Andrew Leigh

AMERICA AS AN INSPIRATION AND A WARNING SIGN

ADDRESS TO THE AUSTRALIAN AMERICAN ASSOCIATION (ACT)

NATIONAL PRESS CLUB, CANBERRA

TUESDAY, 27 APRIL 2021

When I told my three sons that I was about to give this talk, my eldest said, 'Dad, aren't you the least qualified person in this household to speak to the Australian American Association? Mum's a dual citizen, we're all dual citizens, but you're not? What do the Australian American Association want you speaking for?' The only answer I could give him is that if I was a dual citizen like him, Section 44 would’ve seen me out of the parliament.

The connection with America is something that goes back in my family. My father Michael Leigh turned 80 today, and when he finished his undergraduate degree at the University of Melbourne, he was focused on Southeast Asia. He was part of that post-war generation that felt that if Australia was to take its rightful place in the world, it needed to do two things: we needed to better understand Asia and Australia, and we needed to also reach out into our region. So, he focused on understanding particularly Malaysia and Indonesia, and was looking at doing a PhD at Melbourne University, when Herb Feith (who in his early twenties had managed to persuade the President of Indonesia and the Prime Minister of Australia to set up a volunteering program), said to my father, 'why don't you think about studying in Cornell?'

Cornell University had by then set up the best Indonesia studies centre in the world. My father was excited by the idea of being able to work with some of the best people in the world, such as Benedict Anderson and George Kahin. So, he made his way to Ithaca, New York. My mother Barbara - they had only been dating for a few months at this stage - followed and became a teacher in Canada. Eventually they got married at Cornell University.

While they were over there, they were so far away from family. They'd exchange letters once a week, but telephone calls cost a few dollars a minute. In a funny kind of way, that's a bit where we are at the moment. Popping over to America isn't possible right now, and we don't even know whether it's going to be possible anytime this year.

Right now, we're viewing America not that differently from the way in which we view Mars. You know, it's great to see the Rover going around there, there's the helicopter going up and down. We can get the images coming back fast, but we can't actually get there.

My hope is that we re-engage, because America has been incredibly important to Australians' understanding of the world and our place in it. I want to talk about four aspects of that today.

Innovation

The first is innovation. The United States has an extraordinary entrepreneurial culture. You spend some time in a Starbucks in a big American city and you immediately get a sense that people aren't just talking about property prices or planning their weekend. They're very often thinking about what they're going to start, talking with friends about enterprises. Americans have a sense of entrepreneurialism that I haven't seen equalled in any country, except perhaps Israel.

I remember talking to some young people on a visit to Nashville. One of them had come back from her summer holidays working in Africa. She'd been worried about the conditions for children there and had taken upon herself to set up a charity. I'm not sure how many young Australians would immediately say upon returning from a developing country with that sort of problem, 'well, I'm going to set up an organisation to solve it.'

That startup culture has been extraordinarily important in the US, and has meant that the penalties to failure are much lower. You can see this in entrepreneurship surveys. Australians are much more concerned that a failure in a business might well hurt them further on in their career. Americans are much more of the view that failure can be one of the greatest teachers.

Building a stronger culture of star-eyed, startup entrepreneurship could be enormously valuable for Australia. You trip around the streets around a university like MIT or Stanford, and you're immediately struck at the plethora of spin-off enterprises. You trip around the streets around Melbourne University or Sydney University and you're immediately struck by the terrific cafes. There's not that same culture of allowing academics to moonlight in business, nor that culture of encouraging students to think about starting and starting businesses.

Probably the university that's done the best on picking this up is the University of Technology Sydney, which is now aiming, through its entrepreneurship hub, to give half of all students an entrepreneurship experience, effectively to democratise entrepreneurship so we no longer think of this as something that only the elite do, but we think of entrepreneurship as a mass participation sport, something that you try even if you think you might then fail down the track and go and work for a larger organisation.

That'd be healthy for Australia and it would help to turn around the decline in startup rates that we've seen in Australia over the last couple of decades. There's a lot of talk of startups, but fewer startups per person than we had 20 years ago.

Inequality

The second issue on which we can learn something for America, probably in the reverse way, is inequality. If you look at the last generation, the share of income held by the top one percent has roughly doubled in Australia, from about five percent of national income in 1980 to around ten percent today. In the United States, you've seen the doubling of the top one percent's share, except that our finishing point is their starting point: they began 1980 with the top one percent having ten percent of US national income, and now it's around twenty percent of national income. They've seen a huge share of growth, up to half in some decades, going just to the top one percent, fuelled in part by tax changes which have disproportionately benefited the most affluent. Then, if you look at the bottom tenth of the distribution, real wages haven't moved for the bottom tenth of American households over the course not just of thirty years, but of 40 years. The bottom tenth of Americans are now where they were in the early 1970s.

