Friday, 24 October 2014

Capital in the 21st Century

Some of last week's thoughts about privatisation were prompted by reading French economist Thomas Piketty's Capital in the Twenty-First Century, passed on to me by my generous cousin Michael.

Piketty's book is economics on a grand scale.  He sets out to tell the story of global capital accumulation over the past two centuries.  To do so, he draws on an impressive (if not quite truly global) collection of historical data on wealth collated by himself and a number of other economists over the past decade, published in sources such as the World Top Incomes Database.

This is not exactly an easy book to read, but nor is it the kind of impenetrable tome produced by so many professional economists.  Anyone who has some basic economic literacy will have no trouble grasping his arguments and if its 500-plus pages seem daunting take heart, there's a fair amount of repetition involved.  If you take economic issues seriously (as we all should!) this book is essential reading.

Piketty's foil, in an intellectual sense, is Simon Kuznets, the post-war American economist who was responsible for the 'Kuznets curve'.  This was the idea that the progress of industrialisation would initially result in greater inequality of income before swinging back to greater equality as a result of market forces and economic growth.  Kuznets summed this idea up in the famous phrase, "a rising tide lifts all boats".

Kuznets' theory is so hopeful and positive we would all love it to be true, but is it?  Well, according to Piketty even the limited data used by Kuznets himself did not really support his theory.  In his more serious academic works Kuznets was cautious and circumspect, but in his popular speeches and pronouncements as president of the American Economic Association he was far more bullish about the equalising effects of capitalism.

Piketty disagrees.  His data series, stretching back as far as 250 years for countries such as France and the UK and almost as far for the USA, paint a very different picture of the dynamics of wealth inequality.  His data show that both income and wealth inequality increased steadily through the 19th century, reaching a peak in the early 1900s.  In the decades that followed the wealthiest people in society lost a large proportion of their wealth due to the triple shock of two world wars and the Great Depression.  As a result, equality was at an historic high in the post-war period, kept that way by the rapid growth necessitated by post-war reconstruction and the institution of high marginal tax rates at the top of the income scale.

This is the world Kuznets lived in, and he took it to be normal and inevitable.  However, since the 1970s the level of income inequality and the concentration of wealth have increased steadily, so that they are now almost where they were a century ago.

Why has this happened?  Piketty explains the process of wealth accumulation through the use of a number of simple, elegant equations.  One of these suggests that where the return on capital (that is, rent, interest, dividends, capital gains etc) is greater than the rate of growth in the economy, wealth inequality will automatically increase.  Hence in high growth environments inequality tends to be suppressed, but in low growth environments it will almost always grow over time.  Wealth will gradually trickle up to the top.

But if we start out equal, wouldn't the return on capital benefit everyone equally?  Perhaps, but this is purely hypothetical.  Wealth has never been even close to being distributed equally.  Certainly we have a middle class which owns modest amounts of wealth, but this modest wealth is held in safer but lower-yielding assets like housing and bank accounts.  Wealthier people hold much more of their wealth in higher-yielding assets like equities, and have the freedom to take risks in order to achieve higher growth.  This means that over time they will progressively claim more and more of the available wealth.  Nor is this a question of hard work.  Once you have the wealth (whether earned or inherited) it will continue to grow without your lifting a finger.

So, is the answer that we should continuously promote high levels of growth?  Piketty is not hopeful about this option.  Over the long run of history, it seems unlikely that growth has often risen much above one percent.  High growth rates are inevitably a result of catch-up - Europe and the USA during the post-war reconstruction, Japan during its modernisation phase, the South East Asian nations of the 1980s and 90s, most recently China and India.  In the process of building infrastructure and acquiring technology to catch up with the rest of the world, these nations experience rapid growth.  Once they have caught up, growth slows dramatically.

Hence, Piketty believes that the decades to come will overwhelmingly see low growth - no more than 2% per year on average.  Even if Kuznets was right, there will be no rapid tide to lift those boats.

