Its all a matter of construction

A story in today’s media reminded me that the way we construct a problem significantly affects the way we seek to solve it. The story – Change or lose drought assistance, farmers told (and the related Editorial) – appeared in The Australian newspaper. They indicated that on-going drought assistance to farmers would have be accompanied by significant changes in farming practices. This is a major shift in our policy thinking but still begs the question of why we have such inconsistent ways of thinking about policy problems and their solutions.

In the article Change or lose drought assistance, farmers told, the journalists suggest that the federal government is starting to use welfare payments (in this case not considered to be welfare – more about which later) to farmers to change behaviour. They say:

Agriculture Minister Tony Burke is crafting a shake-up that will shift the focus of drought policy from disaster relief to risk management, ending the spectre of perpetually drought-stricken farmers spending years requiring government assistance. The move recognises the likelihood of more frequent and more serious droughts caused by climate change and will include assistance to help farmers deal with the changing conditions by adopting new practices or switching to alternative crops.

By way of context, farmers in drought-declared areas are able to get assistance under the Exceptional Circumstances drought relief system, which provides interest-rate subsidies and income support.

The agency administering the scheme, Centrelink says that to be eligible for the Exceptional Circumstances Relief Payment (ECRP) for Farmers you have to be:

• are a farmer, and
• are not on Newstart Allowance or any other Centrelink benefit or pension, or service pension from the Department of Veterans’ Affairs, and
• are an Australian resident and living in Australia, and
• have an Exceptional Circumstances (EC) certificate stating that your farm is in an EC declared area.

So you see that a farmer with no income is not considered unemployed. Construction matters!

What is the difference between an urban worker (say) who loses his/her income because their job (productive activity) vanishes and a farmer who loses his/her income because their job (productive activity) vanishes?

Why is one job loser able to access crisis relief (which is generous) and the other job loser only able to access unemployment benefits which now provide below-poverty line income support in Australia?

It is clearly the case, that some parts of Australia have been in drought for nearly a decade now and the climate change forecasts are that this situation will be more commonplace across the landscape. Centrelink data shows that around “44 per cent of Australia’s farmland is covered by exceptional circumstances declarations”, which is constructed in the same way as disaster relief.

Why have we ignored all the developments in alternative farming (permaculture, natural sequence farming, organic and bio-farming) up unto now? Construction matters!

But the noises from the federal government now appear to be shifting from “a system of crisis management to risk management” given that the long-range forecasts are that the lack of water is no longer a seasonal matter.

The Minister was quoted in this article as saying:

In policy terms it is unrealistic and downright wasteful to provide unlimited, no-strings assistance if the climate is changing so that droughts that once happened once in 25 years happen every two years. The EC system was designed to help in the event of rare disasters, in the same way that taxpayers help
communities ravaged by cyclones or floods.

The Australian Editorial today was even more direct carrying the title Unviable farms should not be drip-fed by taxpayers.

As an aside, the person who wrote this editorial clearly doesn’t understand how the monetary system operates or else they would not infer that taxpayers fund anything. Tax revenue is not necessary for government spending and once accounted for by the tax office it disappears from the scene.

But that obvious point aside, the editorial says:

Drought relief, like disability pensions and unemployment benefits, is a legitimate duty of government. Few sights are as heartbreaking as pastures turning to caked dirt, crops wilting and dying, and cattle starving. In bad seasons, drought relief protects farming enterprises that, long term, contribute valuable exports to Australia’s balance of payments. Like social welfare, however, drought aid should be administered responsibly to ensure resources are well-directed.

… there is a danger that drought and flood relief can become counter-productive, drip-feeding farms that cannot be viable long term. Too often in the past, farmers in such circumstances have failed to take advantage of generous exit packages offered by government.

The Editorial also notes the contradiction in the Productivity Commission found recently that “most farmers are sufficiently self-reliant to manage climate variability” but that “23 per cent of Australia’s 143,000 farms received drought assistance totalling more than $1 billion” in fiscal year 2007-08. How does that stack up. Some farmers have been on the drip-feed “continuously since 2002.”

So consider this thought process.

The Federal Government”s agricultural research bureau (ABARE) regularly provides estimates of the not insignificant income losses that the economy bears because of drought.

Regularly, through a variety of media, distressing stories of the drought’s impact are retold in different ways. We are very much aware of the stress the drought imposes on farming families and their regional and rural communities. We are aware of the damage to export income and of the fragile, fractured nature of rural life.

We respond by instinctively looking to the heavens, realising that the drought is caused by a lack of rain.

In constructing the problem as a system failure we engender public sympathy for those at the mercy of the weather and demand that the Government provide financial support to the farmers. The amount of aid that we allow to be given to farmers (via our continued voting for governments that give it) is huge and largely unconditional.

