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Archive for April, 2010

Rudd’s Climate Change Policy Back Flip on the ETS Appeases Big Business

Paul Kelly is not my favourite cup of tea, but every now and then he offers up pretty good analysis. His latest essay, in today’s The Australian, on Rudd’s ETS back flip is definitely in the latter category.

He calls this the most damning back flip by a Prime Minister in decades. Kelly would be accused of exaggerating a tad, but I don’t think so. Kelly correctly points out that Rudd defined the issue in very stark moral terms, even in terms of survival. Climate change is the leading moral issue of our times, so Rudd’s argument went.

The mismatch between the back flip, for reasons of political expediency, and the declared moral stakes does indeed raise core issues about the credibility of both Rudd and the government he leads. Kelly might have added that the same applies to his intellectual cheerleaders.

But, of course, maybe Paul Kelly doesn’t understand things properly. You see for Robert Manne, who knows better, Rudd is “an intellectual in politics.”

However Kelly, and most other commentary in the corporate media, makes one major error. It is true that the back flip is due to political expediency. This is how Kelly explains it in his article

In truth, Rudd has lost his nerve. This is a political and policy retreat. He says the ETS remains “the most effective and least expensive” means of combating greenhouse gas emissions. His tacticians will call this smart and they may be right. But it betrays a government weak to its core. Understand what this is about: it is giving Rudd a political strategy to maximise his re-election by removing the only mechanism he had to deliver his ETS policy. He has chosen safe politics over policy delivery. Any voter who believed Rudd was genuine about climate change needs to reassess

Polls actually indicate that support for an ETS type policy remains high even following the failure of the Copenhagen summit. Take a report in today’s The Age on the ETS back flip by Michelle Grattan

A Lowy Institute poll, released yesterday, found 72 per cent agreed ”Australia should take action to reduce its carbon emissions before a global agreement is reached”. But 33 per cent were not prepared to pay anything extra to help solve climate change. An Essential Research poll showed 57 per cent rated the government’s performance as ”poor” in handling introduction of a scheme

Those figures are fairly consistent with Rudd’s previous climate change policy; put in the ETS at a low CO2 cap and then wait for the rest of the world to move as well and then raise the cap. I don’t want to argue here whether Rudd’s policy was the way to go or not.

The point here is that it is consistent with public opinion. Rudd couldn’t have ditched a core policy so easily based on fear of a public backlash pre-election. This gives Abottman too much credit. Not even Rudd is this brittle.

What has happened here is that Rudd is appeasing big business, especially the Australian Industry Group and the Australian Chamber of Commerce. You can see that when you take on board the tail end, the most important end, of Grattan’s article

But the Australia Industry Group said industry remained committed to reducing emissions. The Australian Chamber of Commerce and Industry said the delay was a ”step in the right direction”

The Chamber hasn’t really been on board with Rudd from the start. Since Copenhagen the AIG has gone cold on the ETS. It’s true that energy sector companies are not happy due to investment uncertainty but the Chamber and the AIG outweigh them, especially the latter.

Rudd wants to lock in the support of big business pre-election. He understands that Abottman has faltered with big business, so the two are now engaged in a competitive race to secure the backing of the big end of town.

This race will determine the outcome of the election. The ETS back flip should be seen in this context.

It will be interesting to see what Rudd’s leading kiss asser in academia will write in the next edition of The Ruddly.

Kelly liked to take pot shots at Grattan in his work of comedy, The March of Patriots, but she is way better than he.

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Categories: ALP, Corporation

With Kevin Rudd Everything is the Same Only He Isn’t Here

It has been said that not long after the October 5 2000 uprising that ousted Slobodan Milosevic from power in Serbia many people grumbled that “everything is the same, only he isn’t here.”

So it is in Australia since the 2007 election. Remember when Brand Rudd told us that he’s “Kevin from Brisbane” and that “he is here to help.” Come in spinner! Everything is the same only he isn’t here.

