Andrew Leigh

In her terrific book Dirt Cheap, the late Elisabeth Wynhausen decided to take leave from her journalism job and try life as a low-wage worker. In one job, Wynhausen moved to a country town and worked packing eggs. She earned near minimum wage in a job that started at 6am, left her body aching at the end of the day, and where the smell from the nearby chook sheds was constant. Three weeks in, the manager, a millionaire several times over, came to tell the workers they were losing their jobs.

I thought of Wynhausen's story again last night as I looked at the budget papers.

Today I spoke in Parliament about the National Day of Mourning and the importance of workplace safety.

Kane Ammerlaan was a 16-year-old building apprentice when his boss asked him to do some cash work on the weekend. His job was to carry overloaded buckets of concrete up to a roof with no safety harness and no railings. If he carried to the buckets half full, his boss would throw concrete at him and send him back down to fill up the bucket. One day the buckets were overloaded and he fell. Concrete went into his eyes. He told his boss it was hurting, but his boss laughed and told him to get back to work. Eventually, he phoned his girlfriend rather than an ambulance and, by the time he got to the hospital, the concrete had set on his eye. He lost 100 per cent vision in his eye.

I led off the Matter of Public Importance debate in parliament today, focusing on the issue of inequality.

This morning I received an email from one of my constituents which read in part: 'I am 48 years old and unemployed. The fact that I have not been able to find another job makes life difficult but just manageable because my husband works. He is 52 years old and works for the federal government. He is very good at what he does but unfortunately the program he works with has been cut and he finds out today if his job has been cut.'

TELEVISION INTERVIEW
BREAKING POLITICS - FAIRFAX MEDIA 
MONDAY, 12 MAY 2014

SUBJECT/S:  Budget to axe or privatise Commonwealth agencies; Deficit levy.

CHRIS HAMMER: Well, the federal budget is now just one day away and you have to wonder what's left to announce, so comprehensively has features of it been leaked during the past week or more. Joining me to discuss it is Andrew Leigh, the member for Fraser here in the ACT, the Labor member.  

SHADOW ASSISTANT TREASURER, ANDREW LEIGH: Morning Chris. 

HAMMER: Also Shadow Assistant Treasurer. So a big week for you. And from Brisbane, Andrew Laming, the Federal Member for Bowman. Andrew Leigh to you first, the stories in the papers today are about cutting or merging government agencies and depending on which paper you believe, somewhere between 50 and 70 government agencies are going to be either abolished or merged. If that's delivering the same services with greater efficiencies, surely that's something to be supported. 

LEIGH: That's a big ‘if’ Chris. We look at the Preventative Health Agency, an agency which is investing and making sure that we reduce of rates of obesity, rates of smoking – including cigar smoking – and other preventable health conditions. We look at Indigenous Business Australia which is aiming to increase the number of entrepreneurs in the Indigenous community. These are just some of the agencies that are on the chopping block with no clear plans to replace them. Then there's the expert agencies. [This is] a government that thinks it doesn't need experts to provide advice on climate change. Now we've seen the National Water Commission being cut into and corporate advisory groups which provide vital advice to governments on markets. You just let it all rip, guided only by your big business donors and your gut. Good governments take advice from great experts and they draw-in a wide range of views which is why these bodies were established.

Minister for Business Services and Consumers Gail Gago today called on the Abbott Government to abandon its plans to axe the Australian Charities and Not-for-profits Commission (ACNC).

Ms Gago today joined Federal Shadow Assistant Treasurer Andrew Leigh and Uniting Communities Chief Executive Simon Schrapel to highlight the potential of the ACNC to cut red tape and support the work of local charities.

“Charities need a nationally consistent approach, which is why the ACNC is so important,” she said.

“The charities commission strengthens organisations that work with some of our most vulnerable citizens.

Six years ago, as he was taking on the job of Anglicare CEO, former premier Lynn Arnold said that the job of the charity should be ‘‘to empower and leave alive the spirit of aspiration in people’’.

It’s a simple line that perfectly sums up the valuable work being done in not-for-profits across Australia.

Lynn Arnold may be an exceptional leader, but his decision to devote a significant stage of his post-political career to charitable work shows something that is common in South Australians – a commitment to a vibrant community sector.

To ensure that this sector remains strong, Federal Labor in 2012 established the Australian Charities and Not-for-Profits Commission.

