By Rafe Champion

Walter Olsen, ‘Family Planning,’ Reason, March 1998.

This article points up the tendency of well-meaning social interventions to produce perverse outcomes. Olsen notes that  the American right has been winding up for an official ‘pro family’ policy in the form of spending, tax concessions or law reforms to encourage the traditional family structure. The 1997 Francis Boyer lecturer at the American Enterprise Institute, James Q. Wilson, used the occasion to launch a five-point program to save the family. Some of the ideas Wilson advanced were not new – easier adoption, early intervention in disorganised young lives – but one item stood out. A ‘GI-Bill-for-mothers’ scheme would allow mothers to accumulate credits towards free university education by staying at home to mind their young children. This raised some eyebrows. What has a universal benefit of this kind got to do with helping the underclass? Like free university education, surely it would be the middle to upper classes who would make the most use of the scheme.

Emblematic of the likely effects is Olsen’s scenario at Pricey University. In the front row of a lecture for Media Studies I there is 25 year old Alice, there free of charge because she gave birth when she was 18. Then Beth, whose parents are writing out cheques because she wants to wait to have children after her education. Then Rafe, who was never in the running. ‘Meanwhile, social life at Pricey U has fizzled because half the women are 8, 10 or 15 years older than nearly all the men.’

Peter M Sandman, ‘Behaving Dangerously,’ Australian Quarterly, March-April 1998.

Sandman is an expert in public relations, especially in the delicate art of maintaining the image of a corporation when something has happened that is likely to promote public outrage. Massive oil spills by supertankers come to mind. The natural history of a risky controversy typically passes through four stages. First, ignore them, when a group or watchdog of some kind identifies a hazard. Stage two is to bury people in data.  This is usually seen as an attempt to make critics look foolish and only stimulates them to greater efforts. Then, attack their motives. If they are professionals, label them mercenaries, if amateurs, ignorant, if on the right, call them fascists, if on the left, call them radicals. Again, this is likely to be counterproductive so it is time for top management to step in and give them what they asked for. Unfortunately by this time the issue has changed in character from a hazard problem to an outrage problem.

The function of outrage management is to attack the outrage from the start instead of wasting time, and eventually money, on strategies which only fuel outrage. ‘Better yet, predict and prevent the outrage.’

Sandman identifies six key strategies for this task. Stake out the middle. Instead of arguing ‘perfectly safe’ against people who argue ‘terribly dangerous,’ go for ‘moderately dangerous.’ Acknowledge prior misbehaviour (repeatedly). The more often and abjectly we confess the sins of the past, the sooner others will decide it is time to move on. Acknowledge current problems (dramatically). The expectation of lies and distortion will make it very hard to ‘spin’ the story. So take away one of the causes of sustained outrage by ‘coming clean’. Discuss achievements (with humility).  Allow the critics and activists to think that your strategies to clean up the mess were precipitated by them, not by your own natural goodness. If you claim the latter you will not be believed, and outrage thrives on mistrust. Share control (and be accountable). Accept the role of ‘third party’ regulators and monitors. Pay attention to unvoiced concerns. Unspoken concerns can end up being the most damaging to the outrage-control effort. Find ways to bring them to the surface.

Marc Law and Jason Clemens, ‘The Life Cycle-Permanent Income Hypothesis: How We Spend,’
Fraser Forum, January 1998.

Law and Clemens explore one of Milton Friedman’s contributions to the dismal science. It is a theory which claims that spending and consumption are not directly related to current income but take account of an estimate of lifetime wealth. Further, someone’s ‘permanent income’ is defined as the annuity value of their lifetime wealth.

For example, Bob, on $40,000 per annum will earn approximately a million dollars in his working lifetime. This might purchase an annuity paying $35,000 over his entire lifetime. According to the theory, Bob’s current expenditure will reflect an income of $35,000 rather than $40,000. But of course income tends to follow a humped curve, starting low, peaking in the later working years and then declining sharply. Expenditure patterns do not follow the same trajectory – typically younger people run up debts, pay them back later in their working life and again draw down on the assets in old age. Consequently spending patterns deviate quite a lot from current earnings, with a tendency to balance out over a lifetime.

Friedman’s theory dates from the 1950s and it would be revealing to analyse how consumption patterns are being influenced by the greatest transfer of assets in history, by inheritance, which is under way at present.

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