The Age newspaper reports that the two-speed economy is to “return with a vengeance.”

The gap between the resource states and the rest is set to widen in years ahead as the two-speed economy comes back ”with a vengeance”, a report says.

Forecaster Access Economics says that, as the commodities boom gathers pace, Western Australia and Queensland will expand fastest this financial year, with growth rates of near 3 per cent extending this lead in the long term…

…After raising interest rates at five of the past six Reserve Bank board meetings, RBA governor Glenn Stevens last week said the CPI would shed some light on whether inflation was staying within the RBA’s target range of 2 to 3 per cent.

Rising interest rates, needed to nip inflationary pressure resulting from the boom in the bud, tend to hit the eastern states hardest because households there have larger mortgages

So we are going back to the two-speed economy. I though Brand Rudd wanted an Australia “that makes things.” Notice the bit about mortgage stress.

But much more important was an article by Charles Purcell, also in today’s The Age, that reports on the seething anger out there in the community that has been provoked by the massive declines in housing affordability. As I pointed out in my last entry the commodities boom threatens to crowd out Australia. The anger that Purcell reports on is the type that led to the rise of One Nation. Just take a look at what Purcell has to say

there is a voter groundswell of anger over housing in Australia. But it’s not the sort of transitory anger that one might have over many issues of the day — it’s a deep anger, a bitter anger that extends not only to those trying to buy their first house but also the parent who sees his children potentially locked out of the market forever, a fear his children share…

…It is an anger that grows as prices continue to spiral upward, rising to higher, ridiculous multiples of average yearly wages. It is an anger that festers over the outrage of negative gearing. It is an anger that grows as mortgage stress sweeps the land. It is the impotent anger of letters to the editor and calls to late-night radio programs, desperately searching for answers and reassurance

Purcell could have added that this sort of anger and concern is what got Rudd elected. That’s why Rudd told us that he was “here to help.” Interestingly, The Age today also has a report on a huge fine that has been given to a unionist in the building industry. According to the report

Electrician Mirek Grzegorek was stunned to receive a letter from the building industry watchdog warning him he could be fined $22,000 for attending a couple of short union meetings…

…”At the time there was an understanding if you go on a union meeting during working hours then your employer rightfully can deduct up to four hours of your time, even if the meeting takes 10 minutes.”

But the letter warned that Mr Grzegorek could face a much bigger penalty for attending an unauthorised union meeting

No wonder the Rudd Government caved in to a right wing campaign, pushed with force by The Australian newspaper, to reject a statutory charter of human rights.

The real estate market has been inflated, to a fair degree, by deliberate government policy. It itself is a type of bailout for property investors who banked on perpetually rising asset prices. This is all linked to the Government’s extraordinarily pro big bank friendly nature; to bailout the property investor class is to ultimately bailout the banks who don’t want to be exposed to too many non performing loans. It’s like the bailout of Greece is not a bailout of Greece. It’s a bailout of Greece’s creditors at the expense of the broader population.

So the affect that the real estate asset price boom is having on affordability is the type of externality that we should expect when Australia’s property market is positively geared towards investors, including foreign investors. The Government was just forced to scrap the pro foreign investor measures, but I reckon they’ll be back in one form or another after the next election.

So when Kevin told us that “he is here to help” he, actually, was telling the truth. But who was he trying to help? It is possible to write a thousand word, full referenced, essay in order to answer this question. But there are times when a picture tells a thousand words

Will The Commodities Boom Crowd Out Australia?

During the height of the commodities boom mania, prior to “the great crash of 2008”, the Reserve Bank of Australia made an interesting, though not much discussed, point.

Namely, the RBA argued that although rising commodity prices were great for Australia’s terms of trade the affect of the commodities boom was to crowd out Australian manufacturing. Our commodities were being used by low wage industries in China to outbid Australian manufacturers in global markets. This fed back into the two-speed nature of the Australian economy.