So are we doomed to ever-increasing inequality?  The good news is that there are other options available.  The less good news is that the wealthy citizens of all the major economies have a lot of power and wealth, and will fiercely resist anything that reduces that wealth.  Which brings us to the question of tax.

One of the significant contributors to the relative equality in advanced countries from the 1950s to the 1970s was a highly progressive tax system, with the richest people in many countries paying rates of 70% and beyond on the top part of their income as well as substantial inheritance taxes.  These taxes funded substantial social programs - health, education, public infrastructure, income security, public housing - which predominantly benefited those on lower incomes.  Allied with this were highly regulated labour markets which oversaw improved wages and conditions.

However, the rise of neoclassical economics from the late 1970s, personified by Reagan and Thatcher, represented a reversal of these gains.  Top tax rates were cut around the world, estate taxes were reduced or even abolished, loopholes were allowed to proliferate, wages were pushed down.  The result is what we see today in Australia as elsewhere.  A small number of fabulously wealthy people, many of them beneficiaries of large inheritances, live in luxury while the majority live from day to day and the number in poverty increases.  Meanwhile our governments, deprived of sufficient tax revenue, suffer their own form of poverty, running large deficits and borrowing to stay afloat.

Piketty's answer is that we should tax wealth.  His proposed tax is modest - nothing on the sort of amounts ordinary working families can accumulate, then stepping up progressively to 5% on the largest fortunes.  He clearly thinks it would be reasonable to levy much higher amounts - he suggests that fortunes above a certain size could be seen as socially dysfunctional and could be subject to confiscatory taxes.  However, he also understands that even these modest rates will be fiercely opposed by those who would have to pay them.  If you are in any doubt, just think back to the Rudd government's attempt to levy an extra tax on mining company profits.

Such a tax is not currently on any government's radar, and conservative economists and media outlets have been quick to try and discredit Piketty's analysis.  Instead, the solutions on offer, in Australia as elsewhere in the developed nations, are guaranteed to continue the process of wealth concentration.  Deep cuts to social programs will deepen the poverty of the poorest while leaving the wealthy untouched.  Asset sales will transfer wealth from government to private hands, inevitably those of our wealthiest individuals and companies.  Piketty points out that debt has much the same effect but over a longer period - instead of transferring wealth in one hit, it is transferred bit by bit through interest payments.

It's hard not to be gloomy about all this.  The odds are stacked against a just solution.  Our media and much of our political process is firmly in the hands of the super-rich.  They will not give up their wealth without a fight.  Yet while there are scholars like Piketty to point out the truth, and to point the way to solutions that don't further impoverish the poor, there is at least the justification to keep on striving.

Friday, 17 October 2014

When is a Sale Not a Sale?

Privatisation, lately rebadged as "asset sales", is electoral poison for political parties and their leaders in Australia.  In 2008, after NSW Labor Premier Morris Iemma proposed to privatise parts of the state's electricity system, he was rolled at the party's State Conference by a huge margin and resigned as Premier soon after.

Queensland's Labor Premier Anna Bligh didn't quite manage to learn the lesson.  Soon after her government's re-election in 2009 she announced a privatisation process that included parts of Queensland Rail, various forestry assets, the Abbot Point Coal Terminal and the Port of Brisbane.  Anger at this announcement was heightened by the fact that not a word was breathed on the subject during the election.  She may have hoped this anger would have faded by the 2012 election but it clearly hadn't and her party was almost wiped out.

All this left the incoming LNP government with a problem.  The combination of the Global Financial Crisis and structural problems in the Queensland Budget led to large deficits and a lot of debt.  The LNP loves privatisation and their key financial backers were chomping at the bit to get their hands on valuable State assets.  Yet they had ridden into power on the back of anger over just such a sales program.  As a result, they promised to not to sell any major assets (although they have sold many minor ones) without taking the issue to an election.

Finally, after two and a half years of scare tactics about the budget, savage spending cuts, the odd token tax increase and a huge amount of PR dressed up as consultation, the government has released its strategy.  The final document, The Strongest and Smartest Choice: Queensland's Plan for Secure Finances and a Strong Economy, has a fake stamp on the front that says "No Asset Sales".