However, we could have constructed the problem in a different way. There is evidence that sustainable agricultural practices can cultivate drought-resistant farms, even in areas where conventional farms have suffered badly. Should we therefore focus on the “deficiencies” of individual farmers? Should we highlight their lack of skill or poor motivation or reluctance to plan for bad seasons?

While poor farming practices will deepen the impact of the drought, the root cause of the problem – given current practices – is clear – not enough rain is not enough rain!

Improving farming practices must be part of any long-term strategy to promote ecological sustainability. There is ample evidence from the the permaculture, natural farming, organic agriculture literatures that drought avoidance is possible if new techniques are learned.

But our immediate reaction is to construct the lost farm income problem as one right of the (climatic) system failing our rural communities and thus engendering our support.

How else might we think about drought and the powerlessness of individuals when systems fail? What about a drought of jobs?

My own work shows that Australia loses millions of dollars in lost national income per day through our willingness to tolerate persistently high rates of unemployment and underemployment.

We need to repeat that. By failing to pursue a full employment strategy, and wasting willing labour resources, we are forgoing billions of dollars of national income per annum. This loss does not include the enormous social costs that arise from unemployment in the form of increased family breakdown and crime, and poor physical and mental health.

The scale of loss in income arising from unemployment (and underemployment) dwarfs the losses arising from drought. That is not an opinion – it is a fact – easily documented.

But when was the last time you read about the costs of unemployment or the plight of the unemployed? Even in the current crisis, there is more emphasis on the financial market than there is on the labour market.

There have been more feature stories about failed entrepreneurs having to bear hardship than stories about the unemployed worker who loses everything.

How many times do you hear our parliamentarians or the central bank officials or treasury heads expressing an urgent concern about the “unemployment problem” and advancing direct policies to generate jobs for all who are willing and able to work?

The current fiscal stimulus package in Australia contained very few direct job creation proposals. The Federal Government released its Mid-year Economic and Fiscal Outlook 2009-10 today and admitted that unemployment will continue to rise in the next 12 months but offered no new strategies to deal with it.

The costly acceptance of the status quo raises the following question for all of us. Why do we always have such an urgent concern about the drought – a smaller problem affecting fewer families and children – yet adopt such indifference to the unemployed?

The answer lies in how we construct the problem. We have been repeatedly told that unemployment is the fault of the unemployed. The solution then focuses on making the unemployed “employable” rather than on ensuring there are sufficient jobs. We arraign our most disadvantaged citizens with accusations that they are lazy and unskilled claiming that they could get work if they tried harder or changed their attitude.

Meanwhile, we blithely ignore the failure of macroeconomic policy to ensure there are enough jobs available despite the evidence for unemployment as a “system failure” being as compelling as meteorological data showing a lack of rain.

The current crisis is bringing home again the powerlessness of individuals to improve their circumstances when there is a massive aggregate demand failure which imposes a job ration on the labour market.

While governments of all persuasions have spent billions on labour market programs and training schemes, to encourage more assiduous and effective search behaviour by the unemployed, the employment outcomes from these programs have been poor. Simply put – you can’t search for jobs that aren’t there!

Fortunately, unemployment is an easier problem to fix than the drought. The government has little control over the weather but it has the fiscal power to generate full employment. Not enough jobs means not enough jobs! We all know what a job is.

We don’t have to get scientific about climate change and alternative farming and the rest of it. If there are 100 people available for work then you need 100 jobs to be created to employ them – otherwise, you will have unemployment.

In fact, while you might think there is a convergence appearing in the way we deal with drought (as per the news stories today) and the way we deal with the unemployed, that would be another faulty construction.

It is clearly easy to deal with unemployment – create jobs. No retraining or change of technique is required. This is why I argue that we should, as a matter of urgency, implement a Job Guarantee to ensure there are enough jobs at all times irrespective of the swings in aggregate demand.

The JG would be act as a highly sophisticated automatic stabiliser and reduce the damaging manifestations of macro system failure.

The doomsayers will say this is another “painting rocks” suggestion. However, there are numerous environmental and social needs in our communities that are unmet and that will never be met by the private sector.

What is also overlooked is that the unemployed are already in the “in the public sector” being supported on welfare and not making a productive contribution to society.

It would be better for government to provide the unemployed with opportunities to contribute to productive output, to contribute to their communities, and to acquire independence than to sign welfare cheques, police activity tests, and recycle those without work through a succession of programs and placements.

However, when it comes to the drought – we always start with the proposition that not enough rain means not enough rain.

But the long-term solution to that problem requires more fundamental shifts in land and water use and will require extensive retraining of farmers, many of whom will resist this and bring political force to bear to maintain their privilege access to government assistance.

The problem also extends to how we are debating climate change and the plan by the federal government to implement an emissions trading system (ETS). In this article – The missing link in the Garnaut report – the authors write that “the real climate change culprit is methane gas from cows and sheep”.

