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P. P. McGuinness, “Non-conformity and intellectual cringe,”
The Australian Financial Review, September 13, 1977, p. 4.

It is a disturbing feature of much Government economic policy-making that unpalatable policy advice often gives rise to the demand that the advisers should be muzzled.

This has been especially the case with respect to the Industries Assistance Commission, which is being threatened with an as yet uncertain degree of trammelling or “guidance” on the kind of analysis which it may conduct or the kind of recommendations which it may make, even though there is absolutely no way in which its advice can be imposed upon governments.1

This has been to a large extent the product of a long history of attacks by industry upon the IAC — attacks which when analysed always boil down to the fact that the industries concerned do not like the IAC’s conclusions, and rarely make a serious attempt to understand the analysis which underlies them.

Of course, industry is not alone in this kind of attempt to silence opinions which are uncomfortable. That supposed bastion of free inquiry, the university, has always been prone to the same kind of censorship.

A contemporary example is the campaign by a number of academics at Melbourne University to prevent the delivery of lectures at the university this week by two noted psychologists, Professor Hans Eysenck and Professor Arthur Jensen.

These two are associated with research which tends to establish that there are hereditary differences between races in intelligence, as measured by IQ tests.2

Naturally, such a notion is repugnant to those who are opposed to racial discrimination.

But, of course, even if it were true, it would no more be an argument in favour of racial discrimination than is the difference in intelligence between individuals of the same race grounds for inequality of civil rights.

But the assertion that the possibility of such a difference in intelligence between races (and of course that means a difference in average intelligence, which still means that there would be a lot of blacks who were more intelligent than the majority of whites) must be considered as one which is a legitimate subject of inquiry.

The assumption that any such inquiry should be forbidden is the mirror image of the kind of phony science which flourished under Hitler and Stalin.

For doing research in this field, and producing conclusions which were unpalatable, Professor Eysenck was physically assaulted by a mob of neo-fascist left-wing students at the London School of Economics in 1973. Some academics at Melbourne University are now supporting that precedent.

It is worth stopping to consider, however, how different has been the campaign of denigration and abuse mounted against the Industries Assistance Commission by certain sections of the business community, and which has been taken up by the Prime Minister and some members of his Government.

Of course, physical assault is not a possibility. More subtle, and much more effective methods are proposed.

Yet the fundamental issue remains that the major reason for the campaign against the IAC is that it is expressing not just opinions, but a systematic program of research and analysis, which is leading to conclusions which do not justify the beliefs of the high-protectionists.

Against its report on textiles, clothing, etc, it has been said for example that the IAC should have sat down behind closed doors and worked out, with the representatives of the industry, a plan for structural change — since everyone realises that the present situation is unsatisfactory.

This is the kind of thing which has often gone on in the Australian economy.

It is also a common characteristic of past government policy-making procedures, in that independent inquiry or event independence of view within the advisory machinery has been actively discouraged.

This has given us instead of a clear and coherent approach to economic policy a series of internecine struggle within the bureaucracy for predominance in the advice-giving business, such that a single line of advice can be given unquestioned.

Thus the Treasury successfully persuaded the then Prime Minister, Sir Robert Menzies, to reject the Vernon Committee’s recommendation that there should be some kind of independent national economic council, with its own research staff.

That would have risked an alternative view on economic policy from being available from an influential and well-informed authority.

That the universities cannot be relied on to fill such a role is evidenced both by the kind of behaviour which is apparent in the Eysenck-Jensen case, and by the Treasury’s success in denying access to information to independent researchers on Government economic policy in the universities.

Of course, if such a council had been established and was now advising the Government that it should opt for a higher Budget deficit or cuts in indirect taxes instead of income taxes, or an effective employment subsidy or creation scheme, it would be risking the same kind of censorship with which the IAC is now being threatened.

The effect of the success of Treasury in preventing any competing source of advice in the areas in which it is interested (the Reserve Bank was cowed into submission many years ago) has not led to any improvement in the overall situation with respect to the making of economic policy.

Rather it has led to the collapse of any systematic official advisory function.

For, having lost faith in the Treasury, there is no alternative official source of macro-economic advice which is fully informed to which the Government can turn.

Instead, it is turning to the self-appointed experts whose ignorance of the bases of economic policy is comparable to the hysterical academics who attack people like Eysenck.

They think if you can suppress unpleasant facts from public discussion they will go away.

The result is a degree of muddle and inconsistency in policy-making which is becoming more and more evident.

It is an irony which would be amusing if it were not likely to have such unfortunate consequences for the Australian economy that the results of the attempt to suppress free and informed discussion of macro-economic policy in the past by the Treasury have led now to the situation in which Treasury is largely right, and wholly ignored.

A similar campaign to that against the IAC has already been showing signs of emerging in the case of the Arbitration Commission.

This is, however, a rather tougher nut to crack since is has showed only a fraction of the kind of independence of analysis which has landed the IAC into trouble.

The Arbitration Commission’s role has been a much more political one; and by a judicious tacking between the views of the various parties, rather than facing up to the issues, it has preserved its own independent existence, if not any independence of analysis.

Footnotes for readers

  1. Here are two fierce items by Bert Kelly on this same subject in this same month: (i) C. R. Kelly, “‘I fear for the fate of the IAC’,” The Australian, September 2, 1977, p. 6, as a letter to the editor; and (ii) A Modest Member of Parliament, “The naked emperor and the PM,” The Australian Financial Review, September 9, 1977, p. 3.
  2. Paddy McGuinness in 1994 (with the publication of The Bell Curve) returned to the subject of IQ differences in races in these two articles: Paddy McGuinness defends comparing IQ of races — “Selective intelligence,” The Sydney Morning Herald, October 25, 1994, p. 14; and “Differing intellects,” The Sydney Morning Herald, November 5, 1994, p. 38.
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