So that's it, asset sales are off?  Well not quite.  Instead, the government is proposing to lease key assets - ports, electricity assets and water supply infrastructure valued in total at the deceptively precise figure of $33.6b - for periods of 99 years.  Treasurer Tim Nicholls has been proclaiming that this is a very different thing, because we get the assets back in the end.

Yes, but no.  At the end of 99 years (or 50 if the lessee fails to comply with the terms of the lease) the Queensland Government (assuming such an entity still exists) will be able to take its assets back.  WE, of course, will be long dead, as will the original people and companies who signed the leases.  The leases themselves, or the companies which hold them, will have been bought and sold on the open market many times.

But there's more to it than that.  You see, assets are not static things.  The port infrastructure, power stations, poles, wires and pipes that are about to be leased out did not exist 99 years ago.  Nor will they exist 99 years from now.  Assets gradually wear out and need to be replaced.  Technologies become obsolete and need to be upgraded.

So far the government's details on how this will work are a little sketchy, but it seems to to be like this.  The lease fees to the government will not be paid annually, they will be paid up front at the beginning so the government can use them to pay out debt.  The lessees will then, as part of their lease conditions, assume full responsibility for the management, maintenance and renewal of the assets, at their own expense, and have access to all the revenue that they generate.  Is this sounding like a sale yet?

The big difference between this and a sale is that there is an end date.  There are actually two - at 50 and 99 years.  However, a lot will happen before we get to those dates.  In the early years, investment decisions for the lessee will be clear - they have the reins for 50 years, so it is worth spending the money to upgrade the asset knowing they will get the full benefit.  However, at around the 30 or 35 year mark, they will start to examine their expenditure a bit more closely.  Parts of the electricity distribution network, say, are run down and need replacement.  The new items have an economic life of, say, 30 years, but the company only has 15 years left to run on its lease.  Is it financially prudent to spend the money?

To try and secure their investment, they will start to play hard-ball with the government of the day.  "It's just not worth our while," they will say, "to spend the money unless we have the assurance that we will get the return, so unless you extend the lease we're sorry, but we can't upgrade the infrastructure."  They will have the government over a barrel - their lease will have been prepared by the finest corporate lawyers and the government will have no grounds to end it until the 50 years are up, at which point the electricity system will be so run down that voters will be ripping politicians' heads off in frustration.  Leases will be extended well before it reaches that point.

So, it looks like a sale, it walks like a sale, it talks like a sale....  Dressing it up as a lease is pure PR.  The government is proposing to sell assets.  If you support asset sales, go ahead and vote for them.  If not, don't be fooled by the BS about leases.

Here's the thing about selling assets to reduce debt.  The government has a balance sheet (of which a summary appears in the Strongest Choice strategy) which lists its assets and liabilities.  State assets currently total a bit over $300b, with about $40b in financial assets and about $260b in land and other fixed assets.  Against this are set about $130b of liabilities, the largest item being $85b in debt, and the other big item being over $30b in superannuation and other accrued employee entitlements.  This means the State Government's net asset position - its net worth - is just under $180b.

Now if you sell some of the assets to pay debts, the net worth will stay about the same.  The fixed assets will be reduced, and the financial liabilities will be reduced by the same amount (or less if, as the government is proposing, some of the proceeds are passed back to citizens in various vote-buying exercises).  The overall position will not change, our assets will just be rearranged - more cash (or at least less cash liabilities), less fixed infrastructure.

This is where the problem with asset sales as a budget solution comes in.  Government assets are not simply inert things which sit on the books and can be sold to realise cash.  They are items that are used to provide services - electricity, water supply, transport, etc.  These can be provided in two ways - on an economic basis (the users pay a market price and the asset makes money) or on a subsidised basis (the government uses the asset to provide a free or subsidised service - for instance a hospital or school).  If the asset earns money, this money will now be paid to its private buyer not to the government, so while the budget will get an immediate boost through the one-off sale it will take a hit in each of the subsequent 99 years because the revenue will now be going elsewhere.  If the asset sold is the site of a subsidised service the government will now have to pay the private owner/lessee of this asset for the service, so expenditure will go up.

