What does the economic policy platform of a Pirate Party look like? What does it say about intellectual property protection (i.e. copyright and patents), the Right to Repair, UBI, taxation, and business support? And what type of pirates are Pirate Parties inspired by exactly: Captain Jack Sparrow or Kim Dotcom? Pirate Party Australia Treasurer John August answers these questions in a conversation with Economics Explored host Gene Tunny in Episode 138 of the show.
You can listen to the conversation using the embedded player below or via Google Podcasts, Apple Podcasts, Spotify, and Stitcher, among other podcast apps. A transcript and relevant links are also available below.
Here’s a clip from the video recording of the conversation in which John talks about the Pirate Party’s views on intellectual property.
About this episode’s guest – John August
John August is the Treasurer of the Pirate Party Australia and a Fusion Party candidate for the electorate of Bennelong in the 2022 Australia federal election. John does computer support work in retail and shareholder communication. He is passionate about justice and ethics in our world, particularly as it plays out in law generally and intellectual property in particular. He has stood on behalf of the Pirate Party in the Federal seat of Bennelong and also as a Councillor for Ryde City Council.
Along with technology and law John is also interested in spoken word and poetry. He broadcasts on community radio and hosts the program “Roving Spotlight” on Tuesdays from noon-2pm on Radio Skid Row Marrickville Sydney, and writes about his ideas on the website www.johnaugust.com.au. You can keep up to date with what John is up to via his Facebook page.
Links relevant to the conversation
Land Value Uplift from Light Rail by Cameron Murray
On the persistence of the China shock by David Autor, David Dorn, and Gordon Hanson
Termites in the Trading System by Jagdish Bhagwati
Transcript of EP138: The Pirate Party’s economic policy platform w/ John August
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:01
Coming up on Economics Explored.
John August 00:04
And there is the whole thing of, you know, patent trolls who have a bunch of patents sitting on the shelf, and all they do is run around with a mallet and whack people on the head who try to make that. And to my way of thinking that’s a complete abuse of what a patent should be.
Gene Tunny 00:18
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist based in Brisbane, Australia, and I’m a former Australian Treasury official. This is Episode 138, on the economic policy platform of the Pirate Party, Australia, one of several Pirate Parties around the world. I’m joined this episode by John August, treasurer of the Pirate Party Australia, which is part of the Fusion Party Coalition. The Fusion Party brings together the Pirate, Secular, Science, and Climate Emergency parties. This episode was recorded in late April 2022 in the lead up to the 2022 Australian federal election. John is running as a Fusion Party candidate for the Sydney-based electorate of Bennelong. Please check out the show notes for relevant links, any clarifications and for details of how you can get in touch with any comments or suggestions. I’d love to hear from you. Righto. Now for my conversation with John August on the economic and policy platform of the Pirate Party. Thanks to my audio engineer, Josh Crotts, for his assistance in producing this episode. I hope you enjoy it. John August from the Pirate Party of Australia, welcome to the programme.
John August 01:35
Well, thank you, Gene. Great to be here.
Gene Tunny 01:38
Yes. Good to have you on the show. I’m keen to learn about the economic policy platform of the Pirate Party. So I’ve recently had some discussions with some members of the Pirate Party regarding UBI. I had one member reach out to me after they listened to my episode with Ben Phillips. And so I’ve been speaking with him about that. And I’d just like to make sure I understand this where the Pirate Party is coming from because you hear pirate party and instantly you think of Long John Silver, but I mean, that’s not quite the case is it? So I’d like to understand then where’s the Pirate Party coming from? So if you could take us through that, please, that’d be great.
John August 02:24
Okay, well, I guess you’ve got the right thing that if you actually look at our policies, you’ll find that we’re very much into individual freedom, at the same time as we’re also into social concern. And one of the things, I think this will come out in this discussion, is that every party claims to get that balance or claims to sort of put some effort into it. But you know, obviously, I’m not just saying this. Hopefully, it’ll come out in the discussion. But I think the Pirate Party does a better job of realising that duality than I think any other political party.
And you know, one of the things, yes, there’s this stuff about pirates, they have to understand that way back when, I guess computer games were in fact copying software and other things. And the industry was calling them pirates. And so they thought, well, hang on, if you’re going to call us pirates, we should embrace that and run with it. And along the way, I guess the pirate movement, you might say, they started to appreciate how business was actually flexing its muscles and abusing its position. And then you also had a certain concern about government. So the Pirate Party is, I guess, both concerned about corporate overreach, and also government overreach and government censorship. And we also believe in individual freedom.
But the thing is, along the way, you’re starting to think, look, we believe in individual freedom, we believe in personal initiative, and drive and enterprise and so on. But what does the good drive, the good initiative really look like? And I guess we saw in business, a lot of businesses abusing the situation, you know, rent seeking, abusing intellectual property, and similar. And I guess there’s also, you know, land ownership, you know, the Georges do actually talk about the land ownership monopoly. And we’re certainly informed by those sentiments. So we came from a point of view of saying, we want to celebrate real economic initiative, at the same time as we want to be compassionate and care for people and enable them. And again, no political party runs into government claiming they’re not going to do that and that the devil is in the details.
But like when it comes to social welfare, we do actually believe in the pirate universal basic income, which you might say, I guess it’s more a guaranteed minimum income because not everybody gets it. The idea being that if you make the nominal amount you neither pay tax, nor do you get a top up, but if you make less than that, you get A bit of a top up until finally at zero, you get a certain amount of money regardless. And that means that you provide people with the incentive to apply themselves, you save on bureaucracy, and obviously at the top end, I have to be careful, they’ll call it an incremental rate of taxation. Because obviously, in one sense, it’s a flat rate, but it’s not a flat rate, because it doesn’t, you know, intersect the origin. But certainly, if you are, I guess reasonably well off, you make a bit of money, and you will get a relatively fixed portion of that. Obviously, it’s mathematical, it’s, you know, the offset plus the gradient and this sort of thing.
