Category Archives: Economics

Tilting at markets

5
by Economics, politics • Tags: , , , ,

Once upon a time I thought that Steve Jobs was an IT saint, put down on Earth for a little while to enrich the lives of ordinary mortals, and Bill Gates, well, wasn’t. Recent years have tended to almost, though not quite, reverse those judgements, though you would still have to pry my iPad and MacPro from my cold dead hands, and I have never bought a computer that uses Windows.

Still, Bill, and Melinda, Gates, having gained wealth beyond the dreams of anyone except Rupert Murdoch, the Koch Brothers, and Australian mining magnates, have been heaven bent (unlike Murdoch, the Koch Brothers, and Australian mining magnates) on putting their riches to good use. And good for them.

And good for Bill, on the basis of what he has learnt in his post-capitalist life, getting stuck into capitalism, “ripping it a new one”, as I would say if I was one of them trendy bloggers.

He pointed out:
“The malaria vaccine in humanist terms is the biggest need, but it gets virtually no funding. If you are working on male baldness or other things you get an order of magnitude more research funding because of the voice in the marketplace than something like malaria.”

While this example relates to a particular interest of Bill Gates, it obviously applies more generally. That is, you can’t rely on “capitalism” to provide any kind of services to a community because it will always focus on the profitable bits and ignore the unprofitable ones. Poor people, and poor regions, will always miss out, an observation that in itself makes nonsense of the libertarian free market neoconservative think tank demands to privatise everything up to the air we breathe.

But Bill’s observations, while absolutely correct and damning, are at the same time just a tad ironic.

One of the demands of conservatives of course is that we get rid of all social services, public support mechanisms, because the super rich, getting ever richer under neoconservative governments, will let a little largesse trickle down from the high table to the poor. Just as, once upon a time, king and nobles might allow the poor to fight over food scraps from their table, or over a handful of pennies scattered on the ground, or allow, graciously, hems of robes to be touched in a free medical service.

The irony is that even a benevolent billionaire like Gates, offering not robe touching but malaria treatments to the poor, is still working to the capitalist model. Not “The Market” but Bill’s own interests and inclinations decide what he will support and fund. Absolutely fair enough, it’s his money that we (well, not me, but you see what I mean) gave him, and he can spend it as he pleases.

But what pleases him is no more serving the whole community in the most effective way than the drug companies who put their mouths where the money is. What we need you see, is a system where the people of a country would elect some of their number to represent their interests. And that number would investigate the needs of the country, its people, and set priorities accordingly. Then there could be a mechanism whereby each citizen, and corporation, according to their ability, contributed a proportion of their wealth to a fund which would be used to pay for those priorities.

If only we were smart enough to invent something we could call, oh, I don’t know, “democracy”. Then we could get things like Malaria funded properly, and not at the whim of capitalists and capitalism, and capitalism could pretend to deal with hair loss.

Ill wind

1
by Climate Change, Economics • Tags: , , , , , , ,

This month, once again, air pollution in Beijing has been in the news again. The only new part was that some enterprising fellow was selling bottled air to the public! Let’s leave that for a moment to sink in.

Yes, bottled air. I mean, once upon a time bottled water seemed the ultimate in environmental madness, but we as a species have now really excelled ourselves.

Still, an ill wind and all that, the right-wing think tanks of the US and Australia will be pleased. You see their major task, and this of course has nothing, I repeat nothing, to do with the big corporations that fund them, is to get rid of all regulations in their respective countries. “The Market”, they profess to believe, and I am sure, almost sure, this is a genuine belief they would hold even without funding, will take care of the pursuit of life, liberty and happiness, once freed of the terrible burdens of red, black, green, purple tape.

And here in China (just a touch ironically, but never mind) is the perfect example of their belief in action. Allow business to pour fumes into the air unchecked and, cometh the hour, cometh the libertarian, someone will be ready to sell bottles of less polluted air to twenty million people.

Not saying their beliefs haven’t been proved correct over and over. Here the collapse of a building erected without the burden of building codes provides work for bulldozer drivers in the clean-up; there people burnt in a factory with no fire escapes or sprinklers will provide work for undertakers. Polluted drinking water provides work for medical personnel, as do train and plane crashes, and cigarettes.