The LNP government says it wants to sell assets to "repair" the budget. Asset sales don't work like that.  If you sell assets, you structure into future budgets either reduced revenue or increased expenditure.  You put off the evil day when you have to either cut services or raise taxes, but that day will come as sure as the seasons turn.  It's not a strong choice, its a wimpish one.  But I doubt the current LNP politicians care.  By the time we all realise this, they will be long gone.

Tuesday, 7 October 2014

King Alfred and the Cakes

One of my childhood treasures is a pair of books by C Walter Hodges: The Namesake and The Marsh King.  First published in the mid-1960s, these are what would today be called "Young Adult" novels which I read for the first time in late primary or early high school.  They tell the story of Alfred the Great, the Anglo-Saxon King of Wessex (south England) from 871 to 899 CE, and his conflict with the invading Vikings.

I loved these books and read them over and over again, especially The Namesake, narrated by an engaging character of Hodges' invention, a one-legged boy also called Alfred who is part of the king's household.  They deal with the period from just before Alfred's accession to the throne in 871 to the conclusion of his second campaign against the Vikings led by Guthrum in 878.  I'm sure Hodges would have been pleased with the impression they made on me - to this day my ears prick up whenever I hear Alfred mentioned.

I recently decided to approach the subject for the first time in a more adult way, and bought myself a copy of the Penguin Classics edition of Asser's Life of King Alfred and Other Contemporary Sources.  This volume brings together translations of all the material relating to Alfred that originates in his own time.  It includes the Life written by Asser, a Welsh monk who was enticed to Wessex as part of Alfred's project to improve the educational standard of this clergy and nobles, as well as excerpts from the Anglo-Saxon Chronicle, some fragments of correspondence, prefaces to some books Alfred translated from Latin to Old English, and Alfred's will.  It also includes a lengthy introduction and notes which provide a scholarly account of Alfred's reign.

I had a kind of vague thought that by reading Asser's Life I would be able to sort out fact from fiction in Hodges' treatment.  Of course life is never that simple.  Asser was a member of the King's household and so was hardly likely to present an unbiased account, especially given he was writing during Alfred's lifetime.  The editors suggest he probably wrote for a Welsh audience, during the negotiation of a treaty between Alfred and some of the Welsh kings in which they acknowledged his overlordship in return for military aid.

Hence we should see the Life as a piece of royal propaganda, showing the king in a favourable light to help secure the deal.  Alfred is presented as a brave and resourceful general, a pious and humble ruler and a man of great wisdom and learning.  In other words just the sort of person you would be happy to acknowledge as an overlord.  The account seems unfinished, petering out in the mid-880s.  Although Asser lived for more than a decade after Alfred's death he obviously didn't value the task highly enough to bother completing it.

The low point of Alfred's reign came in early 878.  The Danes, led by Guthrum, launched a surprise attack on Alfred at Chippenham, a royal estate in the north of Wessex.  Most of those with him were killed.  He was forced to flee for his life and take refuge with a small group of followers in the Somerset Marshes while the Danes overran his kingdom.  From there he gathered his forces and planned a counter-attack, which he launched successfully in May 878.  He regained control and forced the Danish leaders to accept Christian baptism before expelling them from his domains.  This much, at least, seems to be history.  Beyond that it gets a little murky.

One of the most famous stories about Alfred dates from this period.  While he was fleeing the Danes, the story goes, he was forced to take refuge in the home of a poor swineherd.  There he was asked to keep watch over the cakes being baked by the woman of the house.  His attention wandered and they caught fire, drawing a sharp scolding from his hostess to the effect that he could not be bothered tending them but would have been happy to eat them.  The story illustrates both the depths of Alfred's trouble and, more importantly, his humility in being prepared to accept such a sharp rebuke from a commoner.