So I suppose I guess you’re sort of more concerned about economic policy, but we certainly cherish individual freedom, freedom of speech, freedom from government intervention. And look, it’s not economic, but we’re certainly concerned about Witness K and Bernard Collaery and Julian Assange, and I guess the government surveillance laws to sort of eavesdrop on our mobile phones and make fiddles and change, it’s with them. And I guess you also have, you know, the corporations who are basically pulling large amounts of data and taking advantage of it.
So we basically are concerned about government and corporations in equal measure. But we do believe in freedom of speech, and we do believe in individual initiative. And as I say, No, I don’t think any political party claims to not believe in enterprise, or these various things. But I think our particular combination, is a result of this being targeted by both government and corporations. And that’s where we’ve ended up. And I think, as a result of the journey we’ve taken to get here, we actually have a, as I say, a much better point of like mixing the celebration of individuality and also looking after people as well.
Gene Tunny 06:58
Yeah. Okay. So is the Pirate Party explicitly Georgist? You mentioned Georgism, or the philosophy of the American economist Henry George from the 19th century. And I mean, you’re probably better placed to explain what his philosophy was. But I guess he was in favour of taxing land, wasn’t he? He talked a lot about the unearned rent from land, is that right?
John August 07:28
That is correct. Now, of our policy platform, if you look at it, we do say, look, land value taxation is a good thing, it would be good to sort of re-emphasise our tax system to do that. And like when you have the universal basic income, I guess there’s lots of people will chuck moral rocks at it, but one of the things we do try to do is say, look, how do we actually cost this in such a way we don’t need print money to actually give people this basic income. And okay, I’m going off on a bit of a tangent. But you know, one of the principles is, once you give people that basic income, without constraints, we reasonably expect, a lot of people will just work a few hours a week, because they don’t fall off a cliff and lose all their benefits. So you will immediately sort of enable that initiative.
But getting back to Henry George, yes, let’s just say I suppose one way of capturing this duality is that if you have a property, and the government does something that lowers the value of your land, you wouldn’t believe you know, the hew and cry, the number of letters to the editor, you know…to the local member. But let’s assume the government sets up a rail station, not so close that it’s polluting noise and making life inconvenient, but actually makes life very convenient for you. And the value of your land just shoots upwards. And I have yet to see a queue of guilt-ridden people at the tax office saying, wow, you’ve increased the property of my land enormously. I’ve got to give you some of that money back. So that’s sort of capturing what Georgism is about.
Now, the speculators will say, oh, by buying and selling land, we sort of contribute to the proper operation of the economy and society and so on. And okay, that’s its own rabbit hole. And I, broadly speaking, say that, to the extent that’s true, people are getting overly remunerated for that. But yeah, the thing is land is in scarce supply. And, you know, if you actually tax land, it’s a much better way of doing things, let’s say, going off on a bit of a tangent, but I think whether you want to have a right wing or left wing inclination, you know, everyone says you should get rid of payroll tax, and yet there was this idea we deal with GST, where supposedly the tax states were going to get rid of payroll tax and it didn’t happen. But the point is, if you actually tax on land, on the one hand, it’s fairer, and another hand it’s actually progressive in its way because if you’re wealthy, you’re more likely to own land. But the other thing is as society changes, and business can be conducted here or overseas, and people can telecommute, and so on, taxing labour when labour is so mobile, you know, I think it makes more sense to say, here’s a business, a business is set up in this location, and we tax it based on the operation there.
But yeah, the idea of the unearned increment, I mean, that is one of the things. With a lot of economic perspectives, I guess we all draw the difference between genuine work that yields an income and basically just sitting back and raking it in. And that’s, I guess, a moral distinction. And I think most, where there might be a hybrid of economic and other perspectives, they demarcate the good economic effort from the dodgy economic effort. And we do actually celebrate innovation, not Silicon Valley style innovation. But like, you sort of say, hey, you know, there could be a green grocer here, maybe I should set up a green grocer. That’s being creative. And that’s what we consider to be the real, worthwhile creativity of economics. But sitting back and speculating, we don’t see that as being so useful. And we think there’s an over-return for it.
So bringing it back to Georgism, taxing land makes a lot of sense. And, of course, the word tax has, you know, all these negative connotations. Some people get neurotic about tax. You could say, the charge on land is paying for the privilege that you have that monopoly. And I guess I’m going off on… You’re prompting me with other tangents. But if you’re aware, there’s some Georgists in Melbourne that actually did some analysis of apartment blocks, based on the water usage. And they figured out that a lot of these apartment blocks were actually owned, but vacant and unused. And I know, I’ve actually heard some commentators on your programme talking about supply and demand of housing. And believe it or not, in a limited sort of way, I do actually endorse the idea of supply being a factor, but what we identify is that people are doing land banking, rather than actually either living at their property themselves, or renting it or otherwise putting it into the market. And the incentives we have is such that it makes sense to just sit on property. But widening it out, we sort of say, if the economy was more based on actual innovation, and real economic activity, then people would have… Shall we say, the non-speculative part of the economy would be stronger, land would be easier to afford, and it’s a win-win situation. You know, basically, accommodation is cheaper, but the non-land non-speculative part of the economy is also more dynamic and stronger.
So but I think that story of the railway station setting up next your place, and the value shoots through the roof, and you know, just everyone just swallows up that and just sort of, oh, this is lovely, I think that captures a lot of what Georgism is about, the idea that maybe there’s some speculation, maybe there’s some useful speculation that lubricates the economy. But really, a lot of it is people, I guess, having unearned income. And that’s ethically problematic. But yet the Georgist perspective does actually fix that. Now, I emphasise, the Pirate Party is informed by Georgism, we emphasise land value taxation. But if you look at our policies, our economic policies, everything, it is a part of what we’re about.
Gene Tunny 13:43
Yeah. Did he advocate for a single tax on land? Was that correct?
John August 13:49
That is correct. I don’t think we would go so far as to say a single tax on land. You know, we are believing in this negative income tax. And we also believe in fiddling around with the other parts of the tax system in order that that guaranteed minimum income and negative tax of that package can be sustainable. And you can basically give people who earn no income a moderate amount of money, without breaking the bank, so to speak, and part of the picture to sort of beef up our tax intake would be landowner taxation. But equally as I say, as our economy changes as a global economy changes, I think it will actually make less sense to emphasise income as a source of taxation.