In fact scarcely a day goes by but somewhere in the world someone, as well as the owner, is making money as a result of regulations unwritten or unenforced. And, thanks to the think tanks succesful fight against any action on climate change, the whole world is still the oyster for energy companies as well as forestry industries, fisheries, agribusiness.

What’s the old Yorkshire saying – ah yes, “Where there’s muck there’s brass”.

Odds on

5
by Economics, Media, politics • Tags: ,

In Orwell’s imaginary world of 1984 there was a government department whose role was to rewrite history in order to make it seem that the way things were in the present was the way they had always been. No need for that these days, the media, and therefore the public seem totally incapable of imagining that things have ever been different to the way they are today.

This week a kerfuffle arose over doping and match fixing in Australian sport. Attention quickly turned to gambling on sport (although it could also have looked at the huge sums of money now paid to sportsmen in order to keep them in a winning team and allow the club to reap the huge sums of money associated with sponsorship and merchandising).

Before you could say “Place your bets, madames et messieurs” the betting companies were swinging into action to try to head off any suggestion that gambling in sport might be curtailed in any way. Apparently if you criminalise gambling only criminals will run gambling, or am I getting confused? Perhaps it was – if you try to wrap gambling in plain packaging criminals will sell gift-wrapped gambling? No, I’m obviously confused. But indeed, the same self-serving rubbish was trotted out by gambling companies as we hear from gun dealers and tobacco companies.

The underlying theme in such debates is always the proposition that the way things are is the way they have always been. That the saturation of Australian sport and society generally by gambling has always been the case. That a casino in every capital city, then a second; that hundreds of thousands of poker machines in clubs; that games of football and cricket being interrupted by bookmaker’s ads and details of available odds; are all perfectly normal, and moreover, an essential part of our economy. But old folks like me, keepers of the corporate memory of the country, remember a time when none of that was the case. A time when effectively the only legal betting was on racetracks and “two-up on Anzac Day”. A time when the government-run TABs were introduced and illegal off-course gambling on horses clamped down on. A time, heaven help me, when there were no casinos and poker machines, and certainly no gambling on all aspects of cricket and football publicised during tv broadcasts. And even more amazing, young folks, society and the economy seemed to function perfectly well.

But it crept up on us gradually, here a casino, there a casino, and suddenly you are talking real money. And suddenly this big money talks, loudly. And suddenly this non-productive activity is essential to our economy. And suddenly it is not just non-productive but actually damaging large numbers of people with its carefully calculated addictive lure. Oh, and almost incidentally, damaging sport, once the pleasure of the public.

And new casinos are rushed through with the active help of state premiers, actively over-riding planning considerations. And the mildest attempt to reduce poker machine addiction is met with a massive political campaign from the clubs. And any suggestion that gambling on who wins a game, indeed who scores first, or last, or most, is met with outrage from big bookmakers, concerned that their licence to print money might be revoked.

Horton’s Law – whenever some activity is begun in order to see how it goes, as soon as it becomes profitable it will be found that it is impossible to stop doing it. A bit like taking up smoking which you can “stop any time, not addicted” until you actually try. Corollary – no matter how much an activity is damaging society it will continue while it is profitable.

You can bet on it.

Je regrette tout

6
by Climate Change, Economics, Environment • Tags: , , , , , , ,

Whenever a young person comes to me and says “Listen, wise old man, what career should I think about? What occupations are going to be most needed in the next twenty years?” I am always happy to help.

“Young Person” I say “you have come to the right man. There are just three occupations you should consider:

1. Plastic Surgeon specialising in tattoo removal. There are going to be hundreds of thousands of Australians, millions perhaps, who are going to reach the age of, say, sixty, and say to themselves ‘What the hell was I thinking? What is all this rubbish on my arms and legs and back and neck? Who is this person whose name is on my arm in big letters? And are those Chinese characters? Really? A tiger, a motor bike, the Southern Cross? FFS’ And then they will be desperately searching for someone who can remove all this rubbish, which once seemed like a good idea (perhaps under influence of alcohol) when they were younger and smoother, from their now wrinkly skin.

