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Free-market think-tanks waged war on entitlement, conscripted an Australian Joe

Treasurer Joe Hockey wants to ‘end of the age of entitlement’, but which think-tanks around the world have played a part in developing that idea? AAP/Alan Porritt

We propose things which people regard as being on the edge of lunacy. The next thing you know they’re on the edge of policy. – Madsen Pirie, President of the Adam Smith Institute, 1987

In a speech in London in April 2012, Australia’s future treasurer Joe Hockey boldly proclaimed “the end of the age of entitlement”, and foreshadowed some of the tough measures the Coalition has since taken to reduce government spending, including co-payments for GP consultations and an increase to the pension eligibility age.

The message is clear: like it or not, people should adjust to a new reality of receiving less assistance from the government. Hockey said in the speech:

The fiscal impact of popular programs must be brought to account no matter what the political values of the government are or how popular a spending program may be.

The severity of Hockey’s first budget as treasurer appears to have taken many by surprise, resulting in widespread public outrage and even concerns from within Coalition ranks that the budget strategy has been misguided.

But should we have been surprised? The free-market, anti-welfare ideas informing this budget have been increasing in popularity in conservative circles since the 1940s. They have been propagated by an international network of think-tanks, forming what has been termed a “neoliberal thought collective”. One of these think-tanks, the Institute of Economic Affairs, provided the platform for Hockey’s speech.

Founding fathers

Every movement needs its idealised founding fathers. For neoliberals those figures are economists Friedrich Hayek and Milton Friedman. The work of both, especially Hayek’s The Road to Serfdom (1944) and The Constitution of Liberty (1960) and Friedman’s Capitalism and Freedom (1962), influenced the governments of Margaret Thatcher in Britain and Ronald Reagan in the United States.

In 1989, after ten years in office, Thatcher reflected on Hayek’s contribution to her government in a personal birthday message:

None of it would have been possible without the values and beliefs to set us on the right road and provide the right sense of direction. The leadership and inspiration that your work and thinking gave us were absolutely crucial; and we owe you a great debt.

Hayek and Friedman were both present at the founding of the Mont Pelerin Society in Switzerland in 1947, an exclusive international club of classical liberals opposed to socialism but also concerned about “the expansion of government, not least in state welfare”.

A transatlantic network of think-tanks

Free-market think-tanks have sprung up across the whole world, but naturally it has been the American and British organisations that have had the most influence in Australia. In the US these include the American Enterprise Institute (founded in 1943), the Heritage Foundation (1973) and the Cato Institute (1977).

The most influential British neoliberal think-tanks have been the aforementioned Institute of Economic Affairs (IEA, founded in 1955), the Centre for Policy Studies (1974), which Thatcher helped to found while in opposition, and the Adam Smith Institute (1977).

The mission statements of all of these organisations are variations on the same themes: individual freedom, limited government, free enterprise, free markets.

Free-market think-tanks influenced the Thatcher government in Britain. EPA/Jim Hollander

The founder of the IEA, Sir Antony Fisher, is especially important in any discussion of the worldwide neoliberal movement. Fisher was a successful farmer who, after reading The Road to Serfdom, sought Hayek’s advice about how he could help “get discussion and policy on the right lines”. Hayek told him that becoming a politician was a waste of time; he would be better off forming a scholarly research organisation to help drive the debate along free-market lines.

Fisher went on to help found a number of think-tanks in the UK, US and Canada, as well as, in 1981, the Atlas Economic Research Foundation. The Atlas Network was designed as a way of institutionalising the process of helping to create and support free-market organisations. Its most recent institute directory lists 495 think-tanks in 96 countries.

Australian free-market think-tanks

In Australia, two organisations in particular have carried the neoliberal torch: the Centre for Independent Studies (CIS) and the Institute of Public Affairs (IPA). The CIS was founded in 1976 by Greg Lindsay, who remains its director to this day. Lindsay sought the advice of Antony Fisher in setting up his organisation.

The IPA was founded in 1943 by C.D. “Ref” Kemp, who ran it for more than three decades. Although not formally linked to the Liberal Party, there are strong and enduring ties. In 1982, the IPA was taken over and revitalised by Rod Kemp, son of Ref, until he won Liberal pre-selection for the Senate in 1989. From 1995 to 2005 it was run by Mike Nahan, who is now the treasurer in the Western Australian Liberal government.

Earlier this year, climate science blog DeSmogBlog published the Mont Pelerin Society’s 2010 membership directory. Of the Australians listed, some predictable names emerged, such as Greg Lindsay (who was president from 2006 to 2008), the IPA’s current director, John Roskam, and veteran right-wing activists Ray Evans and John Stone.

Particularly interesting though were the names of two men providing specific policy advice to the Abbott government: Maurice Newman, chairman of the Prime Minister’s Business Advisory Council, and Andrew Norton, co-author of a recent report on Australia’s higher education funding system. Both also have ties to the CIS: Newman was a founding board member and Norton was a research fellow and editor of its magazine, Policy.

What, then, to make of these links? None of what I have outlined above is intended to suggest that there is some kind of conspiracy at work. These are not secretive organisations. In fact, much of their material can be accessed for free on the internet.

The neoliberal thought collective is a well-organised, politically connected movement of like-minded individuals who have dedicated their lives to spreading the ideas they believe in. That they have managed to influence governments, including the Abbott government, may be dismaying to those who disagree with their ideas, but it shouldn’t be surprising.

Further reading: How the free-market ideology of IEA has gained political ground

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