Gene Tunny 14:36
You mentioned the rail line and boosting property values. You may have seen it already but there was a good study that was done by a fellow Queenslander who’s attached to University of Sydney, Cameron Murray. I don’t know if you saw Cameron’s study of the Gold Coast Light Rail, and he estimated some percentage value uplift for land within, you know, several hundred metres of the Gold Coast Light Rail. So I’ll put a link to that in the show notes. I don’t know if you’ve seen that. But you may be interested in that study.
John August 15:08
I haven’t seen that. But I will sort of stick my oar in and say, we have actually had Cameron Murray in on a more general discussion of housing, within the auspices of the Pirate Party. And Cameron Murray has also written that book Game of Mates, which I’ve had a read of. And that Game of Mates book, I think that one of the origins of that was actually a paper, where he was talking about how there are all these increases in land value. And surprise, surprise, it seemed like the recipients of those improvements were often relatives or in some way related to people at Council. And that, you know, I guess, let’s say we don’t want to point fingers at anyone in particular, or name anyone, but call that grey corruption, and his sort of thing that he was talking about, was a taxation of the uplift. So if you have a zone change, and that increases the value of your property, then that improvement is taxed. I think it’s called a betterment tax was what it was called originally. And that’s one of the things that Cameron Murray is talking about. Now, obviously, a zoning change is obviously a windfall in its own way.
I guess, my story I started with was the railway station within moderate proximity to you. And that’s not really a zoning change, apart from I guess the fact that maybe they had to change the zoning in order to have a rail line there and a station there or whatever. But yeah, there’s different ways of increasing your property value. And one of them is, you know, the railway station. Another one is actually the shopping centre nearby, you know, or the swimming pool or whatever. And, you know, one argument is that if you’re just living there, and the world just changed around you, and it was your choice to live there, and that’s a bonus, well, fair enough. But if you’re essentially buying and selling and you’re actively in the market, and someone else does something, and you get the financial benefit from that, you can wonder how fair that is. But, you know, one of the things about economics, there’s all this hand wringing about what’s fair and unfair, and I recognise that’s part of the picture.
Gene Tunny 17:17
Yes, yes. Okay. Okay, we’ll take a short break here for a word from our sponsor.
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Gene Tunny 17:55
Now back to the show. You mentioned this negative income tax, so then a guaranteed minimum income, so you’re not necessarily going for a UBI. Is that right? You’ve got something –
John August 18:08
That’s right. Okay, yeah, I guess there’s a terminological issue here. I call it a pirate UBI. Technically, it’s a guaranteed minimum income. Now, your universal basic income is a wad of cash that you get regardless. I think in Alaska, they have this thing where they’ve re-allocated the money from them, their oil or their mineral reserves there. And everyone just gets a plunk of money every year, but in a sense, that is sharing the real wealth that’s created. So that’s fair enough, I guess. But yeah, your pirate UBI, or the guaranteed minimum income we are talking about, if you make the neutral amount of money, you pay no tax, nor do you get a top up. If you make less than that, you get a bit of a top up, so the government gives you a bit of money. And finally, if you’re making no money, then you get a wad of cash, which is our guaranteed minimum income. And notice, in a sense, it’s means tested. We’re not just giving people lots of money regardless, so we are trying to avoid the inflationary risk. And in fact, really do our best to make sure that the budget actually balances and we’re not actually printing money to pull this thing off.
If you there is a criticism of some forms of universal basic income, we’d say. If you just give everybody you know a wad of cash each year, regardless, that’s going to be inflationary risk. And we agree that our guaranteed minimum income is targeted. If you’re not making income by other means, you get this wad of cash. And if you’re making a little bit of money, you get a top up. And the thing about that whole slow incline is that you don’t have a poverty trap. You rarely will have a disincentive to sort of work or just work a little bit extra. Who knows there might be some benefits, some concessions or so on that you might lose. And that’s going to be a little bit of a disincentive, but not falling off the cliff like you do at the moment.
Gene Tunny 20:09
Right. And so it’s a negative income tax because below a certain amount of income, the tax office is actually giving you money. When you get up to that level of income, you start paying positive income tax. Okay.
John August 20:25
That’s correct. Yes. Yes, that’s right.
Gene Tunny 20:27
Good one. Okay. I think I chatted about that with Ben Phillips. I think he mentioned that was one of the models, because, you know, UBI, in practice, you know, that’s one of the ways you could do it. And, you know, there are all these sort of terminological issues about what’s UBI.
John August 20:45
I suppose with terminology, you have this broad thing called UBI, which is like the general, you know, we’re giving people some money. But UBI is universal basic income, is we give everybody a certain wad of cash, regardless. The guaranteed minimum income is that it’s to some degree means tested, we give people money, if they need it is a bit of a leg up.
Gene Tunny 21:08
Yeah. Okay. So what I found interesting, so far, and I didn’t realise was that influence from Henry George, I mean, he’s a major figure in economics. At different times he’s been very influential. I mean, there are a lot of, you know, still followers of Henry George. And, you know, he always gets written up in the histories of economic thought. And there’s also the thinking or the philosophy of the people in IT, in the tech sector. And it’s an interesting blend of that. I know that labels can be… They may not be suitable. But is it possible to describe the Pirate Party as a left Libertarian Party? Or am I on the wrong track there?
John August 21:57
I think left libertarian would be a good way of describing it. And we have had some limited overlap with I guess you’re right libertarian parties. I think one was the Liberty and Democracy Party. Some time ago, this is quite separate to economic policy. But they articulated a position about the civil marriage versus religious marriage. And what he had to say, yeah, you guys are on the mark there, you actually expressed it better than we could, though, certainly those right libertarian parties, they don’t believe in Medicare, public health. We actually believe in expanding public health to include dental care, and expanded support for mental health, you know, supporting the NDIS. But all the time, we want to be, I guess, financially responsible about doing that.