2. Financial Guru specialising in the return of privatised companies to public ownership. Australia, like a number of other countries, tattooed its economy with once public utilities turned into glossy private companies. What seemed like a good idea (under the influence of neocon think tanks) in those carefree days of the 1980s and 1990s now is revealed as a terrible error of judgement. Smart people are going to be needed to undo the thatcherite damage, and return railways, water, telecommunications, airports, wharves, hospitals, schools, energy, to public ownership.

3. Landscape ecologist specialising in revegetation. Australia has tattooed its landscape (under the influence of agribusinesses, forestry companies, coastal developers) with the scars of bulldozers and fires and chain saws. What seemed like a good idea thirty years ago has left a barren landscape, erosion, loss of biodiversity and species, and contributed to the terrible consequences of climate change, and the public will soon be demanding that sand dunes, water courses, grasslands, ruined farmland be returned as far as now possible, to the habitats they once contained (not totally possible of course, land, like skin, loses its elasticity).”

So there you have it. Where once, devil-may-care about future consequences, singing along with Edith “Je ne regrette rien”, young people and politicians gaily jumped into decisions with little thought for how hard they would be to later reverse, soon all of us will be trying to undo them now the consequences are clear. And there will be plenty of jobs for young persons.

Budge it on Budget

7
by Economics, Media, politics • Tags: , , , ,

You may remember a year or so ago, enormous pressure on the Australian government, by the Opposition, with the full support of a baying pack of reporters, to “get the budget into surplus”. Failure to do this, it was said, no matter the economic circumstances, would brand the government as hopeless economic managers, spendthrifts, in contrast to the wise money managers of the Liberal Party. A failure to slash everything in sight (but certainly not increase revenue, any hint of which, like a super profit tax on miners, being blocked by Opposition, and howled down by the Media). It was clear the campaign of denigration would carry on and on.

OK, said the government, you want a surplus, we’ll give you a surplus, somehow. If we are not permitted to tax the rich a little more then we need to slash programs, and, as economic conditions worsen overseas, slash some more. Outrage from Coalition, media, interest groups. How dare you cut this, that, the other program? What’s wrong with you? The Coalition never specified an actual program it would cut, merely said it would cut “waste”, and the media accepted this unquestioningly.

Meantime, as the damage austerity programs were doing elsewhere in world became more obvious, economists began saying to the government, hey, you don’t need a surplus, really, a surplus is surplus to requirements, take it easy, go for a reduced deficit by all means, but a “surplus” is not only meaningless but would be economically damaging. Immediately media joined in, yes, what are you aiming for a surplus for? Just a “political” move, not an economic one. Silly incompetent government chasing a surplus, what useless economic managers they are. But, a mere hint from the government that, yes indeed, surplus chasing was as irrational as UFO chasing, an instant chorus from media and Opposition, see, we knew you couldn’t get a surplus you hopeless economic managers.

Finally, faced with the inescapable reality of world economic doldrums, falling resource prices, and coalition premiers sacking thousands of workers, government says, you know, you are right, chasing a surplus was an albatross around our budget necks. All the economists agree, silly to go on with it. Maybe next year if things improve. Okay? Immediate baying for blood from Coalition and media. Broken promise. Bad economic managers. Hopeless government. Can’t even get a surplus. Throw them out.

And so it goes.

The Hucksters

18
by Economics, Media • Tags: , , , , , , , ,

Parents, let us safely assume, have been always pretty much the same – concerned about children’s safety, learning, nutrition, clothing. So why the childhood obesity epidemic, and why suddenly, in 2012, in the view of shock jocks and food lobbyists, have parents stopped caring about, being responsible for, their children’s well-being, to the extent that they are to blame for this obesity?

What nonsense. Whenever you hear the words “Nanny State” and “personal responsibility” reach for a metaphorical gun. Here is the argument – parents have suddenly stopped being responsible for what their children eat, and their health status (not sure why, but there it is, inarguable fact), and must be bullied into being so again by shock jocks. Nothing else has changed in society so it is obviously the fault of parents, who must pull themselves together and once more accept their responsibility. Any suggestion of any other action would be “Nanny Statism” and none of us want that, do we (said somewhat menacingly).