This story is so engaging and human it would be nice to think it was true.  However, it doesn't come up in any of the earliest sources, which simply record Alfred's flight and Somerset stronghold.  It appears for the first time in a life of St Neot, a saint Alfred apparently venerated, which dates from around a century later.  It is repeated thereafter in various forms in other sources, multiplying as the years passed and gaining enough currency to be included in 19th and 20th century school history books and other such dubious sources of information.

Although the story is almost certainly legendary, it is quite consistent with the picture Asser paints of Alfred - a pious, humble, approachable man, someone who didn't stand on his dignity and had the common touch.  Hence while the story itself may not be strictly true, it illustrates something that may well be true, the character of the monarch and his attitude to those around him.  I say "may well be" because the source of the original description is a piece of royal propaganda, so it is just as valid to interpret the story as an illustration of how good propaganda works.

Then there is a third way it can be read.  It is possible that we should understand this as an illustration of how kings should behave.  Whether Alfred was really as humble and pious as Asser makes out, whether he really was the kind of king who would take a scolding from a swineherd's wife, is beside the point.  A king should be humble enough to accept rebuke when he has done wrong, whoever that rebuke comes from.  Perhaps when the English have revered Alfred down the years this is the message they have been giving to his numerous successors.

True or not, this story is too good for a novelist to pass up.  Nonetheless, the sparseness of its original telling will not do - the story requires context, a place in the overall narrative arc.  Neither Asser nor the later sources are much help.   What is Mr Hodges to do?

Of course as a novelist he is free to make things up.  However, as a historical novelist he has to be very careful what he makes up.  It has to at least be plausible within the context of the time and place, and of what is known of the main characters.  It's interesting to observe how Hodges handles this problem when he tells the story in The Marsh King.

The first thing he creates is a nephew for Alfred. It is a matter of historical fact that Alfred was the youngest of four brothers.  No-one expected him to be king at all, never mind by the age of 21, but his brothers fell one by one to battle or misfortune and there he was.  It is also a matter of historical fact that his eldest brother Aethelbalt scandalised his realm by marrying his father's young widow, a marriage considered incestuous even though she was not his mother.  There is no record of any offspring that I can find  but in Hodges' telling there is a son, Edgar, abandoned by his mother and brought up by loyal retainers on his father's English estate, of which he eventually becomes master.

Once we accept Edgar's existence what comes next is equally plausible but also not strictly historical.  Alfred is invited to attend young Edgar's wedding and, despite the misgivings of his lords, agrees to attend, wanting to show kindness to his nephew.  However, Edgar and his ambitious foster-father have tipped off the Danes to his impending presence.  Guthrum's men stage an ambush, intending to kill Alfred and invade his kingdom while it is leaderless.  Guthrum promises in return to install Edgar as king, a title to which he has some small claim.

Once again this is plausible in the context of the times.  The Danes had already installed an Anglo-Saxon puppet ruler in the kingdom of Mercia, just to the north of Wessex.  Although there is no evidence they planned to do the same in Wessex, it is not out of the question, and in any case Hodges doesn't over-play his hand - Edgar is never crowned.

Other parts of the story show the same blend of fact and fiction, or at least of known and unknown. Alongside a disaffected nephew to explain the ambush, he supplies an exchange of kindnesses to explain his escape.  While on the estate Alfred befriends the young daughter of the house, and she warns him of the ambush in the nick of time and helps him to escape through a hole in the fence.  Pure children's literary fancy, but good fun and once again rooted in Asser's description of Alfred's character.

Another detail shows how Hodges subtly modifies his sources to build a story.  According to Asser, Alfred suffered a chronic illness which left him in more or less constant pain.  He doesn't provide enough information for any attempt at diagnosis, so Hodges feels free to modify it slightly for his own purposes, from a constant source of pain to an intermittent illness.  Hodges' Alfred can be healthy for weeks and even months, and then be afflicted with weakness and fever which disables him for a few days before he returns to full strength.

