Shelter from the storm: reflections on the "Risk Society".(economic condition and risks)

As an economist, it is my duty to talk about costs.--J.B. Brigden

RISK IS INHERENT in life because life is inherently uncertain. As Peter Bernstein has put it, uncertainty simply means that more things can happen than will happen--and while some of those things are very good, others are bad and some are very bad indeed. How we deal with those bad outcomes is a crucial part of our lives as individuals and as societies. That governments have a role in helping to deal with bad outcomes is undoubted. But seen in the sweep of history, governments have likely caused at least as much risk as they have alleviated. In the twentieth century, governments killed over a hundred million people, often their own citizens, and displaced millions more, destroying their homes, their livelihoods, their hopes and aspirations. It seems paradoxical that we should turn to government for shelter from the storms--yet we do, perhaps nowhere more so than in Australia.

This has long been so. In his great work Australia, published over seventy years ago, W.K. Hancock defined the ideology of Australian democracy as being "the sentiment of justice, the claim of right, the conception of equality and the appeal to Government as the instrument of self-realisation". All of these, he said, combined in a tendency among Australians to "look upon the State as a vast public utility, whose duty it is to provide the greatest happiness to the greatest number". But entrenched as those habits are, the "school of hard shocks" of the 1970s and 1980s brought a new sense of balance, and a retreat, however cautious and incomplete, from over-extended government.

At the heart of that change was acceptance that a fair society could only be achieved and maintained in an efficient economy. The logic of efficiency proved a powerful force, at least at a rhetorical level, and though its impact on policy has often been greatly overstated, it set the terms for policy analysis.

It is therefore unsurprising that the challenge to the balance which emerged from the 1970s and 1980s should be couched in the language of efficiency. More specifically, the prevailing consensus, which is cautious about the benefits of government intervention, is now being challenged by the claim that achieving efficiency requires a government that does more, rather than less, to insure its citizens against economic and social risk.

Advancing that challenge is the main purpose of John Quiggin's recent and widely-publicised paper on "The Risk Society", published by the newly-formed Centre for Policy Development.

There is much to criticise in Quiggin's paper. It is long on assertion and short on evidence. Many of the assertions, when examined carefully, do not hold water; others are, at best, matters of opinion. Perhaps most annoying, the principles at issue and the underlying reasoning are poorly set out. Little, other than a virulent dislike of John Howard and George W. Bush, is expressed unambiguously, making it difficult to know precisely what it is that Quiggin is arguing for or against. As a result, the reader has to infer the logic and try to make out the key propositions.