Andrew Leigh

I've written an article for the journal Challenge about the Australia of 2032. Full text over the fold.

Party Like It’s 2032
Challenge, Summer 2011-12

Physicist Niels Bohr once said that prediction is very difficult, especially about the future. In writing about the Australia of 2032, I can feel around me the ghosts of economist Irving Fisher (in 1929: ‘Stocks have reached what looks like a permanently high plateau.’), IBM chair Thomas Watson (in 1943: ‘I think there is a world market for maybe five computers.’), and Variety magazine (in 1955: ‘[Rock and roll] will be gone by June.’). Talk show pundits and crystal ball gazers will always be popular, but we should take any predictions with a handful of salt. Technological change moves in unexpected ways. Similarly, as Harold Macmillan famously noted, the biggest challenge for any political leader is ‘Events, my dear boy, events’.

Bearing all this in mind, allow me to take the safe route with my predictions: I’m going to identify three trends that I think will fundamentally change Australia in the future, because they have done so in the past. In essence, my approach will be to assume that lines which have sloped upwards in the past few decades will continue to slope upwards in the next two decades. I will leave it to braver souls to predict sudden turning points.

Three Predictions

The first change that I believe we will see is increasing affluence. It’s easy to forget that as recently as 1800, living standards were close to what they had been on the savannah. Even in Europe, most people ate around 2000 calories a day (the typical westerner now consumes 3000), life expectancy was 30-35, and everyone knew someone who had lost a baby in childbirth. In just two short centuries, economic growth has transformed our lives, and there are more transformations to come. According to a recent report, real household incomes in Australia grew at 3.6 percent per year from the mid 1980s to the late 2000s – twice the OECD average. We face the twin challenges of sluggish productivity growth and rising economic populism, but if the economy were to grow at the same rate for the next two decades, the Australians of 2032 would have real incomes nearly twice as high as ours.

The second change is that our nation will become more ethnically diverse and more enmeshed with Asia. Since the end of the White Australia policy, the share of our migrants coming from non-English speaking countries has continued to grow. The effects of this immigration can be seen in the diverse cuisine now available in our restaurants, but this is really only a superficial picture of how migration has affected the nation. In thousands of workplaces today, Australians are drawing on the culture and experiences of nearly every nation on the globe. At the same time, the growth of China and India is placing us closer than ever to the economic centre of gravity of the world economy. This isn’t just a mining story (Australia’s service exports to China exceed our coal exports), it’s a story that illuminates the evolution of our national character: Australians of two decades hence will be more likely to have been born in Asia, travelled to Asia, worked in Asia, or married someone from Asia.

The third change is that we will be more technologically busy. In a world of iPads, Wiis, Blackberries and Bluetooth, we’re more likely to be plugged into a device than ever before. Increasingly, people are getting their news from Twitter, finding love on RSVP, and watching television on iView. The National Broadband Network creates exciting possibilities for regional Australia, allowing the potential for things such as high-definition videoconferencing with a city medical specialist to diagnose an injury. But with only 24 hours in the day, technological engagement is also crowding out face-to-face engagement. Unlike prior generations, today’s teens have the option of playing a game of soccer on the Xbox rather than in the backyard. As I pointed out in Disconnected, this is one reason why community organisations such as churches, scouts, guides, Rotary, and the RSL are struggling to retain members.

Policy Implications

On balance, each of these changes – affluence, Asia-engagement, and technology – will be good for Australia. But they also present a particular challenge to the ALP, a political party born of the trade union movement, which carries a profound belief in the dignity and value of work. We must continue to campaign on economic issues – particularly when facing the most populist Opposition Leader in a generation. But we also need to recognise that rising affluence will bring a greater demand for social liberalism. Our party has a proud history of standing up for individual liberties. Past Labor governments outlawed discrimination on the basis of gender or race. This Labor government has removed from the statute books much of the explicit discrimination against same-sex couples, and strengthened disability discrimination laws. If they are to be successful, future Labor governments must continue to support small-L liberalism on social issues as on economic ones. This means a commitment to an Australian as Head of State, to marriage equality, and to the freedom to say unpopular things.

Growing engagement with Asia means that the ALP needs to keep increasing our Asia-literacy. At the federal level, we can be proud to have a Mandarin-speaking foreign minister and representatives of Asian descent such as Senators Penny Wong and Lisa Singh. Some of us have spent years living in Asia. But we have more work to do to ensure that our politicians continue to look like our voter base. We also need to do more to build Asia-literacy among the electorate and parliamentarians. Too few members of parliament speak an Asian language, too few are absorbed in Asian art and literature, and too few travel regularly in our region. There are plenty of parliamentarians who follow every twist and turn of US or UK politics, and but not enough who understand party politics in India and Malaysia. And to be blunt, the federal parliament could benefit from more Nguyens, Desais and Zhangs.