Federal Labor urges the Abbott Government to act on new research claiming supermarkets are not complying with a national unit pricing code and are therefore hurting consumers.

It’s up to the Government to verify the research and enforce unit pricing so consumers can get the benefit of competition.

Unit pricing involves retailers providing a price per unit measurement on the price tag, for example – dollars per kilogram – in addition to the sale price.

Under the code, unit pricing information must be prominent and legible, in close proximity to the selling price and unambiguous. 

Over recent months, I've asked Canberrans to fill out my survey on attitudes to trade unions. Over 400 people answered the survey. Here's a rundown of the results.

My Chronicle column this month offers a bit of advice to those finishing high school this year.

The man who looked at the economics of everything, Australian Financial Review, 6 May 2014

Gary Becker began to apply economics to crime when he was running late for a meeting, and had to choose whether to spend extra time parking legally – or park illegally and risk getting a ticket. After considering the size of the fine and the chance of getting caught, he decided to take the risk and park illegally. (He didn’t get a ticket.)

In the 1960s, applying economics to crime was a radical thing to do. Economics then was focused around a narrower set of questions, such as trade, inflation, wages, competition and savings. Crime was the domain of other social sciences, such as psychology and sociology, which saw criminals as having quite different motivations from the law-abiding.

Becker didn’t dismiss morality, but also argued that it was important to see criminals as being affected by the chance of being caught and the size of the punishment. His work led economists to study how crime might be affected by prison terms and police numbers, as well as by unemployment rates and inequality.

In 1976, Becker summed up his style of economics as ‘maximizing behaviour, market equilibrium and stable preferences, used relentlessly and unflinchingly’. It was an approach that he began in his 1955 PhD thesis, which was on the economics of discrimination. Becker argued that the level of discrimination we observe depends not only on people’s prejudices, but also on the market.

For example, suppose prejudiced employers are refusing to hire members of a particular group. In a competitive market, what is to stop a new firm from employing the most productive members of that group, and making more profit? Subsequent studies validated Becker’s theory by showing that as industries became more competitive, the level of racial and gender discrimination fell.

Becker’s work not only won him the Nobel Prize – it encouraged other economists to embark on what its proponents called ‘the economics of everything’ and its critics dubbed ‘economic imperialism’. Popularised in Steven Levitt and Stephen Dubner’s Freakonomics books, the economics of everything has seen economics confidently pushing into topics that were formerly the exclusive domain of sociologists, education researchers, and political scientists.

In my own work as an economist at the Australian National University, Becker’s example was extraordinarily influential. During that time, I wrote papers that looked at the impact of child gender on divorce, the Baby Bonus on birth timing, and obesity on wages. With a suite of co-authors, I looked at trust, media bias, political betting markets and ethnically-identifiable names. Indeed, I even analysed whether beauty affected the electability of federal politicians, a study that makes me uneasy now that I’m a datapoint rather than a datacruncher.

The strength of modern microeconomics as a discipline comes from a marriage of two things: a Becker-like willingness to apply theory to new areas, and the explosion in new data. Chat to empirical researchers in the world’s top economics departments, and they’ll tell you how they’re coding up uncommon surnames to look at social mobility, satellite imagery to look at growth in Africa, or wine magazines to see whether those who advertise get better reviews.

Becker won his Nobel Prize in 1992 not merely for providing insights into the discipline, but for expanding its scope. As well as crime and discrimination, he peered into the family – using economic analysis to consider how families share the work, choose how many children to have, and decide how much to invest in their children. In 1964, he posited the then-controversial notion that we should think of education and skills as a form of capital, productive in the same way as factories and tools. If you’ve ever used the term ‘human capital’, you’re channelling Gary Becker.

As a pivotal member of the University of Chicago’s economics department, Becker’s political preferences were a touch to the right of mine. But only a fool listens solely to people on his side of politics. I found it hard to read anything by Becker without gaining new insights – even where I disagreed.

For the past decade, Becker co-wrote a public policy blog with a fellow economist, judge Richard Posner. In his final three entries (written in February and March of this year), Becker argued that the US should end its embargo on Cuba, that America should adopt a HECS-style system of income-contingent university loans, and that marijuana should be decriminalized. Each bears the trademark Becker approach: big issues, lucidly articulated, with a controversial conclusion.

Andrew Leigh is the federal member for Fraser, and a former professor of economics at the Australian National University. He is the author of The Economics of Just About Everything (forthcoming, Aug 2014).