Short shots. How Hamilton's central bank bill led to the party political duopoly in the US. How the organizational innovations of the Australian Labor Party led to the party political duopoly in Australia. Interest rates as an electoral ploy. Governors for 100kmh.

Shorts

• Zell Miller challenges Chris Matthews to a duel . Zell hopes he is channelling Burr rather than Hamilton . The video looked like two over-inflated egos fighting to be the dominant source of attention.
• Ken Parish has an article on an independent speaker of the house . Which is part of Labors' plan to clean up politics in Australia . Labor will still be maintaining the newly (under Howard) created position of "Special Advisor" (ie the machavalian/rovian political advisor)
• There has not been much in the way of discourse between the polity and the political parties in the US. The parties are more concerned about hammering in their talking points. Three interesting articles on where the language for those talking points comes from.
• Peter King is running as an Independent in the Wentworth electorate . Peter King was the Liberal member for Wentworth until Malcolm Turnball branch stacked. Turnball is a wealthy investment banker and former head of the Australian Republican Movement . King is running as a small 'l' Liberal. The Greens haven't decided to give him preferences yet though.
• Funny cartoon about Howard.

Origin of Political Parties in the American System

Ron Chernow's book on Alexander Hamilton covers in detail Hamilton's initial tenure as Secretary of the Treasury. Chernow sees the creation of the federally supported central bank as the issue that polarised the Hamiltonians and the Jeffersonians that ultimately led to the political split between the Federalists and the Republicans.

The bank bill that Hamilton had put forward was debated hotly. James Madison who led the House of Representatives wanted George Washington to veto it (a first back then). It was of enough concern to Washington that he wanted some assurance of its constitutionality. Jefferson opposed it, as he thought a bank was the states responsibility. Jefferson and Madison were both agrarians, and farmers are constant debtors with a deep distrust of banks. Hamilton represented the Mercantile north, which Jefferson also distrusted.

Washington after reading opposition arguments by Edmund Randolph and Jefferson asked Hamilton to reply to their fears. Hamilton through his life, when faced with opposition went straight to the English language and wrote monstrous essays that covered every possible aspect and argument of the topic he was replying on. At its most extreme, this is where the "Federalist Papers" came from due to George Clinton's opposition to the US Constitution in NY. Chernow writes;

As always, Hamilton wanted to bury his foes beneath an avalanche of arguments. ... In slightly more than a week, Hamilton, the human dynamo, elaborated a treatise of more than fifteen thousand words that covers almost forty printed pages in his collected papers.

Washington signed the bank bill after readings Hamilton's defence of the bill. However, Hamilton had raised new interpretations of the then new constitution. Jefferson had argued that a Federal law was only of need when " absolutely necessary " whereas Hamilton saw government as more powerful than that interpretation and thought that government, " a right to employ all means requisite and fairly applicable to the attainment of the ends of such power " and by power he meant the government's sovereignty (and ability to act independently). Hamilton also wrote to defend the constitution not explicitly mentioning a bank;

It is not denied that there are implied as well as express power and that the former are as effectually delegated as the latter.

When the bank was established, scrip were released and sold as shares in the new central bank. These scrips went mainly to New York, Boston and Philadelphia. Virginia was given the option to release some, but did not take Hamilton up on the offer. The scrips initially sold for $25 dollars. Courtesy of rampant speculation, these rose to $300 before crashing to above $100. The use of capital for speculation became known as "stockjobbers". Since most of the stockjobbers were northern, it increased the distrust of the agrarian south for the mercantile north.

It was after this that Jefferson and Madison openly broke with Hamilton, Adams and even Washington who was of a Federalist bent. The Republicans feared an executive that was too powerful, as they saw it leading to monarchy and tyranny. The Federalists by comparison required an "energetic" federal government which consequently needed to be a powerful central form of government with a strong executive. James T. Flexnor wrote that the party split was;

It[the controversy] was between rival economic systems, each of which was aimed at generating its own men of property.

Hamilton wrote profusely and published widely in the mass media of the time. He was first published as a teenager with poetry. His revolutionary and political publishing were done under pseudonyms which was the fashion of the day. The nom do plume chosen would be a smear in itself against the target. Chernow notes in the book that Hamilton had no empathy for the hurt his words often caused. He was at his most aggresive when his honour was besmirched. As an orphan and self-made man, in a world of Thomas Jeffersons, George Washingtons and Aaron Burrs, he was overly sensitive to that.

Hamilton also had an Othellian fault to him as well. He was a work-a-holic and left little time for home and social life. Rather than jealousy, his failing was pretty women in distress. Hamilton maintained a high sense of honour and chivalry; consequently he was a sucker more than once. His affair with Mary Reynolds, which started with her pleas of being in distress, ultimately led to him being blackmailed. It also later became America's first political sexual scandal.