This provides him with a plot device that he exploits to the full.  Alfred is struck down with his illness as he flees with young Hildis and one of his bodyguard.  King and child are forced to take refuge with the swineherd (remaining anonymous for fear of further betrayal) while the bodyguard struggles on through the snow to find help.  They stay there for a few days while Alfred recovers and his followers find the way back to him - long enough for him to burn a batch of cakes and be scolded for his negligence.  Alfred's thankyou gift of several bags of flour and a dozen perfectly cooked cakes is a nice addition, wholly of Hodges' own invention.

In purely factual terms none of this is historical at all - it is a modern fiction built around the bones of an ancient one.  Yet it presents a picture which is in some respects strikingly historical.  Asser, who tells us none of these things, tells us that Alfred was humble, gentle and approachable and had a sharp sense of humour.  Hodges doesn't tell us these things in so many words, but in this story Alfred shows kindness to his nephew even though his advisors urge him not to, almost dies for it but is saved as a sort of reward for another act of simple kindness towards a young girl.  He burns the cakes and takes his scolding in good spirit, before responding later with an act of self-deprecating humour.

Asser's portrait is, as I said, a piece of royal propaganda, aimed at convincing the Welsh that an alliance with Alfred would be to their advantage.  Hodges, of course, was far removed from the realpolitik of the 9th century and uses the story to illustrate his own concerns.  The Danes (who in keeping with Asser and the spirit of the time he designates as 'the heathen') attempt to conquer and rule through betrayal, brutality and venality.  Alfred (the Christian king), on the other hand, rules with kindness, justice and mercy, keeping promises despite the risks involved and forgoing revenge even if it seems to others the wiser course.  It seems at times that Alfred will be defeated, but in the end he wins and saves his kingdom, in no small part because his own kindness is repaid at the crucial moment.

Was Alfred really such a paragon of virtue?  It seems unlikely.  The further we get from him in time, the more his legend grows.  For those of his day and the years that followed. Asser's boosting aside, he was simply seen as one of a line of competent, successful Anglo-Saxon kings.  It was only later, when the Normans had taken over the realm from his descendants, that he acquired the tag of "the Great".

Yet this myth has its own purpose.  It provides a model of leadership with reflects how we would all like to be led.  For Hodges, who lived through both world wars, the Saxon-Danish conflict no doubt reminded him of more recent events.  Perhaps Guthrum, with his brutality, his cunning schemes and his huge imperial ambitions, represented Hitler and Alfred represented Churchill, a man who for all his faults was both a lover of learning and a thoroughgoing democrat.  And if Guthrum is a much nicer version of Hitler then Alfred is certainly a cleansed and exalted analogue of Churchill, an ideal model of which all rulers will ultimately fall short but from which, if we are lucky, some may still derive inspiration.

Friday, 3 October 2014

Death: Collective Illusions, Cultural Death

One of the things I touched on briefly in previous posts is the collective impact of our illusion of immortality.  Individually we know we will die but we push that idea away and act as if we will live for ever.  This leads us to value the wrong things - to put possessions before people, to waste time on trivialities, to put off until tomorrow what we should be doing today.  At its extremes this illusion can lead us to abuse and exploit others in the belief that our power over them will go on forever.

This same process also works for us as a community.  We see our current culture or "way of life" as something immutable and eternal which needs to be protected and preserved at all costs.  This illusion, and the actions that flow from it, have some very serious consequences for our society and the way we act in the wider world.

We can see this in the way our community responds to three controversial questions facing our country at the moment - our response to the perceived threat of terrorism, the question of asylum seekers, and the response to climate change.  Let me explain.

One of the big justifications being given for us getting involved in the latest Iraqi troubles, and for tougher security laws at home, is that the Islamists are out to destroy our way of life.  This way of life must be protected at all costs, even if this means sending war-planes overseas at huge expense and risk, and giving unprecedented powers to security agencies at home.