It was a perverse side effect of the commodities boom. Notice that the neoliberal reforms were instituted in order to change Australia’s structural profile from a commodities exporter to an exporter of high tech based goods and services.

It didn’t. We ended up with a two-speed economy, following the deep recession of the early 1990s.

Now towards the end of the pre 2008 resources boom a very important driver of Australian GDP growth was private investment. This was not because of the neoliberal reforms, but because cashed up resource corporations were investing big in an effort to pump out more lucrative commodities.

We are told by Ken Henry, and just about everybody else, that we are in for another commodities boom, to be fuelled by Chinese demand, well into 2050. Putting aside little quibbles such as Chinese Premier Wen Jiabao’s comment that China’s growth is irrational and unsustainable, we might discern another crowding out effect.

Ok, so commodity prices are rising again. Putting aside the extent to which this relies on public stimulus in China and the actions of speculators, we note that again the resource exporters are spending big on investment.

As investment increases given rising commodity prices so export volumes will increase, leading to a greater match between supply and demand. This effect would lead, all things being equal, to a dampening in commodity prices.

When we talk about commodity prices the affect on the terms of trade is much discussed. But I would like to focus on something else.

The problem with this little scenario is that it could lead to supply outstripping demand, especially if the global recovery starts to fade on the backdrop of either another financial crisis or the withdrawal of fiscal stimuli not being backed up by a sustained increase in private activity. Speculation in commodities prior to 2008 did play an important role in the rise of commodity prices.

In this case we won’t have the much vaunted capacity constraints that we hear so much about in Australia. Rather we will end up with excess capacity in Australia’s resources sector, the effects of which on the broader economy won’t be too pretty. If we are in the midst of a commodity prices bubble the affect will be multiplied. For a country highly exposed to commodity prices for economic well being risking excess capacity, given increasing speculation in commodities markets, a hallmark of neoliberal deregulation, is not a wise long term economic strategy.

The idea here is that we should aspire in Australia to be the masters of our own destiny. Take that very same RBA bulletin that I alluded to at the start. It showed that higher education is turning into an important little export earner for Australia. That’s good, but it also has a crowding out effect. Our universities are educating our future competitors.

If we truly had a program designed to build high tech industries in Australia we would instead be more interested in investing in skilling Australians for the type of interesting work that “makes things” at high wages.

Instead we have an education system increasingly tuned to foreign investors (foreign students are making a type of investment) and a labour market policy increasingly tuned to importing migrants. Both aspects of policy come at the expense of the broader domestic population.

It’s corporate Australia, in league with the politically correct intellectual-cultural classes, that are most fond of the idea of a “big Australia.”

Of course, under the vile maxim why invest to educate Australians when the masters of mankind can just import the type of labour they want and when they can make more money by educating full fee paying foreigners rather than ordinary aspiring Aussies?

How many young Australians missed out on a university place this year? How many of them won’t be able to afford a home because of the investor centric, including foreign investors, property market that is leading to an acute housing affordability crisis? Investors are crowding out home buyers, especially first home buyers.

Under the vile maxim we are not supposed to care about such questions. The only crowding out effect that you are allowed to focus on is whether public spending crowds out corporate Australia. These other types of crowding out in a future big Australia are better left unsaid.

Categories: Aus Economy

Kevin Rudd’s Productivity Agenda and the Ideological Basis of the Productivity Commission

Last summer the philosopher king, Kevin Rudd, returned from his holiday and gave us his essay on the global financial crisis and neoliberalism. Kiss ass intellectuals such as Robert Manne were in awe of Rudd and his mighty achievement.

A year later, his return from the Christmas break saw him put increasing productivity at the centre piece of his Government’s narrative. After his scolding by school students on the ABC he shifted again to health reform, in an effort to show that he was not all spin and no action.