The Rise of Political Parties In The Australian System

Previous to Federation political parties had existing in the colonies and were mainly unstable factions of convenience for the purpose of maintaining power in the bicameral legislatures of the colonies. Even with Federation in 1901 political parties didn't solidify until the Australian Labor Party emerged as an organizational behemoth. From that point on Australian party politics can be viewed as Labor and Anti-Labor. Campbell Sharman and Jeremy Moon write;

The engine of change [in party stability] was the rise of the Australian Labor Party (ALP). Based on a coalition of labor unions, groups favouring social and economic change and a few radical socialist ideas, the ALP emerged in the 1890's and steadily acquired the characteristics that made it both organizationally distinctive and electorally successful.

The Labor Party established a caucus and organization outside of parliament. It differed from other parties of the time such as the Free Traders and Protectionists in that the party made the representatives they supported swear an oath to follow the party, and not serve as independent decision makers in parliament. This party discipline led to the Protectionists reforming with some Free Traders into the first anti-Labor party, the Liberals. By 1910 many elections at the state and federal level were being decided by Labor or Liberal.

Labor has been a well-organized constant since Federation. Consequently most variation has taken place with the anti-Labor parties. Deakin's Liberals lasted until 1917. The Country Party (now the National Party) joined Federal politics in 1918, and the dominant anti-Labor party become the Nationalist Party that survived until 1931.

The United Australia Party (UAP) had electoral success until 1944. By which time Robert Menzies who had served his first period as Prime Minister with the UAP, reformed Deakin's Liberal Party with himself at the head of it and found electoral success with his appeal to the middle class and British values. Menzies formed the Liberal Party along labor lines with a strong organization outside of parliament and less reliance on a small subset of wealthy backers. This organization has contributed to its longevity since World War II.

The National Party first joined a coalition government at the Federal level in 1923 when it joined with the Nationalists to defeat Billy Hughes' government. Since then the National Party has taken part in many coalition governments, including ones when the UAP and Liberal Party had enough numbers to govern on their own.

The Ongoing Police/Nanny State

A letter writer to the Sydney Morning Herald wrote the following (I hope sarcastic);

Got the perfect solution for speeding idiots on the road: force all manufacturers to make cars that cannot go past 100kmh. It could make for a comfortable and more relaxed society but then the "sex appeal" for those who have none would vanish, as well.

Shane Westall, Potts Point, September 3.

As a leadfoot and the owner of a V8 American muscle car; I am shocked that this mentality exists. Shane Westall of Potts Point needs to spend a week commuting on Rt 287 in New Jersey so he can see how a major thoroughfare and the commuters on it manage to handle driving at 140-150 kmh in a cohesive fashion each day.

Interest Rates As An Election Issue

John Howard's equating of an interest rate rise if Latham was elected was dismissed by former Reserve Bank Governor Bernie Fraser ;

"They must think people are very gullible to believe that," Mr Fraser told AAP.

The reserve bank sets interest rates. This hasn't stopped Howard of scare tactics, nor has it stopped Latham from signing a [bizarre] guarantee to keep interest rates down . Despite Australia having a balanced budget for most of Howard's term of government, interest rates in Australia are higher than in most industrial western nations ;

Believe it or not, Australia has the highest interest rates of all the major developed economies. Look at the comparative tables in The Economist: Australia's short-term rates are low at 5.43 per cent but they are 180 times higher than Japan's, 3.3 times higher than the US's and 2.5 times higher than Canada's and the Euro areas.

Why does Australia have such high interest rates? We are not publicly debt laden like the US or Japan is, though Australia is privately debt laden and the Australian current account deficit is over 5% of GDP. Only America carries more foreign debt and Australia doesn't have the luxury of being the world's de-facto reserve currency. Hence we can't print more plastic and holograms to pay for our foreign debt. Kenneth Davidson writes that interest rates in Australia stem from the risk in the Australian dollar;

In globalised financial markets, national interest rates are determined by the world rate, adjusted for inflationary expectations and the exchange rate. Fundamentally, Australians must pay more for their money than the people of most other countries because the Australian dollar is rightly seen as carrying a bigger exchange risk than most other countries, not only because of the huge current account deficit and foreign debt, but because the dollar is rightly seen as a commodity currency dependent on the fluctuating world demand for agricultural produce and raw materials, rather than the sophisticated products and processes associated with the knowledge-intensive post-industrial era.

Davidson argues for more investment in the country and an adoption of some debt to invest in Australia's future to protect against a "pastoralization" of the Australian economy. In other words an economy dependant on commodities. This is the 1970's adage of living off the sheep's back . One of the benefits of Australian investment in Australian defence technologies is the funding of high tech R&D, subsidising applied scientists and engineers. With investment in high tech is an increased probability of a disruptive technology being developed that will expand the labor market.

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