Australia has a long history of fearing outsiders.  For much of our history, this has focused on people from China and South-East Asia.  We feared that as a small Anglo-Saxon society in a region of populous Asian nations we were in danger of being overrun.  Our response to this perceived problem was to foster immigration from European countries, especially from the United Kingdom, while restricting it from Asia - what is colloquially referred to as the "White Australia policy".  While we moved to a more inclusive immigration policy in the 1970s, the fear remains.  As recently as the late 1990s Pauline Hanson built a political career on the fear of Asian immigration.

This fear still hasn't gone away, but since the World Trade Centre bombing in 2001 its focus has shifted to people from Islamic backgrounds and particularly those from the Middle East.  We fear that Islamic immigrants are a kind of Trojan horse, planting themselves quietly in our midst and waiting for the opportunity to subvert our culture and impose Sharia Law on us all.  Hence the presence of a small group of disaffected young people in our midst takes on a significance massively out of proportion to the actual objective threat.  The fact that we feel threatened by women in niqabs or burkas is a dead giveaway - how many violent crimes have been committed by women wearing these garments?

We are prepared to go to extraordinary lengths to defend ourselves from this threat.  In order to prevent the "uncontrolled" arrival of people we feel threatened by, we are currently detaining over 6,000 people in immigration detention including about 900 children, many of whom are detained indefinitely in extremely harsh conditions.  We have just handed unprecedented powers of surveillance and detention to ASIO and the AFP.  And we are sending fighter planes off to Iraq to assist in the war against IS and its allies.  It seems to me that we are acting like gods, disposing of people as we see fit and imagining that the world will eventually bend to our iron will.

Now don't get me wrong, I actually quite like our way of life.  However, I think in our flurry to protect it at all costs we miss some very important things.

The first is that not everyone sees our way of life as we do.  Why do we have "home grown terrorists", as the government likes to call them?  Because there are young people growing up in our midst who feel excluded from, and vilified by, our culture.  Elsewhere I have written about how one of the most prominent, Mohammed Baryalei, grew up in Australia but never felt at home here despite his often desperate efforts to fit in.  It was Islam, not our way of life, which saved him from suicide.

These young men, and the many like them (Islamic or not) who turn to other alternatives when our society lets them down, are a test for us, a reminder that our culture is not yet all we would like it to be.  We should already know this as Christians.  We are citizens of another kingdom, and much as we love our culture we know that it is temporary and that there is something better coming which will sweep it away.  Jesus' kingdom is one which breaks down walls instead of building them up, which puts a high priority on welcoming the outcast and directs its critique against the powerful.

The other thing we fail to notice is that our culture is changing all the time.  While we have been focused on Islam, the Asians we have forgotten to fear have been moving to Australia in increasing numbers.  We are so used to their presence now we hardly notice it.  Just the other day I realised that the "happy prosperous family" images that scroll across my bank's website include a Chinese family.  We have, in fact, learned that the only really scary thing about Chinese and South-East Asian people is their capacity for hard work.  They have quietly become an accepted, productive part of our community, contributing to our developing culture and embedding themselves seamlessly among us.  Nothing bad has come of it so far, and I'm thinking it probably won't.

Climate change is a slightly different matter.  What is at stake here is our material culture, the ways we produce things, the way we get around, the way we design our cities, the structure of our industry and our economy.  Much of this is founded on the availability of cheap fossil fuels, the use of which powered the Industrial Revolution and helped create and enrich Australia.

Responding to climate change means changing this.  It means shifting from an economy based on fossil fuels, especially coal (of which we are the world's largest source) to renewables.  It means ditching our cars in favour of human-powered or renewably powered modes of transport.  It means shifting from big centralised power generation systems to networked distribution with large numbers of localised sources using sun, wind, thermal and wave power.  It means not flying half way across the country or the world at the drop of a hat.

These changes are difficult and costly.  We would like to think that we don't have to face them, that one day we will wake up and discover the whole thing was a bad dream (or a mistake of some crazed bunch of scientists) and that things can go an as normal.  We act as if that was the case.  We work hard to sustain our illusion that our economy will continue as it always has.