Consider the issue of productivity. The emphasis on productivity came accompanied with a lot of rhetoric of how the Rudd “Labor” Government was to boldly continue the economic reforms of the past 30 odd years otherwise known as neoliberalism. This is what “economic reforms” means in Australian public discourse. It was even alleged that the previous Howard Government was indolent in this respect. Rudd Labor would do better. Everybody forgot his awe inspiring essay from exactly a year earlier, including the kiss ass in chief who published the damn thing.

Now one of the main institutions in Australia that seeks to advance productivity, and the reforms it perceives is necessary to achieve them, is the Productivity Commission.

It is well known that industrial democracy, defined as greater worker participation and control in industry, increases productivity. Greater worker control over the management decisions of the corporation would boost productivity. Involving other stakeholders, such as local communities, presumably would have the same affect.

But try and find any reference to that in any Rudd “Labor” Government policy announcement since the productivity agenda was announced. See if you can find any Productivity Commission study directed towards making suggestions about how the structure of the corporation can be reformed in a fashion designed to increase industrial democracy within the firm.

You won’t do that of course because the productivity agenda is infused by the vile maxim. The purpose is to increase productivity whilst at the same time shifting the wages-profit share further towards profits. That’s not profits for workers and community stakeholders of the corporation. That’s profits for the narrow sectors of power and privilege that benefit from the tyrannical and largely unaccountable structure of the corporation.

It’s a bit like what happened in the 1980s to early 1990s under Hawke and Keating. The Labor Party and the Australian Council of Trade Unions used wage restraint to boost productivity while the take of profits in the wages-profit share increased, quite deliberately. This was sold on the basis that increasing productivity would boost investment, which it did but it was of the junk sort favoured by the rich. It was all basically a party for the rich. Booming credit growth and so on saw the Hawke Government smash the population with high interest rates leading to the “recession we had to have.”

The rich have the wild orgy and then when the hangover sets in the broader population is required to make the sacrifices to get things right again. Things haven’t changed. Southbank and Kew, where the spivs live that gave us the global financial crisis, are doing well whilst most of the burden of the unemployment rises are in Sunshine and Broadmeadows. That’s to be expected given the vile maxim.

Of course, I can’t help but notice that one of the big spruikers of the productivity agenda is Brand Rudd’s socialist minister for deregulation, Lindsay Tanner. You’d think he would, being a socialist and all, make the link between industrial democracy and productivity.

But he doesn’t, naturally. The “careerist” knows which side his bread is buttered on, as do all those Labor MPs who don’t live in their scummy working class electorates, including that fine specimen of Labor manhood, Tim Holding who doesn’t want to live too close to his voters in Springvale. The Herald-Sun reported today that Liberal Party MPs tend to live in their electorates in contrast to Labor MPs.

Labor MPs don’t because they are of the same class as the Liberals, so it is that we observe little difference between the ALP and the Liberal Party when it comes to policy. They hail from the same class and they represent the same class. Policy is thereby largely convergent.

Policy converges on the vile maxim because that is the maxim that the people of Kew, Hawthorn, Southbank and the rest hold with great gusto. They wrap this up in a smug sense of cultural and moral superiority, which is the necessary cultural and moral accompaniment to the vile maxim.

Categories: ALP, Corporation

Lindsay Tanner Vs Barnaby Joyce: Who is the Real Freak Show

The former shadow minister for finance, Barnaby Joyce, was sacked because he was not an economic rationalist. Lindsay Tanner, Kevin Rudd’s socialist minister for deregulation, by contrast, is an economic rationalist. The contrast explains why Lindsay Tanner holds his post and why Joyce has found himself out on his ass.

Tanner liked to taunt Joyce as a “freak show.” However, Joyce is no freak show. The former shadow finance minister understands full well that he has a constituency and a core belief system built around serving that constituency. Joyce’s constituency is those segments of rural and regional Australia, particularly in his native Queensland, who have been hit hard by globalisation and neoliberalism.

Joyce has stayed true to his constituency and his beliefs even though Abbottman bumped up into the shadow finance portfolio.

It is easy to see that it is Lindsay Tanner who is the real freak show.