But wait, what is wrong with this picture? Society has extensively changed in the way that food is produced, packaged and promoted. When I was growing up in the 1950s there were no fast food outlets. I’ll say that again, NO fast food outlets. There were no supermarkets. There was very little processed or packaged food. People bought, or grew, fresh ingredients, and made stuff.  Freshly made bread was delivered to the door each morning, as was freshly made milk.

Nor was there much advertising of food, though there was, of course, of cigarettes, what would have been the purpose? As a consequence, none of us copied each other in eating certain foods, nor nagged parents to get them. Food was, well, just food, and you ate it, of necessity, just like you drank water and breathed. Conversely, glamorous cigarettes, promising a world of maturity and sophistication, were massively taken up by young teens, imitating each other, and the cool cats in adverts and movies.

But about this time, as my teenage years succeeded each other, a change came over the food industry. Corporations realised that “supermarkets” could make far more money than the old corner grocery store (which had also, incidentally, because taken for granted as customer service, delivered to the door, in fact delivered to the kitchen table, groceries too heavy for customers like my grandmother to carry home). The supermarket would also send out of business the greengrocer, and end for ever home deliveries of fresh milk and bread.

At the same time, to make the supermarket work profitably, much of what was sold had to be processed, preserved, packaged, to make it last, to make it appealing, to make it a little addictive. Meanwhile, fast food makers of various kinds were realising that if they created a market for their product by making, for example, a certain kind of hamburger as appealing as, say, Peter Stuyvesant cigarettes, huge profits were assured. Fast food, which also, uncoincidentally, required to be processed, preserved, packaged, and made addictive by the addition of salts and fats.

Convince people to buy food that was convenient for the corporations but bad for them, how could you do that?

Well, cometh the hour, cometh the adman. As early as 1957 Vance Packard (as was Frederic Wakeman  in fictional form in “The Hucksters” in  1946) was detailing the sophistication with which advertising was already operating, a world away from the simple informative ads before WW2. The psychology of human beings and how they could be made to respond, unwittingly, to colours, sounds, smells, shapes, shop placement, were all carefully studied and applied. Even subliminal advertising was tested.

In the last half century the sophistication of the psychological analysis in advertising. Whole teams of psychologists examine every detail of human perception and how to manipulate it. Every age and socio-economic group in society is individually targeted with finely tailored advertising. Down to children, where there is both big money, and future customers.

So everything is thrown at children, once and future customers. Every trick learnt over 50 years is beamed at them in advertising blitzkrieg. Not just colours, shapes, smells, sounds, shop placement (though the latter is particularly a science for children) but all sorts of extras.

Most important is to develop the most powerful force in children’s lives – peer pressure. Make something so apparently desirable that its ownership by one child will make it an imperative for others to own and you have a licence to print money. Add in the linkage of products to popular films or games, and make gifts available with, say, hamburgers, and you have a bigger licence. Ensure products made attractive by such methods are placed at children’s eye level in supermarkets and you multiply your sales even further.

So, half a century of development, tens of thousands of psychological researchers, designers, film makers, all aimed at making children both want and demand things from their parents which they must have or their lives will be ruined.

And yet, in the face of this highly sophisticated industry worth billions of dollars, individual parents are supposed to be able to resist the enormous pressures. Be “responsible”. No difference between parents caring for their children 50 years ago and now, but the big difference is the food and advertising industries and their effects.

But after all, reining in this advertising onslaught on children, and its disastrous effects on their weight and health, would be “Nanny State” right?

Emperors

7
by Economics, Media, politics • Tags: , , , , , ,

These senior business journalists. These people who constantly, in AFR and Australian, scream hatred of Greens, Unions, Labor.  Would, it seems, like to see all three groups banned, their members jailed. What the hell is this all about in what remains, on paper at least, a Democracy?

The only interest. I repeat, because it is so extraordinary, the only interest these people have is the welfare of a small number of very large companies and their Emperor-like owners. The aim is for these companies to pay very little, preferably none, tax. That their workers be subject to the most restrictive workplace conditions (“flexibility”), and are paid the lowest possible wages. That the companies are freed from all legislative, regulatory restrictions, so they can do whatever they like to the environment, to the social structure of the towns under their domain. That they will keep gobbling up small companies, even larger rivals.