In the process we forget two things.  The first thing is that it always hasn't.  Our automobile culture only took off after the second world war.  I can remember a time when air travel was a luxury - my English grandparents only visited Australia once in my childhood because they simply could not afford the plane fare.  Our whole industrial system of production only dates back less than two centuries.  There were thousands of generations who did not live like we do.

The second is that if we open our eyes just ever so slightly we will see that it can't possibly go on as it is forever.  Our economic and industrial structures are not, and cannot possibly be, eternal.  Even in the unlikely event that the scientists turn out to be wrong and climate change is a false alarm, the supply of fossil fuels is strictly limited.  If global warming doesn't bring it to an end, peak oil will.  We don't have the option of not changing, but if we open our eyes and accept the mortality of aspects of our way of life, we have the option of preventing the change from being catastrophic.

Things are changing all around us, and not always in ways that we would like.  Many things that we are used to a take fro granted are coming to an end as we speak.  Richard Leakey talks about the "sixth extinction", the rapid elimination of species and lifeforms that is going on as a direct result of our industrial civilisation and the huge toll it takes on the natural environment.  Bruce Cockburn captures the tragedy of this so beautifully.

There's a knot in my gut as I gaze out today
On the planes of the city all polychrome grey
When the skin is peeled of it what is there to say?
The beautiful creatures are going away

Like a dam on a river my conscience is pressed
By the weight of hard feelings piled up in my breast
The callous and vicious things humans display
The beautiful creatures are going away

Why? Why?

From the stones of the fortress to the shapes in the air
To the ache in the spirit we label despair
We create what destroys, bind ourselves to betray
The beautiful creatures are going away

Then of course there is this.  A big part of the reason we persist in this illusion of immortality is that it seems to us that the alternative is despair.  What we fear most of all is our own annihilation.  David Crosby and Graham Nash capture it so well in their song To the Last Whale.  The song imagines the world's last whale stranded and dying as a result of our overhunting (an eventuality we have fortunately managed to avert so far).

However their final verse captures the problem neatly in a few words.

Maybe we'll go, maybe we'll disappear
It's not that we don't know, it's just that we don't wanna care...

The possibility of our own ending is too terrible to contemplate.  It literally paralyses us with fear.  So we close our eyes and pretend it's not so.  We pretend to be gods, but really we are just frightened children.

Jesus faced the same problem.  The people of first century Palestine faced the very real prospect of the annihilation of their culture and their way of life - indeed it happened within decades of Jesus' own crucifixion.  After his protest in the temple John quotes him as saying "Destroy this temple, and in three days I will raise it up."  His hearers' response in incredulous: "This temple has been under construction for 46 years..." they say.  Even Jesus' own disciples marvel at its grandeur and solidity.  Yet Jesus warns them, "Not one stone will be left upon another".

He faced clearly the imminent destruction of their religion and way of life, and offered them something better.  The Samaritan woman who he asked for water asked him which was right, to worship on Mt Gerazim as the Samaritans did, or in Jerusalem as the Jews did.  Jesus responded, "The hour is coming when you will worship the Father neither on this mountain nor in Jerusalem....  But the hour is coming, and is now here, when the true worshipers will worship the Father in spirit and truth...."

All these things, he's saying - the temple, the mountain shrine, all the customs and practices that go with them - are temporary, powerful and eternal though they may seem.  When their time is up they will be destroyed, and this destruction can indeed be catastrophic as it was for both Jews and Samaritans in the war of 66-70 CE.  Yet we can rely on the fact that the Father is permanent, and when he takes away one thing he will replace it with another, different but better.  The temple had become a den of thieves.  The mountain had become a place to worship a god they hardly knew.  All this needed to be renewed.  Now worshipers must learn once again to worship in a new way, in spirit and in truth.

"So if anyone is in Christ," says Paul in 2 Corinthians 5, "there is a new creation: everything old has passed away; see, everything has become new!"