I mean, so much of social welfare, I think… Look, there are financial constraints, but the way it rolls out, it really does feel very penny pinching to the recipients. And I know some people who, yes, they got their NDIS, but the amount of reports and you know, turning up to doctors and, and getting XYZ certified, you know, you listen to their stories and go, well, alright, maybe one doctor to say, tick the box and say you really do have that condition, but there seems to be this overload of bureaucracy there. And like with the universal basic income, I mean, obviously, yes, we want to, we want the books to balance, but you do have a saving in bureaucracy, because at the moment, whole government departments have to figure out whether you really are unemployed, whether you have been trying to look for work, all these sorts of things, and you would get rid of those sorts of overheads in administering the system.
Gene Tunny 23:45
Yeah. Can I just ask about NDIS? So National Disability Insurance Scheme, if you’re listening internationally, this is a scheme we have in Australia to assist people and their families or their carers if they have a disability. And yeah, I mean, John, you rightly mentioned that for recipients, they see that it can be bureaucratic, and it can be hard to get the support that they need. At the same time, there is an incredible amount of money being spent on it. I mean, what is it? Is it going up to 30 to 40 billion or something, or there are projections of that? And it’s going to overtake Medicare. So our single payer health care system here in Australia, we’re going to be spending more on NDIS than that. And yeah, I mean, so what are your thoughts on that? I mean, how do we control that cost? Or how do we pay for that?
John August 24:44
Well, there are the various broad changes. We’ve been talking to the tax system, you know. I did mention you know, land value taxation. Another one is to properly tax religion. Now I’m going off on a bit of a tangent here, but I know they were some people who analysed the value, I think it was Catholic church property in Victoria, and said it was comparable to the Westfield property holdings. And then there was a council in Bondi. This goes back to the 1980s. But they said that they had to double their rates to cover the cost of garbage collection, because they couldn’t charge the churches for garbage collection. So again, that’s the thing where sometimes the tax is a tax in the more pejorative sense. And sometimes it’s more a payment for services. And you know, those church properties get away without that.
But let’s see, then another one we’re talking about doing is doing capital gains tax if you use an asset to secure a loan. So there’s a whole gamut of tax changes we can make. And look, I acknowledge the thing about NDIS is you want to properly support things, but at the same time, you want to control the cost, and you want to have it that at least it doesn’t feel markedly bureaucratic to those participating in it. And let me just acknowledge that that is still a work in progress.
I’ll be a little bit political here and say, if you look at the current government, you know, lifters and leaners, the age and entitlement is over, all this sort of rhetoric, and, you know, sort of suddenly saying that, you know, the unemployed aren’t working hard. And, you know, if you look at, say, the Illawarra, that’s a region to the south of Sydney, that over five or 10 years, their rate of unemployment suddenly shot up. And it doesn’t make any sense to say that suddenly, over five or 10 years, all these people suddenly became lazy and couldn’t be bothered working. And yet, that’s sort of the rhetoric of the government going around. So I would say, look, who knows, maybe occasionally, the government does actually have some good ideas that are, shall we say, morally neutral or morally good. But it’s in the context of then having form in terms of saying all these narky petty things, and implementing all these narky petty things, like say, there’s Robodebt. I guess I’m being a bit political there. But what I’m saying is, look, you can have good ideas for economic reform. But if the rest of your story is dodgy, no one will believe you. Now somehow, John Howard managed to implement GST and get away with it, which was a bold thing in its way, but for a government to credibly make grand changes, and do it credibly, and be believable, you know, I think that’s hard.
But anyway, getting back, I’ve gone off on a bit of a sidetrack, but let’s just say, Yes, coping with NDIS and not having the cost blowout, while trying to sustain it, and not have it heavily bureaucratic in the rollout, that is one thing there. But the other thing I would try to… I mean, I haven’t looked into in detail, but I would like to think that if you can run NDIS properly, support people properly, you will then give them the opportunity to participate in the economy. And as it were, bring some of that investment back. And, you know, people, I guess maybe that’s happening already, and we haven’t really identified that benefit. Or maybe we need to target our schemes better. You know, there may be ways of trying to reduce, shall we say the overall financial impact of NDIS while still will be money coming out of the government at some level. So anyway, I’m not sure I’ve answered your question properly. But let’s just say yes, it is a challenge…
Gene Tunny 28:32
Yeah. Yeah. Just occurred to me when you mentioned NDIS, so that I/d bring that up, on the taxation of religion, it’d be good to see some of religious organisations, which are largely, I think that they’re exempt from tax, aren’t they? It’d be good to see some estimates of that, what that could bring in. I haven’t seen them. But yeah, it could be it could be substantial.
One thing I was surprised by, and you probably know this already, but I went to a friend’s birthday party, they held it at the Presbyterian Church, their head office here in Brisbane city, on Ann Street. And I never realised but back in the 19th century, the state governments of the day granted land to the various churches. There was some authority under a New South Wales Act of Parliament, to provide grants of land to churches, and so Catholic Church and the Anglican Church and Presbyterian Church and various others. And so in part, that’s why they have these inner city properties. So that’s why they’ve held on to them, I guess, and they had some extra land that was surplus to requirements and they’ve redeveloped that land. So, you know, that’s helped them out immensely. It’s related to an initial grant of land they had from state governments back in the day, which I found quite interesting. I don’t know if you’re aware of that at all, John.
John August 29:59
In Sydney there’s a suburb called Glebe. And it’s called Glebe because it was originally attached to a church. And I think over time, you know, the church only had its only tiny little part of Glebe. But Glebe is called Glebe because it was originally a church allotment. So I’m sort of aware of that.
But yeah, it is the broader issue that churches have a lot of privilege. And they excuse it, because of the good things they do. But at the same time, it’s not very transparent, and you just have to take their word for it. And I think also, our government in the past has like, basically thrown a lot of money at churches for services that I don’t think were efficiently thought through or efficiently allocated. So I guess it is pointing a finger at the church and saying that they are the equivalent of a feather bedded monopoly, I suppose, you know, would be one way of looking at it.
Now, sure, the churches do have some community stuff to do. But you know, that community stuff should be supported by the people in it. I mean, you could say, look, there’s only a certain number of people who are Catholics, but taxpayers at large pay for that privilege. You know, so there’s some things that are really out of whack there. But I know, there’s the book The Purple Economy, was written quite some time ago.