They have set great snowballs rolling across the continent. These companies gathering up all people, resources, money in their path so as to grow bigger and bigger, more and more powerful, returning ever greater profits to owners here or in Australia, whatever. Australia and its people are merely there to serve, to feed, these monsters as they roll along. And all of this is presented, by these media Enablers, as the most natural thing in the world, the only possible way an economy can work, the end of history, all of human endeavour for thousands of years destined for this outcome. In other countries Enablers are doing the same enabling for their Behemoths.

The astute among my readers, and you are all astute, will have noticed one tiny problem with this cunning plan.  If these giant companies are sending massive profits overseas, and if their tax contribution is getting smaller, then the country’s government, its people, will be getting smaller and smaller. Now to our Enablers this is not a flaw but part of the plan. These people, and their mates in right wing think tanks, think government should be drowned in a bathtub. That everything in economy and society should be just handed over to the free market, with the people, through their government, to have absolutely no say.

So let us see Australia through the Enabler’s eyes. Species and ecosystems are disappearing fast, trees are cleared, unregulated irrigation dries up rivers, overfishing and pollution wrecks the oceans. Schools suffer from lack of teachers, resources, decent buildings. Hospitals lack nurses and doctors and modern facilities. Old people are dumped into rooms with few care staff waiting for death. Arts and other cultural activities dry up through lack of support. Infrastructure – roads, ports, railways, airports, electricity distribution, irrigation – crumbles and decays. Aboriginal communities battle the problems of health, education, social dysfunction. Child care costs more than a second salary can pay for, as the qualifications of carers decrease. The disabled continue to receive little support. Housing is unavailable to the poor. Rural communities die as they lose support facilities.

The Enablers don’t want you to see any of this, to see that their Emperors have no clothes. Don’t want you to see that their “modern economy” is just nineteenth century robber barons writ large. Don’t want anyone, Greens, Unionists, Labor, who see reality, to be able to communicate that reality to the public, transfixed by the glorious robes. So they abuse them, denigrate them, call them old-fashioned, call them Communist, do anything to discredit them. And so far it is working.

But hey, you bastards, I’m calling you – the Emperors are naked. Anyone else want to add their voice to mine?

Planet Dystopia

8
by Climate Change, Economics, Environment, Media, politics • Tags: , , , , , , , , , , ,

Everywhere giant corporations are engaged in an accelerating destruction of the Planet. It is total war, no part of the planet is off-limits. The methods of production involve total destruction, waste is left behind. The corporations totally exterminate environmental opposition, community action groups, often these days with deadly force.

The small group of military industrial complexes formerly called countries are also conducting total war. This is no coincidence. They crush any opposition from any country with resources – they will  invade, bomb, assassinate, infiltrate, install governments – whatever it takes to subdue the country. There will be no respect, compassion.

In western countries The Right Wing political parties are engaged in total political war to gain power. This is also no coincidence. They lie, establish fake community groups whipped up into outrage by propaganda, have fellow travellers like Breivik who kill opponents, church groups screaming of gay marriage. they make parliamentary institutions non-functional, they resist every single positive policy, they lie and lie, ignoring any correction and lying again. They discredit unions and community groups. The are supported by think tanks and media.Their interest is solely in power.

Not sure what the end game looks like on this Planet Dystopia (formerly known as Earth). But with Enron moving in to drill the shrinking Arctic, we know it has begun.

Note – written from my hospital bed where I am very ill with pneumonia. This is the first evening I have felt able to string either thought or sentence together. Hope to be home for continued treatment in couple of days.

Pastime with good company

16
by Economics, Education, politics • Tags: , , , , , , , ,

I recently, and somewhat belatedly, watched the Showtime tv series “The Tudors” http://www.imdb.com/title/tt0758790/. Pretty good series, on the whole, and an excellent introduction to the reign of Henry VIII. It should, I reckon, be made compulsory viewing for the following people:
1 those who think religion should play a much bigger role in our society.
2 those who support monarchic/autocratic government
3 those who support laissez faire economics
4 those who think justice should be decided by public opinion not courts
5 those in favour of death penalty
6 those comfortable with huge wealth disparities
7 those against feminism
8 those against public education for all
9 those against science and medicine
10 those who believe in trickle down economics

There, I’m sure you guys can think of other lessons from history as we seemed doomed to repeat it.