The rapid growth in technology has major implications for skills training in Australia. In The Race Between Education and Technology, Claudia Goldin and Larry Katz argue that inequality grows when technological development outpaces educational attainment, and shrinks when education outpaces technology. For those of us who care about the gap between rich and poor, it is vital that we raise both the quality and quantity of education in Australia. Lifelong learning isn’t just a white-collar concept – it matters for everyone. For example, a mechanic who only knows how to fix the cars of today will struggle to adapt to the electric self-drive cars of tomorrow. The rapid growth in technology is a major reason why Australia needs to boost our educational levels.

Political Impacts

Affluence, Asian engagement and technology confront our party structures as they do our policies. From its origins in Barcaldine and Balmain, the ALP has been built on grassroots engagement. Unlike the US Democratic Party, the ALP is a party where membership matters. Our party has traditionally relied primarily on face-to-face meetings, not rallies and donors. As Opposition Leader, Gough Whitlam famously used to fly back to Werriwa to attend his FEC. And on Prime Minister Gillard’s initiative, each Community Cabinet is now followed by a drinks event for local ALP branch members. Many of my colleagues emphasise the way in which branch meetings and community engagement make them better able to understand and represent their electors.

Yet for an increasingly affluent population, a meal at a nice restaurant or a night out at the footy may be more appealing than a branch meeting. Thanks to technology, you can read any Australian government report at australia.gov.au, find any federal political speech at openaustralia.org, or keep up to date with political gossip by checking the Twitter feed on your smartphone. Affluence and technology challenge the ALP, just as they do all mass-membership organisations. This means that if we want branches to remain relevant, they need to offer more than what’s available online. The branches of 2032 will need to offer members substantive engagement with policy and a stake in the political process. It isn’t good enough to have a one-way flow of information, or to regard party members merely as campaign footsoldiers. Labor’s ACT federal representatives (Gai Brodtmann, Kate Lundy and myself) have been arranging closed briefings at Parliament House, where ALP members can discuss current policy debates with federal ministers and share their ideas for reform. I have found these briefings to be more effective than online policy forums, but it is possible that the advent of high-definition video-conferencing will shift the balance.

Labor has been at our best when recognising the need for the economy, society and politics to adapt with the times. Unlike our conservative opponents, who like to say ‘no’ to everything, we recognise that reform is often in the interests of the most disadvantaged. Australia might not have created thousands of service export jobs if we had not engaged with the global economy. A generation of teenagers will benefit from a higher school leaving age and more places in higher education. And the right way to boost the life chances of Australians with a disability is to tackle discrimination and put in place a National Disability Insurance Scheme. The challenges of the future are significant, but I am confident that our policies and politics can adapt to meet them. That is the Labor way.

Andrew Leigh is the federal member for Fraser. His most recent book is Disconnected (UNSW Press, 2010), and his website is www.andrewleigh.com.

With the ALP National Conference in full force this weekend, I'm pretty sure that I'm the only person with an article both in the journals of the left (Challenge) and the right (Voice).

The Voice piece is just a few hundred words, and it's below.

Policy Ideas for Labor - Randomised Policy Trials
Voice, Summer 2011

In politics, there are few hotter potatoes than drug laws. So when the NSW Labor Government in 1999 was faced with a suggestion that it deal with drug offenders through a ‘Drug Court’, there were plenty of vocal opponents. To deal with the challenge, the government did something that was both smart policy and clever politics: it set up a randomised trial.

Like a randomised medical trial, offenders were assigned to the treatment or control groups by the toss of a coin, making the two groups basically identical at the outset. A couple of years later, it was clear that those who went through the Drug Court were much less likely to reoffend than people who went through the traditional judicial process.

Internationally, randomised trials of early childhood intervention, job training, housing vouchers, health insurance and microcredit have produced similarly valuable results. Farmers have used randomised evaluations for centuries, while medical randomised trials date back to James Lind’s 1747 experiment showing that citrus fruits cure scurvy.

We should not lightly dismiss ethical concerns about randomised policy trials, but they are often overplayed. Many government policies are surely ineffective, and some may even be harming the people they were intended to help. Part of the reason is that we mostly use low-quality evaluations rather than randomised policy trials.

Like other forms of evaluation, randomised trials have their limitations. But my best estimate is that less than 1 per cent of all government evaluations are randomised trials (excluding health and traffic evaluations, the proportion is probably less than 0.1 per cent). Given that you can’t get a new pharmaceutical approved in Australia without a randomised trial, it seems odd that hardly any policies are subject to randomised trials. One option would be to learn from the US, where federal legislation sometimes sets aside funding for states to conduct randomised evaluations.