And, look, it’s great that you’re asking these questions. The sad thing is, I was a bit more up on these things 10 or 15 years ago, and it has been a topic of debate on the fringes, but it’s never really hit the mainstream. And, you know, look, if the government is struggling to pay for, you know, XYZ, you know, they play silly buggers, they screw over us with taxation, councils are obliged to jack up their parking fines rather than charge the council’s rates. But, you know, the government never thinks laterally and says, Well, hang on, let’s take a good look at this religious privilege, and maybe we can reform things and basically get a bit of extra money to spend on these things we want to do. But like, I just see just how creative government is at sort of shaking trees and finding money in high logs, but they never look in that direction though.
Gene Tunny 32:12
Just with the taxation of religion, you mentioned, it was something you were more up on 10 or 15 years ago. And you’re right, it hasn’t really been a prominent issue. The only time I remember it becoming an issue in say the last 10 years was when Jim Sorley, the former Lord Mayor of Brisbane, who was a preacher at one stage in his life, he brought it up and suggested that given that, you know, many religious organisations are doing very well, they probably should, or they’ve got substantial assets. I don’t know how well they’re doing day to day. Then, you know, they could actually pay some or make a greater contribution, or they could make a taxation contribution. So I thought that was interesting.
John August 32:55
Makes a lot of sense, because occasionally, you do get your secular religious types. And, you know, obviously New South Wales, and one of the contrasts I make is that Gillard was an atheist, but she had to be dragged kicking and screaming to do, you know, inquiry into churches and child abuse. Kristina Keneally was an Australian Catholic, and in New South Wales, she was the premier that oversaw the introduction of ethics education in schools, of non-religious education in schools. But yeah, at times, you get religious people who really are quite considerate. And if you look at a lot of elements of the Uniting Church are actually quite secular in the way that they relate to things. Obviously, yes, they get a bit of religious privilege, but it’s not something they covet, if you know what I mean. And at times, they will even push back against it. So you know, it does vary. And obviously there was this particular person you’re saying that was was sort of saying, hang on, maybe the churches should pay tax.
Now, if you go back far enough way, way back in the depths of time, before there were the Greens, before there was the Democrats, there was actually a political movement called defence of government schools. And they were very concerned about the way the government was feeding so much money into religious schools and was trying to say that it was against the Constitution. Now, I’m no constitutional lawyer. But I’ve read the commentaries, when people were writing the constitution of Australia. And I think based on what they were saying about the Constitution at the time, we never really should have given all this money to religious schools. Obviously, yes, I’m not a lawyer, and it was the High Court judges who get to make these calls. But yeah, if you go back decades, there was the defence of government schools movement. It was such a strident political force before the Greens or the Democrats. And it really had a lot of energy to it before my time, and I read about and think, wow, this is amazing. And the sad thing is, that was decided in the High Court when it was in Melbourne. So then the High Court moved to Canberra and it basically fell off the radar of the High Court because the High Court loves to sort of parade all the controversial decisions that were made within its halls, even if the public didn’t like them, or the controversial or whatever. They couldn’t get [inaudible] decisions made in Melbourne before they moved to Canberra. There you go.
Gene Tunny 35:20
Right. Okay, I’ll have to look into that. I mean, it’s a big issue, the division between church and state and therefore, what governments can do to assist religious organisations or schools. I mean, I guess the issue in Australia was that, at the time, didn’t we have some Catholic schools that were struggling financially because they charged relatively low fees, and they couldn’t afford to install the science blocks. This was during the Cold War, and there was a push to educate people in maths and science. And so therefore, you could argue there was some public policy rationale for it.
John August 35:57
There was a bunch of schools in Canberra, Catholic schools that went on strike because they weren’t getting the money together for that. And details of that story are not sort of close to hand. But I do know, during the Cold War, even though the US was very religious, and you even had some fist-waving creationists, when the Russians put Sputnik into orbit, they all thought, oh, shit, we better roll out the science education in our schools. And, you know, that’s my understanding, that that was why creationism took a backseat until the Cold War sort of thawed out, and there was no longer that pressure. So I do believe that’s not got a lot to do with economics, of course, but I do believe that’s some of the history there.
And look, it’s not at my fingertips, but there has been this whole thing of charities and the definition of charities. And I certainly would say that churches have a lot of privilege when it comes to charities, but my narky observation about the government is they really want to reduce the charitable status of any group that might criticise government. And, you know, of course, you know, there’s the whole freedom of speech thing, yada yada yada, but yeah. Let’s say yes, historically, this whole thing of what is a charity, we should have a charities commission and so on, that was bubbling away at the side. And again, I was more familiar with this 10 or 15 years ago, and then I got serenaded by intellectual property and the Pirate Party, I suppose.
Gene Tunny 37:25
Okay, well, yeah, we want to get on to IP, because that’s fascinating too. Just with religion for listeners internationally, I should know that when I mentioned Jim Sorley, he was a former Lord Mayor of Brisbane here, so well-known figure in one of the political parties, in the Labour Party. And yes, he was also at one time a Catholic priest. So that’s why it made news when he came out and said that the churches should pay tax.
John August 37:52
Yes, well, it is one of the things that a secular Australia I should say, that the minority seat of secular Australia do actually say that Gough Whitlam made a deal with the Catholics to get into power. So that’s the one narky thing that secularists will actually say increased criticism of Gough Whitlam. I don’t want to get embroiled in the whole bog mire of Gough Whitlam. That’s one observation I’d make.
Gene Tunny 38:17
Okay. Okay. Well, we might move on to IP and then we’ll finish off with a discussion of business support or crony capitalism, or however you want to describe it. The Game of Mates, you might like to describe it. You mentioned Cameron and Paul Frijters’s book before. What’s your position on IP? I mean, is it complete no protection of IP, something extreme like that? Or is there some protection to encourage innovation?