That's even true for median male earnings. Median male earnings are no better after inflation than they were in the early 1970s. The share of Americans who earn more than their parents has also declined. For young Americans born in the 1940s, nine out of ten could expect to earn more than their parents. For young Americans born in the 1980s, just half could expect to earn more than their parents. You don't need to listen to too many Bruce Springsteen songs to get a sense that that notion of upward mobility is pretty fundamental to people's notion of what it is to live a good life, to have a good career.

People expect for their kids that they will do a little better than they did. That betrayal of the mobility dream is a real challenge. We haven't seen stagnating of bottom incomes, but we've certainly seen a skewing of incomes towards the top.

We have an Australia now where wealth inequality has risen, income inequality has risen, consumption inequality has risen. You see it in the price of mansions. You see it in the doubling in the number of Porsches, a doubling in the number of private planes and private helicopters in Australia over the course of the last couple of decades.

One question is: how long does the typical worker have to work in order to earn what the CEO takes home in a year? For a big company the answer to that used to be a decade. Work for a decade on the factory floor and you'd earn what the best-paid person in the corner office earned. Now, it takes a lifetime or two for a regular worker to earn what the CEO takes home in a single year.

Increasingly, that gap is growing, in part due to technology, which acts as a kind of a force multiplier for inequality. You think about what technology does to a lawyer, and allows the most productive lawyers in a Sydney law firm like Minter Ellison, where I once worked, to not only serve the best clients in Sydney, but to serve the best clients in Australia or indeed the best clients in the Asia Pacific. They can quickly engage and operate in a larger team. But for the person who cleans the office of Minter Ellison, well, technology probably only means that they're now competing with a robot vacuum cleaner. It's depressing their wages.

What economists call skill-biased technological change, that tendency of technology to advantage those with the most education and disadvantage those with the least education, has been a driver of the widening gap in Australia and in America as well. In this sense, the United States paints a picture of where we don't want to go, of the dangers that happen if you get too much inequality.

Community

The third thing I want to talk about is the strength of civic life. America has long been famous for the vibrancy of its community organisations. Alexis de Tocqueville commented in the 1800s about the number of civic organisations that America has.

I mentioned before the woman in Nashville starting up an organisation to help children in Africa, but that tendency to start organisations has been one of the great American traits. When I was at Harvard in the early 2000s I worked as a research assistant to Robert Putnam, who had then just put out a book called Bowling Alone. In Bowling Alone, Putnam identified the way in which the United States had moved from being a country which was joining, volunteering, and donating to a country that was increasingly drawing inwards, becoming more individualistic.

I got interested in seeing whether or not the trends were true Australia as well, and in 2010 published a book called Disconnected, whose titled basically explains what's going  on. Nick Terrell and I tracked the figures even more recently in Reconnected, published last year, and identified that the decline had continued.

Just to give you a little snapshot as to what's happened in Australia: if you look at the average number of friends the typical Australian had in the mid-1980s, the number of close friends was around nine. Last year, the number of close friends was around five. There's been a halving in the number of close friendships that the typical Australian has.

We've seen the same trends in connections with neighbours, when you ask people how many of their neighbours they know. You go back to the post-war decades, and almost half of Australians are attending a religious service monthly or more often. Now, that share is down below twenty percent. You look at the share of Australians who are members of a trade union, and that's fallen from half to less than a fifth in the last forty years. Australians are less likely to start organisations. We have fewer associations listed in the Directory of Australian Associations now than we did in the late 1970s - a huge collapse in the number of associations per person. In the latest volunteering surveys we again saw a drop-off in volunteering rates, and that's pre-COVID, which had significant adverse impacts on volunteering.

In The Upswing, Robert Putnam talks about how the United States, on both inequality and social connection, has moved from a country of 'we' to a country of 'me'. He documents that you can even see that trend when you look at the words in books published in America. If you look at individualistic words, like 'I' or 'me', and compare them to the number of collective words like 'us' or 'we', then you've seen a decline in the communitarian words and a rise in the individualistic words. Even in the language of books published you see this shift in America.

Nick Terrell and I looked at the same trend for Australian books. The data isn't quite as easy to get at because of the way in which Google Books catalogues Aussie books, but to the extent that we can get at it we do see that decline in the amount of communitarian language.