This is someone who claims that he is a socialist. This is someone who hails from the “socialist left” of the ALP. Yet he understands full well that he owes his lofty position to his enthusiastic support for, and facilitation of, neoliberal deregulation.

Unlike Barnaby Joyce, Comrade Tanner is more than happy to plunge the knife into the back of his core constituency, if we understand that constituency not to be big business and the banks.

Comrade Tanner has lead the charge against Abbottman’s paid parental leave plans. On what grounds? Because Abbottman’s policy would tax big business. Comrade Tanner not only likes deregulating big business but he also likes to keep their taxes nice and low.

He now is spending plenty of time thinking about how to cut back spending on the broader population. In fact his very political identity now seems to be built on it, judging by the title of his pathetic blog which connotes “the razor gang.”

Keep corporate taxes low, but cut back public spending on the people. Only spend on the people when the rampant greed of the rich threatens to fuck up the economy. That’s freak show Tanner’s motto.

It’s interesting to observe how Abbottman got himself into a spin after making this announcement. He started to attract pretty bad press after his small defiance of corporate power. Big business is wondering; is he really a social conservative that is prepared to hit our interests in the name of social and family cohesion?

I am sure that Brand Rudd and his freak show of a deregulation minister have internalised this lesson. Stay nice and close to the big end of town.

What is especially freakish is that the freak show had the nerve to attack the Greens for “dividing the progressive vote”. Naturally progressives would turn to a party that stands for progressive principles, unlike the backstabbing freak show who exists to serve the interests of big business.

The Corporation and Australia’s Human Rights Debate

The human rights debate in Australia is deeply flawed. The terms of the debate have been set by the well known report of the Human Rights Consultation Committee, chaired by Father Frank Brennan. The Federal Government has yet to formally respond to the report, especially with respect to its key finding. The report recommended that a statutory human rights charter be adopted to weigh the human rights implications of government acts.

The debate is flawed because the debate concerns itself with the rights of the individual with respect to the state only. This has been quite deliberate. The Brennan proposals, let us call them however unfairly, expressly excluded social and economic rights, even though such rights are a critical part of the United Nations Human Rights Convention. Brennan has acknowledged that such rights should be promoted but “nonetheless in light of advice received from the Solicitor-General, we don’t think the courts have a role to play in the progressive realisation of these rights”.

So on one side of this limited debate we have those who argue that recent high profile cases, especially in relation to counter terrorism, demonstrate the limitations of the “rights revolution” in Australia. A more robust system of protections is needed to protect the individual from capricious legislation that seeks to restrict liberty.

On the other hand, conservatives argue that human rights is being used to cloak an agenda being pursued by Australia’s cultural-intellectual elite to advance their preferred ideological whims. It is understood that these elites lack public support, so they naturally seek to enshrine their policy preferences by bypassing the ballot box. The purpose and affect is to subvert democracy. On the latter point it is argued that a human rights act will hand too much power to the judiciary, thus undermining parliament.

In focusing on the state a very important and powerful collectivist institution is being neglected, namely the corporation. Large corporations are able to violate the human rights of the individual just as much as the state, and for pretty much the same reasons.

Corporations have overwhelming resources and power. The asymmetry between the resources that the corporation is able to command and that of the individual is vast. Moreover, unlike the state the corporation is an unaccountable tyranny. It is a top-down hierarchical institution which functions very much akin to the fascist ideal, as pointed out in a classic study by the political economist Robert Brady. It is also concerned with little else other than profit, and if trampling over the rights of the individual, both within and without the organisation, advances profit maximisation then so be it.

In our legal system corporations are recognised as being persons, this is known as the organic conception of the corporation. The recent judgement by a reactionary, not conservative, US Supreme Court on campaign finance legislation has brought this largely unrecognised facet of Western society to relief.