John August 38:46
We do believe in some protection for IP. But there’s a whole heap of reforms and changes. Like, as far as copyright’s concerned, we’d have a whole heap of like, what is it, fair use exemptions. Now, one of the things we get into is like, the right to repair, say. It is actually bubbling. And I think it’s sort of starting to get to the mainstream. But you know, the cliche is, you’ve got this farmer in Western Australia. They’re so damn far from civilization. They’ve got this farming equipment. Their harvest season runs a few weeks, and if one of their bits of equipment is out of action, and they’ve got to wait a few weeks for some guy from Perth to travel all the bloody way. Oh, okay, we need this spare part ordered. That will be a week away. That sort of makes no sense. And, you know, there is the idea of the right to repair.
And this is another thing about individual freedom. There’s some people who run repair cafes, they talk about the dignity of risk, okay, and you know, it is one of those things that I guess a slightly libertarian sense is, you know, cotton wool drawers and that sort of thing. And, you know, my own personal view is look, companies have a legitimate concern that, you know, you don’t mess with their thing, injure yourself and get sued. Okay? We do think there needs to be some sort of way of saying, look, I’m going to mess with this. I’m taking the responsibility onto myself. If I injure myself, it’s my own problem. But I do think a lot of firms run around saying, oh, we can’t let the consumers do blah, blah, blah, because they might hurt themselves. And that’s actually an excuse for them to flex their muscles in terms of intellectual property.
Gene Tunny 40:39
Yeah. So John, just for clarity, what do they do that prevents you from repairing it? They void the warranty? They say the warranty is voided if you do any work on it, if you actually open it up?
John August 40:49
There’s a few things. One is the warranty is voided. The other one is software that basically logs the fact that you’ve opened the case or tried to tamper with it. And worst case, you have software that basically self destructs if you meddle with something. That’s getting even more serious. I mean, there was a story of I think, Sony put a dodgy thing on CDs, that actually put a programme in your laptop that stops you from doing further copying of CDs. That caused quite a kerfuffle in the IT world. Whether it got to the outside world, I don’t know. But there’s some dodgy stuff that goes on there.
But anyway, so fair use exemptions for copyright. Okay. And obviously, that sort of spilled into the copyright of bits and pieces and of right to repair rather. And certainly, I think the Australian Government does have something that if you sold a car and you stopped selling it, you gotta keep selling the fit spares five or 10 years. Well, we also think that once a car is no longer really properly supported, it should be a free for all for people to make knockoffs and you know, run their 3D printers, bananas, whatever. So I think they should be thresholds where, okay, until this point, people could can claim a bit of copyright and this sort of thing. But beyond this point, come on, let people rip in.
But as far as patents go, for sure, our view is a few things. One is that that basically patents should only be used to protect stuff that’s actually being bought and sold in the market. And if you go back far enough, in our patent legislation, but there was a previous thing saying that if you have a patent, you have to serve the market. There was actually an obligation in legislation. In other words, it was saying, if you’ve got a patent, you should be making stuff and flogging it. Our position is that if you have a patent, then you should be making it. You shouldn’t be using that patent defensively and stopping others from doing it. And there is the whole thing of you know, patent trolls who have a bunch of patents sitting on the shelf, and all they do is run around with a mallet and whack people on the head to try to make that. To my way of thinking, that’s a complete abuse of what a patent should be. And we also have actual schemes where you actually declare the value of your patent. And if you’re not declaring it properly, someone can just put up their hand and buy the patent off you. So you have to value it publicly in a way that that sort of is sustainable.
And I suppose there is a whole thing of copyright that it shouldn’t be, you know, death of the author plus 50 years or 70 years, which is ridiculous. Now, the US kept trying to extend the copyright of Mickey Mouse to keep them. And so that was to my way of thinking, clear abuse of the patent process. So you’ve got patent trolls. You’ve got so-called evergreening of patents where a medicine is used for one use, and then they figure out an alternate use and get an extended patent on it. But it still gets a bit grey as to whether you could use it for the use to sort of run out a patent.
And I suppose a broader thing would be, it would be lovely, my vision is that, you know, an arm of the UN farms out grants the universities for basic research. And if some particular university then comes up with a idea, then the free market can get that idea for a nominal licence fee, and then rip in and sell it. And that’s re-pivoting the whole way corporations relate to medical patents. So notice we’re not totally against patents for medicine, but you know, these medical firms, I think there’s something like, oh, look, they spend a bucketload on R&D, and they spend even more on marketing. I think that’s telling us look, there’s something wrong with this picture.
And there was a story goes back… Unfortunately, I’m not up on these things recently. But going back about 10 or 20 years ago, there was a bunch of researchers in the UK that made this variant on interferon and that actually evaded the then existing patents and then they hired some Indian chemical firms to crank this stuff out. And it was what you might call an open-source pharmaceutical metaphorically. Those sorts of models I think are much better. But then there’s the fact that in the US, like me clicking on a button, software patents, to my way of thinking…
Look, this is going into the technical details of patent law. But I know a lot of commentators who said that like, way back when 100 years ago, in the UK, a patent was something that you basically bribe someone to do good things in the community, for the general good of society. In other words, yes, you were making a profit. But it should be articulated that not only were you making a profit, but society as a whole was benefiting. And that was the way the Brits articulated patent law 100-odd years ago. And it’s my view that that got morphed into the US, and the US much more was worried about coveting assets, you know, people own this, and we’ve got to protect the people who own it. And then the lawyers got in and defined all these things around it. So the emphasis changed. And along the way, the idea of the inventive step got watered down. And it used to be that was a very strong thing. This had to be really creative, you’ve done something big here. And then that’s been diluted in US patent law to think, oh, you’ve run this algorithm that anyone could have dreamed up, you clicked over here, oh yeah, we’ll give you a patent for that.