What we need in Australian policy today is not more ideologues, convinced that their prescriptions are the answer, but modest reformers willing to try new solutions, and discover whether they actually deliver results. As Labor Party members, we must always remember that what defines us is the light on the hill, not a particular path up the mountain. As US judge Learned Hand famously said, ‘The spirit of liberty is the spirit which is not too sure that it is right’.

Andrew Leigh is the federal member for Fraser. Web: www.andrewleigh.com.

With the parliamentary year having wrapped up, I thought I'd post another call for potential interns and fellows. Details here (or below).

In particular, I'm interested in students with data-crunching skills (eg. someone with one or two semesters of econometrics under their belt). There are a couple of empirical projects I'm keen to try out.

When I was 16, I did two weeks’ work experience for John Langmore, who was then the member for Fraser. It was the first year that the new Parliament House had been opened, and I remember getting hopelessly lost as I went on errands around the building. I’m not sure how much of an impression I made on John (he didn’t remember me when we met again a decade on), but the experience had a profound impact on me – as I learned a ton about the issues and personalities that drove politics in that era.

Over the past year, I’ve been fortunate to have several people help out as volunteers in my office, assisting me with speeches and submissions, helping solve constituent problems, answering the phone, and assisting with campaigning activities.

So I thought it might be useful to put out a formal call for interns and fellows.

Keen to apply? See the FAQs below.

Frequently Asked Questions

What are the criteria?

Enthusiasm, intelligence, and an interest in helping shape progressive ideas.

How long are the placements?

It depends on you. My office can accommodate anything from a week to a couple of months (though longer stints would probably need to be part-time). We will only have one intern/fellow at a time.

What would I gain?

A unique insight into parliament and constituent engagement.

What can you supply?

We can’t promise anything more than a desk and a chair. You’ll probably need to bring your own laptop.You may be working at either the electorate office in Braddon, the Parliament House office, or both.

What’s the difference between a fellow and an intern?

A fellow will complete a piece of writing – which is likely to be a submission or a report. School work experience students are likely to work as interns, while graduate students are likely to work as fellows. Undergraduate students could take either role, depending on their skills and interests.

How do I apply?

Email andrew.leigh.mp <asperand> aph.gov.au with a one-page CV setting out your experience and skills, plus a covering email saying why you’d like the position and what period you’d like to work. Either I or my overworked chief of staff Louise Crossman will get back to you within two weeks. It would be helpful to contact us at least a month before you’d like to start volunteering.

Andrew Leigh & ASSA President Barry McGaw at the ASSA New Fellows Dinner and presentation.

I gave a keynote address this afternoon to the ANU Crawford School's PhD student conference. I'll post the video when it becomes available, but I promised the audience that I'd post on my website now the ten economics papers that I'd like to read. (Since my production of research has tailed off lately, the least I can do is to suggest papers I want others to write!)

Politics:

1. Why are people in urban areas more left-wing? Is this selection or causation?

2. Do children of politicians make better politicians?

3. Is the frequency of an opposition leader’s media conferences negatively correlated with consumer confidence?

Microeconomics:

4. What is the elasticity of taxable income with respect to the marginal rate? How does it change across the distribution?

5. What is the deadweight cost of taxation? (Our current estimates are over a decade old, and this critical number needs updating.)

6. How do childcare, school, university and hospital reporting affect outcomes?

Macroeconomics:

7. How well does a Taylor Rule fit RBA decisions?

8. How accurate are business sector economic forecasters?

9. How much do GDP announcements affect the sharemarket? (using GDP measurement errors as an IV)

10. How do international events affect the exchange rate channel of monetary policy?

Lyndal Curtis hosted me and Michaelia Cash on the Capital Hill program yesterday evening. Topics discussed include Labor's plan for the Murray-Darling Basin, the Australian Labor Party national conference and how to involve party members, along with Tony Abbott's statement about only the "right kids" staying at school until year 12.

http://www.youtube.com/embed/7Cv1x4JE2XE

A report in today's Herald Sun returns to an economics paper that Chikako Yamauchi and I put out in the public domain in 2009, and which garnered quite a bit of coverage when I presented it to the December 2009 LSAC conference. The basic findings of the paper are:

• the differences in behaviour between kids in parental and non-parental care are small;


• there isn't 'one effect' of daycare - it differs across socioeconomic groups; and


• kids appear to do a smidgin better in daycare centres with smaller ratios.

If you're interested in the paper (or would like to see our application of the Altonji-Elder-Todd approach of using selection on observables in order to gauge the potential importance of unobservables bias), it's available here.