That's a real concern, and one for which we need to find homegrown solutions. In Reconnected we talk about ways of turning the trend around by harnessing technologies to encourage face-to-face connections rather than supplant them. We've called that CyberConnecting. We talk about the importance of organisations serving two purposes, what we call doubleplusgood social capital. My favourite example here in the ACT is Greening Australia's singles tree planting events, in which you can tackle the issue of deforestation and potentially meet the love of your life. In Britain, they have a thing called the Good Gym, in which people who want to get fit sign up to go and run to the house of an older person each Saturday morning. (Obviously, this is a pre-COVID model and hopefully will return post COVID.) You run for some 20 minutes or so, you get to get to the house of the older person, you come on in, have a cup of tea – you might be the only person that's visiting them that week - and then you run back home. The person you're visiting is called the ‘coach’ because they're the person who's getting you out of bed in the morning. It's doubleplusgood social capital because it's serving two purposes: getting fit but also strengthening community at the same time. We need more models like that if we're to turn around the trend of civic disconnection in Australia.

Populism

Finally, there's the risk of rising populism. Donald Trump's defeat last year was surprisingly narrow. In fact, it's reasonable to say that if COVID hadn't come along, Donald Trump would be in his second term as US president today. We've seen a rise in populist politics in countries like Poland and Hungary. We've seen it to some extent in our region and countries such as the Philippines, and to a lesser extent in Indonesia. We've also seen Boris Johnson, who is - let's face it - unique, but shares many characteristics of the populists.

What's driven the rise of populism? There's a handful of factors. One is jobs. We've seen a decline in the number of good jobs which support a family and pay a mortgage. Where the labour market has collapsed we've seen people turning most strongly towards populist politics.

We've seen the issue of race being effectively weaponized, as racial inequality has been characterised by canny political entrepreneurs as being something which is a zero-sum game. Racial equality, for some, they argue, means less for you, and in a world in which people are benchmarking against others that can be a powerful political argument.

The pace of change has increased. Thomas Friedman's recent book Thank You For Being Late talks about how profoundly unsettling the combination of technological changes and social changes can be, generating a space in which populist political entrepreneurs suggest that they can magically take countries back to some imagined halcyon era, when the pace of life was slower.

We've also seen the luck of several political entrepreneurs. Compare Donald Trump with Pat Buchanan, for example. They’re not that different in their ideology, but as luck would have it, Trump was savvier in his ability to weaponize social media and mass media for populist ends.

Again, the trends in Australia are weaker, but they’re there all the same. We've seen a big decline in the share of Australians supporting major political parties, with that trend being strongest the further you go away from big cities.

We've seen a rise in extreme politicians within the Liberal Party. You contrast the Liberal Party of the 1980s, which was reasonably coherent around a set of ideological aims, with the Liberal Party of today, which is quite divided, particularly over the issue of climate change, but also over various other racial issues. The way in which the more extreme wing of the Liberal Party has been able to dominate climate politics is the clearest example of the influence of populist politics in Australia. Some did it very explicitly. Think about Cory Bernardi's 'Make Australia Great Again' caps. Others have picked up the cues more subtly.

That's a real danger for those of us who love public policy, who think that there are big, hard problems that government should engage to solve. If you're worried about intergenerational problems you should be terrified by populist politics because the short-termism of populism is the enemy of acting on long-term issues such as climate change, nuclear disarmament and bioterrorism.

Conclusion

Tomorrow will mark the 25th anniversary of the Port Arthur massacre, which was followed immediately by a package of gun laws that took Australia down a very different path from the United States when it comes to guns. We now have one-seventh the number of guns per capita as the United States; one-twenty ninth the number of gun homicides as a share of the population; and one-tenth the number of gun suicides.

John Howard and Tim Fischer made a brave political decision in 1996 to choose a different route on gun control from the US. Australia still has a culture of sports shooting. I can go on a run that will take me past both the pistol club and the rifle range near my home. But Australia doesn’t have the US culture which sees guns kept in bedside tables, car glove boxes, or tucked into the waistband of a teenager's jeans. Through the National Firearms Agreement, Australia chose to avoid the US approach, and thousands are alive as a result.

Both when it served as a beacon on the hill and when it served as a danger sign to avoid, the United States has been enormously important to the path that Australia has followed.

Thank you, and I look forward to your questions.

ENDS

Authorised by Paul Erickson, ALP, Canberra