And, again, going back in patent law, there was, I think, a manufacturer of, goodness me ,of airline engines, of engines for aircraft, and they actually came up with this way, you can operate this engine in a certain way and reduce noise, and they wanted to get a patent on it. And the judge at the time said, look, these people piloting these planes responsible for hundreds of lives. And you want to add to their cognitive load that they can have to actually figure out whether they’re licenced to operate this bit of equipment in this way, or not, based on how they’re licenced. And that particular judge said, go away, that’s nonsense. And then, you know, there’s obviously the more recent excesses like the EpiPen. Someone was sort of making a gadget to check for COVID. And someone else wanted to do a patent injunction against them. I mean, even if they have a bit of a case, the best that the legal system should do is say, this is something of merit for society. Let’s let these people make the COVID equipment. And you can do a court case and extract profits from them after the event if it really is relevant. But so there’s a whole lot of messiness to do with intellectual property.
And what’s a few other things I can point out? That like, with Hollywood, I don’t know if you’ve heard the term Hollywood accounting, there was a guy who wrote the novel… Goodness me, what was it called? Forrest Gump, I think it was. And the first movie didn’t make a profit and they wanted to make a sequel. And he’s saying, Why the hell do you want to make a sequel if the first movie didn’t make any money? And so I think there’s this moral duplicity, where Hollywood gets very resentful about people copying their movies, but has no problem with dibbling their creative partner partners on their end of the fence. So there’s some dodgy stuff going on in the copyright industry there.
And there’s various cases of, you know, bands in Australia getting done by overseas copyright claims on music in their tracks and, you know, I think the band Men at Work was dragged through the courts. So there’s a whole lot of dodgy shit going on with intellectual property. What’s another story? I think Mattel had the Barbie doll and they had a copyright on the Barbie doll. And someone wanted to do a book on anorexia that had Barbie in the title. They said, no, you can’t do that. So again, copyright, trademarks, defamation, you had all these things into mix. Sure, you shouldn’t be able to sell a knockoff doll and call it Barbie and make money out of it. Okay, maybe. But, you know, protecting your trademark and stopping people from doing derivative creative works. I mean, come on.
Oh, yes. Okay. There’s one more thing I will say, which is, I think, a bit of a sideline to do with Trump. Now, you might remember, Trump was pushing back against the Trans-Pacific Partnership, and he obviously managed to win an election. And it’s my suspicion that a lot of people in the Rust Belt saw all of these trade treaties, and what those trade treaties meant was that, you know, overseas countries would sell stuff in the US, in exchange for them recognising US intellectual property laws.
And look, let’s just say, look, you’re the economist, and I’m sure we will agree that on paper, you have international trade and parties benefit, and the net wealth is increased. But under the hood, what happened in the US was there was a net transfer of wealth from people who made stuff with their hands to people who owned ideas. And it’s my suspicion that that might have been one of the factors in the Rust Belt of people going, hang on, there’s all these lovely trade treaties, which are supposed to be so beneficial, and we see ourselves losing our jobs. So that’s sort of, I guess, less to do with intellectual property directly. But I think it’s one of the things going on in in global trade and global politics. Look, I can I can say more about intellectual property. You got me started, but maybe I’ll leave it at that for the moment.
Gene Tunny 50:54
I’ll make a few comments on that. John, very good points. With the Rust Belt, look, yep, absolutely. And economists have studied that. And they have concluded that there certainly has been an impact on some of those regions. Some regions have been disadvantaged, jobs have been lost, and they haven’t come back. Metropolitan areas have prospered. They’ve done well. Their consumers are getting cheaper products. But then there are some Americans in some states, in rural areas or in the Rust Belt, as you call it, that have been disadvantaged. I’m trying to remember the study. It might have been by David Autor. I can put a link in the show notes. He looked at I think he called it the China shock.
That point about trade agreements, there is actually a debate in economics about these preferential trade agreements, free trade agreements. They’re not necessarily welfare enhancing for countries. I mean, the best thing you can do is actually to lower tariffs for all countries selling to you. So there are issues with these preferential trade agreements. In particular, if we sign up to some of these IP provisions that mean that we have to pay the American producers more, as you mentioned.
What’s the other point? Oh, I think you’re on strong ground on the IP stuff, because, yeah, economists generally think that… At least my impression is that economists are very much against just this, you know, these excessive IP, these copyright terms. So you know, what is it, 70 years you mentioned. And I remember when I was in Treasury, in Canberra, we had a visit once from David Levine, I think it’s Levine, from Berkeley. He’s a professor of economics at University of California, Berkeley. And he was arguing that, look, I mean, that as an economist, what you want is you want people to be incentivized to innovate, and to create new works. But you actually don’t need a lot of copyright protection to do that, right? I mean, you might need 5, 10, 20 years at the most. Beyond that, that would discount any sort of benefits beyond that practically to zero. And I mean, they’re not really going to care what their heirs… I mean, maybe some of them do, but they’re not really going to care about what their grandchildren are going to be earning from their creative works. That is not what is motivating them to be innovative. And I thought that was a good argument. So I don’t know if you’re aware of his work.
John August 53:29
Certainly, I mean, the echo there is, a long time ago, Walt Disney came up with the Mickey Mouse character. Did he think, wow, this is lovely, 70 years after my death, my estate will still be making money from this. So this is a bloody good move on my part to come up with this lovely looking mouse. And that’s sort of echoing your sentiment. And I suppose further to the point that we’re making before is that I think particularly in the US, they are artificially by legal means extending the life of assets to benefit the person who owns that asset, but not in any meaningful way contributing to the economy at large. And, as I say, my feeling is that in the US, they really got behind, oh, you own that thing, oh, we need to protect you. And that sort of just went a bit crazy in the US as compared to the origins of intellectual property in the UK, which were a bit more restrained and sensible.
Gene Tunny 54:26
So on the trade agreements, I might put a link in the show notes, there’s a book that I’ve read recently that I can highly recommend, Termites in the Trading System, by Jagdish Bhagwati, one of the great Indian American economists. He’s based at Columbia. He’s a professor there. So very good book and he’s been very critical of all of these trade agreements, for reasons including what we’ve talked about there, that they’re not necessarily welfare enhancing, just the way that they’re rolled out. Okay. Finally, John, it’d be good to chat about business support. Do you have a blanket ban? Or are you against business support? So all of the subsidies, the what you might call crony capitalism, what’s your position on that?