One hit wonders

3
by Economics • Tags: , , , , , , , , , ,

Bill Clinton, presidential candidate, famously had pinned to his wall by his campaign manager (the glib James Carville) a sign saying “It’s the economy, stupid”. It was shorthand for “all the voters are interested in is their hip pocket so give them what they want, not any high falutin’ stuff about environment, or arts, or foreign affairs, or infrastructure, or health, or education, Dumbo”. It was instantly adopted as the kind of ageless political advice on stone tablets brought down from the Acropolis by Machiavelli after everybody said “gosh darn why didn’t I think of that?”

And away they went. And because it was the preferred political fighting ground of the Right it suited them down to the balance sheet to have progressives always focused on “the economy” and not the hundreds, thousands of other aspects of daily life that the Right don’t have a clue about. While the strengths of progressive politicians were left undiscussed. As time went by this became a self-fulfilling bon mot because progressives were expected to focus on the economy, so only those who were happy to do so, looked the part, and talked the talk, could become political candidates. Game set and match to the corporations and banks. Bravo Mr Carville.

But the ramifications of this ratty little bit of paper with its fortune cookie sentiment went even further. The public began to believe that you only had to utter the phrase “the economy”, and, like a Hogwarts’ spell, demons would be defeated, all put to rights, happy ever after. An answer to a perceived problem which is “the economy” ignores all the other aspects of society and culture that combine to keep the wheels of history turning. Ignores environmental issues, education, health, infrastructure, culture, technology, communication, ethnic relations, population parameters, geography, history itself indeed. To pretend that there is some magic economic lever you can pull and everything comes good is fooling both yourself and the people.

But it has got worse since that golden age when the Clinton-Carville political renaissance was in full bloom, like a hundred flowers. At least then the post-it note’s wisdom for the ages encompassed the whole economy. In more recent times politicians have come to reduce the language of a campaign to three word slogans, and the “policies” to glib single issues. Modern Carvilles I guess pin-up notes saying “It’s the Dummies, Stupid”. Can’t confuse the dumbed-down voters, so politicians wander around, repeating the same mantra endlessly – all will be well if you elect me and I just do this one thing. The one thing might be the removal of a tax, the change in a law, the building of a railroad, the bulldozing of a forest, the cutting of “red tape” (or these days “green tape” or “black tape”), the stopping of immigration, the reduction of minimum wages, fighting terrorism, and so on.

Our very own Tony Abbott, who three word slogans suit just fine because he can’t remember sequences longer than three words (Romney in America the same) has been telling the public, daily for two years that the “Big New Tax” (ie what is actually a price on carbon applicable only to a few hundred big companies) will be removed and the Golden Years of Howard will be restored. Nothing else needed, just keep telling people (ranging from fishermen to antique dealers to coal miners), over and over that the removal of this ‘tax’ will solve all their problems, for ever and ever amen.

Tony Abbott, Opposition Leader and prime minister manque, doesn’t bother explaining to the businesses that, if they do have “problems”, those problems have nothing whatsoever to do with a carbon price. Their businesses are the way they are (for better or worse) because of the exchange rate of the dollar, free trade agreements, global financial crises, lack of funding for education, inadequate infrastructure, the labour market distortion caused by the mining boom, the adequacy of workplace safety regulations, health care for workers, business tax concessions, the wages that potential customers get, the presence of sufficient housing for a workforce, adequate transport and communications, and so on. If it takes a village to raise a child, it takes a society to support a business.

Similarly the general public, offered, say, a tax cut by a wannabe leader, might want to consider what that wannabe might to do public transport, public schools and hospitals, road maintenance, whether they will ensure the air and water are clean (whether indeed they will help to stop the climate itself changing), whether they will be tempted to take the country to war for some less than adequate reason, whether they will encourage development of the arts, and so on.

It is no good making promises about what you will do about one tiny element of people’s lives. What counts is the entirety of the society in which we all live. And the entirety of the people who ask to lead us.