Flat White

We are the boiling frog

8 June 2017

7:41 AM

8 June 2017

7:41 AM

The growing influence of the state throughout the western world, buttressed by technological development and a crisis of confidence in the capitalist system is shaping up as a major threat to personal freedom.

The genius of capitalism is that through the system of risk and reward, within a framework of secure borders, an independent legal system, and respect for personal property rights, it has provided the means for the genuine needs of billions of individuals to be met.

It is consumer demand and capitalist initiative that has driven the creation of new markets worldwide and led to the unprecedented reduction in poverty and improvements in living standards over the last 200 years.

However, while there is a natural role for government in this framework as the guardian of the legal system, guarantor of competition and the method by which the people can change the law through democratic elections, modern bureaucracy, crony capitalism, and producer capture of government is busily removing choices and putting liberty in peril.

Some examples illustrate the extent of the problem.

In the primary and secondary education system, schools are increasingly funded and run for the benefit of teachers, unions and sectoral interests rather than responding to the needs of students.

Resource decisions in the health system are made for the benefit of medical administrators, bureaucrats and doctors rather than to address the needs of patients.

In child care, billions of dollars each year are paid directly to identikit child care centre operators artificially inflating prices and reducing parent choice.

Unfortunately, this is not getting better any time soon.

On energy, both sides of politics are increasingly in the business of selecting what type of producers are allowed to compete in the market, and grid operators are increasingly in the business of controlling demand and supply including in Australia and the UK.


It doesn’t take too much imagination to know where the ‘successful’ 2012-15 trial by an English electricity distributor which at the press of a central button could remotely reduce each household’s power usage, or Dark Green activist mutterings of a human ‘carbon budget’ or ‘carbon quotas’ are headed.

The next ‘big thing’ will be National Disability Insurance Scheme where, as Vern Hughes wrote for the IPA in April 2017, instead of consumers being encouraged to purchase the services they need as originally envisaged, the system is being geared up for providers to determine the range and price of services.

Human rights and environmental legislation as well as international treaties are increasingly being used by NGOs and bureaucracies in Australia and overseas to resist moves to influence the ‘centre-knows best’ policy agenda

Uber and Airbnb are two companies at the forefront of regulatory moves to restrict whose car people can get into and in whose home people can stay, the Fair Work Commission polices who people are allowed to work for, and of course hardly a week goes by without a publicly-funded activist calling for sugar, fat or cigarette taxes to restrict what legal products you can put into your mouth.

Economics Professor Tyler Cowen recently claimed that the West is being killed by comfort and the desire of baby boomers to build a harm-free world, under the guiding hand of government.

Of course, the most extreme manifestation of this trend is becoming evident in China with the evolution of the Communist Government’s ‘social credit scheme’ which will rank a citizen’s ‘place in society’ according to their social, moral and financial history. No points for guessing what may happen in China when a person’s social credit expires!

Whether China, the US, UK or Australia, the rationing of goods, limiting of supply or demand or direct funding or favouring of producers by governments, are cut from the same cloth – i.e. the increasing tendency of the state to be the sole arbiter of what is permitted.

The fault however lies not with capitalism as some claim, but what we as individuals have allowed to be done in capitalism’s name.

Fortunately, the solution is simple. We need a new, people-centred approach to government, where personal choice is taken back from the state and from producers, and put firmly into the hands of consumers.

A new agenda would see government spending limited to a fixed proportion of GDP, ideally around 20 per cent as it was in Australia prior to the election of the Whitlam Government.

The vast bureaucracies that regulate non-criminal personal behaviour between individuals and between governments should be dismantled.

Governments should get out of the business of picking winners in energy, telecommunications, workplace relations and other social policy contracts.

Education vouchers should be the primary means of funding the education system, with providers required to tailor their offering to parental demand.

Child care vouchers that allow parents to choose whether to stay home, pay a relative or put their child into the formal system would save money and acknowledge the different situation in each household.

Market operators in all industries should simply provide a meeting place for buyers and sellers and not try to restrict producers or curtail demand.

Unless we rapidly re-imagine the role of the state in the twenty-first century, our future will be increasingly governed by the space we are allowed to occupy, and may very well resemble this recent dystopian glimpse of a ‘small footprint approach’ to domestic housing.

While there is still time for the boiling frog to escape, it is getting awfully warm.

Brett Hogan is director of research at the Institute of Public Affairs.

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