what point does an anecdote become significant of some wider change in the environment, or some important realisation? When should we distinguish between something conforming to the error of the Law of Small Numbers, and dismiss it, and something which signifies an important truth which we ought to acknowledge?
I think the difference lies in the context in which the information arrives, and what is done with it. We fall into the error of the Law of Small Numbers when we use a piece of anecdotal information to reinforce existing beliefs, whereas using anecdotal information or incidents to spark a re-examination of our beliefs is a wise use of them. Of course, we don’t want to create a whole new belief structure – do a 180 degree turn, if you like – on the basis of a single observation. But if it leads to a considered re-examination – that is, if it begins a process of Bayesian Updating – then the anecdote has served us well.