John August 55:21
Well, in broad terms, yes, I’m very much against crony capitalism, against support for business. Now, look, there are some exceptions for very well-defined social outcomes. Now, this is going off on quite a tangent, but you know, the whole thing of like, childcare, and like, you know, subsidies to consumers of childcare. And, you know, I guess it’s more a personal position that’s informed by other, not that I’m an economist, but other economists in the Pirate Party. And we talk about subsidising supply. So it may make sense to have grants to businesses to either establish childcare facilities, expand childcare facilities, and maybe have a hex discount for people who are trying to qualify themselves to work in childcare. And notice, that would be a corporate subsidy for a very well-defined social need that needs to be properly articulated and costed, and yada yada yada yada.
But in broad terms, I think a lot of the subsidies we get, like, I guess the whole cliche is, you know, the government expands this port, spends bucketloads of money on it, then these firms sort of ship the gas off overseas, and we end up paying more for the gas as a result of the cabinet investing in the port works, you know what I mean. There’s a lot of dodgy stuff like that, that you can point to. So certainly against that. And I suppose we have a broader position against bureaucracy and rent seeking broadly defined. So that’s certainly the case. But to get into the nuts and bolts of that, I have to admit, I’m going to struggle to get into…
Gene Tunny 57:00
That’s okay. Well, I mean, it’s probably a good time to wrap up. I’ve had you for nearly an hour, and we’ve had a really good discussion of IP and before that on Georgism. I thought that was really interesting. Also the negative income and the taxation of churches. So something that I’ve been interested in in the past, particularly when –
John August 57:21
I can but say, yes, go back 10 or 15 years ago. And look, there are a moderate number of like, shall we say, economically qualified people on the secular side of the fence, who are all going, look, look, look, and no one’s paying attention. So in a sense, it’s lovely that your programme, which you might say, as it’s starting to approach the mainstream is actually putting a bit of light on this sort of issue. And that is actually quite wonderful, I have to say.
Gene Tunny 57:45
Yeah, well, I’m trying to be frank and fearless. And as someone who was in, I worked in the treasury, and I’ve worked in around policy, I think we really should approach these issues rationally, and not have these… I guess a lot of people probably think, oh, we can’t do that, or we’ll upset these people. And if you look at these things rationally, that a lot more policies become, or changes become, you know, something that should be discussed and debated. So that’s what I’m trying to do with this show.
John August 58:16
Well, I will put in a bit of a plug for the Pirate Party. Look, I’m not saying we’re not were the only innovative party out there. But as a small party, we can actually talk some very creative and innovative things. And as I say, look, who knows, maybe the Liberal Party will have the odd good idea. But for them to do it, and have people believe that they’re honest and honestly inclined, you know, they have such a track record, where a party who can say, look, there’s some economic realities we should consider here and let’s think about XYZ. And if the Liberal Party did something like that, people would just shake their heads and go, Yeah, another one, you know. So there are some opportunities that small parties have to put innovative ideas out there.
And yeah, as I say, I won’t claim that pirate party is the… I should say Fusion. Oops, I think we’re finally got to this point, I should emphasise the Pirate Party is a part of the Fusion amalgam. And so that does actually include the Science Party, the Secular Party, the Pirate Party, and Climate Emergency. So they are the different branches of Fusion. And while what you were saying, certainly, there are degrees of development of policy within the Pirate Party, and like we have our basic original form of the Pirate UBI that you can look at, and that’s all very good, and we’re continuing to develop our ideas, and obviously, that’s within the Pirate realm or the Pirate branch of Fusion. And obviously, the Fusion has sort of more universal policies that everybody adopts. But you know that that’s a limited subset of what we’ve been talking about.
Gene Tunny 59:59
Yeah. Okay. John, this has been great. I’ll put links to your social media channels. And you’ve got your own radio show. Is that right?
John August 1:00:11
Yes, I have a radio show broadcasting out of Marrickville in Sydney on Radio Skid Row. So there’s some links to that. You can check out some old episodes. There’s also my own website, johnaugust.com.au. But, you know, hopefully, you’ll put that amongst the links there. And I will also mention, there’s a gentleman, Quinton Fernandez, Professor Quinton Fernandez of University of New South Wales. And he’s actually been saying that, like, the UK was abusing the free trade situation when they were the top dogs. And he’s also got his own views on intellectual property, like value global value chains, and just how much intellectual property is a part of the fact that like, things are a token amount coming out of Taiwan. And then the price goes up by 10 times because of, you know, intellectual property and branding. And it’s quite staggering when you listen to the picture that he paints.
Gene Tunny 1:01:11
Okay, I’ll, I’ll have a look at his work and might see if I can get him on the show sometime in the future. Okay, John August, thanks so much for your time. I really appreciated learning about the Pirate Party platform, and just the discussion of the economic issues because you raised some very good ones there. And it was great to be reminded of the work of Henry George, because it’s one of those fascinating ideas that economics has come up with over the centuries. I remember what I learned about him in the history of economic thought, I thought, that’s a fascinating perspective. Yeah. So very good. So, again, thanks so much for your time.
John August 1:01:58
Well, there is a lot of merit in what Henry George says, but I don’t believe in the single tax. And I do think that his philosophy was 90% correct. There will be some little sort of rejoinders I’ll make to what you said, but you know, it’s certainly 90% got the full picture.
Gene Tunny 1:02:15
Yeah, that’s an important thing to note. I might try and find a guest to cover Henry George in a future episode, just to go through some of the intricacies of it. Righto. Okay. John, thanks so much for your time, and all the best. And, yeah, hopefully I’ll chat with you again soon. Thank you.
John August 1:02:39
Oh, well, I do look forward to that. Thank you very much for the opportunity. I think the Pirate Party has been saying some interesting stuff. It would be lovely for that to be more broadly recognised, and it’s lovely that you’ve obviously taken the interest in interviewing me, so very much appreciate that.
Gene Tunny 1:02:54
Okay. Very good. Thanks, John.
John August 1:02:56
Okay, thanks, Gene. Bye.
Gene Tunny 1:02:59 Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to firstname.lastname@example.org And we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye.
Big thanks to EP138 guest John August and to the show’s audio engineer Josh Crotts for his assistance in producing the episode.
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