They say that in the entire 548-page climate change report, the author, government stooge Ross Garnaut

…. mentions Australia’s largest current contribution to climate change precisely once – in the glossary, where we find a definition of “enteric fermentation”. Never heard of it? It’s what goes on in the digestive systems of ruminants, like cattle and sheep. It produces methane, Australia’s largest but also most under-appreciated contribution to climate change over the next few decades. The second-largest current contribution is coal. It gets mentioned 272 times in the report – as it should.

Once again, soft-pedalling when it comes to the rural sector.

The authors of this article say that it will be very hard telling the population they have to pay more for energy but even hard to tell them “they need to consume less beef, lamb and dairy products”.

They show that Garnaut, in averaging the “heating impact of methane” over 100 years severely underestimates the true problem.

Methane is mostly switched off after just a decade, and almost entirely gone after 20 years, so averaging it over a century dramatically reduces its apparent impact. The problem is that during the decade in which it is doing its damage, it has had a much larger impact than talk about its average impact over a century would lead you to believe.

They also explain the concept of radiative forcing and demonstrate that Garnaut neither understands “what it means” nor “why it is so important”.

Radiative forcing refers to factors that change the difference between incoming and outgoing energy in a climate system. Positive forcings warm the system, negative forcings cool it down. There are two ways in which Garnaut misunderstands forcing. The first … is the use of relative forcing averaged over 100 years … This mistake leads Garnaut to rate methane as 25 times more potent, per tonne, than carbon dioxide in causing global warming, whereas the correct figure, if we average over 20 years, is that it is 72 times more potent …

The second misunderstanding is the opposite of looking a century ahead. Garnaut includes in his report a chart of contributions to climate radiative forcing … It includes the full impact not only of our recent activities, but of those of our parents, grandparents and more distant ancestors all the way back to 1750. Carbon dioxide dominates this picture … Some of the carbon dioxide currently heating up the planet … was put into the atmosphere by the pioneers who cleared 1 million square kilometres of the US forests more than a century ago … On the other hand, the methane in the chart is all ours. Almost every bit of it was put there in the past 20 years. The historical chart is interesting if you want a historical picture, but it is irrelevant if we are interested in what we are doing now, and how we might get out of this mess. If that is our concern, we need to focus most attention on the impacts of current forcings during the next 20 years.

So the methane forcings are seemingly easy to deal with and should be the subject of policy intervention – “The livestock emissions, on their own, will cause significantly more warming in the next 20 years than all our coal-fired power stations”.

So the obvious conclusion that is drawn by the authors is that we should significantly cut back on farm animal production. Instead, the government proposes to exclude farming from the ETS until at least 2015 (and then don’t hold your breath). This is a total policy vacuum.

This reminded me of a wider agenda that is not mentioned in the climate change debate.

Popularist climate change interventions are typically remiss in excluding meat production from the scope of the debate. For example, Al Gore’s Inconvenient Truth did not analyse that the fact that meat production is a larger polluter than much of industry. You might like to watch You can’t be a meat eating environmentalist.

The July 21, 2007 edition of New Scientist concluded that:

Researchers at the National Institute of Livestock and Grassland Science in Japan have carried out a life-cycle analysis of beef production which shows that ‘a kilogram of beef leads to the emission of greenhouse gases with a warming potential equivalent of 36.4 kilograms of CO2 …

That is about the same CO2 as a motor car would emit driving about 250 kms.

And here is another interesting YouTube movie – World Food Crisis: Is Meat Consumption a Major Cause.

I also saw Food, Inc. recently which pursues some of these themes and is recommended. After watching it I worked out new ways to plant more food in my already intensive fruit and vegetable garden.

I mentioned some weeks ago that I was joining a national task force organised by the most recent former Governor General of Australia. That Task Force, while not directed at eliminating meat production (if only) is aiming to systematically change farming practices and drought-proof our productive rural landscape. It also aims to produce not reduce rural employment (that is where I come in). I will write more about this when I know more.

Conclusion:

Whenever we think about a policy problem there are many constructions that are possible. The way we construct the problem is often driven by the dominant ideology which probably caused the problem in the first place and has no real stake in actually solving the problem at its elemental level.

So we get a version of the problem – the unemployed are lazy – and attack the individual with an elaborate labyrinth of policies that do nothing at all to get the workers into jobs.

The same goes for how we understand modern monetary theory (MMT) and so we get sidetracked into a number of dead-ends because the debate is falsely constructed.

Tomorrow:

Tonight I am travelling to Canberra and tomorrow I will be giving a talk at the Space and place matter workshop which is the Annual Symposium of the Academy of the Social Sciences in Australia.

My blog will probably be either very early or quite late once I return. The topic – Supra-national currencies.