Obviously at MB we are more used to bashing the MSM than praising it. But, when a ball-tearing piece of analysis comes along, it behooves us to give it as much promotion as possible. And that’s the case with yesterday’s comment by Jessica Irvine at the SMH. Jessica has recently written some bold stuff, putting most of her politically and corporate bound stable mates to shame (though for some reason they seem to get better billing). None better, however, than yesterday. Frankly, I wish I’d written the following myself (republished with permission).
Enough of the pedlars in politics
There’s an old rule in journalism that ”man bites dog” makes a far better story than ”dog bites man”. Dogs bite men every day, making it a less newsworthy event. But when men bite dogs, something unusual is going on – something people might like or need to know about.
Don your newspaper editor thinking hats and answer this: which type of story is it when Business A comes out warning of dire consequences if it is slapped with a new tax?
Is that what you’d expect them to say? Well, yes, it is. Dog biting man. If Business A came out complaining it didn’t pay enough tax, that would be man biting dog.
Most, but not all, newspaper editors in Australia still appreciate and respect this distinction, treating business people’s claims with the scepticism they deserve. But newspapers are far from the only source of information these days.
The speeding-up of the news cycle and diversification of distribution platforms means news is less filtered than it once was. It now falls not just to a select number of news editors, but all citizens, to run a critical eye over the claims of various interest groups.
Which is not to say they might not have a point, just that we’ll have to judge their claims using some critical analysis, given they’re more than likely to be talking their own books.
Australia is in the grip of a rent-seeking epidemic and the rent-seekers are winning. Sure, seeking special protection and privileges from government for one’s own industry is a long-standing tradition among Australian business. They used to seek tariffs on imported goods and other protectionist shelters. Today, they mostly seek ways to pay less tax.
The thing is, all government interventions in the economy create winners and losers. But often it is a small group of potential losers that have the self-interest and resources to mobilise against the changes, while the winners, for example the millions of consumers who benefit from lower import prices under trade liberalisation, are disparate and not as inclined to organise in favour of the change.
Rent-seeking destroys economic efficiency. Dollars invested in rent-seeking, through lobbying or advertising, represent a loss to the economy – focused, as they are, on shifting the distribution of existing profits, rather than creating more profit.
Every dollar spent on rent-seeking is a dollar less reinvested in expanding business or investing in new technology. So this new outbreak of rent-seeking not only duds taxpayers out of money, it threatens our future wages and living standards, too.
Rent-seekers have adapted cannily to the politics of the day. As politicians have moved to a poll-based ”we want what the people tell us they want” credo, big business has begun to pour money into expensive advertising campaigns to sway popular opinion; witness the anti-mining tax and anti-carbon tax campaigns.
The mining industry’s investment of $22 million for an advertising campaign to sway public opinion against raising an extra $60 billion in tax from highly-profitable mining companies is surely the most successful rent-seeking mission in Australian history.
Unions can rent-seek, too, seeking higher wages without offering higher productivity or government mandates that mining companies should use their services.
All this rent-seeking used to take place away from the public eye through hidden political donations and good old-fashioned long lunches. But today, thanks to new rules around donations and lobbyist registers, rent-seeking is increasingly played out in the public sphere, spearheaded by a proliferation of telegenic ”spokespeople” working for business associations.
There’s the Business Council of Australia, the Australian Chamber of Commerce and Industry, and the Australian Industry Group, as well as state-based business chambers. Each battles with the other for supremacy.
They are supplemented by a multitude of industry-specific associations. The retail industry is a good example. Retailers can be represented by the Australian National Retail Association, the National Retail Association, the Australian Retailers Association, the United Retail Federation, the National Independent Retailers Association or the Bulky Goods Retailers Association, to name but a few. And yes, they are all separate bodies.
That’s an awful lot of people employed to appoint committees and subcommittees, commission skewed economic modelling and generally pester government.
Politicians and the media cop most of the blame these days for the dumbing down of the political debate. But let’s not forget this entire industry of rent-seekers who are doing the best they can to muddy the waters of good public policy and confuse everyone.
Politicians need to wake up to the way they are being played. The public needs to switch on their rent-seeking bullshit-ometers when watching the next round of self-serving business advertising and learn to think: ”Well, they would say that, wouldn’t they?” And the media needs to rediscover its love of man bites dog tales and stop giving these guys a free kick.
Occupy Wall Street protesters in the United States are leading a global backlash against crony capitalism and special government favours for finance sector chief executives.
Australians have invented our unique brand of corporate rent-seekers, and far from standing up against them, we’ve often been complicit tools in their trade, shifting our opinion on public policies in response to their self-interested advertising campaigns.
When government thinks it’s doing what the public wants, but what the public wants is in fact what big business wants it to want, we have a problem.