The political philosopher, Ronald Dworkin, who should have recognised this long ago, stated that the “nerve of the argument” used by the Court, “that corporations must be treated like real people under the First Amendment” is “preposterous” because “corporations are legal fictions. They have no opinions of their own to contribute and no rights to participate with equal voice or vote in politics.”

Notice that Dworkin is referring to one of the bill of rights to the US constitution.

The organic view of the corporation was enacted through late 19th century judicial activism, not primarily by way of legislation. The underlying philosophical conception used to justify this position, neohegelianism, does not place ontological primacy upon the individual. Furthermore, these ideas are at variance with other staples of enlightenment thought, such as rationalism. They are also quite popular within the academic left.

The primacy that has been accorded the corporation in society is founded upon a thorough rejection of classical liberal ideas. The notion that the pro corporate policies of the past 30 odd years, known as “neoliberalism”, somehow have something to do with classical liberalism is a fiction just about shared by all.

Governments can be defeated at election time. Mechanisms exist to advance the public interest in the policy making process. That these mechanism are meagre does not obscure their existence. On the other hand corporations are unaccountable in the absence of regulations. Yet deregulation has been central to neoliberal policy making. We now even have, with Lindsay Tanner, the absurdity of a professly socialist minister for deregulation.

The controversial statements on the nanny state by Formula One driver Mark Webber are relevant here. We have seen increasing regulation and red tape being extended over the individual. Yet at the same we have witnessed progressive corporate deregulation. It follows that ours is not a society that places the rights and interests of the individual at its core. Nothing can be allowed to trump the rights of the corporation.

One can observe this in many a court case, with listings such as, say, Joe Bloggs vs Acme Corporation or such. The title itself implies neutrality. Yet we have two competing rights systems. On the one hand we have the right of the individual. On the other we have the right of the corporation to pursue profit. We also have the asymmetry of power.

It is improper to suppose that the corporation be treated as a person, with rights equal to that of the individual, nor that the right of the corporation to pursue a profit is somehow on a par with the right of the individual. The rights of the individual outweigh the rights of the corporation. The corporation should have rights, if any, not for itself but to the extent that it contributes to the social good, just as liberal theory recognises with respect to the state.

But what is called “liberalism” today mostly concerns itself with ensuring that corporations can do as they please.

Corporate hegemony has been allowed to proceed because of the tight linkages between corporate power and the state. Corporations have privileged access to policy makers and are able to use a variety of techniques, owing to an asymmetry of power relative to the individual, to ensure that their interests are “peculiarly attended to”, as Adam Smith had it, in legislation.

The individual does not enjoy such privileged access. This leads to a rights asymmetry between the individual and the corporation. The individual still has the power of the ballot box. However, this occurs in a money driven political system and where corporations control the media. The result is that we have a managed political system that is largely in tune with corporate power.

If opinion does not cater to advertisers then it won’t become a part of public discourse, absent publicly funded media. Surely the American philosopher, John Dewey, was on to something when he pointed out, as corporations were being granted the rights of persons, “politics is the shadow cast on society by big business.”

Given this asymmetry it is necessary that some form of enshrined human rights protections exists to check the power of corporations to subvert our democracy in ways detrimental to the rights of the individual. In fact this problem is deep seated given the provisions on commerce in the Australian constitution, doubtless deliberately framed to protect the then emerging corporate shadow over society.

By far on any given day across the length and breath of Australia the rights of living and breathing human beings are being infringed more by corporations than they are by the state.

Any human rights act or other similar mechanism that purposefully neglects corporate dominance with respect to the individual is extremely limited, indeed highly flawed. So we have two elites engaged in debate. One cultural-intellectual based. The other economically based.

The people of Australia, whose rights and interests should be at the forefront, are neither here nor there. They remain voiceless although both elites claim to know their sores. If the Liberal Party were truly a party of liberalism and if the Labor Party were truly a party of the working class then both would seek to advance the rights of the individual with respect to the corporation.

That both place greater priority on tending to the needs of big business tells us a great deal about both the theory and practise of Australian democracy.

Categories: Corporation